# Appendix — O'CALLAGHAN v. AMBROSIO AND ASSOCIATES (Nos. 78-79, 78-1248) > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385005_2528%3A2 ## Record - **Collection:** Supreme Court brief - **Document type:** Appendix - **Published:** January 1, 1979 ## Text Supreme Court, U. & FILED FEB 23 1979 MIBHABL @ODAK, JR., CLERK IN THE Supreme Court of the United States Docket No. 78-] Pe UNITED STATES EX REL. MARSHALL P. SAFIR and MARSHALL P. SAFIR, Petitioners, AMERICAN EXPORT LINES, LYKES BROS. S.S. CO. INC., AMERICAN PRESIDENT LINES, FARRELL LINES INC., PRUDENTIAL LINES INC., P.S.S. STEAMSHIP CO. INC., UNITED STATES LINES INC., MOORE McCORMACK LINES INC., Respondents. Appendix to Petition for Writ of Certiorari MARSHALL P. SAFIR, Pro Se, 41 Flatbush Avenue, Brooklyn, New York 11217 (212) 858-2700 N.J. Appellate Printing Co., Inc., South Plainfield, New Jersey (201) 753-0200 TABLE OF CONTENTS TO APPENDIX Letter from Michael Rodak, Jr., Re: Time for Filing Writ, dated September 18, 1978......ceeeeeeee Corrected Copy of Denial of Petition for Rehearing en Banc.......-eee- Corrected Copy of Denial of Petition for Rehearing by Original Panel.. Suvplerental Memorandum to Petition for Rehearing en Banc.........-e- Letter to Chief Judge Wm. P. Bryant, U.S.D.J., District of Columbia... Opinion of Second Circuit Court of Avpeals of June 27, 1978......... Memorandum Order and Annex A of United States District Court, for . the Eastern District of New York, Judge John F. Dooling, Jr., filed ED ee Transcript of Hearing before Judge Dooling on October 28, 1977...... Affidavit and Complaint, Marshall P. Safir, Pro Se, and on Behalf of The United States of America..... Notice of Pendencv Letter to Hon. Griffen Bell, Attorney General, ee Es ree la 3a 5a Ja lla 15a 25a 66a 79a 86a Table of Contents to Appendix Order of Secretary of Commerce, Frederick Dent, dated September 9, Ly! Sarre Pee eT ee ee ee eer ee ee 89a *Excerpt* of Opinion & Order of the Maritime Subsidy Board, dated pe & RR | SP eee ee ee ere 93a Memorandum and Order of Judge Dooling, ‘i ae > ere a ee ee ee ee 96a Injunction pendente lite, Judge Dooling, dated June 23, 1971...... 103a Opinion of Second Circuit Court of Appeals on Carrier Defendants Petition for Rehearing, June 18, oy, Preys Pere e Se ee ee er ee eee 109a Amended Complaint in United States, ex rel Marshall P. Safir and Marshall P. Safir, PlaintiffS v. Blackwell, American Export et al, dated September 13, 1977........6. 1ll3a Affidavit of Marshall P. Safir, Re: Amended Complaint, September 13, pgs ge See Pa ere ee Sere aaa gor ae a ee l3la Petitioners' Reply Brief in Pet #388- 70, Supreme Court, September 28, Original Complaint, Docket #68C643, United States District Court, Eastern District of New York...... 143a Table of Contents to Appendix Notice of Motion for Nixon Tapes, United States District Court, District of Columbia, Civil Action No. 74—1l474. cccccccccceces Affidavit and Motion for Nixon Tapes in The United States District Court, District of Columbia, Docket No. 74-1474, Chief Judge Bryant. ccccccccccccccccccscccces Letter of Department of Commerce, May 29, 1970, establishing Amounts of Subsidies Paid dur- ing Period of Law Violation..... Merchant Marine Act, 1936, 46 U.S.C. i> y POOCCETEREEEE TEP False Claims Act - 31 U.S.C. 232, 233, 235; Procedure, Duties of U.S. Attorney, Statute of LAME CACIORR sc ccc dc es cbavesesasse 150a 153a 162a 164a 165a la SUPREME COURT OF THE UNITED STATES OFFICE OF THE CLERK WASHINGTON, D.C. 20543 September 18, 1978 Mr. Marshall P. Safir 41 Flatbush Avenue Brooklyn, New York 11217 Re: Marshall P. Safir v. Juanita Kreps, Secretary of Commerce, et al. Marshall P. Safir v. American Export Lines, Inc., et al. Dear Mr. Safir: Your applications for extensions of time to file a petition for a writ of certio- rari in each of the above cases, received September 14, 1978, are herewith returned. Under the Rules of this Court, if you have made a timely petition for a rehear- ing, the ninety days allowed for filing a petition for a writ of certiorari do not begin to run until the rehearing has been acted upon. After conferrina with the Court of Appeals for the Second Circuit, I have found that you have made such a timely petition in these cases, which have not yet been acted upon. As such, an application for an exten- tion of time is presently premature. Very truly yours, MICHAEL RODAK, JR., Clerk 2a By /s/ Francis J. Lorson Francis J. Lorson Devuty Clerk th Enc. cc: Hon. Wade H. McCree, Jr. Kominers, Fort, Schlefer & Boyer