This week we are planning to post a series of blogs looking at NAD procedural issues. For advertisers, how NAD works can sometimes be as important as what NAD decides. This first posting, however, pertains to the intersection between the NAD and the federal courts. The evidentiary value of an opinion by an advertising self-regulatory body like the NAD is an issue that has received relatively little attention. Although NAD is designed to adjudicate advertising disputes quickly, efficiently, and effectively, sadly it does not always have the final word. Sometimes a disappointed party before the NAD chooses to move the dispute to federal court under the Lanham Act. Other times, the advertiser may find itself the subject of a consumer class action lawsuit after receiving an unfavorable NAD recommendation. In either circumstance, your client may wonder: What evidentiary impact will the NAD’s case report have if my advertising is challenged in federal court? The answer is probably very little, although the impact may vary depending on the posture of the litigation and the reason for which the case report is offered as evidence.
For many lawyers, the hearsay rule remains seared into law school memory: Hearsay is an out-of-court statement that “a party offers in evidence to prove the truth of the matter asserted in the statement.” Even if relevant, hearsay is inadmissible as evidence unless offered for a non-hearsay purpose or under one of the numerous hearsay exceptions provided for by the rules. In federal court, an NAD decision might be used for three reasons – one is typically inadmissible hearsay; the second is usually admissible non-hearsay; and the third is not evidentiary at all.
Click here to read the full text of this article on Venable's All About Advertising Law blog.