Preferred Risk Mut. Ins. Co. v. U.S.

• Decision Date: 10 September 1996
• Docket Number: No. 95-3104,95-3104
• Citation: 86 F.3d 789
• Parties: , 39 U.S.P.Q.2d 1131 PREFERRED RISK MUTUAL INSURANCE COMPANY, Appellee, v. UNITED STATES of America, Appellant, International Trademark Association, Amicus Curiae.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 789

86 F.3d 789

64 USLW 2814, 39 U.S.P.Q.2d 1131

PREFERRED RISK MUTUAL INSURANCE COMPANY, Appellee, v. UNITED STATES of America, Appellant International Trademark Association, Amicus Curiae.

No. 95-3104.

United States Court of Appeals Eighth Circuit.

Submitted Feb. 15, 1996.

Decided June 13, 1996.

Rehearing and Suggestion for Rehearing En Banc Denied Sept.

10, 1996.

Sean A. Lev, U.S. Dept. of Justice, Washington, DC, argued (Mark B. Stern, on the brief), for appellant.

Edmund J. Sease, Des Moines, Iowa, argued (Heidi Sease Nebel, on the brief), for appellee.

Before WOLLMAN, HEANEY, and MAGILL, Circuit Judges.

HEANEY, Circuit Judge.

Holding that a federal agency's use of the term "Preferred Risk" in conjunction with its flood insurance applications infringed upon an insurance company's trademark and was without a rational basis, the United States District Court for the Southern District of Iowa enjoined the agency from further use. Because we hold that the Lanham Act does not apply to the federal government, we reverse and vacate the district court's decision.

BACKGROUND

Preferred Risk Mutual Insurance Company (PRM) is a property and casualty company that sells multi-line insurance including automobile, home, and commercial coverage. PRM has been in existence since 1947 and has used the term "Preferred Risk" to identify its policies since that time. Domiciled in Iowa, PRM is licensed to sell insurance in all The Federal Emergency Management Agency (FEMA) was created by Executive Order in 1978 pursuant to a federal statute that authorized the creation of a federal flood insurance program. FEMA, through its component federal agency, the Federal Insurance Administration (FIA), administers the National Federal Flood Insurance Program. As part of the program, FEMA provides flood insurance to businesses and dwellings. Policies are marketed nationwide and are brokered by independent insurance agents. Since the 1980s, FEMA has offered a lower premium rate for flood insurance in areas where the risk of flooding is lower. At some point before August 1989, FEMA began using the term "Preferred Risk" on these policy application forms and in advertisements to insurance agents.

fifty states. PRM has filed trademark applications for "Preferred Risk Group," "Preferred Risk," and "Preferred Risk Mutual" on May 20, 1988.

On January 31, 1990, PRM wrote FEMA. After outlining its history of use of the term "Preferred Risk," PRM explained that it was concerned by FEMA's use of the term. Citing confusion among its agents regarding these advertisements and its trademark application of "Preferred Risk," PRM requested that FEMA cease using the term in conjunction with its policies. On February 22, 1990, PRM wrote FEMA again to convey another incident of confusion involving a FEMA Preferred Risk Flood Policy Application that had been mistakenly sent to PRM. The letter noted the importance of avoiding confusion and reiterated its request that FEMA cease using the term.

On February 23, 1990, FEMA responded in a letter that discussed the background of FEMA and the Standard Flood Insurance Policy. Because the United States logo and the name of the federal agency were both prominently displayed on all National Flood Insurance Program forms, FEMA claimed that they were not confusingly similar to the PRM logo. The letter also asserted that "Preferred Risk" was a widely-used, generic term in the insurance industry and had not and could not be granted any protected status under federal trademark law.

In addition to a letter dated September 15, 1992 informing FEMA that registration of "Preferred Risk" had been formerly allowed by the Trademark Office, PRM wrote FEMA several letters during a period from March 8, 1990 until February 25, 1993 reiterating its objections and demanding that FEMA cease using the term "Preferred Risk." In each instance, FEMA either refused PRM's request or failed to respond.

On May 25, 1993, PRM filed a complaint seeking to enforce its trademark through a writ of prohibitory or mandatory injunction. It did not seek damages. PRM sought judicial review of FEMA's decision to continue using the term "Preferred Risk" under the Administrative Procedure Act, 5 U.S.C. §§ 701-706 (1994) (APA). ¹ On July 14, 1995, the District Court for the Southern District of Iowa held that the federal government's use of the term "Preferred Risk Flood Policy" constituted an infringement of PRM's trademark and that FEMA and FIA "lacked any rational basis for finding that the use of the 'Preferred Risk' term was not likely to cause confusion." (Order, July 14, 1995, at 13). The district court then enjoined the government from further use of the term. This appeal follows.