Kirlin, Campbell & Keating Foley, Hoag & Elliot Barrett, Smith, Schapiro & Simon Shea & Gardner | 3a CORRECTED COPY UNITED STATES COURT OF APPEALS SECOND CIRCUIT At a stated term of the United States Court of Appeals, in and for the Second Cir- cuit, held at the United States Court House, in the City of New York, on the twenty-eighth day of November, one thousand nine hundred and seventy-eight. Marshall P. Safir and Sapphire Steamship Lines Inc., Plaintiff Marshall P. Safir, 77-6219 Plaintiff-Appellant, 77-7626 Vv. Robert J. Blackwell, Assistant Secretary for Maritime Affairs, United States Department of Commerce, Successor to and Sub- sitituted for James W. Gulick and Andrew Gibson, etc. et.al., Defendants American Export Isbrandtsen Lines Inc. et. al., Defendants-Appellees. A petition for rehearing containing a Suggestion that the action be reheard in banc having been filed herein by the appellant pro se, and no active judge or judge who was a member of the panel having requested that a vote be taken on said suggestion, 4a Upon consideration thereof, it is Ordered that said petition be and it hereby is DENIED. f/s/ Irving ®. Kaufman Chief Judge IRVING R. KAUFMAN 5a CORRECTED COPY UNITED STATES COURT OF APPEALS Second Circuit At a Stated Term of the United States Court of Appeals, in and for the Second Cir- cuit, held at the United States Court House, in the City of New York, on the twenty-eighth day of November, one thousand nine hundred and seventy-eight. Present: HON. HENRY J. FRIENDLY HON. WILLIAM H. TIMBERS Circuit Judges HON. WALTER E. HOFFMAN District Judge Marshall P. Safir, and Sapphire Steamship Lines, Inc., Plaintiff Marshall P. Safir, Plaintiff-Appellant 77-6219 Vv. 77-7626 Robert J. Blackwell, Assistant Secre- tary for Maritime Affairs, et.al. Defendants American Export Isbrandtsen Lines Inc., et. al., Defendants-Appellees. A petition for a rehearing having been filed herein by the appellant pro se 6a Upon consideration thereof, it is Ordered that said petition be and it is hereby DENIED. A. Daniel Fusaro A. DANTEL FUSARO, Clerk 7a UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT oo OS Ne Oe a a ate OP AD he Se a ae aD Ns ee eh eas es en ee X MARSHALL P. SAFIR, Docket No. Plaintiff-Appellant, teoen 77-7626 -against- ROBERT J. BLACKWELL, Assistant Secretary for Maritime Affairs, United States Department of Commerce, et al, Defendant-Appellees. and UNITED STATES OF AMERICA, ex rel. MARSHALL P. SAFIR and MARSHALL P. SAFIR, Plaintiffs-Appellants, and AMERICAN EXPORT LINES, INC., et al, Defendants~-Appellees. ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF NEW YORK Supplemental Memorandum to Petition for Rehearing en Banc. MARSHALL P. SAFIR Pro Se 41 Flatbush Avenue Brooklyn, N.Y. 11217 8a Supplemental Memorandum to Petition for Rehearing en Banc. Petitioner respectfully requests this Court to take judicial notice of the annexed Thirty-Second Report by the Committee On Government Operations, together with Addi- tional Views submitted to the second session of the 95th Congress and transmitted by the Chairman to the Speaker on October 2, 1978. hp The report no. 95-1680 on pages one through sixteen set forth the relationships between Assistant Secretaries for Maritime Affairs Gibson (1971) and his successor Black- well (1972) to the present date in an "out- rageous' conflict of interest when they and their General Counsel H. Clayton Cook, Jr. (cf pp. 12-15) sat on the Maritime Subsidy Board concurrently in the hearing mandated by this Circuit in its decisions in Safir I and Safir II while they were initiating the es- tablishment of a trade association. They sat on the Board of Directors of this trade asso- ciation whose purpose was to protect the in- terests of ODS contractors and whose predomin- ant members were the named carriers under in- vestigation for the violation of section 810 MMA 1936. In docket 77-7626, appellant has alleged not only that the claims were false, but also that there was corruption upon the part of 1 See views of Rep. Paul McCloskey, pp. 31-34 of the report. 9a government in dealing with them. This House report bears out this corruptive conflict of interest on the part of the government offi- cers charged with the responsibility by this Circuit to decide whether to seek prosecution. As stated in U.S. et al. v. Rippe- toe et al, 178 F.2d at 736, as follows: ",..