United States v. Anaconda Wire & Cable Co.

• Decision Date: 03 August 1944
• Citation: 57 F. Supp. 106
• Parties: UNITED STATES ex rel. SHERR v. ANACONDA WIRE & CABLE CO. et al.
• Court: U.S. District Court — Southern District of New York

57 F. Supp. 106

UNITED STATES ex rel. SHERR v. ANACONDA WIRE & CABLE CO. et al.

District Court, S. D. New York.

August 3, 1944.

Francis M. Shea, Asst. Atty. Gen., James B. M. McNally, U. S. Atty., of New York City (Laurence H. Axman, Asst. U. S. Atty., of New York City, Joseph M. Friedman, of Washington, D. C., Jess G. Schiffmann, of New York City, and Tobias G. Klinger, of Cleveland, Ohio, of counsel), for the United States.

Chadbourne, Wallace, Parke & Whiteside, of New York City (Horace G. Hitchcock, and Dwight R. Collin, both of New York City, of counsel), for defendant Anaconda Wire & Cable Co.

Moses B. Sherr, of New York City, pro se.

LEIBELL, District Judge.

The relator, Moses B. Sherr, brought this qui tam action on December 23, 1942, against the Anaconda Wire and Cable Company and some of its officers. Only the corporation was served. The action was started two days after an indictment had been filed by a Grand Jury sitting in the United States District Court at Fort Wayne, Indiana. That Grand Jury heard evidence during the month of December 1942, concerning alleged fraudulent practices of the defendant corporation, Anaconda Wire and Cable Company, and certain of its Marion plant officials in circumventing and falsifying required tests of wire and cable material manufactured by the defendant corporation for the Army Signal Corps and for the United States Navy. A newspaper account of the indictment appeared in the New York Times on December 22nd.

It further appears that another Federal Grand Jury sitting at Providence, Rhode Island, heard evidence in the month of January 1943 against the defendant corporation and some of its Pawtucket plant officials and that on January 18, 1943, an indictment was returned against them making charges of fraud very similar to those embodied in the Indiana indictment. At the time the indictment was filed in Rhode Island on January 18, 1943, the United States promptly started a civil action under R.S. § 3492, 31 U.S.C.A. § 233, against the defendants for the damages sustained by the Government as a result of the defendant's fraudulent conduct at the Pawtucket plant.

On June 10, 1943, the defendants named in the indictment in the Indiana case entered a plea of nolo contendere in the United States District Court for the Northern District of Indiana and sentences were imposed on June 12, 1943. The criminal proceedings in Rhode Island went to trial and the defendants named therein were convicted and were sentenced on January 18, 1944.

On March 6, 1944, the United States entered an appearance in the Sherr qui tam action and on May 16, 1944, the United States commenced its own action against the defendant, Anaconda Wire and Cable Company, for substantially the same frauds as those set forth in the Indiana indictment and in this present qui tam action. It thus appears that criminal proceedings on the two indictments, the one in Fort Wayne, Indiana, and the other in Providence, Rhode Island, have both been disposed of and that at present the Government has two civil actions pending against the defendant corporation for filing false claims and other frauds.

After the institution of the Sherr qui tam action and similar qui tam actions in this Court and other Federal courts, the 78th Congress passed Public Law No. 213, which became a law December 23, 1943, 31 U.S.C.A. § 232. That law radically amended the former qui tam statute, which was embodied in Revised Statute, Sections 3491 and 3493. Section 3491 was recast and new provisions added thereto; old Section 3493 was repealed. R.S. § 3491 was § 232 of 31 U.S.C.A.; R.S. § 3493 was § 234 of the same Title.

Some of the purposes and effects of the new legislation have been discussed in an opinion by Judge A. N. Hand in the case of United States ex rel. Rodriguez v. Weekly Publications, Inc., 144 F.2d 186, in the Circuit Court of Appeals for this Second Circuit. The majority report of the Senate Judiciary Committee, which considered the new legislation, refers to the fact that the amendment of the old qui tam statute was sought because of the experiences of the Department of Justice— "that many persons who have filed suits and may file suits under this section (3491 Rev.Stat.) have no information or facts of their own, but prepare and file complaints which obviously are based on information and alleged facts obtained bodily from indictments returned in the United States courts, from newspaper stories, and congressional investigations".

The Government on its present motion has filed an affidavit of one of its attorneys, who states that the Sherr complaint appears to be based on the Indiana indictment and the newspaper accounts thereof. The Government also annexes to its papers, as Exhibit F, a letter dated September 2, 1942, received by the United States Army Signal Corps from The Soviet Government Purchasing Commission in the U.S. A., and the Government's attorney states that the charges contained in paragraph 7 of the Sherr qui tam complaint herein "are practically copied word for word from this letter."

The relator Sherr has filed an affidavit on these present motions making the following admissions:

"It is hereby conceded that this suit is based upon evidence or information which was in the possession of the United States, or an agency, officer or employee thereof, at the time the suit was brought. It is further conceded that, before this suit was filed, plaintiff had not in his possession and had not voluntarily disclosed to the Attorney General substantial evidence and information which was not theretofore in the possession of the Department of Justice."

On the foregoing, it is clear that this Court should grant that part of the Government's motion herein which seeks an order determining that this action (the Sherr action) "was based upon evidence or information in the possession of the United States or agencies, officers or employees thereof at the time this suit was brought."

As a second part of its motion herein the Government prays for an order staying the Sherr action, in which it has filed a notice of appearance, "pending final determination of an action entitled United States of America v. Anaconda Wire and Cable Company, Civil No. 25-533, now pending in this Court and an action entitled United States of America v. Anaconda Wire and Cable Company et al., Civil No. 234, now pending in the District of Rhode Island."

The plaintiff Sherr contends that because the Government filed a notice of appearance herein, the Government must either go on with the suit or permit Sherr to conduct the suit. To that the Government made answer in a supplemental memorandum from which I quote the following, as showing the Government's position herein:

"The argument of the relator ignores the fact that from the outset the Government indicated that it appeared in this action primarily for the purpose of determining, judicially, that the instant suit was based upon Government information. In that event, the Government clearly indicated that it did not wish to proceed with the qui...