Tuesday, August 31, 2010

CAFC blows Brooks Brothers away in qui tam ruling

In Stauffer v. Brooks Brothers, the CAFC reversed a decision of SD NY ["Because Stauffer
had standing to bring his claim, and
because the government had a right to intervene, we
reverse on both grounds." ], although
the case had a New Jersey flavor [RAYMOND E. STAUFFER, of Chatham, New Jersey, pro
se; STEPHEN L. BAKER, Baker & Rannells, PA, of Raritan,
New Jersey, argued for defendants-appellees.

The gist of the case:

Stauffer is a patent attorney who has purchased some
of the marked bow ties. Id. at 251. In December 2008,
Stauffer brought a qui tam action under 35 U.S.C. § 292
alleging that Brooks Brothers had falsely marked its bow

The CAFC dug into the history books to eviscerate arguments by Brooks Brothers:

Indeed, the Court in Vermont Agency recognized and
found conclusive the historical precedent of informer
statutes enacted by the First Congress, which assigned
certain sovereign interests of the United States to private
parties. Id. at 776–77. For example, the Court relied
upon statutes allowing an informer to sue for, and receive
half the fine for, failure to file a census return, carriage of
seamen without contract or illegal harboring of runaway
seamen, and unlicensed trading with Indian tribes
. Id. at
777 n.6. Those fines were not based on harms to the
United States’ proprietary interest, as the federal treas-
ury was not directly diminished because of the violations.
The fines were instead based only on harms to the sover-
eign interest of the United States, viz., the interest in
seeing the harms, as defined in the statutes, redressed.
One statute noted by the Court even allowed informers to
conduct a criminal prosecution and receive half the fine,
id., which would redress an injury that the Court explic-
itly found to be sovereign, id. at 771 (stating that a sover-
eign, as opposed to proprietary, injury “suffices to support
a criminal lawsuit”). Thus, under Vermont Agency, the
United States’ sovereign injury is sufficient to confer
standing upon it and therefore upon Stauffer, its implicit
partial assignee.3 We therefore take no view as to
whether section 292 addresses a proprietary or a sover-
eign injury of the United States, or both, as either one
would confer standing on the government, and therefore Stauffer.

Basically, anybody can sue under the false marking

Stauffer’s standing arises from his status as
“any person,” and he need not allege more for jurisdic-
tional purposes. The district court conflated its jurisdic-
tion with the merits of the case when it stated that
Stauffer had failed to sufficiently allege a “purpose of
deceiving the public.” Standing Op., 615 F. Supp. 2d at
254 n.5. Brooks Brothers similarly conflates jurisdiction
and merits in asserting that Stauffer must show that the
marking is fairly traceable to Brooks Brothers, rather
than to J.M.C. Bow, the third party Adjustolox manufac-
turer. Neither of those points is jurisdictional in nature,
nor do they fall under the standing inquiry. The standing
doctrine is intended to require that the plaintiff is a
proper person to bring the suit; it does not require that
the plaintiff properly allege all of the elements of his
claim. Thus, “standing does not depend on the merits of
the plaintiff’s contention that particular conduct is ille-
gal”; it instead requires a claim to an injury of a legally
cognizable right. 15 James Wm. Moore et al., Moore’s
Federal Practice—Civil ¶ 101.40[5][a]. By allowing any
person to sue, Congress granted individuals a legally
cognizable right to half of the penalty defined in section
Thus, Stauffer has sufficiently alleged (1) an
injury in fact to the United States that (2) is caused by
Brooks Brothers’ alleged conduct, attaching the markings
to its bow ties, and (3) is likely to be redressed, with a
statutory fine, by a favorable decision. See Lujan, 504
U.S. at 560–61.


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