(3) In the second place, we do not think that knowledge on the part of a government official who is implicated in the fraud precludes suit by the in- former. The whole history of the provi- sion shows that its ourpose was, not to bar bona fide suits by informers merely because corrupt officials of the govern- ment might have participated in the fraud or refused to prosecute it, but to pre- vent the bringing of parasitical actions by those who sought to profit from go- vernmental investigations or prosecu- tions by using the evidence which these had developed, as occurred in United States ex rel. Marcus v. Hess, 317 U.S. 537,63 S.Ct. 379,87 L.Ed. 443, the de- cision in which led directly to the leg- islation of which the provision here is a part ...". (Emphasis added.) Contrary to involving the government with the "full expense of the prosecution" (see Petition for Rehearing, Attachment A, Slip opinion, at p. 3674), the mandate of the Second Circuit in Safir II was converted into a defense for the government and industry acting in concert to insure against the re- quirement of the Department of Commerce to seek prosecution. No moneys were expended in Safir's behalf to the end of his reentry into business by the Department of Commerce in what 10a e the Report terms as "outrageous" and "blatant" conflict of interest. Appellant Safir should not be disqualified and foreclosed from a false claim act remedy when the improper re- lationship caused the Department of Commerce to share with these violating carriers the full expense not of the pvrosecution, but of the defense. The cost of the prosecution during the entire period from 1971 to 1974 when the litigation was in the administrative process mandated by this Circuit in Safir I and II, was, on the basis of the revelations in the House Report, alwasy the burden of this petitioner. Attached hereto is a copy of peti- tioner's letter to Chief Judge William T. Bryant of the U. S. District Court for the District of Columbia, covering the same sub- ject matter as it pertains to the continuing review action under the Administrative Pro- cedure Act. Respectfully submitted, /s/ Marshall P. Safir Marshall P. Safir Pro Se, Petitioner Dated: October 13th, 1978 lla MARSHALL P. SAFIR 41 Flatbush Avenue Brooklyn, N. Y. 11217 October 12th, 1978 The Honorable William P. Bryant Chief Judge United States District Court for the District of Columbia Washington, D. C. Re: Dockets 74-1474 Safir v. Kreps et al. 74-1788 75-0055 Dear Judge Bryant: On October 2nd, 1978, the Committee on Government Operations of the House of Pepre- sentatives submitted to the Speaker its House Report No. 95-1680 Union Calendar No. 908. This report by the Commerce, Consumer and Monetary Affairs Subcommittee is entitled, Report on Problems in the Relationships Be- tween the Commerce Department's Maritime Ad- ministration and the National Maritime Council, A Private Trade Organization. The report contains additional views of Rep. Paul McCloskey, a member of the Committee and also of the House Merchant Marine and Fisheries Committee. While the report initially was inspired by "grass roots lobbying" aspects of the re- lationships in 1977 and 1978, the Committee found, as follows: 12a "(a) The relationships between the Maritime Administration, a subsidy and regulatory agency, and the National Mar- itime Council, a private trade organi- zation, was a blatantly improper one from its inception in 1971 and demon- Strated an utter disregard for conflict- of-interest requirements and consider- ations." I am enclosing six copies of the House Report with this letter, Att. I, and hereby request that judicial notice be taken of the adjudicative facts therein as the period during which this illicit liason was counten- anced by Secretaries Stans, Peterson, Dent, Richardson and Kreps spans all the years of the Safir litigation and indeed the Assistant Secretaries for Maritime Affairs Andrew Gib- son (in 1971) and Robert J. Blackwell, who with their General Counsel H. Clayton Cook (in 1972, 1973) initiated the establishment of this trade association with voting rights for the government members. These men also sat in judgment and voted for the mitigation theories expanded in the MSB decision in Docket S-243. These formed the basis for the final decision by Secretary Dent in 1974. The Report, and in particular pages 1 through 16, and the additional view of Repre- sentative McCloskey, effectively destroy any facade of impartiality or good faith. Any presumption of the validity of a "mitigation" theory in this case which I addressed in my appeal brief in the Court above on July 17, 1978 (dismissed without prejudice on July 27, 1978) must also be seen in the light of this