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JONES DAY TALKS  The eBay Cyberstalking Case  M

JONES DAY TALKS®: The eBay Cyberstalking Case: Mitigating the Compliance Risks of Employee Misconduct

In mid-2019, a group of corporate employees based in Silicon Valley launched a months-long campaign of online harassment, threats of violence and physical surveillance targeting a middle-aged couple in Massachusetts who ran an online newsletter covering eCommerce. The employees worked for eBay, one of the largest, oldest Silicon Valley companies. The bizarre episode led to a high-profile federal prosecution of seven people in Boston federal court and a major civil suit against current and former eBay executives. Both matters are ongoing.

Jones Day’s Andrew Lelling and Amy Harman Burkart, brought the federal criminal case against the rogue eBay employees, when Lelling was the United States Attorney for the District of Massachusetts and Burkart the Chief of the Cybercrime Unit in that office. In this podcast, these veteran enforcement lawyers explain what companies must do to mitigate the corporate risks posed by employee misconduct, with a focus on management expectations, the importance of internal reporting and communications across teams, and the role executives must play in encouraging compliance through ethical behavior.

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Read the full transcript below:

Dave Dalton:

We're all familiar with the term cyberstalking, but I can almost guarantee that you've never heard anything quite like what we're about to talk about today. This is about a harassment campaign undertaken by a group of employees at eBay, targeting a suburban Boston couple. That couple ran an online newsletter, focusing on eCommerce that some eBay employees believed was unfairly a critical of the company.

Dave Dalton:

The inexplicable retaliation included not only online threats, but also a barrage of deliveries of unwanted items, including a funeral wreath, and live cockroaches, and ultimately, the campaign escalated to physical surveillance. A U. S. district court judge called the situation, "Just nuts," and I think she was being charitable. Jones Days' Andy Lelling and Amy Burkhart were there when this bizarre story unraveled. We'll talk about how something this strange could possibly happen and what lessons all companies can learn from this.

Dave Dalton:

Stay put, and turn it up. This is going to be good. I'm Dave Dalton. You're listening to Jones Day Talks.

Dave Dalton:

Prior to joining Jones Day, Partner Andy Lelling was U. S. Attorney for the district of Massachusetts, capping a 20-year career with the Justice Department. He was also the former Head of the Attorney General's Advisory Committee on Cyber and Intellectual Property Crimes, and a member of the Attorney General's Cyber Digital Task Force.

Dave Dalton:

In Jones Day's Amy Burkart is the former Chief of the Cyber Crime Unit in the Boston U. S. Attorney's Office, and the former lead prosecutor for the eBay case that we're about to discuss. An experienced trial lawyer and part of Jones Day's Cybersecurity, Privacy and Data Protection practice, she has represented clients in criminal matters and civil litigation related to securities, accounting, and other financial matters. Both Andy and Amy are based in Jones Day's Boston office.

Dave Dalton:

Amy, Andy, thanks for being here today.

Andrew Lelling:

It's good to be here.

Dave Dalton:

Yeah, I got to tell you, I've done a lot of podcasts at Jones Day Talks. We're sneaking up on 150 episodes, and we have covered all sorts of matters, and cases, and developments, and happenings, and events. I got to tell you, this is more than likely going to be most bizarre podcast because of the underlying content and what happened in the events that we've ever done.

Dave Dalton:

It's a good thing Halloween's coming up close, right, it's that weird. With that kind of strange introduction to some strange circumstances, Amy, talk about the background of this matter with eBay, and these employees, and what they did, and where we are right now. Give us an overview of what happened.

Amy Harman Burkart:

Sure. Well, I'll start from the victim's perspective, because I think it's an important piece to kind of keep at the forefront here. There is a couple that live in the suburban Boston town in Massachusetts, and they started in the summer of 2019 was really the peak of it, it started before that.

Amy Harman Burkart:

In 2019, there was a flurry of activity directed at them. It kind of falls into three buckets. The first bucket was they were getting a number of anonymous, sort of Twitter communications. They ran an online eCommerce newsletter, and the husband was a publisher, the wife was the writer, and they were getting just a barrage of communications, deliveries, and eventually, surveillance of them at their suburban home.

Dave Dalton:

Okay, and the crux of it was, and I've not seen what they actually published, or put out there, but they apparently were critical of eBay, in some capacity, whatever eBay may have been doing that they didn't like, they were critical of eBay. So this was a retaliation?

