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Simonian v. Oreck Corp.

August 23, 2010

THOMAS A. SIMONIAN, RELATOR,
v.
ORECK CORPORATION, ORECK DIRECT, LLC, AND ORECK HOMECARE, LLC, DEFENDANTS.



The opinion of the court was delivered by: Robert W. Gettleman United States District Judge

Judge Robert W. Gettleman

MEMORANDUM OPINION AND ORDER

Relator Thomas A. Simonian has brought this qui tam action against Oreck Corporation, Oreck Direct, LLC, and Oreck Homecare, LLC ("defendants") for false patent marking under 35 USC §292. Defendants have moved to dismiss Simonian's claim for lack of subject-matter jurisdiction pursuant to Fed. R. Civ. P. 12(b)(1), or, in the alternative, for failure to state a claim pursuant to Fed. R. Civ. P. 12(b)(6). For the reasons discussed below, defendants' motion to dismiss is denied.

BACKGROUND

Simonian has alleged that defendants have violated 35 USC §292 by affixing certain of its vacuum cleaners (including, but not limited to, the Oreck XL Classic Power Team vacuum cleaner) with United States Patent Number 4,219,902 ("the '902 Patent") and United States Patent Number 5,016,315 ("the '315 Patent"). Simonian further alleges that the '902 Patent expired on February 9, 1999 and the '315 Patent expired on November 24, 2007. Since the expirations of these patents, defendants have allegedly continued to manufacture and market these "falsely marked" vacuum cleaners around the United States. Consequently, Simonian has brought this action for violations of 35 U.S.C. §292*fn1 on behalf of the United States Government as a qui tam relator.*fn2 Simonian seeks $500 for each falsely marked product, half of which would be paid to the United States Government.

DISCUSSION

A. Legal Standards

Under Rule 12(b)(1), a court must dismiss any action for which it lacks subject matter jurisdiction. Rule 12(b)(1) motions are premised on either facial or factual attacks on jurisdiction. Villasenor v. Industrial Wire & Cable, Inc., 929 F. Supp. 310, 311 (N.D. Ill. 1996). If the defendant makes a factual attack on the plaintiff's assertion of subject matter jurisdiction, it is proper for the court to look beyond the jurisdictional allegations in the complaint and to view whatever evidence has been submitted in response to the motion. Id. at 312. To withstand such a motion, the plaintiff must put forth "'competent proof'" that the court has subject matter jurisdiction. NLFC, Inc. v. Devcom Mid-America, Inc., 45 F.3d 231, 237 (7th Cir. 1995) (quoting McNutt v. General Motors Acceptance Corp. of Indiana, 298 U.S. 178, 89, (1936)). Put another way, plaintiffs must prove by "a preponderance of the evidence or 'proof to a reasonable probability' that jurisdiction exists." Id. at 237 (quoting Gould v. Artisoft, Inc., 1 F.3d 544, 547 (7th Cir.1993)).

When ruling on a Rule 12(b)(6) motion to dismiss for failure to state a claim, the court accepts the complaint's well-pleaded factual allegations as true and draws all reasonable inferences in the plaintiff's favor. Sprint Spectrum L.P. v. City of Carmel, Indiana, 361 F.3d 998, 1001 (7th Cir. 2004). The complaint must describe the claim in sufficient detail to give the defendant fair notice of what the claim is and the grounds on which the claim rests. The allegations must plausibly suggest that the plaintiff has a right to relief, raising the possibility above the "speculative level." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 1964-73, 167 L.Ed.2d 929 (2007).

B. Motion to Dismiss for Lack of Subject Matter Jurisdiction

Under 28 U.S.C. §1331, "the district courts shall have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States." Simonian has brought this qui tam action pursuant to the federal false patent marking law, 35 U.S.C. §292. Because this claim falls within the purview of laws of the United States, the court has original jurisdiction, leaving only the question of whether the plaintiff has sufficient standing to bring the claim.

Article III standing under the Constitution requires that: (1) the plaintiff must have suffered a concrete and particularized harm that is actual or imminent rather than conjectural or hypothetical; (2) there must be a fairly traceable causal connection between the injury and the defendant's conduct, and the injury may not be the result of a third party's independent action; and (3) it must be more likely than speculative that injury would be remedied by a favorable outcome. Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (U.S. 1992).

Simonian has alleged that defendants falsely marked their products with expired patents and intentionally tried to "deceive the public" and quell competition. Simonian has not alleged that he was a competitor, an injured consumer of the product, or that he has any connection to the product or defendants at all. It is very clear that the complaint alleges no concrete or particularized harm to Simonian. There may not even be a traceable hypothetical injury to Simonian. Without any injury, Simonian has no Article III standing as a traditional plaintiff.

Simonian, however, brings this claim as a qui tam relator. "Qui tam is short for the Latin phrase qui tam pro domino rege Guam pro se ipso in hac parte sequitur, which means 'who pursues this action on our Lord the King's behalf as well as his own.'" Vermont Agency of Natural Resources v. United States ex rel. Stevens, 529 U.S. 765, 768 n.1 (2000). A qui tam relator brings a claim on behalf of the United States and his or herself. Usually, this "whistleblower" is entitled to a portion of the remedy awarded by the courts. "[A] federal qui tam statute in effect creates an assignment of the federal government's claim to the qui tam relator, so that the appropriate analysis of standing in a qui tam case focuses on whether there has been a cognizable injury to the government, not whether there has been a ...


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