CASE BRIEF 7.2 Tiffany and Company v. Andrew 2012 W.docx

CASE BRIEF 7.2
Tiffany and Company v. Andrew
2012 WL 5451259 (S.D.N.Y.)
FACTS: Tiffany (plaintiffs) allege that Andrew and others
(defendants) sold counterfeit Tiffany
products through several websites hosted in the United States.
Andrew accepted payment in U.S.
dollars, used PayPal, Inc. to process customers' credit card
transactions, then transferred the sales
proceeds to accounts held by the Bank of China (“BOC”),
Industrial and Commercial Bank of
China (“ICBC”), and China Merchants Bank (“CMB”)
(“Banks”).
Andrew defaulted on the suit, and Tiffany sought discovery
from the Banks by serving subpoenas
seeking the identities of the holders of the accounts into which
the proceeds of the counterfeit sales
were transferred and the subsequent disposition of those
proceeds. The Banks involved all

maintained branch offices in the Southern District of New York,
and the subpoenas were served
on those branch offices.
The Banks responded to the subpoenas by explaining that the
information sought was all
maintained in China and that the New York branches of the
Banks lacked the ability to access the
requested information. China's internal laws prohibited the
disclosure of the information except
under certain conditions. The Banks proposed that the plaintiffs
pursue the requested discovery
pursuant to the Hague Convention.
The court concluded that Tiffany should pursue discovery
through the Hague Convention. Tiffany
submitted its Hague Convention application to China's Central
Authority in November 2010, and
on August 7, 2011, the Ministry of Justice of the People's
Republic of China (“MOJ”) responded
by producing some of the documents requested. For each of the
Banks, the MOJ produced account
opening documents (including the government identification
card of the account holder), written

confirmation of certain transfers into the accounts and a list of
transfers out of the accounts. With
respect to CMB, the records indicate that all funds in the
account were withdrawn through cash
transactions at either an ATM or through a teller. BOC and
CMB each produced documents
concerning a single account; ICBC produced documents for
three accounts.
In its cover letter, the MOJ noted that it was not producing all
documents requested. Specifically,
the letter stated, “Concerning your request for taking of
evidence for the Tiffany case, the Chinese
competent authority holds that some evidence required lacks
direct and close connections with the
litigation. As the Chinese government has declared at its
accession to the Hague Evidence
Convention that for the request issued for the purpose of the
pre-trial discovery of documents only
the request for obtaining discovery of the documents clearly
enumerated in the Letters of Request
and of direct and close connection with the subject matter of the
litigation will be executed, the
Chinese competent authority has partly executed the requests
which it deems conform to the

provisions of the Convention.”
On the grounds that the MOJ's production is deficient, Tiffany
moved to enforce the subpoenas
previously served on the New York branches of the Banks. The
deficiencies Tiffany claims are (1)
whether any of the defendants have any additional accounts at
the Banks; (2) detailed wire transfer
records concerning the deposits into and withdrawals from the
CMB and ICBC accounts.
ISSUE: Could the court issue subpoenas in order to obtain
more information about the bank
accounts to help Tiffany identify the perpetrators of the
counterfeit goods?
DECISION: No, the court will not issue the subpoenas. The
Banks, through the MOJ, have
unquestionably produced relevant, responsive documents.
Second, the scope of the Banks'
production has not been so narrow that resort to the Convention
can fairly be described as futile.
The account holders' identities and addresses have been

identified as well as transaction histories.
Plaintiffs' argument that additional documents concerning
transfers into and out of the accounts
will lead to a fuller understanding of the trademark
counterfeiting operation is extremely
speculative. Finally, the fact that the MOJ China takes a
narrower view concerning the appropriate
scope of pretrial discovery does not render the Hague
Convention process futile. The high cost of
discovery in federal litigation is well known, and the fact that
another sovereign chooses to take a
more restrictive view of the appropriate scope of pretrial
discovery is not unreasonable. In addition,
as noted above, China is not unique in reserving its right to
limit production in response to a Hague
Convention request to documents that it considers to bear a
direct and close connection with the
litigation; many other countries have made the same
reservation.
Questions:
1. What information was provided by the Chinese government?
2. What did Tiffany hope for?

3. Why will the court not issue subpoenas to the Chinese
government?
Program Evaluation
Studies
TK Logan and David Royse
A
variety of programs have been developed to address social
problems such
as drug addiction, homelessness, child abuse, domestic
violence, illiteracy,
and poverty. The goals of these programs may include directly
addressing
the problem origin or moderating the effects of these problems
on indi-
viduals, families, and communities. Sometimes programs are
developed
to prevent something from happening such as drug use, sexual
assault, or crime.
These kinds of problems and programs to help people are often
what allracts many
social workers to the profession; we want to be part of the
mechanism through which
society provides assistance to those most in need. Despite low
wages, bureaucratic red
tape, and routinely uncooperative clients, we tirelessly provide

services that are invaluable
but also at various Limes may be or become insufficient or
inappropriate. But without
conducting evaluation, we do not know whether our programs
are helping or hurting,
that is, whether they only postpone the hunt for real solutions or
truly construct new
futures for our clients. This chapter provides an overview of
program evaluation in gen-
eral and outlines the primary considerations in designing
program evaluations.
Evaluation can be done informally or formally. We are
constantly, as consumers, infor-
mally evaluating products, services, and in formation. For
example, we may choose not to
return to a store or an agency again if we did not evaluate the
experience as pleasant.
Similarly, we may mentally take note of unsolicited comments
or anecdotes from clients and
draw conclusions about a program. Anecdotal and informal
approaches such as these gen-
erally are not regarded as carrying scientific credibility. One
reason is that decision biases
play a role in our "informal" evaluation. Specifically, vivid
memories or strongly negative or
positive anecdotes will be overrepresented in our summaries of
how things are evaluated.
This is why objective data are necessary to truly understand
what is or is not working.
By contrast, formal evaluations systematically examine data
from and about programs
and their outcomes so that better decisions can be made about
the interventions designed
to address the related social problem. Thus, program evaluation

involves the usc of social
research meLhodologies to appraise and improve the ways in
which human services, poli-
ci~s, and programs are conducted. Formal eval.uation, by its
very nature, is applied research.
Formal program evaluations attempt to answer the following
general question: Does
the p rogram work? Program evaluation may also address
questions such as the following:
Do our clients get better? How does our success rate compare to
those of other programs
or agencies? Can the same level of success be obtained through
less expensive means?
221
222 PART II • QUANTITATIVE A PPROACHES: TYPES OF
STUDIES
What is the experience o f the typical client? Should this
program be terminated and its
funds applied elsewhere?
Ideally, a thorough program evaluation would address more
complex questions in
three main areas: (1) Does the program produce the intended
outcomes and avoid unin-
tended negative outcomes? (2) For whom does the program
work best and under what
conditions? and (3) Ilow well was a p rogram model developed
in one setting adapted to
another setting?