Amy Harman Burkart:

Well, it looks like that at first. It turned out not to be quite that. They wrote an online newsletter that covered all kinds of eCommerce trends, but eBay is obviously a big player in the eCommerce space. The communications that they were getting from these anonymous accounts were purporting to be from eBay sellers. They were saying things like, "Why are you so hard on eBay? We're trying to support our families and make money by selling things on eBay, and you're pushing buyers away to other companies."

Amy Harman Burkart:

It sort of started like that. It became very threatening saying things like, "People will do anything to protect our families. You're hurting our families." The images that were associated with these communications were scary. There was sort of a variety of different voices, two in particular, but one of them was a scary pig face. That made the deliveries that they started getting even more menacing because they included a pig mask, an attempt to deliver a preserved fetal pig, so a fetal pig was tried to get sent to the house, and they saw that. They got live cockroaches. They got funeral wreaths, plumbers and pizza deliveries at all times of day and night.

Amy Harman Burkart:

They also started having a number of pranks directed at them, trying to get other people to come to the house. There was a posting for a garage sale, "Everything must go, come on in, and make an offer." There were postings for online parties, "Come on over, we're an adventurous couple, swingers welcome," things of that nature posted on all different websites, trying to get other people to come to the house and sort of unwittingly participate in the harassment.

Amy Harman Burkart:

Then they started feeling like they were being watched. They started seeing cars that were unfamiliar to them in their residential neighborhood, and they had the sense that they were being surveilled. It turned out they were right.

Dave Dalton:

We warned the listeners, this was going to be strange, and so far, I'm sure no one's disappointed if they were expecting that.

Dave Dalton:

Amy, how did this come to your attention back in 2019, I think it was?

Amy Harman Burkart:

At that time, I was at the U. S. Attorney's Office in Boston.

Dave Dalton:

Yeah.

Amy Harman Burkart:

I was the Cyber Crime Unit's Chief and NAUSA working in the unit, and I was at the FBI, which I would do fairly regularly. I had an office over there, and the call came in from local PD to one of the FBI agents I worked with quite a bit, and described what sounded like a very bizarre situation. My reaction was that sounds very hard to believe, but very interested if that's real.

Dave Dalton:

Andy, eBay is a household name. Certainly one of the biggest players in the eCommerce space. As this investigation gets rolling, what was the company's reaction, and how did they work with you with your office?

Andrew Lelling:

Once eBay was aware of this, they were extremely responsive. Their in-house lawyers investigated it aggressively inside the company, and they were cooperative with the local police department, and with the FBI, and with us, as we'll get to. The key art here is the once aware, right, and that's where the lessons come for other companies. It took a while for eBay to even understand that this was going on within its own company.

Dave Dalton:

Since you kind of swerved into this point, Andy, how long had this been going on before it was uncovered? Amy gets this tip, for lack of a better word.

Dave Dalton:

Did this go on for months? Was it a year? How long were these weird situations going?

Andrew Lelling:

The span of this was probably from about March or April 2019 through to September, or so.

Dave Dalton:

Okay.

Andrew Lelling:

Of 2019, so it at the company, itself, months before it was aware that this kind of activity was going on within the company. As you pointed out before, and as Amy pointed out, there's nothing subtle about this activity. You have a unit within eBay, essentially launching a campaign of terror against a middle-aged couple in a suburb.

Dave Dalton:

Yeah, again, if this were a movie, no one would watch it, or the views would be terrible, because this is so strange, this could never possibly happen. You can't suspend reality altogether when you're telling a story, because it turns out, as I say, I guess cliche, cliché, truth can be stranger than fiction. Okay.

Dave Dalton:

Amy, to you first, I want to talk Andy about this, also, but this is cyberstalking by employees of one of the world's largest companies.

Dave Dalton:

How does something this strange even happen in the first place? I mean, how did they get to this point?

Amy Harman Burkart:

Well, it's funny you should mention something out of a movie because it's actually part of how they got to this point. This was a slowly developing situation, and then one that really took off like wildfire in part, because of a plot that was based on a movie.

