appeals about the type of evidence that's necessary to establish causation in damages in unfair competition case under the lanham act there is also an issue about when under what circumstances discouragement of profits is  permissible and there's a really tricky question of whether a district court has jurisdiction to consider rule sixty b motion i'm going to start with the causation damages issue because i think it's really the meat of the main appeal  in this case out of the box failed to present sufficient evidence to establish that it lost sales to elp a sale as a result of sales advertisements and i'd like to highlight three specific deficiencies of proof in this case the first was the evidence at the trial showed that although opus a was not paying as much for gold as it said it was in his advertisements it was still paying more for gold then out of the box and i would refer you to the range of the prevailing market price for gold can i back you up for a second so say we agreed with you that there wasn't evidence of lost sales the jury still could have found liability based on loss of goodwill and i don't see anyone talking about that here and i'm trying to figure out what to do with that can you address that please it's an interesting issue i mean because i think you could i mean the jury said loss of sales or loss of good will so maybe they thought it was  of good will and you haven't attacked that so i'm not sure what to do you're only attacking half of what literally could have found i guess i would i would my response to that would be that there is no evidence of substantial goodwill here particularly where out of the had only been in existence for three months before why didn't we see someone argue i know you weren't counsel below but why didn't someone argue that that shouldn't be in this jury instruction or that shouldn't be on the verdict form and there's no evidence to support it or something i mean no one's i mean i look at the verdict form and i think what what was the jury thinking and i'm kind of at a loss about what's why this case is not talking about everything the jury might have been thinking well i mean i think the case was very clear there was an especially heightened standard for causation in damages in connection with a new or nascent business and that's exactly what we have here they just opened up their doors they hardly started it's inconceivable to imagine that they had any significant goodwill certainly not sufficient goodwill to justify this size of the damages award and certainly then i think it would then if you're concerned about the goodwill issue then we have a question about whether or not the new trial motion should have been granted well i think that would be an argument amounts for granting a new trial i mean i think there could have been an argument that there was a disconnect between the damages theory and this goodwill put perhaps a goodwill liability theory but that's also not something i see having been argued right well and i think i would also say that the there was really no evidence presented at trial that there was any good will to be lost and so there's no one i would lean on the jury for and i don't understand what happened here i think it would be because people are imperfect the clearly the evidence presented at trial was for los that was the at was the theory of damages that was presented there is no evidence but there were two phases right so there was a liability phase of the for i think your causation argument is i mean you're arguing it from both but the first step is did they do was there a liability problem  here should there be a new trial on liability or should there not have ever been a seems like your first causation thing is just about liability isn't it absolutely i think there was a causation and damages are both elements of the claim there's no causation here there's no causation because we're paying more for gold than they are and there's no causation there's a couple other following arguments but i mean this is this is a gold mine business right if the three of you were gold buyers and i wanted to sell my ring i don't care which one of the three of you buys it i just want whoever is going to give me the most money and the evidence here was that help to say i was paying more money and so it's very very hard to imagine how  to establish causation to establish liability here you have the i don't the box would have to show that the could the gold buying gold selling consumers out there would have sold their gold to out of the box for less money than they would have gotten from other competitors such as opus a oh and there's i mean that's just contrary to law to fact to logic they pay back against herself i mean maybe the jury thought people walked into your client or el paso's store thinking they were probably a good store holding this ad in their hand left really angry when they heard that they weren't getting to have the price in the ad met and that was a loss of good will and if that's what the jury thought where is the problem in that being what the jury thought and that being the basis for the verdict and if that's what the basis of the verdict is then how can you argue there's not no causation well the ads the ads were a sales ads so it's difficult to see how oh i'm sorry i'm sorry so i got a will because i was i was at rock but there you go without this isn't the same as at into out of the box i apologize right you go and out of the box you're mad when you leave because they're not going to match the price of the ad how does that not cause a loss of goodwill for out of the box well you're not losing good will because they would have been your customers anyways because you're not competing at the fundamental core here which is paying more money for you in a big fight with but if a customer walks in has already made the effort to walk into