Evaluation has taken an especially prominent role in practi.ce
today because of the focu~
on evidence-based practice in social programs. Social work, as a
profession, has been asked
to use evidence-based practice as an ethical obligation (Kessler,
Gira, & Poertner, 2005).
Evidence-based practice is defined diLTerently, but most
definitions include using program
evaluation data to help determine best practices in whatever
area of social programming is
being considered. In other words, evidence-based practice
includes using objective indica-
tors of success in addition to practice or more subjective
indicators of success.
Formal program evaluations can be found on just about every
topic. For instance,
Fraser, Nelson, and Rivn rd (1997) have examined the
effectiveness of family preservation
services; Kirby, Korpi, Adivi, and Weissman (1997) have
evaluated an AIDS and preg-
nancy prevention middle school program. Morrow-Howell,
Beeker-Kemppainen, and
Judy ( 1998) evaluated an intervention designed to reduce the
risk of suicide in elderly
adult clients of a crisis hotline. Richter, Snider, and Gorey (
1997) used a quasi-experimental
design to study the effects of a group work interven tion on
female survivors of childhood
sexual abuse. Leukefeld and colleagues ( 1998) examined the
effects of an I IlV prevention
intervention with injecting drug and crack users. Logan and
colleagues (2004) examined
the effects of a drug court in terven tion as well as the costs of
drug court compared with
the economic benefits of the drug court program.

Basic Evaluation Considerations
Before beginning a program evaluntion, several issues must be
initially considered. These
issues are decisions 1 hat are critical in determining the
evaluation methodology and goals.
Although you may not have complete answers to these questions
when beginning to plan
an evaluation, these questions help in developing the plan and
must be answered before
a n evaluation ca n be carried out. We can 1.um up these
considerations with the following
questions: who, what, where, when, and why.
First, who will do the evaluation? This seems like a simple
question at first glance.
llowever, this particular consideration has major implications
for the evaluation results.
Program evaluators can be categorized as being either internal
or external. An internal
evaluator is someone who is a program staff member or regular
agency employee, whereas
an external evaluator is a professional, on contract, hired for the
specific purpose of evalu-
ation. There are advantages nnd disadvantages to using either
type of evaluator. For
example, the internal evaluator probably will be very familia r
with the staff and the
program. This may save a lot of planning time. The d isadvnn
tage is that evaluations com-
pleted by an internal evaluator may be considered less valid by
outside agencies, including
the funding source. The external evaluator generally is thought
to be less biased in terms of
evaluation outcomes because he or she has no personal

investment in the program. One
disadvantage is that an external evaluator frequently is viewed
as an "outsider" by the staff
within an agency. This may affect the amount of time necessar)'
to conduct the eva luation
or cause problems in the overall evaluation if agency staff are
reluctant to cooperate.
CHAPTER 13 • PROGRAM E VALUATION S1 UDIES 223
Second, what resources are available to conduct the evaluation?
Hiring an outside eval-
uator can be expensive, while having a staff person conduct the
evaluation may be less
expensive. So, in a sense, you may be trading credibility for
less cost. In fact, each method-
ological decision will have a trade-off in credibility, level of
information, and resources
(including time and money). Also, the amount and level of
information as well as the
research design .. ciU be determined, to some e11."1ent, by
what resources are available. A
comprehensive and rigorous eval uation does take significant
resources.
Third, where will the information come from? If an evaluation
can be done using exist-
ing data, the cost will be lower than if data must be collected
from numerous people such
as clien ts and/or staff across m ultiple sites. So having some
sense of where the data will
come from is important.
Fou rth, when is the evaluation information needed? In other

words, what is the time-
frame for the evaluation? The timeframe will affect costs and
design of research methods.
Fifth, why is the evaluation being conducted? Is the evaluation
being conducted at the
request of the funding source? Is it being conducted to improve
services? Is it being con-
ducted to document the cost-benefit trade-off of the program? If
future program funding
decisions will depend on the results of the evaluation, then a lot
more importance will be
attached to it than 1f a new manager simply wants to know
whether clients were satisfied
with services. The more that is riding on an evaluation, the
more attention will be given
to the methodology and the more threatened staff can be,
especially if they think that th e
purpose of the evaluation is to downsize and trim excess
employees. In other words, there
arc many reasons an evaluation is being considered, and these
reasons may have implica-
tions for the evaluation methodology and implementation.
Once the issues described above have been considered, more
complex questions and
trade-offs will be needed in planning the evaluation.
Specifically, six main issues guide
and shape the design of any program evaluation effort and m ust
be given thoughtful and
deliberate consideration.
L Defining the goal of the program evaluation
2. Understanding the level of information needed for the
program evaluation

3. Determining the methods and analysis that need to be used
for the program evaluation
4. Considering issues that might arise and strategies to keep the
evaluation on course
5. Developing results into a useful format for the program
stakeholders
6. Providing practical and useful feedback about the program
strengths and weak-
nesses as well as providing information about next steps
Defining the Goal of the Program Evaluation
It is essential that the evaluator has a firm understanding of the
short- and long-term
objectives of the evaluation. Imagine being hired for a position
but not being given a job
description or informed aboul how the job fits into the overall
organization. Without
knowing why an evaluation is called for or needed, the
evaluator might attempt to answer
a different set of c.1uestions from those of interest to the
agency director or advisory board.
The management might want Lo know why the majority of
clients do not return after one
or two visits, whereas the evaluator might think that his or her
task is to determine
224 PART II • QUANTITATIVF APPROACHES: TYPlS Or
SIUDIES

whether clien ts who received group therapy sessions were
better off than clients who
received ind ividual counseling.
In defining the goals of the program evaluation, severa l steps
should be taken. First, the
program goals should be examined. These can be learned
through examining official
program documents as well as through talking to key program
stakeholders. In clarifying
the overall purpose of the evaluation, it is critical to talk with
different program "stake-
holders." Scriven ( 199 1) defines a program stakeholder as
"one who has a substantial ego,
credibility, power, futures, or other capital invested in the
program . . .. This includes
program staff and many who arc no t actively involved in the
day-to-day operations"
(p. 334). Stakeholders include both supporters and opponents of
the program as well as
program clients or consumers or even potential consumers or
clients. lt is essential that
the evaluator obtain a variety of different views about the
program. By listening and con-
sidering stakeholder perspectives, the evaluator can ascertain
the most important aspects
of the program to target for the evaluation by looking for
overlapping concerns, ques-
tions, and comments from the various stakeholders. However, it
is important that the
stakeholders have some agreement on what program success
means. Otherw ise, it may be
difficult to conduct a satisfactory evaluation.
It is also important to consult the extant literature to understand
what similar