Amy Harman Burkart:

What happened was, the company had been tracking this couple and the press that they were putting out for a good amount of time, and it was done generally out of this group called the Global Security and Resiliency Group, which one of their tasks, and many companies have them, was to sort of figure out what the potential threats are, and what people are saying about the company. Obviously, there were others at the company that were aware of this press.

Amy Harman Burkart:

There had been concern about the journalism that was being posted here. The comments that were coming, that there were a number of people who felt like they were unfair to eBay and the company and wanted to know more about this couple and what they were writing. Some of the things that happened at early stages were more subtle. This peak that we've described, which happened over the course of, really in the summer of 2019, was after some people at very senior levels of the company became very frustrated with the press.

Amy Harman Burkart:

There was a lawsuit that had developed, the online newsletter had covered the lawsuit in a way that they thought was unfair, and they wanted something to be done. There was an email that was sent and some text messages that were sent, where it was conveyed to Jim Baugh, who headed the Global Security and Resiliency Group, that something should be done, whatever it takes.

Dave Dalton:

Whatever it takes.

Amy Harman Burkart:

Whatever it takes.

Dave Dalton:

This sounds like a gangster thing, right?

Amy Harman Burkart:

It certainly appears like it.

Dave Dalton:

Whatever it takes.

Amy Harman Burkart:

Yeah, because it becomes, "Okay, what's our plan? We're going to harass this couple," and that came from the movie Johnny B. Good, in which there's a scene in which there's a number of deliveries that creates some chaos. Also, Body of Lies with Leonard de Caprio, that was watched.

Amy Harman Burkart:

There was a plot based on that where they decided to harass the couple, make them extremely upset, and then have someone from eBay come in, say they had seen what was going on, and they wanted to stop it like a white night. This white night would save the couple, and the press of eBay would just certainly turn. They'd be so thankful that eBay had stopped this harassment that they, themselves, are creating, that the press coverage would suddenly become very positive, and that would be how they would solve the problem.

Dave Dalton:

Diabolical stuff, fact that they thought through these steps or this was the plan. It's incredible, really.

Dave Dalton:

Andy, what would you add to Amy's remarks regarding that part of this?

Andrew Lelling:

Amy's remarks highlights one of the things that's interesting about this case, which is that you have a series of compliance failures that enabled this to occur. You have hiring issues, in that it appears that Jim Baugh, who ran the Global Resiliency Unit, had some judgment problems, to put it mildly. You have management issues, because no one seemed to know what he was doing, and his management of his own unit seems to have been suboptimal. You have culture issues within eBay.

Andrew Lelling:

It's easy to dismiss this case as bizarre, and so unique, but that would be a mistake for companies that think about these issues, these sort compliance issues and what their employees are doing.

Dave Dalton:

Yeah, certainly. I guess I have to ask, Amy, you ever seen anything like this before, ever?

Amy Harman Burkart:

Never.

Dave Dalton:

Andy, you?

Andrew Lelling:

No, in fact, the press asked us that at the time, and no, I have never seen anything like this before.

Dave Dalton:

Yeah. I guess you stay around long enough, you're bound to see and hear just about everything.

Dave Dalton:

All right, let's talk about this. What do we learn from this? There's probably really nothing positive to come out of this, but sometimes, out of an unfortunate situation, there are lessons learned, and we can maybe improve somehow.

Dave Dalton:

Let's talk about that. Let's go to Amy first. What are the lessons for compliance officers say, and general counsels even, or anybody at a large organization like an eBay, what do you take away from this?

Amy Harman Burkart:

One of the things that I have seen over the course of the time that I was prosecuting, and then now assisting victims involved in the cyber world, is how much the world has changed, and how sometimes people are slow to pick up on that.

Amy Harman Burkart:

Many companies have these groups, these GSAT groups, and there are things that they do to protect companies that are completely legitimate and appropriate, but cyber adds this different element, right, and what the parameters are, and what the expectations are aren't always going to be clear because sometimes people aren't kind of staying abreast of the different things that people might do.

Amy Harman Burkart:

Here, we saw this use of anonymous accounts, and purchasing of burner laptops, and burner phones, and using prepaid cards to purchase the deliveries, techniques that we would've seen previously only in drug trafficking organizations, or other kinds of criminal activity being used in a corporate context.