a store they are exposed you know if if they're treated fairly they may buy there and even if the difference is you've got more out of the box than you did it help to say oh but it's or whatever you have affected a sale there haven't you right but that i guess what i would say is there is no evidence that there are any considerations going on here other than sheer who's going to pay me more for gold and is this court noted and it's a great decision when you have a fungible service like this one the most important competitive factor is price and on that most important competitive factor out of the box was bolo help us say oh and i would note that in this context we're talking about a you know a lanham act case you're talking about one business competitor suing another in this context the courts have made very clear that we have to have an exacting standard of causation and damages because we want businesses to compete in the sale of providing goods and services and not compete in the courtroom when they've lost when they go by  that is the fundamental deficiency in proof because i would submit number one they didn't lose sales because we are paying more i would submit number two that there is no evidence of lost sales period no admissible evidence the only evidence of lost sales i customers coming in and saying can you meet this price you can't ok i'm going over there and the still wet in decision and a third circuit squarely on point says that while that out of court communications like that are admissible for state of mind purposes received by another defendant so that's the first kind of fundamental problem and that's it statutory section one one seven a specifically refers to distortion of a defendant's profits and made it didn't have any profit there's no evidence of that it was a sales profit recovery of both plaintiffs lost profits and a discordant of defendants profits is generally considered a double recovery under the lanham act and the reason this case is it kind of a great example of that right because on the one hand out of the box was awarded both the sales that it lost to opus a o as a result of the the false advertisement and then it was able to recover again the profits that the sale received for those exact same sales please the court matthew kelly on behalf of the box enterprises in preparing for this case i will be quite honest with your honor that i didn't pick up on the goodwill aspect of it and i'm more than happy to prepare any sort of supplemental briefing and i think the reason is because it wasn't raised in the opening brief but again if the court desires some sort of supplemental position on that particular issue we're happy to do that  you know from my perspective this case really comes down to the standards of review in all of the issues that we're dealing with we're dealing with a jury verdict we're dealing with with standards of review that really militate in favor of of affirming judge phillips judgments in both of the appeals the standard of review definitely helps you but where is the evidence of any lost sales well you match it and they say no they said well then we're going to go we're going to get them the most money but the evidence at trial in fact i think the concessions in the brief are that it's clear that the sale was not paying that advertised ninety two percent so locking out how why do you think that they walk out the door and they go to where the ad is advertising and they learn then that they're not going to pay that price so then they probably walk out of that store too how do we have any last sale for your significant review of the hellman doctrine in u s versus feaster by forty four fed second three fifty three it was a kidnapping case a criminal kryten kidnapping case where the victim said he was going to meet angelo at sambo's north to get a pound of we for free and so at trial the victim's friends  require that the state of mind of the declarant be an actual issue in the case instead under the helm and doctrine the state of mind is used inferentially to prove other matters which are in issue it goes on to but say the state of mind is they're hoping to leave and go get ninety two percent but we know because your allegation is that the ninety two percent was false advertising that when they get to the store they're going to learn they can't get ninety two percent so why do you think that that customer either would still buy or sorry sell would still sell or that that customer ever would have sold to you otherwise i mean maybe maybe this customer only got interested in selling the gold because of ninety two percent when they were in they don't get ninety percent they just go home with their go that number one there was evidence that it was set forth at length and believe in the opening brief that there was evidence that the sale was actually paying ninety two percent i believe the well that's true they don't have false advertising well but but you've also got a standard of review that gives deference to the jury's findings because the jury is free to accept all some or or none but they have to be consistent right so it's either ninety two percent or it's not isn't it i mean it's either false i mean you have to choose i don't know that if i were there to have them have both it's false and it's not false the defendant's evidence at trial was that we've got these eight witnesses that are going to say really great things about us that we pay ninety two percent and then of course the plaintiffs had  evidence for example the undercover sales that prove that they weren't paying that and i think what mr clapper is referring to with respect to you to say it was paying more even though it wasn't paying what it said it was paying it was still paying more than out of the box i think that's a mathematical average and quite frankly i didn't dig into the record to find out