Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_06-cv-02944/USCOURTS-caed-2_06-cv-02944-1/pdf.json

Nature of Suit Code: 830
Nature of Suit: Patent
Cause of Action: Civil Miscellaneous Case

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 Because oral argument will not be of material assistance, 1

the Court orders this matter submitted on the briefs. E.D. Cal.

Local Rule 78-230(h). 

1

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

SHERRYN HAYNES, an individual No. 2:06-CV-02944-MCE-EFB

doing business as "CALIFORNIA

STRAW WORKS,"

Plaintiff,

v. MEMORANDUM AND ORDER

R. H. DYCK, INC., a California

corporation doing business as

"R. H. DYCK, INC.," et al.,

Defendants.

----oo0oo----

Before the Court is the Estate of Sherryn Haynes’ (“the

Estate”) Motion to Substitute for Plaintiff Sherryn Haynes

(“Plaintiff”). Defendants oppose the proposed substitution

arguing that the Estate is not a proper party for substitution

and that Plaintiff’s claims were extinguished by her death. 

1

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Case 2:06-cv-02944-MCE -EFB Document 39 Filed 10/15/07 Page 1 of 8
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 All references to the “Rules” hereinafter shall mean the 2

Federal Rules of Civil Procedure.

2

For the reasons set forth below, the Court finds substitution to

be proper and, hereby, GRANTS the Motion to Substitute. 

BACKGROUND

Plaintiff commenced this action in December of 2006. 

Plaintiff’s Complaint alleges Defendants committed numerous

violations of 35 U.S.C. § 292. The complaint seeks recovery of

statutory fines, costs of suit, and interest. On July 6, 2007,

Plaintiff passed away. Plaintiff’s attorneys filed a suggestion

of death and moved to substitute the Estate as the Plaintiff in

this action within 90 days, as required by Federal Rule of Civil

Procedure 25.2

Defendants oppose this substitution arguing that the Estate

is not a proper party and that Plaintiff’s claims do not survive

her death because they are claims for penalties and not damages.

ANALYSIS

Rule 25(a)(1) states that if “a party dies and the claims

[are] not thereby extinguished, the court may order substitution

of the proper parties.” Fed. R. Civ. P. 25(a)(1). The foregoing

Rule raises two issues in the present action. The first is

whether the Estate of Sherryn Haynes is a proper party for

purposes of substitution. The second is whether the claims

brought by Ms. Haynes under section 292 survive her death. 

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3

1. Proper Party Requirement

Defendants argue that based on California case law, the

Estate is not a proper party under Rule 25(a)(1). This Court

does not find the cases cited by Defendants persuasive. The

question before this Court is whether the Estate can now pursue

claims that Plaintiff filed prior to her death. In Tanner v.

Estate of Best, the plaintiff brought an action to quiet title

against the estate of a decedent. That case decided whether an

action could be brought against an estate after the decedent’s

death, not whether an estate can pursue an action filed by the

decedent prior to the decedent’s death. 40 Cal. App. 2d 442, 445

(1940). Bright’s Estate v. Western Air Lines involved an action

commenced by the estate after the decedent’s death, not

substitution in a case brought by the decedent prior to his

death. 104 Cal. App. 2d 827, 828 (1951). Further, under

California law cited by Defendants, an estate is “a sum total of

assets and liabilities of a decedent, or of an incompetent, or of

a bankrupt.” Because Plaintiff may have stood to gain from this

lawsuit, the lawsuit is an asset of the Estate.

Additionally, the Third Circuit has found that the Advisory

Committee Notes to Rule 25 provide for the “substitution of the

estate for the deceased.” McKenna v. Pacific Rail Service, 32

F.3d 820, 836 (3rd Cir. 1994) (citing 1963 Advisory Committee

Notes to Rule 25). In addition, the Ninth Circuit has, in dicta,

suggested that the substitution of an estate would be proper. 

See Barlow v. Ground, 39 F.3d 231, 232 (9th Cir. 1994).

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4

Although perhaps it may have been more prudent to substitute

the representatives of the Estate rather than the Estate itself,

absent clear law on the issue, this Court finds insufficient

grounds to deny the motion based solely on Defendants’ argument

that the Motion for Substitution names the Estate as the party to

be substituted.

2. Survival of Cause of Action

Rule 25(a)(1) provides that if “a party dies and the claim

is not thereby extinguished, the court may order substitution of

the proper parties.” Fed. R. Civ. P. 25(a)(1). Therefore,

before a party can substitute a new party pursuant to Rule

25(a)(1), the Court must establish that the substantive law

controlling the suit permits survival of the cause of action. If

the cause of action does not survive the death of a party, there

can be no substitution. Plaintiff’s claims under 35 U.S.C. § 292

are federal claims. Accordingly, federal substantive law

determines whether these claims survive Plaintiff’s death and

Defendants’ reliance on California law is misplaced. This Court

finds no case law determining whether a claim under section 292

survives the death of the party bringing the action.

“It is a well-settled rule that actions upon penal statutes

do not survive the death of a party.” Reiserer v. U.S., 479 F.3d

1160, 1162 (9th Cir. 2007). Defendants rely heavily on U.S. v.