Amy Harman Burkart:

Maybe people aren't thinking ahead about what parameters do we put out? What expectations do we put out in the cyber world? It's particularly important because I saw over and over again in a variety of context, but particularly cyberstalking, how the internet gives us this ability to be anonymous from each other, this distance from each other. When you don't see your victim, you don't see the harm that you're causing. You don't necessarily see them as a real person, and anonymity and the internet allows you to do that, put this buffer between you and the people you're hurting.

Amy Harman Burkart:

Even people who would never consider themselves someone who would cause that kind of hurt or pain to someone else might start doing it. We all need to step back and take a look at how the world has changed, and what different expectations we need to put out to others, particularly around cyber, make sure that we're continuing to comply with what we would consider basic rules of operations.

Dave Dalton:

And human decency. You talk about, it's interesting. No one's used this term yet because maybe it doesn't apply exactly, but they talk about cyberbullying all the time. This is a different level of stuff, right, but it's true that the wall, if you will, the internet, it could dehumanize the person on the wrong end of this abusive sort of contact.

Dave Dalton:

Maybe it's time for a reset, and people need to understand these things more thoroughly than they're showing.

Andrew Lelling:

That's for certain.

Dave Dalton:

Andy, you alluded to this a second ago, but let's come back to it.

Dave Dalton:

There's some other things going on here, not just with eBay in this situation, but in any complex organization, you think about things like management issues, oversight of employees, training even.

Dave Dalton:

What do you take away from this situation, in terms of those kind of, what should be basic things, in a large organization? How's this fit?

Andrew Lelling:

Well, it really struck us, Dave, when we looked at the facts in this case, that this went on for months and months, and the behavior was pretty egregious, including traveling across the country for physical surveillance of this couple. It appears that no one else inside eBay knew that this was happening.

Andrew Lelling:

That implies a few things, none of them good. One of them is, it implies the lack of an effective reporting structure, and when Amy and I were preparing for this, Amy made a great point, which is that the more specialized an area, a unit, or group within a company works in, the harder it is to supervise that group, because they're specialists in their area, they know what they're doing. If they're reporting to someone outside their group, their immediate report may have no real understanding of what that group does, or how to properly supervise their behavior.

Andrew Lelling:

Some of that may have been going on here. It implies siloing. It implies a certain insularity in the groups or units operating within eBay, and that one doesn't know what the other is doing. It also implies a problem with management training. Was there a consistent approach to management? Were managers trained? Were problematic managers identified and retrained? Was there a consistent approach to discipline?

Andrew Lelling:

There's some indication in public reporting about an atmosphere of fear within eBay and that could deter employees from reporting wrongdoing, right. What were the intragroup dynamics within the Global Resiliency Group? How did people interact with Jim Baugh, who ran that unit? Did they feel like they were able to bring concerns to people in more senior management, that kind of thing?

Andrew Lelling:

It seems to me that the events though, weird cue up a lot of questions that every organization should be thinking about.

Dave Dalton:

Definitely, and just to kind of pick up on something you said, Andy, and this is again, this gets stranger the more I think about it, I guess, but these titans of the tech community, eBays of the world, they tend to get really smart people to work there. They tend to recruit really smart people, and they want them to stay, and you'd think really smart people, I guess, occasionally do dumb things, but this is beyond the pale.

Dave Dalton:

You got to wonder how did people that might show such poor judgment later get in the door, or I oversimplifying here?

Andrew Lelling:

I think that is a question, and I'm curious for Amy's thoughts on this, but I think it is hard at the frontend to screen for that. It's very difficult in the recruiting process to understand whether say a Jim Baugh, or someone else you can hire as a mid-level to senior-level manager, beyond being smart enough and having the right experience.

Andrew Lelling:

Do they have the judgment to avoid unnecessary problems when they're running the unit? I think it's extremely difficult to catch that on the frontend. I think it's more an ongoing management and reporting question when they are in the organization.

Dave Dalton:

Makes sense. Amy, pick up on that in a context maybe of compliance and making sure that procedures are in place that can help, if not prevent, at least detect these kinds of things before they get out of control.

Dave Dalton:

What do companies need to be doing?

Amy Harman Burkart:

You need to put in the structure that allows for that kind of reaching outside your silo that we've been talking about. When we're saying, what is the dynamic, what is the culture? These are really important questions to ask. It's also important to think about who people could go to if they had questions or concerns, right. How would that work? Maybe it's something as simple as a hotline.

