Stauffer v. Brooks Brothers Group, Inc. , 758 F.3d 1314 ( 2014 )

United States Court of Appeals
for the Federal Circuit
______________________
RAYMOND E. STAUFFER,
Plaintiff-Appellant,
v.
BROOKS BROTHERS GROUP, INC.,
formerly known as Retail Brand Alliance, Inc.,
formerly known as Brooks Brothers, Inc.,
Defendant-Appellee,
AND
UNITED STATES,
Intervenor-Appellee.
______________________
2013-1180
______________________
Appeal from the United States District Court for the
Southern District of New York in No. 08-CV-10369, Judge
Sidney H. Stein.
______________________
Decided: July 10, 2014
______________________
RAYMOND E. STAUFFER, of Chatham, New Jersey, ar-
gued pro se.
STEPHEN L. BAKER, Baker & Rannells, PA, of Raritan,
New Jersey, argued for defendant-appellee. With him on
2 STAUFFER v. BROOKS BROTHERS GROUP, INC.
the brief were NEIL B. FRIEDMAN and RYAN A.
MCGONIGLE.
ADAM C. JED, Attorney, Appellate Staff, Civil Division,
United States Department of Justice, of Washington, DC,
argued for intervenor-appellee. With him on the brief
were STUART F. DELERY, Assistant Attorney General,
PREET BHARARA, United States Attorney, and SCOTT R.
MCINTOSH, Attorney.
______________________
Before LOURIE, SCHALL, and MOORE, Circuit Judges.
SCHALL, Circuit Judge.
Pro se plaintiff-appellant Raymond E. Stauffer
brought this qui tam action in the United States District
Court for the Southern District of New York in 2008. 1 In
his suit, Mr. Stauffer sued defendant-appellee Brooks
Brothers, Inc. (“Brooks Brothers”) under the then-extant
version of the false-marking statute, 35 U.S.C. § 292(2006). 2 Mr. Stauffer alleged that Brooks Brothers violat-
ed the statute by marking its bow ties with expired patent
numbers.
In 2011, while Mr. Stauffer’s action was pending, the
President signed into law the America Invents Act, Pub.
L. No. 112-29, 125 Stat. 284 (2011) (the “AIA”). The AIA
1 A qui tam action is one brought under a statute
that allows a private person to sue for a penalty on behalf
of the government or a public institution. In return, the
government or public institution shares a portion of the
penalty. Black’s Law Dictionary 1368 (9th ed. 2009).
2 Brooks Brothers, Inc. was merged into defendant-
appellee Retail Brand Alliance, Inc. and no longer exists.
On August 8, 2011, Retail Brand Alliance, Inc. changed
its name to Brooks Brothers Group, Inc.
STAUFFER v. BROOKS BROTHERS GROUP, INC. 3
made three significant changes to the false-marking
statute that affected Mr. Stauffer’s claim: (1) it eliminated
the statute’s qui tam provision, changing the law so that
only a “person who has suffered a competitive injury” may
bring a claim, AIA § 16(b)(2); (2) it expressly stated that
marking a product with an expired patent is not a false-
marking violation, id. § 16(b)(3); and (3) it expressly
stated that these amendments apply to all pending cases,
id. § 16(b)(4).
After the AIA became law and eliminated the qui tam
provision of the false-marking statute, Mr. Stauffer
acknowledged that he no longer had standing to pursue
his lawsuit. The district court subsequently issued an
order directing him to show cause why, in light of the
AIA, his suit should not be dismissed for lack of standing.
Mr. Stauffer responded by arguing that the AIA amend-
ments were unconstitutional because they amounted to a
pardon by Congress, thus violating the doctrine of separa-
tion of powers. He also argued that, by making the elimi-
nation of the qui tam provision applicable to pending
suits, the statute violated the common-law principle that
prohibits use of a pardon to vitiate a qui tam action once
the action has commenced. The government, as an inter-
venor, defended the constitutionality of the AIA.
On December 19, 2012, the district court dismissed
Mr. Stauffer’s suit for lack of standing due to the AIA’s
elimination of the false-marking statute’s qui tam provi-
sion, Stauffer v. Brooks Bros., Inc., No. 08-Civ-10369,
2012 WL 6621374 (S.D.N.Y. Dec. 19, 2012) (“Final Deci-
sion”), and on January 16, 2013, the court denied recon-
sideration, Stauffer v. Brooks Bros., Inc., No. 08-Civ-
10369 (S.D.N.Y. Jan. 16, 2013). Mr. Stauffer now appeals
the dismissal of his suit. For the reasons set forth below,
we affirm.
