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12  UNITED STATES EX REL. SCHUTTE v. SUPERVALU INC. 

Opinion of the Court 

that respondents’ “usual and customary” prices were their 
discounted ones; if so, it might have been a forgivable mis-
take if respondents had honestly read the phrase as refer-
ring to retail prices, not discounted prices.  But the Seventh 
Circuit did not hold that respondents made an honest mis-
take; it held that, because other people might make an hon-
est  mistake,  defendants’  subjective  beliefs  became  irrele-
vant  to  their  scienter.    Respondents  make  three  main
arguments in support of that rule.  But none is persuasive. 

1 
Respondents first focus on the inherent ambiguity of the
phrase  at  issue  here,  asserting  that  they  could  not  have 
“known”  that  their  claims  were  inaccurate  because  they 
could not have “known” what the phrase “usual and custom-
ary” actually meant.  The most that is possible, respondents
posit, is that they took a (correct) guess. 

We disagree.  Although the terms, in isolation, may have 
been  somewhat  ambiguous,  that  ambiguity  does  not  pre-
clude respondents from having learned their correct mean-
ing—or, at least, becoming aware of a substantial likelihood 
of the terms’ correct meaning.  To illustrate why, consider 
a hypothetical driver who sees a road sign that says “Drive
Only Reasonable Speeds.”  That driver, without any more 
information,  might  have  no  way  of  knowing  what  speeds
are reasonable and what speeds are too fast.  But then as-
sume that the same driver was informed earlier in the day 
by a police officer that speeds over 50 mph are unreasonable 
and then noticed that all the other cars around him are go-
ing only 48 mph.  In that case, the driver might know that
“Reasonable Speeds” are anything under 50 mph; or, at the 
least, he might be aware of an unjustifiably high risk that 
anything over 50 mph is unreasonable.  Indeed, if the same 
police officer later pulled the driver over, we imagine that 
he would be hard pressed to argue that some other person 
might have understood the sign to allow driving at 80 mph.