Report. : 13a Your order of March 29, denying my motion for the Nixon tapes at that time evi- denced your need to be convinced by a stronger showing of the bad faith on the part of the government officials responsible for the decision before you would allow supple- mentation of the record in an "Overton" type hearing. Plaintiff herewith submits that this Report is the "smoking gun". My brief on appeal from your March de- cision is now part of the record before you by your fiat of Sept. 9, 1978. I respect- fully offer pages 9-14 as sufficient support for the subpoena of the relevant tapes and other discovery documents regarding gift of material value given to these officials by the subsidized carriers which were alluded to in the transcript of the hearing before the Subcommittee. I have apprised the Second Circuit Court of Appeals of this Report, since as of this date no action has been taken on my Petition for Rehearing en Banc of the False Claims Amendment to the original complaint I filed in 1968 or to the dismissal of the action under 31 USC231,232 that I filed in 1977 in the USDC EDNY Docket 77-1093. I submit here- with as Attachment II my supplemental memo- randum to the Second Circuit about House Re- port No. 95-1680 Union Calendar 908. Under these circumstances, I request that the pretrial hearing be convened so that a renewed motion for relevant Nixon tapes and other evidence can be heard before this Court. The House Report represents "one of those future events" which would trigger the renewal of such motion and which formed the basis of the United States Court of Appeals for the l4a District of Columbia's decision per curiam in Safir v. Kreps on July 27th, 1978. Respectfully yours, /s/ Marshall P. Safir Marshall P. Safir Pro Se Copies sent to: Clerk U.S. Court of Appeals for the Second Circuit J. Franklin Fort, Esq. T.S.L. Perlman, Esq. James N. Jacobi, Esq. Elmer C. Maddy, ESq. Robert T. Basseches, ESq. Verne W. Vance, Jr., Esq. Allen van Emmerick, Esq. Daniel H. Margolis, Esq. 15a UNITED STATES COURT OF APPEALS For THE SEcoND CirRcvUIT =—_or Nos. 770, S40—September Term, 1977. (Arcued May 31, 1978 Decided June 27, 1978.) Docket Nos, 77-6219, 77-7626 a> _— ry MarsHauu, P. Sarir, Plaintiff-Appellant, tOBERT J. BLACKWELL, Assistant Secretary of Commerce, et al., Defendants-A ppellees, —— MarsuHatu P. Sarir, Plantiff- Appellant, v. American Export Lines, Inc., et al. Defendants-Appellees. 4 } Before: Frienpty and Timbers, Circuit Judges, and Hlorrman, District Judge.* ws ow Of the District Court for the Eastern District of Virginia, sitting ly designation, 3665 l6a Appeals from orders of the District Court for the East- ern District of New York, Jobn F. Dooling, Judge. One order denied plaintiff's motion to amend a complaint filed In 1°68 against United States government officials to com- pel them to take action to recover subsidies alleged to have been illegally paid under * 810 of the Merchant Ma- rine Act, 1936, 46 U.S.C. £1227, see Safr vy. Gibson, 417 F.2d 972 (2 Cir, 1969), cert. denied, 400 U.S. S50 (1970), so as to state a claim against the intervening subsidy recipients under the False Claims Act, 31 U.S.C. ¢* 231 and 252. The other order dismissed an action brought in 1977 against the subsidy reeipients under said Act. Affirmed a ie ca MarsHatt P. Sarm, Brooklyn, N.Y., Pro Se. Ginsert S, Fretscner. Esq., Department of Justice, New York, N.Y. (Barbara Allen Babcock, Assistant Attorney General, and David G. Trager, United States Attorney for the Eastern District of New York. of Counsel), for Defendants-Appellees P hert J. Blackwell, et al. Eimer C. Mappy, Esq., New York, N.Y, (Kir- lin, Campbell & Keating, Esqs.. for Di fen- dant-Appellee United States Lines, Tne.: James N. Jacobi, Esq., and Kurrus, Dyer, Jacohi & Mooers, Esqs., for Det nlayt- alppellee American Export) Lines, Twe.; J. Franklin Fort, Esq., T.S.L. Perlman, Esq., William H. Fort, Esq., and Kominers, Fort, Schlefer & Bover, for Defendants- Appellees Lykes Bros, Steamship Company, Inc, and Mvore-McCormack Lines, Ine. of Counsel), 3666 17a Rosert T. Bassecues, Esq., Washington, D.C. (Shea & Gardner, Esqs., Daniel H. Mar- golis, Esq., Warren L. Lewis, Esq., and Bergson, Borkland, Margolis & Adler, for Defendants-Appellees American President Lines, Ltd.. Prudential Lines, Inec., and PSS Steamship Company, Inc.; Verne W. Vance, Jr. Esq., Arthur G. Telegen, Esq., and Foley, Hoag & Eliot, Esqs., for Defendants- Appellees Farrell Lines; Barrett, Smith, Schapiro, Simon & Armstrong, Esqs., for