programs have used to evaluate their outcomes as well as to
understand the theoretical
basis of the program in defining the program evaluation goals.
Furthermore, it is critical
that the evaluator works closely with whoever initiated the
evaluation to set priorities for
the evaluation. This process should identify the intended o
utcomes of the program and
which of those outcomes, if not all of them, will be evaluated.
Taking the evaluation a step
further, it may be important to include the examination of
unintended negative outcomes
that may result from the program. Stakeholders and the
literature will also help to deter-
mine those kinds of outcomes.
Once the overall purpose and priorities of the evaluation are
established, it is a good
idea to develop a written agreement, especially if the eva I uator
is an external one.
Misunderstandings can and will occu r months later if things are
not written in black
and white.
Understanding the Level of Information
Needed for the Program Evaluation
The success of the program evaluation revolves around the
evaluator's ability to develop
practical, researchable questions. A good rule to follow is to
focus the evaluation on one
or two key questions. Too many questions can lengthen the
process and overwhelm the
evaluator with too much data that, instead of facilitating a
decision, might produce
inconsistent findings. Sometimes, funding sources require only

that some vague unde-
fined type of evaluation is conducted. The funding sources
might nei ther expect nor
desire dissertation-quality research; they simply migh L expect
"good fa ith" efforts when
beginning evaluation processes. Other agencies may be quite
demanding in the types and
forms of data to be provided. Obviously, the choice of
methodology, data collection
procedures, and reporting formats will be strongly affected by
the purpose, objectives,
and questions examined in the study.
It is important to note the difference between general research
and evaluation. In
research, the investigator often· focuses on questions based on
theoretical considerations
or hypotheses gene rated to hu ilcl on research in a specific area
of study. Although
CHAPTER 13 • PROGRAM EVALUATION $ TUUIES 225
program evaluations may foc us on an intervention derived from
a theory, the evalua-
tion questions should, first and foremost, be driven by the
program's objectives. The eval-
uator is less concerned with buildi ng on prior litera ture or
contributing to the
development of practice theory than with determining whether a
program worked in a
specific community or location.
There are actually two main types of evaluation questions.
There are quc~>tions that

focus on client outcomes, such as, "What impact did the
program have?" These kinds of
questions are addressed by using outcome evaluation methods.
Then there are questions
that ask, "Did the program achieve its goals?" "Did the program
adhere to the specified
procedures or standards?" o r "vVhat was learned in operating
this program?" These kinds
of questions are addressed by using process evaluation methods.
We will examine both of
these two types of evaluation approaches in the following
sections.
Process Evaluation
Process evaluations offer a "snapshot" of the program at any
given time. Process evalua-
tions typically describe the day-to-day program efforts; program
modifica tions and
changes; outside events that influenced the program; people and
institutions involved;
culture, customs, and traditions that evolved; and
sociodemographic makeup of the clien-
tele (Scarpitti, Inciardi, & Pottieger, 1993). Process evaluation
is concerned with identify-
ing p rogram strengths and weaknesses. This level of program
cvaluarion can be usefuhn
several ways, including providing a contex-t within which to
interpret program outcomes
and so that other agencies or localities wishing to sta rr similar
programs can benefit with-
out having to make the same mistakes.
As an example, Bentelspacher, DeSilva, Goh, and LaRowe (
1996) conducted a process
evaluation of the cultural compatibility of psychoeducational
family group treatment

with eth nic Asian clients. As another example, Logan,
Williams, Leukefeld, and Minton
(2000) conducted a detailed process evaluation of the drug court
programs before under-
taking an outcome evalual ion of the same programs. The Logan
et al. sl udy used multiple
methods to conduct the process evaluatio n, including .in-depth
interviews with the
program administrative personnel, inten,iews with each of five
judges involved in the
program, surveys and face- to-face interviews with 22 randomly
selected current clients,
and surveys of all program staff, 19 community treatment
provider representatives, 6 ran-
domly selected defense attorney representatives, 4 prosecuting
attorney representatives, l
representative 6:om the probation and parole office, 1
representa tive from the local
county jail, and 2 police departmen l representatives. In all, 69
different individuals repre-
senting I 0 different agency perspectives provided information
about the drug court
program. Also, all agency documents were examined and
analyzed, observations of vari-
ous aspects of the program process were conducted, and client
intake data were analyzed
as part of the process evaluation. The results were all integrated
and compiled into one
comprehensive repor t.
What makes a process evaluation so important is that
researchers often have relied only
on selected program outcome indicators such as termination and
grad uation rates or
number of rearrests to determine effectiveness. However, to
better understand how and

why a program such as drug court is effective, an analysis of
how the p rogram was concep-
tualized, implemented, and revised is needed. Consider this
exan1ple-say one outcome
evaluation of a drug court program showed a graduation rate of
80% of those who began
the program, while another outcome evaluation found that only
40o/o of those who began
the program graduated. Then, the graduates of the second
program were more likely to be
free from substance usc and criminal behaviors at the l2-month
foUow-up than the graduates
226 PART II • QuANTITATIVE APPROACHES: TYPES OJ
SJUDIES
from the first program. A process evaluation could help to
explain the specific differences
in factors such as selection (how clients get into the programs),
treatment plans, monitor-
ing, program length, and other program features that may
influence how many people
graduate and slay free from drugs and criminal behavior at
follow-up. Tn other words, a
process evaluation, in contrast to an examina tion of program
outcome only, can provide a
clearer and more comprehensive pictme of how drug cou rt
affects those involved in the
program. More specifically, a process evaluation can provide
information about program
aspects that need to be improved and those that work well
(Scarpilli, Inciardi, & Pottieger,
1993). Finally, a process evaluation may help to facilitate
replication of the drug cou rt

program in other areas. This often is referred to as technology
transfer.
A different but related process evaluation goal might be a
description of the failures
and departures from the way in which the intervention
originally was designed. How were
the staff trained and hired? Did the intervention depart from the
treatment manual rec-
ommendations? Influences that shape and affect the intervention
that clients receive need
to be identified because they affect the fidelity of the treatment
p rogram (e.g., delayed
funding or staff hires, changes in policies or procedu res).
"/hen program implementation
deviates significantly from what was intended, this might be the
logical explanation as to
why a program is not working.
Outcome or Impact Evaluation
Outcome or impact evaluation focuses on the targeted objectives
of the program, often
looking at variables such as behavior change. For example,
many drug t reatment programs
may measure outcomes or "success" by the number of clients
who abstain from drug use.
Questions always arise, though. For instance, an evaluation
might reveal that 90% of those
who graduate from the program abstai n from drug use 30 days
after the program was com-
pleted. However, only 50% report abstaining from drug use 12
months after the program
was completed. Would key stakeholders involved all consider
that a success or failure of the
program? This example brings up three critical issues in
outcome evaluations.