Amy Harman Burkart:

The better way to probably do it is to have more cross-functionality, more teams checking in with each other, more fostering of relationships for people outside of different groups that they're working in so that they don't just have silos, and so that they learn a variety of perspectives, and a variety of different people at the company who don't necessarily answer to each other. It may feel inefficient to have things kind of outside the tree, and I know that that can be uncomfortable for people, in and of itself.

Amy Harman Burkart:

The idea that you're talking to this when we're talking to that one, but it allows people to continue to have fresh perspectives on what a group is doing, and people questioning it from different ideas. As Andy said, sometimes when there's a specialization, there's kind of a deferral to people, and people are afraid to ask questions. Sometimes they're afraid to look stupid. As you said, eBay, and Silicon Valley, and all of these companies, they're hiring really smart people, and people are sometimes afraid to ask questions.

Amy Harman Burkart:

I see that all the time in tech, there's new acronyms every day. Maybe just a willingness to put yourself out there and say, "Wait, what is that? I'm confused about this. What is this plan?" Having structure around, writing things down and vetting them with other people, it can prevent people from going too far down a path where, had they had a fresh set of eyes on it, they would've quickly seen it was the wrong path.

Dave Dalton:

This is interesting. We're talking about breaking down silos, and cross-referencing things, and getting teams involved. That's a whole different discussion, and maybe for a whole different podcast really, because that's not what, but that there are lots of benefits to that, right. In terms of creativity and sharing energy, and as you put it, fresh perspectives, so there are positive things there, too, besides just maybe helping prevent not so good stuff like what we're talking today, so that's always a good idea.

Dave Dalton:

I want to go back to Andy for a second. You were kind enough. I'm giving the listeners some inside baseball here. We don't just show up and do this cold. We have a couple of phone calls. We send notes back and forth for show preparation, and one of the documents that you were kind enough to send over, Andy, you referenced the significance of corporate culture, and I'm quoting, "A tone from the top."

Dave Dalton:

What exactly does that mean in the context of all this matter, and why is that important?

Andrew Lelling:

I think, overall, that might be the key lesson here, Dave. Tone from the top is a well-known compliance principle. Everyone who thinks about compliance has heard that line again and again, and essentially what it means is that leadership in an organization should be modeling ethical behavior, and be encouraging corporate employees to also act ethically, and to want to act ethically.

Andrew Lelling:

You can think about compliance in two ways; there's rules-based compliance, and then there's culture-based compliance. Rules-based compliance is you say to your employees, "Look, these are the rules, and you need to follow them, or else," and maybe you get compliance that way. Culture-based compliance is modeling ethical behavior and encouraging your employees to engage in ethical behavior because it's the right thing to do, right, sort of inculpating those values in your employees.

Andrew Lelling:

At the end of the day, culture-based compliance always works better because you never know what factual scenario is going to confront an employee. What temptation is going to confront an employee, and this weird case is a perfect example. When those weird scenarios come up, you want your employees to fall back on the values that they've been taught to follow as an employee of that company, basically to do the right thing. It always works better.

Andrew Lelling:

Here, because I think Amy pointed it out earlier, you had executives at the very top of the company setting the wrong tone with Jim Baugh, who ran that Global Resiliency Unit, at least if the public filings in the criminal case are accurate. They're sending him texts like, "Whatever it takes," as Amy said earlier. There's one that says, "Burn her to the ground," referring to the woman in the couple that ran the eCommerce site.

Andrew Lelling:

All of those things send the wrong tone of aggression and results-oriented approach, which may have, remains to be seen, encouraged Jim Baugh and his staff to act that way. Adding to that is if there's an unhealthy atmosphere for employees within eBay, meaning if employees are afraid to report concerns to management, are afraid to report apparent misconduct, are afraid to be fired if they don't follow every single order or suggestion, that, too, is going to tie in and make it even harder to unearth this conduct once it's gotten rolling.

Dave Dalton:

You said all that very well, and it's no way the compliance manual do this. Don't do that. You're allowed to do this. You can't do that. There's no way you could possibly anticipate every potential situation an employee might be faced with, let alone something as bizarre as what we're talking about today. I get what you're saying now, in terms of the tone from the top, as you say, that might have been the best lesson we take away from all this.