4 STAUFFER v. BROOKS BROTHERS GROUP, INC.
BACKGROUND
I.
The false-marking statute, 35 U.S.C. § 292, makes un-
lawful various acts of falsely marking products with
patent numbers. Under § 292(a), a person who violates
the statute “[s]hall be fined not more than $500 for every
such offense.” At the time Mr. Stauffer filed his suit,
§ 292(b) allowed any person to sue for the penalty. If the
suit was successful, one half of the penalty paid would go
to the United States.
The basis of Mr. Stauffer’s allegation was that Brooks
Brothers had violated the false-marking statute by mark-
ing its bow ties with patent numbers that had expired
more than a half century ago. However, before reaching
the merits of the suit and before enactment of the AIA,
the district court dismissed it for lack of standing, finding
that Mr. Stauffer failed to satisfy the constitutional
requirement of an “injury in fact.” Stauffer v. Brooks
Bros., Inc., 615 F. Supp. 2d 248 (S.D.N.Y. 2009). Subse-
quently, the government sought to intervene, contending
that the court’s dismissal drew into question the constitu-
tionality of the statute. Stauffer v. Brooks Bros., Inc., No.
08-Civ-10369, 2009 WL 1675397, at *1 (S.D.N.Y. June 15,
2009). The district court denied the government’s re-
quest. Id. at *4.
On appeal, we reversed both decisions of the district
court. Stauffer v. Brooks Bros., Inc., 619 F.3d 1321, 1322
(Fed. Cir. 2010). First, we held that, if Mr. Stauffer’s
allegations were correct, the United States had suffered
an “injury in fact” and that therefore Mr. Stauffer, as an
assignee of the government’s damages claim, satisfied the
requirement of showing standing. Id. at 1328. Second,
we held that the government had the right to intervene to
protect its interest. Id. at 1329. Accordingly, we remand-
ed for further proceedings.
STAUFFER v. BROOKS BROTHERS GROUP, INC. 5
II.
While the case was pending, the President signed into
law the AIA. As noted above, the AIA made three signifi-
cant changes to the false-marking statute: it eliminated
the statute’s qui tam provision; it expressly stated that
marking a product with an expired patent is not a viola-
tion of the statute; and it provided that the amendments
apply to all pending cases. AIA § 16(b).
After enactment of the AIA, Mr. Stauffer conceded
that the amendments eliminated his standing and left
him with no claim for relief on the merits. Final Decision
at *1. He contended, however, that applying the amend-
ments retroactively violated the Constitution’s separation
of powers. In response to the district court’s order to show
cause why his case should not be dismissed, Mr. Stauffer
argued that the retroactive application of the amend-
ments usurped the President’s pardon power. According
to Mr. Stauffer, Brooks Brothers committed a criminal act
by falsely marking its bow ties with expired patent num-
bers. By eliminating Brooks Brothers’ criminal liability,
Mr. Stauffer claimed, Congress effectuated a pardon—a
right exclusively granted to the President. Mr. Stauffer
also argued that the amendments to the false-marking
statute violated the common-law qui tam principle that
prohibits use of a pardon to vitiate a qui tam action once
it has commenced. In a subsequent reply brief, Mr.
Stauffer raised additional constitutional arguments. He
also argued in his reply brief that, as an alternative basis
for standing, he had suffered a “competitive injury,” as
that phrase is used in the AIA. According to Mr. Stauf-
fer’s argument, Brooks Brothers’ false marking chilled
competition and thus inflated the price he paid for his
bow ties, thereby injuring him.
Regarding the pardon-power argument, the district
court ruled that, assuming the false-marking statute
amendments immunized certain law breakers, Congress’s
6 STAUFFER v. BROOKS BROTHERS GROUP, INC.
action amounted to a general amnesty. Final Decision at
*3. Relying on Brown v. Walker, 161 U.S. 591 (1896), the
court held that Congress had the power to grant a general
amnesty without encroaching on the President’s power.
Moreover, rather than usurp the President’s power, the
court found, the amendments instead placed the authority
to seek the statutory penalty for false marking solely
within the President’s hands. Final Decision at *3.
Regarding Mr. Stauffer’s additional arguments, the
court held that Mr. Stauffer lacked standing to make
them and that he had waived the arguments by failing to
raise them in his opening response to the court’s show-
cause order. Id. at *4 n.3. The court, however, did ad-
dress Mr. Stauffer’s claim that he had standing because
he had suffered a “competitive injury.” Relying on our
decision in Brooks v. Dunlop Manufacturing, Inc., 702
F.3d 624 (Fed. Cir. 2012), the court found that Mr. Stauf-
fer could not have suffered a “competitive injury” because
he is a consumer of bow ties—not a competitor of Brooks
Brothers. Final Decision at *4.