exactly what every person testified to as to what help the sale was paying on any particular case but i think when we circle back to getting to the last sale they walk in ninety percent no we can't meet it we're going to go to the sale to sell and what hilman stands for and what feaster confirms and kind of went through this  awkward analysis feaster the fisa court went on to say the doctrine provides that when performance of a particular act by an individuals in this unit case his intention state of mind to perform the act may be shown from that intention the trier of fact may draw the inference that the person carried out his intention and perform the act within this conceptual framework hearsay evidence of statements by the person which tend to show his intention is deemed miscible under the state of mind that the home doctrine which allows evidence of intention as tending to prove the act intended was left undisturbed so that's how we get to evidence of law still a still lag and then i'm sorry so you're using the case that kidnapping statement offered to prove the truth of the matter asserted there are all kinds of statements that are not hearsay things that aren't offered for truth or party opponent admissions or are identifications but there's a certain classification of hearsay statements meaning they said the statements of intent cannot be used for the truth of the matter asserted well that's the definition of actually used for the truth of the intent but not for that idea that they actually did the sale understood but i think hil case we had a principle and i believe a manager of the box testifying that like i said customers would come in flash the ad and say we're leavin and we're going to take our business elsewhere and i think that's where we get back to the last sale and again i don't know how it deals with me but not a single customer came in the trial and said i would have bought at your client if  theory was free to infer that under the hellman conception of the state of mind exception rate of three three well you know evidence not a big deal anymore what we do as as lawyers trial lawyers and appellate lawyers in speaking of of evidence the standard of review is your review judge phillips for an abuse of her discretion in allowing this information in which she said will show will allow the jury or allow the jury to infer what the people may have done next i mean that's classic human you review that for an abuse of discretion and reverse only if it's a rony yes and prejudicial  right certainly that's what they do but if they're not going to match the price that's been falsely advertised why wouldn't they go to the other place i mean i think think think that's the point this is work that's i pressed it i do your honor it's one forty five us two eighty five one forty five us two eighty five eight hundred ninety two that's a far cry from five forty four f second three fifty three that you gave us a there's no evidence of goodwill here for a three month old business case on makes clear that brand new businesses don't have goodwill there more importantly there was no evidence presented at trial by anyone that there was any lost goodwill here so to the  verdict could have been based on you know a loss of goodwill it's also completely unsupported by the evidence because there was none turning to hilman hilman is basically establishes the state of mind exception which dispute from producing evidence of actual lost sales and i think what's critical on this point again still lag and i love stowing it's a great case footnote sixteen expressly discusses and distinguishes the hillmen rule and i'll quote it for you because it's so great although the customer statements at issue in this case clearly word miscible as evidence of why the customers were not purchasing tarmac maps from stat wagon i e because they thought they could get a better deal elsewhere the statements were not admissible as proof that still wagons customers did in fact purchase maps from one of still wagons competitors so still wagon specifically addresses this hilman argument and says no no no we can't do that in this context right and i would also refer this court to a it's also a hoary supreme court decision but of more recent vintage i think that's the critical point the buckeye power company case to forty eight us sixty five which is decided by justice holmes after hilman in which he says quote statements by third persons of their reasons for refusing or ceasing to do business with the plaintiff are not admissible where the quote the statement was wanted not as evidence of the motives of the speaker but as evidence of the facts recited as furnishing the motives and i think even the supreme court has recognized in the buckeye powder company case you can apply hellman in his contest it just doesn't apply and so unless the panel is any further questions i would submit i would make one no because i know we didn't talk about the rule sixty b issue which is a really nasty issue i'm not sure that the panel can get around avoiding it because that palance in the two appeals are different and so there are entity appellants in the rule sixty appeal that even if you reverse the judgment as to appellant made in the you know in that in the appeal from the merits would still be affected by what happens on the rule sixty be so i think you may have to wade into that really me is that it should all fall out and there are fallback argument is that at the very least the discordant should fall so that you know that only the one point five remains but again are are sparse strong positions that there's no evidence for any of it is there any  profits from from the defendant is a double recovery and we started the nintendo case it really is squarely on point on the thank you thank you both sides for your arguments the case is submitted and we're adjourned for the day