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Univ. of South Carolina School of Law

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Tuesday, March 24, 2009

Cross The Pages Of The Magazine: Court Notes That Consumer Complaints Are Often Admissible Under The Residual Hearsay Exception

When litigants are unsuccessful in introducing statements under the traditional exceptions to the rule against hearsay, they typically attempt to rely upon Federal Rule of Evidence 807, the residual exception, as a last resort.  Usually, courts rebuff such attempts, but as the recent opinion of the United States District Court for the Western District of Pennsylvania in F.T.C. v. Magazine Solutions, 2009 WL 690613 (W.D. Pa. 2009), makes clear, courts generally have found that consumer complaints qualify for admission under Rule 807.

In Magazine Solutions, the Federal Trade Commission brought an action against Magazine Solutions, alleging that they

violat[ed] the FTC Act and the Telemarketing Sales Rule (TSR) by calling consumers and telling them they were eligible to receive "valuable coupons" for groceries and other items, when in fact they were luring them into signing up to purchase unwanted magazine subscriptions. The Commission’s complaint state[d] that the defendants, collectively known as Magazine Solutions, often did not tell consumers up-front that to get the coupons they had to buy the subscriptions, and sometimes claimed the magazines were free or that the consumers only had to pay shipping and handling. When consumers tried to cancel their orders, many found it was nearly impossible to do, and were stuck with subscriptions to magazines they never wanted in the first place.

The problem for the F.T.C. was that it had numerous consumer complaints and declarations concerning Magazine Solutions, but none of these documents were covered by any of the traditional exceptions to the rule against hearsay included in Federal Rules of Evidence 803 and 804. Nonetheless, the F.T.C. claimed that these documents were admissible under Federal Rule of Evidence 807, the residual exception to the rule against hearsay, which provides that    

A statement not specifically covered by Rule 803 or 804 but having equivalent circumstantial guarantees of trustworthiness, is not excluded by the hearsay rule, if the court determines that (A) the statement is offered as evidence of a material fact; (B) the statement is more probative on the point for which it is offered than any other evidence which the proponent can procure through reasonable efforts; and (C) the general purposes of these rules and the interests of justice will best be served by admission of the statement into evidence. However, a statement may not be admitted under this exception unless the proponent of it makes known to the adverse party sufficiently in advance of the trial or hearing to provide the adverse party with a fair opportunity to prepare to meet it, the proponent's intention to offer the statement and the particulars of it, including the name and address of the declarant.

The court agreed.  First, the court found that the complaints and declarations were trustworthy because the consumers were known and named, their allegations were based upon personal knowledge, the allegations corroborated each other, and the allegations "were made to governmental agencies and/or consumer agencies with the apparent expectation that action would follow based upon the representations."  Second, the court found that the complaints and declarations were evidence of a material fact because they

contain[d] evidence...of the Defendants' representations regarding the value of the coupons promised and the value actually received. The evidence will also be probative regarding representations about the cancellation policy, the consumers' obligation to pay for services and the Defendants' intentions to pursue legal action. Because the complaints also show the widespread nature of the Defendants' representations, they are material with respect to the issue of customer redress as well.

Third, the court found that the complaints and declarations were (more) probative (than any other evidence) because Magazine Solutions itself admitted that it "failed to retain all records of customer complaints" and "all letters they themselves sent to consumers." Fourth, the court found that "the general purpose of the Rules of Evidence and the interests of justice would best be served by the admission of the complaints because they would assist this Court in determining the truth."  Finally, the court found that "the Defendants were given fair and adequate notice of the FTC's intent to use this evidence." 

As noted in the introduction, this was not a landmark ruling.  Instead, in reaching the conclusion that these consumer complaints/declarations were admissible under Rule 807, the court noted that other courts, such as the Ninth Circuit, "have also found consumer complaints to have sufficient guarantees of trustworthiness under Rule 807 to permit admission."

-CM

http://lawprofessors.typepad.com/evidenceprof/2009/03/807ftc-v-magazine-solutions-llcslip-copy-2009-wl-690613wdpa2009.html

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