Mr. Stauffer timely appealed the dismissal. We have
jurisdiction pursuant to 28 U.S.C. § 1295(a)(1).
DISCUSSION
I.
“The question of standing to sue is a jurisdictional one
. . . which we review de novo.” Rite-Hite Corp. v. Kelley
Co., 56 F.3d 1538, 1551 (Fed. Cir. 1995) (en banc) (cita-
tions omitted). “The constitutionality of an act of Con-
gress is a question of law that is likewise reviewed de
novo.” Brooks, 702 F.3d at 628 (citing Thomson Multime-
dia Inc. v. United States, 340 F.3d 1355, 1359 (Fed. Cir.
2003)).
On appeal, Mr. Stauffer makes two main arguments,
which we address in turn.
STAUFFER v. BROOKS BROTHERS GROUP, INC. 7
II.
A.
Mr. Stauffer first contends that the retroactive appli-
cation of the AIA amendments amounts to a mass pardon
of past acts of false marking. According to Mr. Stauffer,
the false-marking statute is a criminal statute and, before
enactment of the AIA, marking a product with an expired
patent number was a criminal violation. After enactment
of the AIA, however, such actions are no longer punisha-
ble. Mr. Stauffer therefore argues that the amendments
are unconstitutional because they amount to a pardon
that only the President—not Congress—can grant.
Second, Mr. Stauffer contends that the retroactive
amendments which eliminate his standing, as a qui tam
plaintiff, amount to an unconstitutional deprivation of his
rights, by violating the common-law principle that prohib-
its use of a pardon to vitiate a qui tam action once it has
commenced. According to Mr. Stauffer, pardons are
limited to the same extent they originally were limited in
England. As stated in Blackstone’s Commentaries on the
Laws of England, Mr. Stauffer argues, a pardon cannot be
used to vitiate an informer’s action after the action has
been commenced because the informer has already ac-
quired a private-property interest in his share of the
penalty.
Brooks Brothers responds that the false-marking
statute is not a criminal statute and that there thus was
no criminal act to pardon. Rather, Brooks Brothers urges,
the statute is penal in nature with a civil fine. Moreover,
Brooks Brothers contends, the President signed the AIA
into law himself, so the argument that Congress bypassed
the President in granting a pardon is illogical on its face.
Finally, Brooks Brothers argues, even if the false-marking
statute was criminal in nature, Congress did not grant a
pardon to anyone. Rather, it changed the law to redefine
what constitutes false marking.
8 STAUFFER v. BROOKS BROTHERS GROUP, INC.
Regarding Mr. Stauffer’s second argument, Brooks
Brothers responds that the Supreme Court decided the
issue over a hundred years ago in the case of United
States v. Connor, 138 U.S. 61 (1891), when it held that
Congress could constitutionally amend laws in a way that
nullified a pending suit of a qui tam claimant. In any
event, Brooks Brothers also responds that there was
never a common-law right to a qui tam suit in England.
Likewise, there was no common-law qui tam right when
the United States was formed. Accordingly, Brooks
Brothers urges, Mr. Stauffer’s argument fails because
there was no common-law right to qui tam standing for
Congress to have vitiated in the AIA.
The government contends that Mr. Stauffer lacks
standing to make his pardon-power argument because a
favorable decision would not redress his injury. According
to the government, if we strike down the AIA amendment
that eliminated liability for marking products with ex-
pired patent numbers, Mr. Stauffer’s lawsuit would still
need to be dismissed because the qui tam provision upon
which he originally brought suit no longer exists. Indeed,
the government argues, it has long been held that the
legislature could halt pending qui tam actions as it
wished. A decision on Mr. Stauffer’s pardon-power argu-
ment, therefore, the government contends, would be
nothing more than an advisory opinion.
On the merits, the government contends that no one
has a vested interest in a rule of law and that Congress is
free to change the laws and eliminate statutorily created
causes of action. The government further argues that a
change in the substantive law is not a pardon. As the
government sees it, by changing the definition of false
marking, Congress did not exempt people from the pun-
ishment the law inflicts but instead changed the law
itself. Finally, the government urges, false-marking
actions are civil actions and there can be no pardon for a
civil penalty.
STAUFFER v. BROOKS BROTHERS GROUP, INC. 9
Regarding his second argument, the government re-
sponds that Mr. Stauffer mistakenly relies on the obser-
vation that, at common law in England, the King’s pardon
power did not reach pending qui tam suits. Mr. Stauffer
is mistaken, the government explains, because a change
in the law to a pending lawsuit is not a pardon, and it was
well established at common law that the parliament in
England could release an informer’s interest even after he
commenced a suit.