Edwards, for the proposition that an action for a penalty does

not survive the defendant’s death where the penalty is paid to

the government. 667 F. Supp. 1204 (W.D. Tenn. 1987). 

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5

This Court rejects Defendants’ analysis under Edwards for two

reasons. First, Edwards relied on Murphy v. Household Fin.

Corp., 560 F.2d 206 (6th Cir. 1977). The Ninth Circuit has

rejected the analysis under Murphy in favor of the analysis

announced in Hudson v. U.S., 522 U.S. 93 (1997). Reiserer, 479

F.3d at 1164-65. Second, Edwards involved a case where the

government sought to enforce a penalty against a deceased

defendant. This Court finds that the analysis is not analogous

where, as here, the party to be substituted is seeking to enforce

the penalty, not the party against whom the penalty is to be

enforced.

In Reiserer, the Ninth Circuit looked to the legislative

intent behind the statute in question, the nature of the penalty,

whether scienter was required, and the remedial goal of the

statute in question. 479 F.3d at 1163-64. Section 292 provides

that a fine of not more than $500 can be assessed against whoever

falsely marks a patent with the intent of deceiving the public. 

Any person may sue for the penalty, and one-half goes to the

plaintiff and the other half to the United States. The 1952

Revision Notes to section 292 state that it is a criminal

provision, however, the Federal Circuit has found that “[t]he

statute supplies a civil fine for false marking of articles.”

Clontech Labs., Inc., v. Invitrogen Corp., 406 F.3d 1347, 1352

(Fed. Cir. 2005) (citing Arcadia Mach. & Tool Inc., v. Strum,

Ruger & Co., Inc., 786 F.2d 1124, 1125 (Fed. Cir. 1986)). 

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Further, 

[i]t is well settled that section 292 was intended to

protect a patentee against the fraudulent us of his

name or device and to prevent, for the purpose of

deceiving the public, the use in advertising in

connection with any article, words imparting that an

application for patent had been made when no

application had been made or if made, is not pending.

Accent Designs Inc., v. Jan Jewelry Designs, Inc., 827 F.Supp.

957, 969 (S.D.N.Y. 1993) (citing Lase Co., v. Wein Prod., Inc.,

357 F.Supp. 210, 213 (N.D.Ill. 1973)). 

As to the nature of the penalty, section 292 is similar to

the Internal Revenue Code at issue in Reiserer as both sections

“involve only monetary penalties, and no ‘affirmative disability

or restraint’ and ‘certainly nothing approaching the infamous

punishment of imprisonment.’” 479 F.3d at 1163 (citing Hudson,

522 U.S. at 104). According to Reiserer, monetary penalties are

not typically regarded as punishment. Id. at 1163-64.

In Reiserer, the statute in question required that the

conduct penalized was committed knowingly. Id. at 1164. Here,

section 292 requires that the false marking be done either with

the intent to counterfeit or with the intent to deceive the

public. Finally, the court in Reiserer found that the penalties

involved in that case served the remedial goal of reimbursing the

government for the costs in investigating tax fraud and that the

penalties were not excessive in relation to that remedial goal. 

Id. Those statutes each involved a $1,000 penalty per violation. 

26 U.S.C. §§ 6700, 6701. Despite the fact that these statutes

also served the ends of retribution and deterrence to some

extent, the court found that these were civil penalties that did

not abate upon the death of the defendant. 

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7

Reiserer, 479 F.3d at 1164. Here, section 292 provides a penalty

of $500 per offense. One-half of the penalty goes to the person

who sues and the other half to the United States. This Court

finds that the penalty, and the division thereof, provides an

incentive to private parties to prosecute false marking, thus

alleviating the government’s need to pursue such actions. 

Further, the penalties are not excessive in relation to this

remedial goal. Accordingly, this Court finds that claims brought

under section 292 are not extinguished upon the death of the

party and, therefore, are appropriate claims for substitution of

parties under Rule 25(a)(1).

Further, the Court notes that the distinction between

penalties and remedial actions is not clearly applicable in a

case such as this where the plaintiff is the deceased party and

not the defendant. The general rule is that actions for

penalties do not survive the death of the defendant because a

deceased defendant is beyond punishment. On the other hand,

actions to recompense or compensate a plaintiff do survive the

death of the defendant because his estate should compensate for

the injury caused by the defendant. Bracken v. Harris & Zide,

L.L.P., 219 F.R.D. 481, 483 (N.D.Cal. 2004) (quoting Derdiarian

v. Futterman Corp., 223 F.Supp. 265, 296 (S.D.N.Y. 1963)). In a

case such as this, where the plaintiff passes away during the

course of the action and his estate moves to substitute in his

place to continue to pursue the action, the distinction between

penalties and remedial actions simply does not apply.

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CONCLUSION

Based on the foregoing, it is hereby ordered that the Estate

of Sherryn Haynes shall be substituted as the plaintiff in this

action.

IT IS SO ORDERED.

Dated: October 12, 2007

_____________________________

MORRISON C. ENGLAND, JR.

UNITED STATES DISTRICT JUDGE

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