Dave Dalton:

Since we were talking about culture, let's return to that for a second. Amy, there's talk out there about the Silicon Valley culture, how competitive it is and even cutthroat and so forth.

Dave Dalton:

Does that kind of mentality play a role in a situation like this, do you think?

Amy Harman Burkart:

The big picture atmosphere always plays a role, so in the sense that there are certainly legendary stories about combative kinds of behavior in Silicon Valley and also encouraging of innovative thinking. This is innovative thinking gone awry, but certainly innovative.

Amy Harman Burkart:

I think that there are factors that contribute that you could say, this is part of what is good and bad about Silicon Valley culture. Often, I think, what is good about a place is sometimes what's bad about it, and that is a lesson to look at, but it's something that we should extrapolate out and say, "What are the cultural things that contribute to behavior at all companies," and certainly, competitiveness is high among them, and also solving problems. Getting the job done. There are things that, again, can be good or bad.

Amy Harman Burkart:

It depends on what degree you take them to and how you try to affect that goal, and the way that Andy phrased it is an important tone from the top and cultural issue, it can't be underscored enough. There's nowhere in any manual that says don't send fetal pigs, or lots of cockroaches to your enemy, right. You would never think to articulate it.

Dave Dalton:

Wouldn't it be great, you're you're sitting there the first day at the job. You're in employee orientation. They're showing you where the restrooms are and everything, "Hey, by the way, cockroaches are a no."

Andrew Lelling:

Dave, those manuals, they might say that now.

Amy Harman Burkart:

This would be the lawyer problem, right, it's why our contracts always have 40,000 provisions in them because they're always trying to solve for the last problem, and really, you could just distill it all down to do the right thing or some other kind of corporate ethos. It goes right back to that whole point about the culture of compliance.

Dave Dalton:

Excellent. Excellent. We've covered a lot here today in a short amount of time, and I thank you both. If you had to give us one takeaway, one lesson learned, what was the big idea, if you will, that you come away from this conversation with?

Dave Dalton:

I'd like to hear from each of you. Andy, first, what do you want our listeners to remember about this program?

Andrew Lelling:

I remember my reaction to this case, because when it came up, I was running the U. S. Attorney's Office in Boston, so you're leading an organization. My one takeaway from this is you have to lead from the front.

Andrew Lelling:

Guys like Jim Baugh, or the other defendants in that case, they thrived at eBay because leadership above them was not sending the right message. If leadership is sending the right message to those beneath them in the organizational chart, I don't think this kind of thing happens, because I think people willing to engage in it don't last at the company that long.

Dave Dalton:

Gotcha. Well said.

Dave Dalton:

Amy, what do you want to leave the listeners with regarding this bizarre eBay matter?

Amy Harman Burkart:

I'll echo is something that Andy said a few moments ago. You never know what scenarios you're going to be faced with, you, your employees. This case could easily be dismissed as an incredibly outrageous and extremely unique situation. That would be a mistake because, while this exact fact pattern, one hopes would never play out again in this way, there are so many crazy things that happen in this world.

Dave Dalton:

Sure.

Amy Harman Burkart:

You asked this at the beginning, "Have you ever seen this before?" No, definitely not, nor do I think it will arise in this way again, but will there be other situations where ordinary people find themselves in extraordinary situations, and engage in activity that they never would've seen themselves doing, and crossed the line sometimes into criminal activity? Absolutely, and companies and individuals need to be on guard for that.

Dave Dalton:

We'll leave it right there. Well said, Andy, Amy. Thank you both. Thank you both so much. This was great. I hope we do this again soon, but I hope the next thing we talk about is not as strange, if that's okay with you.

Amy Harman Burkart:

That's fine.

Dave Dalton:

Hey, you guys, thanks so much. We'll talk again soon.

Andrew Lelling:

Thanks, Dave.

Amy Harman Burkart:

It was a pleasure.

Dave Dalton:

You can find complete contact information for Andy Lelling and Amy Burkhart @jonesday.com, and be sure to check out our insights page for more podcasts, videos, publications, newsletters, and other compelling content. Subscribe to Jones Day Talks at Apple Podcasts or wherever else you can find your podcast.

Dave Dalton:

Jones Day Talk is produced by Tom Kondilas. As always, we thank you for listening. I'm Dave Dalton. We'll talk to you next time.

Dave Dalton:

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