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Yes, this happens.
That said, civil rights crusaders saying things like "SHOULD HAVE CALLED HIS LAWYER AND THREATENED TO SUE" are idiots. The dude knew he had nothing illegal, even if what the police are doing is BS, don't be an asshole - just let them do their thing. It'll seriously be much less of annoyance. If you start getting all high and mighty you're just going to end up wasting a bunch of your own time for no useful reason.
Unless you happen to get off on standing up to authority figures, in which case go nuts, but also get help.
Also dude up there, your "upstanding citizen" thing sounds really dumb, and no cop is stupid enough to think he's going to be facing a civil suit for searching a guy's car. You wouldn't pay the filing fees to even get into court and you'd 100% lose pretty much no matter what.