In reply, regarding the government’s contention that
he has no standing to make his pardon-power argument
on appeal, Mr. Stauffer argues that he has collectively
challenged both the expired-patent provision as well as
the retroactivity provision of the AIA amendments, and
that striking down all of the false-marking amendments
would redress his injury.
B.
Before addressing the merits of an appeal, we must
first resolve whether we have jurisdiction over the matter
appealed. Steel Co. v. Citizens for a Better Env’t, 523 U.S.
83, 94–95 (1998). Whether a plaintiff has standing is a
jurisdictional question. Lewis v. Casey, 518 U.S. 343, 349
n.1 (1996). Before turning to the merits of Mr. Stauffer’s
pardon-power argument, therefore, we address first the
government’s contention that Mr. Stauffer lacks standing
to even make such an argument.
The Supreme Court has explained that, in order for
there to be standing in a case, at a minimum, three re-
quirements must be met:
First, the plaintiff must have suffered an “injury
in fact”—an invasion of a legally protected inter-
est which is (a) concrete and particularized, and
(b) “actual or imminent, not ‘conjectural’ or ‘hypo-
thetical.’” Second, there must be a causal connec-
tion between the injury and the conduct
10 STAUFFER v. BROOKS BROTHERS GROUP, INC.
complained of—the injury has to be “fairly . . .
trace[able] to the challenged action of the defend-
ant, and not . . . th[e] result [of] the independent
action of some third party not before the court.”
Third, it must be “likely,” as opposed to merely
“speculative,” that the injury will be “redressed by
a favorable decision.”
Lujan v. Defenders of Wildlife, 504 U.S. 555, 560–61
(1992) (citations omitted). If independent legal provisions
bar a claim and only one provision is at issue, then a
favorable decision might not redress a party’s injury. See
Renne v. Geary, 501 U.S. 312, 319 (1991) (questioning
whether redressability existed when two separate legal
provisions barred the conduct of the litigants, but the
constitutionality of only one of the provisions was before
the Court).
The government’s contention goes to the third ele-
ment of constitutional standing—redressability. Accord-
ing to the government, if we strike down as
unconstitutional the AIA amendment that eliminated
liability for marking products with expired patent num-
bers, Mr. Stauffer could not continue his suit because the
AIA eliminated the false-marking statute’s qui tam provi-
sion, so that now only a person who has suffered a com-
petitive injury may bring a claim under the statute.
Therefore, the government concludes, a favorable decision
could not “redress” Mr. Stauffer’s injury.
We conclude that Mr. Stauffer has the necessary
standing on appeal to make his arguments. First, Mr.
Stauffer seeks to establish that Congress carried out an
unconstitutional pardon when it amended the false-
marking statute to permit marking with expired patent
numbers. Second, he seeks to show that Congress could
not have constitutionally eliminated the ability of a qui
tam plaintiff to enforce false-marking violations. Were he
to win on both issues, it is likely rather than speculative
STAUFFER v. BROOKS BROTHERS GROUP, INC. 11
that a favorable decision would redress his alleged injury.
We consider each issue in turn.
III.
A.
Striking down an Act of Congress as unconstitutional
“is the gravest and most delicate duty” which a court may
be called upon to perform. Blodgett v. Holden, 275 U.S.
142, 147–48 (1927) (opinion of Holmes, J.). We have
previously addressed and rejected challenges to the
constitutionality of the false-marking statute amend-
ments on two different occasions. In Brooks, 702 F.3d at
632–33, we upheld the constitutionality of the retroactive
elimination of the statute’s qui tam provision, concluding
that retroactive elimination did not violate the Due Pro-
cess Clause or the Intellectual Property Clause of the
Constitution. And, in Rogers v. Tristar Products, Inc.,
Nos. 2011-1494, 2011-1495, 2012 WL 1660604, at *2–3
(Fed. Cir. May 2, 2012) (nonprecedential), we rejected the
argument that qui tam plaintiffs have vested rights in
pre-AIA lawsuits and concluded that making the amend-
ments to the false-marking statute retroactive did not
violate the Takings Clause or the Due Process Clause of
the Constitution. We now conclude that the AIA amend-
ment to the false-marking statute that eliminated liability
for expired patents does not constitute an impermissible
pardon.
The U.S. Constitution grants the President the “power
to grant reprieves and pardons for offenses against the
United States.” U.S. Const. art. II, § 2. The grant of a
pardon is an “executive action that mitigates or sets aside
punishment for a crime.” Nixon v. United States, 506 U.S.