Defendants-Appellees American President Lines. Ltd.. Prudential Lines, Inc.. PSS Steamship Company, Inv. and Farrell Lines, Inc., of Counsel.) — errr Frienpiy, Circuit Judqe: Plaintiff-appellant Marshall P. Safir has been laboring for more than a decade to obtain a recovery for the United States of subsidies alleged to have been illegally paid to members of the Atlantic and Gulf American Flag Berth Operators (AGAFBO). The Federal Maritime Commis- sion (FMC) held, on December 8, 1967, that in 1965 AGAFBO, with the purpose of eliminating Mr. Safir’s com- pany, Sapphire Steamship Lines, Inc. (Sapphire), from competing with the conference lines, had promulgated rates for Government cargoes in the North Atlantic trade which were so unreasonably low as to he detrimental to the commerce of the United States, contrary to the public interest, and, in consequence, violative of ¢§ 15 and 18(b)5 of the Shipping Act, 1916, 46 U.S.C. ‘§ 814, 817(b) (5). Rates on U. S. Government Carqoes, Docket No. 65-13, 11 F.M.C. 263, 287. Safir then requested the appropriate 3667 « 18a goverument officials to recover subs:dies allegedly paid illegally to AGAFBO members, on the grounds that these same discriminatorily low rates constituted a violation of » 810, Merchant Marine Act, 1936, 46 U.S.C. § 1227. These efforts proving unsuccessful, be brought a suit in 1968 in the District Court for the Eastern District of New York to prod the officials into action. Safir was rebuffed by the district court, but met with success here. Safir v. Gibson, 417 F.2d 972 (1969), cert. denied. 400 U.S. 850 (1970) (Safir I). However, the Maritime Subsidy Board decided to follow an expensive and time-consuming course which would have required relitigation of the issues of violation already de- termined by the FMC. When Safir sought the aid of the district court in avoiding such duplicative proceedings, the law officers of the Government opposed him and the district court agreed. Again we took a different view. both when the appeal was first heard with only the Government as appellee, and later when the subsidy recipients, who had previously abstained from participating. see 417 F.2d at 976 n. 4, intervened in the action for the purpose of seek- ing a rehearing. Safir v. Gibson, 432 F.2d 137, 145 (2 Cir.), cert. denied, 400 U.S. 942 (1970) (Safir IT). Following another resort by Safir to the Eastern District and to this court, this time unsuccessful, see Safir v. Blackwell, 469 F.2d 1061 (1972), cert. denied, 414 U.S. 975 (1973), (Safir IIT), the Maritime Subsidy Board directed in 1973 that a total of #2.388.463.16 should he recovered from five AGAFBO lines that had heen in direct competition with * NSapphire. Investigation of Alleged Section 810 Violation, Maritime Suhsidy Board S-243, 14 P&F Shipping Regul. Reptr. 77, 78 (1973). On a diseretionary appeal to the Secretary of Commerce pursuant to 46 C.F.R. $209.1 (© 6.01), the latter, by order dated September 9, 1974, re- 3668 19%a duced the amounts to a total of $1,126,522.26. The basis for this slash was what the Court of Appeals for the Dis- trict of Columbia Circuit has called a “preemptory an- nouncement” by the Secretary that “the record indicates that the United States Government actively induced the rate reductions here in issue,” see Safir v. Kreps, 551 F.2d 447, 455 (D.C. Cir.), cert. denied, 46 U.S.L.W. 3215 (1977) (Safir IV).1. When Safir complained to the courts of the inadequacy of the recovery, he was again opposed by the law officers of the Government. He was unsuccessful in the District Court for the District of Columbia, but the Court of Appeals, taking a different view, reversed and remanded with a direction that “the trial court should care- fully serutinize the evidentiary support for the Secre- tarv’s ruling and should, if necessary, remand the record to the Secretary for clarification of his reasons for inter- preting the evidence as he has.” 551 F.2d at 455. With this frustrating background it is understandable that Safir should have decided the time had come to place the controversy in a posture where he, rather than Gov; ernment officials, would control the prosecution. The in- strument he chose was the “qui tam” statute which em- powers any person to bring and carry on a suit on behalf of the government against anyone who has presented a claim against the United States for payment or approval, “knowing such claim to be false, fictitious, or fraudulent,” 31 U.S.C. §§ 231 and 232.2 His theory was that the steam- ship lines had submitted claims for subsidy, knowing that 1 It should he made clear that the Secretary who directed the reduction was Secretary Dent, not Secretary Kreps. 