One of the critical issues in outcome evaluations is related to
understanding for whom
docs the program work best and under what conditions. In other
words, a more interest-
ing and important question , rather than just asking whether a
program works, would be
to ask, "Who are those 50% of people who remained abstinent
from drug use 12 months
after completing the program, and how do they differ from the
50% who relapsed?" It is
not unusual for some evaluation questions to need a
combination of both process and
impact evaluation methodologies. For example, if it turned out
that results of a particular
evaluation showed that the program was not effective (impact),
then it might be useful to
know why it was not effective (process). Tn such cases, it
would be important to know how
the program was implemented, what changes were made in the
program during the
implementation, what problems were experienced during the
implem entation, and what
was done to overcome those problems.
Another important issue in outcome evaluation has to do with
the timing of measur-
ing the outcomes. Outcome effects are usually measured after
treatment or postinterven-
tion. These effects may be either short term or long term.
immediate outcomes, or those
generally measured at the end of the treatment or intervention,
might or might not pro-
vide the same results as one would get later in a 6- or 12-month
follow- up, as highlighted
in the example above.

The third important issue in outcome evaluation has to do with
what specific measures
were used. Is abstinence, for example, the only measure of
interest, or is reduction in use
something that might be of interest? Refrainin g from cri minal
activity or holding a steady
CHAPTER l3 • PROGRAM EVALUATION STUOIES 2 27
job may also be an important goal of a subslance abuse
program. If we only measure
abstinence, we would never know about other kinds of outcomes
the program may affect .
These last two issues in outcome evaluations have to do with
the evaluation methodol-
ogy and analysis and are addressed in more detail below.
Determining the Methods and
Analysis That Need to Be Used
for the Program Evaluation
The next step in the evaluation process is to determine the
evaluation design. There
are several interrelated steps in this process, including
determining the (a) sources of data,
(h) research design, (c) measures, (d ) analysis of change, and
(e) cost-benefit assessment
of the program.
Sources of Data
Several main sources of data can be used for evaluations,
including qualitative informa-

tion and quantitative information.
Qualitat ive Data Sources
Qualitative data sources are often used in process evaluations
and might include obsen a-
tions, analysis of existing program documents such as policy
and procedure manuals, in-
depth interview data, or focus group data. There are, however,
trade-offs when using
qualitative data sources. On the positive side, q ualitative
evaluation data provide an "in-
depth" snapshot of various topics such as how the program
functions, what staff think are
the positive or negative aspects of the programs, or what clients
really think of the O'erall
program experiences. Reporting clients' experiences in their
own words is a characteristic
of qualitative evaluations.
Interviews arc good for collecting qualitative or sensitive data
such as values and atti-
tudes. This method requires an interview prolocol or
questionnaire. These usual!) are
structured so that respondents are asked questions in a specific
order, but they can be
semistructured so t.hat there are fewer topics, and the
interviewer has the ability to change
the order based on a "reading" of the client's responses. Surveys
can request information
of clients by mail, by telephone, or in person. They may or may
not be 1>clf-administered.
So, besides considering what data are desired, evaluators must
be concerned with prag-
matic considerations regarding the best way in which to collect
the desired data.

Pocus groups also offer insight in to cer tain aspects of the
program or program func-
tioning; participants add their input, and input is interpreted and
discussed by other
group members. This discussion component ml!y provide an
opportunity to uncover
information that might otherwise remain undiscovered such as
the meaning of certain
things to different people. Focus groups typically are small
informal groups of persons
asked a series of questions that start out very general and then
become more specific.
Focus groups are increasingly being used to provide evaluative
information about human
services. They work part icularly well in identifying the
questions that might be important
to ask in a survey, in testing planned procedures or the phrasing
of items for the specific
target population, and in exploring possible reactions to an
intervention or a service.
228 P!IRT II • QuANTITATIVE APPROACHF.S: TYPES OF
SruOI[S
On the other hand, qualitative studies Lend to use small
samples, and care must be used
in analyzing and interpreting the information. FurLhermore,
although both qualitative
and quantitative data are subject to method bias and threats to
validity, qualitative data
may be more sensitive to bias depending on how participants are
selected to be inter-
viewed, the nu mber of observations or focus groups, and even

subtleties in the questions
asked. With qualitative approaches, the evaluator often has less
abil ity to account for alter-
native expla nations because the data are more limited. Making
strong conclusions about
representativeness, validity, and reliability is more difficult
with qualitative data corn-
pared to something like an average rating of satisfaction across
respondents (a quantita-
tive measure). Yet, an average rating does not tell us much
about why participants are
satisfi ed with the program or why they may be dissatisfied with
other aspects of the
program. Thus, it is often imperative to use a mixture of q
ualitative and quantitative
information to evaluate a program.
Quantitative Data Sources
Two main types of quantitative data sources can be used for
program evaluations: sec-
ondary data and original data.
Secondary Data. One option for obtaining needed data is to use
existi ng data. Collecting
new data often is more expensive than using existing data.
Examining the data on hand
and already available always is a good llrst step. However, the
evaluator might want to
rearrange or reassemble the data, for example, dividing it by
quarters or combining it into
12-month periods that help to reveal patterns and trends over t
ime. Existing data can
come from a variety of places, including the following:
Client records maintained by the program: These may include a

host of demographic
and service-related data items about the population served.
Program expense and financial data: These can help the
evaluator to determine whether
one intervention is much more expensive than another.
Agenc.y annual reports: These can be used to identify trends in
service delivery and
program costs. The evaluator can compare annuill reports from
year to year and can
develop graphs to easily identify trends wilh clientele and
programs.
Databases maintained by the state health department and other
state agencies. Public
data such as births, deaths, and divorces are available from each
state. Furthermore,
most state agencies produce annual reports that may reveal the
number of clients
served by program, geographic region, and on occasion,
selcct·ed sociodemographic
variables (e.g., race or age).
Local and regional agencies. Planning boards for mental health
services, child protec-
tion, school boards, and so forth may be able to furnish
statistics on outpatient and
in patient services, special school populations, or child abuse
cases.
The federal government. The federal governmen t collects and
maintains a large amount
of data on many different issues and topics. State and national
data provide bench-
marks for comparing local demographic or social indicators to

