It is lag guys... sorry.
On the other guys machine he didn't fall off rainbow road - he got the shell. But it takes time to send that information to your machine. Your machine didn't receive that information so just had him keep going straight and fall off the road (after all, your machine doesn't know what happened, it just has to assume he's still going the same direction).
Suddenly, your machine gets the update from his machine, and it will update your game showing him on the road ahead of you with the item.
Lag.
Easiest solution? Update your internet connection to a faster speed (although, it won't help if the guy on the other end has a horrible internet connection).
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Our enemies are innovative and resourceful, and so are we. They never stop thinking about new ways to harm our country and our people, and neither do we.
- George W Bush.
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