2 Safir had adverted to possible resort to a qui tam action im the 1972 proceedings before both the district court and this court, and had spe- cifically mentioned the possibility of a later False Claims Act claim in an affidavit, see also Safir III, supra, 469 F.2d at 1063, but had not pursued this. 3669 2a ‘S10 of the Merchant Marine Act, 46 U.S.C. § 1227, and the corresponding clauses in their subsidy contracts made them ineligible for subsidies while they were charging rates which violated {15 of the Shipping Act. Safir sought to invoke the qui tam statute in two ways: First, he filed an action against the steamship companies on May 25, 1977. After Safir had complied with the requirements of 8L U.S.C. § 252(C) with respect to advising the Attorney General of the pending action, the United States declined to enter the suit. Second, he moved to amend his 1968 complaint against government officials in which, as hereto- fore stated, the steamship lines had later intervened, so as to state a claim under the false claims statute! and moved to consolidate the two actions. The steamship lines opposed the motion for leave to amend the 1968 complaint and moved for summary judgment with respect to the 1977 action. Judge Dooling denied Safir's motion for leave to amend and granted the defendants’ motion for summary judgment, and these appeals followed.‘ The jndge stated his reasons for denying leave to amend as follows: While. as it would be amended, the complaint would in ultimate substance add a False Claims Act Count. that count does not arise out of the matter of original 3 The advantage of this course lay in the possibility of “relation lack.” FLOR. Civ, PL oie}. and consequent aveidarce of serions Uitienlties With respect to the statute of limitations. 4 Defendants have not raised the claim that. as held in Musted Stet. Vv. Onan, 190 Pd 1, 6 (8 Cir.), cert. denied, 342 U.S. 869 (1951). a htigant cannot prosecute a qui tam action under 31 U.S.C. § 222 pro se. If we ussume that such a claim would be well founded, the remedy would not be outright dismissal but a direction that the action he dismissed unless an attorney is retained. Compare Phillips v. Tobin, 548 F.2:1 #98. 415 (2 Cir. 1976) (stockholder’s derivative action). At argument Mr. Safir expressed willingness to retain an attorney if either of the orders were reversed. 670 21a complaint. The original complaint sought to compel public officers to do what plaintiff contended that it was their duty to do. The claim rested on the contrast between the FMC decision that the AGAFBO rates were unjustly discriminatory and the failure of the Maritime Administration, Maritime Subsidy Board, to take appropriate action in the light of 46 U.S.C. § 1227. The new matter would add a completely new claim both as to substantive content and as to the identity of the persons against whom relief was sought. Noth- ,ing in the original case turned on the knowing pre- sentation of a false, fictitious or fraudulent claim. There is no basis for authorizing an amendment that would transform the case, in effect dismiss the orig- inal defendants, and pursue a completely different claim. Cf. Rosenberg v. Martin, 2d Cir. 1973, 478 F.2d 520, 526-27; United States v. Templeton, E.D. Tenn. 1961, 199 F.Supp. 179, 183-84. We can find no sound basis for disagreeing with this analysis The grant of summary judgment for the defendants on the 1977 complaint was based on the clause in 31 U.S.C. * 932, added by the Act of December 23, 1943, 57 Stat. 60s. which reads: The court shall have.no jurisdiction to proceed with any [qui tam] suit whenever it shall be made to appear that such suit was based upon evidence or information in the possession of the United States, or any agency. officer or employee thereof, at the time such suit wa- brought. The judge concluded that the information which Safir had already furnished to Congressional committees, to the FMC, and to the Maritime Administrator in the course of his 3671 22a long fight to have AGAFBO’s predatory rates declared wn- lawful and to cause the government officials to recover illegally paid subsidies constituted the very evidence on which the action under the False Claims Act would depend.