national-level demo-
graphic or social indicators. For instance, if you were working
as a cancer educator
whose objective is to reduce the incidence of breast cancer, you
might want to consult
cancercontrolplanct.cancer.gov. That Web site will furnish
national-, state-, and
CHAPTER 13 • PROGRAM EVAlUA II ON S TUD ICS 229
county-level data on the nwnber of new cancer cases and deaths.
By comparison, it
will be possible to determine if the rate in one county is higher
than the state or
national average. Demographic information about communities
can be found at
www.census.gov.
Foundations. Certain well-established foundations provide a
wealth of information
about problems. For example, the Annie E. Casey Foundation
provides an incredible
Kids Count Data Book that provides an abundance of child
welfare-related data at the
state, national, and county level. By using their data, you could
determine if infant
mortality rates were rising, teen births were increasing, or high
school dropouts were
decreasing. You can find the Web site at www.aecf.org.
lf existing data cannot be used or cannot answer all of the
evaluation questions, then
original data rnust be colleclcd.

Original Data Sources. There a re rnany types or evalua tion
designs (rom wh ich to choose,
and no single one will be ideal for every project. The specific
approach chosen for the
evaluation will depend on the purpose of the evaluation, the
research questions to be
explored, the hoped-tor or in tended results, the quali ty and
volume of data available or
needed, and staff, time, and financial resources.
The evaluation design is a critical decision for a number of
reasons. Without the
appropriate evaluation design, confidence in the resuiL<> of the
evaluation might be lack~
ing. A strong evaluation design minimizes alternative
explanations and assists the evalua-
tor in gauging the true effects attributable to the intervention. In
other words, the
evaluation design directly affects tl1e interpretation that can be
made regarding whether
an intervention should be viewed as the reason for change in
clients' behavior. Howewr,
there are trade offs with each design in the credibility of
information, causality of
an)' observed changes, and resources. These trade-off.~ must be
carefully considered and
discussed with the program staff.
Quantitative designs include surveys, pretest-posttest studies,
quasi-experiments with
noncquivalcnt control groups, longitudinal designs, and
randomized experimental
designs. Quantitative approaches transform answers to specific
questions into numerical
data. Outcome and impact evaluations nearly always are based
on quantitative evaluation

designs. Also, sampli ng strategies must be considered as an in
regr<1l p<1rt of the research
design. Below is a brief overview of the major types of
quantitative evaluation designs. For
an expanded discussio11 o r these topics, refer Lo Royse,
Thyer, Padgell, and Logan (2005).
Research Design
Cross -Sectional Surveys
A survey is limited to a description of a sample at one point in
time and provides us with
a "snapshot" of a group of respondents and what they were like
or what knowledge or atti-
tudes they held at a particular point in time. If the survey is to
generate good generalizable
data, then the sampling procedures must be carefully planned
and implemented. A cross-
sectional survey requires rigorous random sampling procedures
to ensure that the sample
closely represents the population of interest. A repeated survey
is similar to a cross-
sectional study but collects information at two or more points in
time from the same
respondents. A repeated (longitudinal) survey is effective at
measuring changes in facts,
attitudes, or opinions over a course of Lime.
230 PART II • QuANTITATIVE APPROACH ES: TYPES Of S
TUOIES
Pretest-Po sttest Design s (Nonexperimental)
Perhaps the mosl common quantitative evaluation design used in

social and human
service agencies is the pretest-posttest. In this design, a group
of clients with some specific
problem or diagnosis (e.g., depression) is administered a pretest
prior to the start of inter-
vention. At some point toward the end or after the intervention,
the same instrument is
administered to the group a second time (the posttest) . The
one-group pretest-posttest
design can measure change, but the evaluator has no basis for
attributing change solely to
the program. Confidence about change increases and the design
strengthens when control
groups are added and when participants are randomly assigned
to either a control or
experimental condition.
Quasi-Experimental De signs
Also known as nonequivalent control group designs, quasi-
experiments generally use
comparison groups whereby two similar groups are selected and
followed for a period of
time. One group typically receives some program or benefit,
v,rhereas the other group (the
control) does nol. Both groups are measured and compared for
any differences at the end
of some time period. Participants used as controls may be clien
ts who are on a waiting list,
those who are enrolled in another treatment program, or those
who live in a different city
or county. The problem with this design is that the control or
comparison group might
no t, in fact, be equivalent to the group receiving the
intervention. Comparing Ocean View
School to Inner City School might not be a fair comparison.

Even two differen L schools
within the same rural county might be more different than
similar in terms of the learn-
ing milieu, the proportion of students receiving free lunches,
the number of computers
and books in the school library, the principal's hiring pract~ces,
and the like. With this
design, there always is the possibility that whatever the results,
they might have been
obtained because the intervention group really was different
from the control group.
However, many of these issues can be considered and either
controlled for by collecting
the information and performing statistical analysis with these
considerations or at least
can be considered within the contex1: of interpreting the
results. Even so, this type of study
does not provide proof of cause and effect, and the evaluator
always must consider o ther
facto rs (both known and measured and unknown or
unmeasured) that could have
affected the study's outcomes.
Longitudinal Designs
Longitudinal designs are a type of quasi-experimental design
that involves tracking a par-
ticular group of individuals over a substantial period of time to
discover potential
changes due to the influence of a program. It is not uncommon
for evaluators to want to
know about the effects of a program after an extended period of
Lime has passed. The
question of interest is whether treatment effects last. These
~tudies typically are compli-
cated and expensive in time and resources. In addition, the

longer a study runs, the higher the
expected rate of attrition from cl ients who drop out or move
away. High rates of allrition can
bias the sample.
Randomized Experimental Designs
l.n a true experimental design, participants are randomly
assigned to either the control
or treatment group. This design provides a persuasive argument
about causal effects of a
program on participants. The random assignment of respondents
lo treatment and con-
trol groups helps to ensure both groups are equivalent across
key variables such as age,
race, area of residency, and treatment history. This design
provides the best evidence Lhat
CIIAPT ER 13 • P ROC RAM EVALUATION STUDIES 231
any observed differences between the tl'IO groups after the
intervention can be attributed
to the intervention, assuming the two groups were equal before
the intervention. E·en
with random assignment, group differences preinLervention
could exist, and the evaluator
should carefully look for them and use statistical controls when
necessary.
One word of warning about random assignment is that key
program stakeholders
often view random assignment as unethical, especially if they
view the treatment program
as beneficial. One outcome of this diffkulty of accepting