ANALYSIS

I. Waiver of Sovereign Immunity under the APA.

A finding that the actions of an agency were arbitrary, capricious, and not in accordance with law is reviewed de novo. See Shalala v. St. Paul-Ramsey Medical Ctr., 50 F.3d 522, 527 (8th Cir.1995). We start our analysis with the well-established proposition that the United States may not be sued without its consent. See Affiliated Ute Citizens v. United States, 406 U.S. 128, 141, 92 S.Ct. 1456, 1466, 31 L.Ed.2d 741 (1972). That consent must be express and unequivocal. See United States v. Nordic Village, Inc., 503 U.S. 30, 33, 112 S.Ct. 1011, 1014, 117 L.Ed.2d 181 (1992). PRM seeks judicial review of FEMA's decision to continue using the term "Preferred Risk" under the APA. Section 702 of the APA explicitly consents to judicial review ² of agency action where such action results in a legal wrong or adversely affects the plaintiff "within the meaning of a relevant statute." Thus, this waiver contains two separate requirements: 1) the person claiming a right to review must identify some agency action, and 2) the party seeking review must show that he has suffered a legal wrong or been adversely affected by that action within the meaning of a relevant statute. See Lujan v. National Wildlife Fed'n, 497 U.S. 871, 882-83, 110 S.Ct. 3177, 3185-86, 111 L.Ed.2d 695 (1990). We focus on the second prong.

As a procedural statute, the APA provides no substantive requirements, but merely provides the framework for judicial review of agency action. See Defenders of Wildlife v. Administrator, EPA, 882 F.2d 1294, 1303 (8th Cir.1989). Accordingly, "[t]here is no right to sue for a violation of the APA in the absence of a 'relevant statute' whose violation 'forms the basis for [the] complaint.' " El Rescate Legal Serv. v. Executive Office of Immigration Review, 959 F.2d 742, 753 (9th Cir.1991) (citing Lujan, 497 U.S. at 883, 110 S.Ct. at 3186); accord A-G-E Corp. v. United States, 968 F.2d 650, 655 (8th Cir.1992). The language of the APA makes this clear. Section 706 provides that the reviewing court shall set aside agency action found to be "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law." § 706(2)(A) (emphasis added). Thus, although the plaintiff need not demonstrate that the substantive statute independently waives federal sovereign immunity, which is the function of section 702, the plaintiff must identify a substantive statute or regulation that the agency action had transgressed and establish that the statute or regulation applies to the United States.

PRM points to the Lanham Act of 1946, 15 U.S.C. §§ 1051-1127 (1994), as the substantive statute that should govern the agency's actions with respect to trademarks. ³ The question to this court then is whether the Lanham Act's requirements apply to the federal government and regulate agency action. ⁴ If the Lanham Act does not apply to the federal government, FEMA's use of "Preferred Risk" would not constitute a "legal wrong" ⁵ nor would it adversely affect PRM within the meaning of the relevant statute, ⁶ the Lanham Act. As a consequence, the Lanham Act could not form the basis of an APA challenge to federal agency action.

In response to the government's assertion that an APA plaintiff must point to some substantive statute that the alleged agency action transgressed, PRM argues that "it is exactly this type of unfettered agency action that Congress intended to limit by enacting the Administrative Procedure Act, which enlarges the authority of the courts to check illegal and arbitrary administrative action without any constraint." (Appellee's Br. at 13). Although we acknowledge the broad scope of the APA, its own language and the case law interpreting it clearly reject the conception of the APA as substantive, mandating free-wheeling judicial review of any agency action.

PRM also argues that the scope of judicial review is limited to the administrative record, which consists of the six letters exchanged between PRM and FEMA. As such, they contend that by failing to raise sovereign immunity in its correspondence with PRM, FEMA waived its ability to assert immunity. This fails to recognize the distinction between a factual evidentiary record and a jurisdictional basis. The issue before our court is whether the United States has waived its sovereign immunity in this case. Sovereign immunity is jurisdictional in nature. See FDIC v. Meyer, 510 U.S. 471, ---- - ----, 114 S.Ct. 996, 1000-1003, 127 L.Ed.2d 308, 317-19 (1994). Therefore, regardless of the scope of conversation between the plaintiff and employees of an administrative agency, questions of subject-matter jurisdiction may be raised at any time and may not be waived. See Yeldell v. Tutt, 913 F.2d 533, 537 (8th Cir.1990) (citing Insurance Corp. of Ireland v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 702, 102 S.Ct. 2099, 2104, 72 L.Ed.2d 492 (1982)). Therefore, we proceed to the issue of the Lanham Act's applicability to the federal government.

II. Application of the Lanham Act to the United States

PRM argues that FEMA's use of the term "Preferred Risk" violates sections 1114 and 1125 of the Lanham Act. ⁷ Both provisions prohibit "any person" from actions...