‘ Thus he had no need to consider the defendants’ additional contentions that the 1977 action was time-barred and that their submission of subsidy claims could not be viewed as “false, fictitious or fraudulent” within the meaning of 3 U.S.C. § 231. It is established that the “whenever it shall be made to appear” defense to a qui fam suit being prosecuted by the relator may be made not only by the United States but hv a defendant. United States ex rel. Leslie v. Potomac Electric Power Co., 208 F.2d 39, 41 (D.C. Cir. 1953): United States v. Pittman, 151 F.2d 851, 853 (5 Cir. 1945) (dictum), cert. dented, 328 U.S. 843 (1946). The leading court of appeals decision construing the clanse. [wited States an] Aloff v, Aster, 275 F.2d 281, 283 (3 Cir.). cert. denied, 364 U.S, 894 (1960), gives it a liters! reading which supports the ruling by the district judge that knowledge hy the government prior to suit bars the action, even if the plaintiff is the source of that knowledee. “We. like others, see United States ex rel. Vaner v. Westinghouse Llectriec Corp., 863 F.Supp. 1038, 1041-42 (WD. Pa. 1973 United States ex rel. Davis v. Lona’s Druas, Tue.. 411 F.Supp. 1144. 1150-52 (S.D. Cal. 1976) (dietum), are not 5 The jndge stated that the only new evidence alleged by Safir. ex eerpts from whieh were attached to his opinion, “related to a cor + arrangement to frustrate plaintiff's endeavor to vindicate his claims” by a “deal’ and coneluded that this “is neither germane to the False Claims Act case nor to the Government's claims under 46 U.S. 6 1227. nor os it material that was not in the possession of the Government ste it professedly came from ‘leaks’ from the Watergate Special Pros evutor’s offee.” Sinve we agree that the matter was not germane to the False Claims Act claim, we have no occasion to consider the cor- reetness of the judge's two other propositions. 3672 23a altogether happy with this approach, which extends the clause considerably beyond the evil sought to be remedied aud gives it a broader effect than would be indicated by the legislative history reviewed by Judge Hastie in the district court decision, 176 F.Supp. 208, 209-10 (B.D. Pa. 1950), affirmed in wfster. and by Judge Knox in Vance, supra, 363 F.Supp. at 1041-42. Safir is at an opposite pole from the “mere busyhody who copies a Government’s indictment as his own complaint and who brings to light no frauds not already disclosed and no injury to the Treasury not already in process of vindication”, described in the dissent of Mr. Jnstice Jackson in United States ex rel Marcus v. Hess, 317 U.S. 537, 558 (1945), the case Which inspired the 1943 amendments to the qu tim stat- ute. Moreover, it seems rather curious that an informer who makes only a partial or merely conelu-ory diselosure to the United States before filing suit, should he free to earry ona gu? fas action or to receive an award, 31 U.S.C. Tone. )(1). if the United States elects to take over the prosecution, whereas the informer who has already fur- nished complete information should be barred from either. We have wondered whether some argument could he made for the plaintiff on the basis that no one in the Govern- ment hed entertained any thought of pursuing the steam- ~hip companies under 31 U.S.C. £281) which vermits recovery not simply of anv subsidies illegally paid but of “the sum of $2,000, and, in addition, double the amount of damages which the United States may have sustained hy reason of the doing or committing such act, together with the costs of suit.” However, this would he trne in almost any false claims suit which was not duplicative of one already filed or in course of preparation by the Gov- ernment. Moreover, such an argument would. still con- front the obstacle that the false claims suit would be 3673 24a “hased upen evidence or information” already in the pos- session of the Government. and would have to face our decision in United States ex rel. Greevherg v. Burimah Oil Co.. 558 F.2d 48, 45-46 (2 Cir.). cert. denied, 46 U.S. L.W. 3357 (1977), see also United States er rel. Bayarsku v. Brooks, 110 F.Supp. 175, 180) (DLN... 1955). afd 210 F.2d 257 (3 Cir. 1954): Cuited States cc vel, WeCans vy. rmour & Co. 146 F.Supp. 546, 549 (D.D.C. 1956), afd 254 F.2d 90 (D.C. Cir.). cert, dent da. 358 TLS, 834 (1958), While a case may arise when the literalism of cfster would he so offensive to the intention of Congress as to demand a more liberal approach, we do not think this to be one. Despite his vears of valiant effort, when all is said and done, Mr. Safir had three choices available to lim in the late 1960's, He could have instituted a treble Camege action on behalf of himself and his company for injury to business or property under