Follow The Leader: Ninth Circuit Finds Statements Of Customer Confusion Admissible Under State Of Mind Exception To Rule Against Hearsay

Customers call a company complaining that they were confused because they visited what they thought was the company's website but could not find any information about the company. It turns out that an "Internet entrepreneur" acquired a domain name with the company's name and created a website that consisted only of a few lines of code redirecting visitors to a different website with search result links, including links to the company's competitors. The company sues the individual, claiming that he violated the Lanham Act, the Anticybersquatting Consumer Protection Act, a consumer protection act, and common law. Should the company be able to present evidence about the customer complaints that they received? According to the recent opinion of the Ninth Circuit in Lahoti v. Vericheck, Inc., 2011 WL 540541 (9th Cir. 2011), the answer is "yes."

In Lahoti, the facts were as stated above with Vericheck being the company and David Lahoti being the defendant who registered www.vericheck.com.  At trial, to prove actual confusion,

two witnesses testified on behalf of Vericheck that there ha[d] been significant confusion as a result of the www.vericheck.com website. The evidence show[ed] that Vericheck and its independent sales offices and resellers receive[d] a substantial number of telephone calls from confused customers who could not find information about Vericheck on www.vericheck.com.

After the district court found that Lahotu committed the alleged violations, Lahoti appealed, claiming, inter alia, that this testimony was improperly received. The Ninth Circuit disagreed, finding that while this testimony referenced hearsay statements regarding customer confusion, those statements were admissible under Federal Rule of Evidence 803(3), which provides an exception to the rule against hearsay for

A statement of the declarant's then existing state of mind, emotion, sensation, or physical condition (such as intent, plan, motive, design, mental feeling, pain, and bodily health), but not including a statement of memory or belief to prove the fact remembered or believed unless it relates to the execution, revocation, identification, or terms of declarant's will.

As support for this conclusion, the Ninth Circuit cited to Conversive, Inc. v. Conversagent, Inc., 1079, 1091 (C.D. Cal. 2006), for the proposition that the "majority of circuit courts that have considered this issue have...found that such evidence is admissible."

-CM