random assignment is that staff
might have problems not giving the intervention they believe is
effective to specific needy
clients or to all of their clients instead of just to those who were
randomly assigned. If they
do succumb to this temptation, then the evaluation effor t can be
unintentionally sabo-
ttlged . The evaluator must train and prepare all of those
individuals involved in the e'al-
uation to help them understand the purpose and importance of
the random assignment.
That, more than any other procedure, provides the evidence that
the treatment really does
benefit the clients.
Sampling Strategies and Considerations
vVhen the client population of interest is too large to obtain
information from each
individual member, a sample is drawn. Sampling allows the
evaluator to make predictions
about a population based on study findings from a set of cases.
Sampling strategies can be
very complex. lf the evaluator needs the type of precision
afforded by a probability sam-
ple in which there is a known level of confidence and margin of
error (e.g., 95% confi-
dence, plus or minus 3 percentage points), then he or she might
need to hire a sampling
consultant. A consultant is particularly recommended when the
decisions about the
program or intervention are critical such as in drug research or
when treatments could
have potentially harmful side effects. However, there is a need
to recognize the trade-offs
that are made when determining sampling strategy and sample

size. Large samples can be
more accurate than smaller ones, yet they usually are much
more expensive. Small
samples can be acceptable if a big change or effect is
ell.lJected. As a rule, the more critical
the decision, the larger (and more precise) the sample should
he.
There are two main c<ttegories of sampli11g strategies from
which the evaluator can
choose: probability sampling and nonprobability sampling.
Probabili ty sampling imposes
statistical rules to ensure that unbiased samples are drawn.
These samples normally are
used for impact studies. Nonprobability or convenience
sampling is less complicated to
implement and is less expensive. This type of sampling often is
used in process evaluations.
With probability sampling, the primary idea is that every
individual, object, or institu-
tion in the population under study has a chance of being
selected into the sample, and the
likelihood of the selection of any individual is known.
Probability sampling pro,;des a
firm basis for generalizing from the sample lo the population.
No11probability samples
severely reduce the evaluator's ability to generalize the results
of the study to the larger
population.
The evaluator must balance the need for scientific rigor against
convenience and often
limited resources when determining sample size. If a m ajor
decision is bei ng based on
data collected, then precision and certainty are critical.

Statistical precision increases as
the sample s ize increases. When differences in the results are
expected to be small, a larger
sample guards against confounding variables that might distort
the results of a treatment.
Measures
The next important method decision is to determine how best Lo
measure the variables of
interest needed to answer the evaluation questions. These will
vary from evaluation to
232 PART I I • QUANTITATIVE APPROACHES: T YPES OF
STUOICS
evaluation, depending on the questions being asked. In one
project, the focus migh L be on
the outcome variable of arrests (or rearrests) so as to determine
whether the program
reduced criminal justice involvement. In another project, the
outcome variable mighL be
nmnbcr of hospitalizations or days of hospitalization.
Once there is agreement on the outcome variables, objective
measures for those
variables must be determined. Using the example of the drug
court program above, the deci-
sions might include the following: How will abstinence be
measured? How will reduction in
substance use be measured? How will crimina 1 behavior be
measured? llow will employment
be measured? This may seem simple at first glance, but there
are two complicating factors.
First, there are a variety of ways to measure something as

simple as abstinence. One could
measure it by self-report or by actually giving the client a drug
test. When looking at reduc-
tion of use, the issue of measurement becomes a bit more
complicated. This will likely need
to be self-report and some kind of comparison (either the same
measures must be used
with the same clients before and after the program [this being
the best way) or the same mea-
sure must be used with a control group of some kind [like
program dropouts)).
The second complicating factor in measurement is determining
what other constructs
need to be included to better understand "who benefits from the
program the most and
under what circumstances" and how those constructs are
measured. Again, using the drug
court program as an example, perhaps those clients who are
most depressed, have the
most health problems, or have the mosL anxiety do worse in
drug court programs because
the program may not address co-occurring disorders. If this is
the case, then it will be
important to include measures of depression, anxiety, and
health. However, there are
many different measures for each of these constructs, and
different measures use different
timeframes as points of reference. T n other words, some
depression measures ask aboul
12-month periods, some ask about 2-week periods, and some
ask about 30-day periods.
ls one instrument or scale better than another for measuring
depression? ·what are the
trade-offs relative to shorter or longer instruments? (For

example, the most valid instru-
ment might be so long thal clients will get fatigued and refuse
to complete it.) Is it better
to measure a reduction in symptoms associated with a
standardized test or to employ a
behavioral measure (e.g., counting the number of days that
patients with chronic mental
illness are compliant with taking their medications)? Is
measuring attitudes aboul drug
abuse better than measuring knowledge about the symptoms of d
rug addiction?
Evaluators frequently have to struggle with decisions such as
these and decide whether it
is better to use instruments that are not "perfect" or to go to the
tro uble of developing and
validating new ones.
When no suitable instrument or available data exist for the
evaluation, the evaluator
might have to create a new scale or at least modify an existing
one. If an evaluator revises
a previ.ously developed measure, then he or she has the burden
of demonstrating that the
newly adapted instrument is reliable and valid. Then, there are
issues such as the reliabil-
ity of data obtained from clients. Will clients be honest in
reporting actual d rug and alco-
hol use? How accurate are their memories?
A note must be made here about a special case of program
evaluation: evaluating pre-
vention programs. Evaluation of prevention programs is
especially challenging because
the typical goal of a prevention program is to prevent a
particular problem or behavior
from developing. The question then becomes, "How do you

measure something that
never occurs?" In other words, if the prevention program is
successful, the problem will
not develop, but it is difficult to dclermine with any certainty
that the problem would
have developed in the flrst place absent the prevention program.
Ti l uS, measures become
very important as well as the design (such as including a control
group).
Evaluators use a multitude of methods and instruments to
collect data for their stud-
ies. A good strategy is to include multiple measures and
methods if possible, especially
CHAPrtR 13 • PROCRAM EVALUATION STUDIES 233
when random assignment is not possible. That way, one can
possibly look for convergence
of conclusions across methods and measures.
Analysis of Change
After the data are collected, the evaluator is faced with a
sometimes difficult question of
how to determine whether change had occurred. And, of course,
there are several consid-
erations within this overall decision as welL One of the first
issues to be decided is what
the unit of analysis will be.
The unit of analysis refers to the person or things being studied
or measured in the eval-
uation of a program. Typically, the basic unit of analysis
consists of individual clients but

