If I file for a patent pertaining to a product I've researched and did a patent search and the product doesn't exist, but when I file, USPTO declines to award patent and then I find that many people are now using the product because they saw the application published or something, can I sue the USPTO?
They can be sued. Gil Hyatt is an inventor with many issued patents and many applications still pending. He filed before the change of the term calculations so, if issued, they would be good for 17 years from issue. With some grounds, he alleges that the USPTO has a secret policy of not giving him an allowance. He sued to get pending patents allowed.
The difference is you apparently let your application go abandoned. You could have appealed rejections while it was pending.
Regarding the underlying facts, your search and your not finding anything on the market are worthless. You needed to counter the arguments and references the examiner surfaced. If you post the publication number someone might look into the history and give you more on-site as to why it was rejected.
I'm assuming you didn't work with a patent attorney or agent when applying for your patent. Applying for patents is a bit of a dance with the USPTO. Nearly every application gets initially rejected. The applicant will then explain why the examiner is wrong in their logic and will possibly amend the claims to circumvent any issues raised. Also just because something doesn't exist, doesn't mean it is patentable although it is a good sign.
Again, an experienced patent attorney would have written the application to enable the broadest claim coverage, would have replied to any rejections and obtained the most useful patent possible. This is why I always recommend working with an attorney of agent. Under certain circumstances it might be possible to resurrect your application so it might be a good idea to consult with a patent attorney.