224, 232 (1993) (quoting Black’s Law Dictionary 1113 (6th
ed. 1990)). Rather than granting a pardon, the amend-
ments to the false-marking statute are better character-
ized as repealing a law, an action undoubtedly within
Congress’s power. Indeed, at common law, it has long
12 STAUFFER v. BROOKS BROTHERS GROUP, INC.
been held that Congress has the power to “repeal[] a
penal provision (whether criminal or civil)” and that “such
repeals [are] understood to preclude punishment for acts
antedating the repeal.” Landgraf v. USI Film Prods., 511
U.S. 244, 270–71 (1994) (collecting cases); see also United
States v. Chambers, 291 U.S. 217, 223 (1934) (“In case a
statute is repealed or rendered inoperative, no further
proceedings can be had to enforce it in pending prosecu-
tions unless competent authority has kept the statute
alive for that purpose.”). 3 Significantly, this is not a case
where Congress attempted to set aside an already adjudi-
cated punishment for a specific individual or a group of
individuals; rather, Congress repealed the provisions of
the false-marking statute that it did not wish to remain in
force. The amendments, therefore, do not constitute a
pardon.
B.
Further, we conclude that the AIA amendments do
not violate the common-law principle on which Mr. Stauf-
fer relies because (1) he has no vested rights in his law-
suit, and (2) the AIA amendments do not constitute a
pardon. First, a plaintiff has no vested rights in a lawsuit
until final judgment has been entered. McCullough v.
Virginia, 172 U.S. 102, 123–24 (1898). Because Mr.
Stauffer’s case is still pending and has not reached final
judgment, he has no vested rights in it. Further, we have
already considered and rejected the argument that a
litigant like Mr. Stauffer enters into a contract with the
government upon filing a qui tam false-marking claim.
3 The federal saving statute, 1 U.S.C. § 109, over-
rides the common law rule and keeps repealed statutes
alive for pending prosecutions except where the repealing
act expressly provides otherwise. Here, the AIA amend-
ments expressly provide that they apply to pending cases.
AIA § 16(b)(4).
STAUFFER v. BROOKS BROTHERS GROUP, INC. 13
Brooks, 702 F.3d at 632. Even if the law had not changed,
Mr. Stauffer might still have lost his lawsuit against
Brooks Brothers. He, therefore, could not have acquired a
private-property interest in his share of the statutory
penalty simply by filing suit. See id. In addition, as noted
above, the AIA amendments do not constitute a pardon.
The common-law principle on which Mr. Stauffer relies,
therefore, does not apply here and does not save his suit
from dismissal.
IV.
Finally, Mr. Stauffer makes a host of additional ar-
guments on appeal that were not properly raised before
the district court. Regarding the constitutionality of the
false-marking statute, he argues that the provision allow-
ing anyone who suffered a “competitive injury” to sue
violates the Ex Post Facto Clause because it creates
additional liability for past acts by companies like Brooks
Brothers. He also argues that all of the amendments
violate the Takings Clause of the Fifth Amendment
because they result in him losing the filing fee he paid to
the district court in order to bring his case. In addition,
he urges that the amendments violate the Seventh
Amendment’s right to a trial by jury because he no longer
has the opportunity to argue the merits of his case at
trial.
Additionally, Mr. Stauffer argues that he has suffered
a “competitive injury” as that term is used in the amend-
ments because the false marking by Brooks Brothers
chilled competition and increased the price he paid for his
bow ties. He also argues that Brooks Brothers should be
estopped from denying liability, and that the case should
be reassigned to a different judge on remand.
Brooks Brothers and the government argue that Mr.
Stauffer waived all of these arguments by not properly
raising them before the district court. We agree.
14 STAUFFER v. BROOKS BROTHERS GROUP, INC.
The record shows that Mr. Stauffer did not raise these
arguments in his initial response to the district court’s
show-cause order, but instead waited until his reply brief
before the district court to first raise them. Compare
Joint Appendix 809, with 887. Issues not properly raised
before the district court are waived on appeal. Fresenius
USA, Inc. v. Baxter Int’l, Inc., 582 F.3d 1288, 1295–96
(Fed. Cir. 2009) (finding arguments waived that were not
properly raised before the district court); see also DSND
Subsea AS v. Oceanografia, S.A. de CV, 569 F. Supp. 2d
339, 347 (S.D.N.Y. 2008) (noting that new arguments may
not be raised for the first time in a reply brief).
CONCLUSION
For the foregoing reasons, we affirm the dismissal of
Mr. Stauffer’s suit for lack of standing due to the elimina-
tion of the qui tam provision in the false-marking statute.
AFFIRMED