also may be groups, agencies, communities, schools, or even
slates. For example, an evalu-
alor might examine the effectiveness of a drug prevention
program by looking for a
decrease in drug-related suspensions or disciplinary actions in
high schools in which the
program was implemented. In that instance, schools are the
primary unit of analysis.
Another evaluator might be concerned only with the attitudes
toward d rugs and alcohol of
students in one middle school; in that situation, individuals
would be the uni l of analysis.
The smal lest unit of analysis from which data are gathered
often is referred to as a case. The
unit of analysis is critical for determining both the sampling
strategy and the data analysis.
The analysis will also be determined by the research design
such as the number of
groups to be analyzed, the type of dependent variable
(categorical vs. continuous), the
control variables that need to be included, and whether the
design is longitudinal. The
literature on similar program evaluations is also usefullo
examine so that analysis plans
can consider what has been done in the past. The analysis phase
of the evaluation is basi-
cally the end product of the evaluation activities. Therefore, a
careful analysis is critical to
the evaluation, the interpretation of the results, and the
credibility of the results. Analysis
should be conducted by somebody with adequate experience in
statistical methods and
statistical assumptions, and limitations of the study should be
carefully examined and
explained to program stakeholders.

Cost-Benefit Analysis
While assessing program outcomes is obv iously necessary to
gauge the effectiveness of a
program, a more comprehensive understanding of program
"success" ca n be attained by
examin ing program costs and economic benefits. In general,
economic costs and benefits
associated with specific programs have received relat ively
limited attention. One of the
major challenges in estimating costs of some cornm unily-baseu
social programs is that
slanuard cost estimation procedures do not always reflect the
true costs of the program.
For example, a drug court program often combines both
criminal justice supervision and
substance ab use trcaLrnen L in a community-based
environment. And in order for drug
court programs to work effectively, they often use many
community and outside agency
resources that are not necessarily directly paid for by the
program. For example, although
the drug court program may not directly pay for the jail time
incurred as part of client
sanctions, jail time is a central component in many drug court
programs. Thus, jail costs
must be considered a drug court program cost.
A comprehensive economic cost analysis would include
c.slimates of the value of all
resources used in providing the program. When resources are
donated or subsidized, the
out-of-pocket cost will differ from the opportunity cost of the
resources for a given
program. Opportunity costs take into account the forgone value
of an alternative use for

program resources. Other examples of opportunity costs for the
drug court program may
include the time and efforts of judges, police officers, probation
officers, and prosecutors.
234 PART II • QuANIITATIVE APPROACHES: TYPES OF
STUDIES
Including costs for which the program may not explicitly pay
presents an interesting
dilemma. The dilemma primarily stems from the trade-off in
presenting only out-of-
pocket expenditures for a program (thus the program will have a
lower total cost) or
accurately reflecting all of the costs associated with the
program regardless of whether
those costs are paid out of pocket (implying a higher total
program cost). furthermore,
when agencies share resources (e.g., shared overhead costs), the
correct proportion of
these resources that are devoted specifically to a program must
be properly specified. To
date, there has been liule discussion in the literature about
estimating the opportunity
cost of programs beyond the out of pocket costs. Knowing
which costs to include and
what value to place on certain services or items that are not
directly charged Lo the
program can be complicated.
A comprehensive analysis of economic benefits also presents
challenges. The goal of
an economic benefit analysis is to determine the monetary value
of changes in a range

of program outcomes, mainly derived from changes in client
behavior as a result of par-
ticipating in the program. When estimating the benefits of a
program such as drug
court, one of the most obvious and important outcomes is the
reduction in criminal
justice costs (e.g., reduced incarceration and supervision), and
these are traditionally
the only sources of benefits examined in many drug court
evaluations. However, drug
court programs often have a diverse set of goals in addition to
reducing criminal justice
costs. For example, drug court programs often focus on helping
the participants
become more productive in society. This includes helping par
ticipants take responsibil-
ity fo r their financial obligations such as child support. In
addition, employment is
often an important program goal for drug court clients. If the
client is working, he or
she is paying taxes and is less likely to use social welfare
programs. Thus, the drug court
program potentially red uces several different categories of
costs that might have
accrued had program participants not received treatment. These
"avoided" costs or
benefits are important compo nents to a full economic eva
luation of drug court
programs.
So, although the direct cost of the program usually is easily
computed, the full costs
and the benefits are more difficult to convert into dollars. For
example, Logan et al. (2004)
fo und that the average direct cost per chug court treatment
episode for a grad uate was

$3,319, whereas the opportunity cost per episode was $5, 132.
These differences in costs
due to agency collaboration highlight the importance of clearly
defining the perspective
of the cost analysis. As discussed earlier, the trade-off in
presenting only out-of-pocket
expenditures for a program or accurately reflecting all of the
costs associated with the
program regardless of whether those costs are paid out of
pocket is an important distinc-
tion that should be co nsidered at the outset of every economic
evaluation . On the benefit
side of the program, results suggest that the net economic
benefit was 514,526 for each
graduate of the program. In other words, this translates to a
return of $3.83 in economic
benefit for every dollar invested in the drug court programs for
graduates. Obviously,
those who dropped out of the program before completi ng did
not generate as large of a
return. However, results suggest that when both graduates and
terminators were exam-
ined together, the net economic benefit of any drug court
experience amounted to $5,446
per participant. This translates to a return of $2.71 in economic
benefit for every dollar
invested in the drug court programs.
When looking <~l the cost-benefit analysis of programs o r
comparing these costs and
benefits across programs, it is important to keep in mind that
cost- benefit analysis may be
done very differently, and a careful assessment of the methods
must be undertaken to
ensure comparabilily across programs.

Assignment: Developing a Program Evaluation
To ensure the success of a program evaluation, a social worker
must generate a specific
detailed plan. That plan should describe the goal of the
evaluation, the information needed, and
the methods and analysis to be used. In addition, the plan
should identify and address the
concerns of stakeholders. A social worker should present
information about the plan in a
manner that the stakeholders can understand. This will help the
social worker receive the
support necessary for a successful evaluation.
To prepare for this Assignment, identify a program evaluation
you would like to conduct for a
program with which you are familiar. Consider the details of the
evaluation, including the
purpose, specific questions to address, and type of information
to collect. Then, consider the
stakeholders that would be involved in approving that
evaluation. Review the resources for
samples of program evaluations.
By Day 7
Submit the following:
1 page stakeholder analysis that identifies the stakeholders,
their role in the agency and any
concerns that they might have about the proposed program
evaluation
2 to 3 page draft of the program evaluation plan to submit to the

stakeholders that:
Identifies the purpose of the evaluation
Describes the questions that will be addressed and the type of
information that will be
collected
Addresses the concerns of the stakeholders that you identified
in your Stakeholder
Analysis
Resources:
W. K. Kellogg Foundation. (n. d.). W. K. Kellogg foundation
evaluation handbook. Retrieved
October 8, 2013, from http://www.wkkf.org/knowledge-
center/resources/2010/w-k-kellogg-
foundation-evaluation-handbook.aspx
• Chapter 3, “Three Levels of Evaluation” (pp. 14–18)
• Chapter 5, “Planning and Implementing Project-Level
Evaluation” (pp. 47–104)
Document: Logan, T. K., & Royse, D. (2010). Program
evaluation studies. In B. Thyer (Ed.), The
handbook of social work research methods (2nd ed., pp. 221–
240). Thousand Oaks, CA: Sage.
(PDF).
Dudley, J. R. (2014). Social work evaluation: Enhancing what
we do. (2nd ed.) Chicago, IL:
Lyceum Books.
• Chapter 1, “Evaluation and Social Work: Making the
Connection” (pp. 1–26)

• Chapter 4, “Common Types of Evaluations” (pp. 71-89)
• Chapter 5, “Focusing an Evaluation” (pp. 90-105)
CASE BRIEF 7.1
In re Yukos Oil Company Securities Litigation
2006 WL 3026024 (S.D.N.Y.)
FACTS: Yukos is a Moscow-based joint-stock company whose
shares trade on the Russian stock
exchange. Yukos shares also trade indirectly on multiple
European exchanges and over-the-
counter in the United States.
Allegedly, Khodorkovsky was part of a select group of Russian
business leaders known as
“oligarchs” who supported former Russian President Boris N.
Yeltsin, but were politically opposed
to current Russian President Vladimir V. Putin.
The Tax Code of the Russian Federation prescribed a maximum
income tax rate that incorporated
two components: a tax payable to the federal budget and a tax
payable to the budget of the

taxpayer's local region. For example, in 2004, the statutory
maximum rate was 24%, of which up
to 6.5% could be collected by the federal government and up to
17.5% by regional governments.
The Tax Code also prescribed a minimum rate for taxes payable
to regional governments. In 2004,
that rate was 13.5%. However, the regional governments could
offer tax benefits to reduce or even
eliminate the regional budget liability of certain categories of
taxpayers. Because of this regional
variance in the effective income tax rate, taxpayers in the
metropolitan regions of the Russian
Federation, such as Moscow, paid higher taxes than taxpayers in
remote regions, or “ZATOs.”
The complaint alleges that from 2000 through 2003, Yukos
grossly underpaid its taxes to the
Russian Federation by illegally taking advantage of the ZATOs'
preferential tax treatment.
According to the complaint, Yukos booked oil sales at “well
below” market prices to seventeen
trading companies, all of which were registered within ZATOs.
Without taking physical
possession, the trading companies sold the oil to customers at
market prices and claimed the tax

benefits of their ZATOs. However, the profits were “funneled ...
back to Yukos and Yukos paid
taxes only on the initial below-market sales while reaping
substantial profits from the low-tax
market-price sales.
The complaint alleges that the regional trading companies
received the benefits of ZATO
registration illegitimately because “[n]o business was actually
conducted by the sham companies
in the ZATOs.” This Yukos tax strategy presented enormous
risk because it violated Russian law
and because the Russian Federation had prosecuted other
companies that had acted similarly.
Nonetheless, the risk was not disclosed in any of the Yuko’s
filings with the SEC. Also, what was
filed with the SEC was allegedly not prepared in conformity
with U.S. GAAP or other standards
of financial reporting.
At a secret meeting with Khodorkovsky and other oligarchs in
2000, Putin promised not to
investigate potential wrongdoing at their companies if the
oligarchs refrained from opposing Putin.

Nearly three years later, at another such meeting, Khodorkovsky
allegedly voiced his opinion that
high-level officials in Putin's government should be ousted.
According to the plaintiffs, Putin
reacted negatively and intimated to Khodorkovsky that the
Russian Federation might investigate
Yukos' methods of acquiring oil reserves. Despite Putin's
warnings, Khodorkovsky publicly
criticized Putin and financed opposition parties.
On October 25, 2003, Russian Federation authorities arrested
Khodorkovsky and charged him with
fraud, embezzlement and evasion of personal income taxes.
Days later, the Russian Government
seized control of Khodorkovsky's 44% interest in Yukos as
security against the approximately $1
billion he owed in taxes. Concurrently, the Tax Ministry
revealed that it had been investigating
Yukos' tax strategies. The Department of Information and
Public Relations of the General
Prosecutors Office then announced charges that accused
Khodorkovsky and others of fraudulently
operating an illegal scheme at Yukos to avoid tax liability
through shell company transactions.

On December 29, 2003, the Tax Ministry concluded its audit of
Yukos for tax year 2000, issued a
report that Yukos had illegally obtained the benefit of the
ZATOs’ preferential tax treatment, and
owed $3.4 billion to the Russian Federation in back taxes,
interest, and penalties for tax year 2000.
As a result, Yukos defaulted on a $1 billion loan from private
lenders and the Russian Government
confiscated Yukos' assets, including its main production facility
and billions of dollars from its
bank accounts. The price of Yukos securities “plummeted” in
response to these events.
Shareholders in Yukos (Plaintiffs) filed consolidated class
actions against Khodorkovsky and
others (defendants) on July 2, 2004. The U.S. plaintiffs had
purchased Yukos securities between
January 22, 2003, and October 25, 2003. They allege that
Yukos, its outside auditor, and certain
of its executives and controlling shareholders knowingly
concealed the risk that the Russian
Federation would take action against Yukos by failing to
disclose: (1) that Yukos had employed
an illegal tax evasion scheme since 2000; and (2) that

Khodorkovsky's political activity exposed
the Company to retribution from the current Russian
government. The plaintiffs based their claims
on the fraud provision, Section 10(b), of the Securities
Exchange Act.
ISSUE: Does the act of state doctrine prohibit the court from
taking the case?
DECISION: No. The court dismissed the case on other
grounds, but found that the act of state
doctrine did not prohibit the court from hearing the case. The
case was not one that involved
invalidating Russian actions; it was a case to decide whether the
company should have been more
transparent and forthcoming about the risk of its strategy as
well as the political risk in Russia.
Questions:
1. Describe how Yukos is alleged to have saved significant
amounts in taxes.
2. Explain what act of the Russian Federation is in question.
3. What are the plaintiffs asking the court to decide? Does

that decision require revisiting what
the Russian Federation did, and why or why not?

CASE BRIEF 7.2 Tiffany and Company v. Andrew 2012 W.docx

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CASE BRIEF 7.2 Tiffany and Company v. Andrew 2012 W.docx