the precise terms of * 810 of the Merchant Marine Act, 1996, 46 U.S.C. * 1227: he could. if he had thought of it, have withheld at least some information from the Gevernment and broneht a qui fam action under 31 U.S.C. 6° 231-252: or he could have done what he did, namely, endeavor to force the Maritime Administrator to take action to recover sub-i- dies illegally paid. Under either of the first two courses. he would have been required to incur the complete bur- den of the expense of prosecution unless the Government elected to take over the qui tam action. Having opted for tle third course and thereby involved the Government with the full expense of prosecution, he may not now bring a qui tam action on the basis of the same information he has already furnished. The orders are affirmed. 3674 25a UNITED STATES DISTRICT COURT FASTERN DISTRICT OF NEW YORK MARSHALL P. SAFIR, ; Plaintiff, : Vv. 77 C 1093 AMERICAN EXPORT LINES, : et al., Defendants. MARSHALL P. SAFIR, j Plaintiff, : 68 C 643 Vv. ROBERT W. BLACKWELL, : MEMORANDUM et al., and Defendants. : CRDER see ees © &@ © © = «© «= «= xX Appearances: MARSHALL P. SAFIR, pro se ELMER C. MADDY and KIRLIN CAMPBELL & KEATING, KOMINERS FORT, SCKLFEFFER & BOYER, and KURRUS & ASH for American Export Lines, Lykes Bros. S.S. Co. and United States Lines ROBERT T. BASSECHES and BARRETT, SMITH SCHAPIRO SIMON & ARMSTRONG, BERGSON, BORKLAND, MARGOLIS & ADLER, SHEA & GARDNER and FOLEY, HOAG & ELIOT for American President Lines, Farrell Lines, Prudential Lines, and PSS Steamship Co. 26a CILBERT S. FLEISHER and DAVIC G. TRACCR, United States Attorney DOOLING, D.J. The 1977 action was commenced on May 26, 1977, against the ocean carriers to enforce their alleged liability under 31 U.S.C. § 231 to the United States. The ground of liability asserted is that the carrier defendants, by reason of their participation in a practice discriminatory against Sapphire Steamship Lines, Inc., were not entitled to payment of any construction or opera- ting differential subsidy (46 U.S.C. § 1227) but have nevertheless filed claims for and received payment of such subsidy amounts from the United States, and that those subsidy claims must be held to be false, fictitious or fraudulent. Plain- tiff sues in reliance on Clause (B) of 31 U.S.C. § 232; that clause authorizes any person to bring a suite to recover the fraud damages and forfeiture provided in Section 231 “as well for himself as for the United States". Plaintiff has given to the United States the notice required by Section 232 (C), by sunply- ing it with a copy of plaintiff's Peti- tion for a Writ of Certiorari and Appen- dix in Safir v. Kreps as comprising plaintiff's "disclosure in writing of substantially all evidence and informa- tion in his possession material to the effective prosecution of such suit." (The petition for writ was one of three addressed to the decision of the Court of Appeals for the Pistrict of Columbia 27a Circuit, reported 551 F.2d 447. The petitions were denied October 3, 1977.) The United States within sixty days thereafter declined in writing to enter the suit, saying that it had concluded from plaintiff's submission that the central issue of plaintiff's allegations in the present 1977 action "is presently being litigated in the United States District Court for the District of Columbia in an action styled" Marshall P. Safir, plaintiff, v. Juanita M. Kreps, et al, defendants, Civil Action No. 74- 1474. Plaintiff, then, is free under Section 232(C) to pursue the suit unless there is a defect in the court's authority to proceed, for Section 232(C) provides, in part, that "The court shall have no jurisdiction to proceed with any such suit brought under clause (B) of this section whenever it shall be made to appear that such suit was based upon evidence or infor- mation in the possession of the United States, or any agency, officer or employee thereof, at the time such Suit was brought." Section 235 provides that suits to enforce liability under Section 231 28a "...Shall be commenced within six years of the commission of the act, and not afterward." In the period from March 29, 1965, until March 1, 1966, the Atlantic and Gulf American Flag Berth Operators (a “conference") had in effect rates for certain United States military cargoes which the Federal Maritime Commission (FMC) on December 12, 1967, held had been designed for the sole purpose of eliminating Sapphire Steamship from the carriage of military cargo by unfair competition; these rates the FMC charac- terized as so unreasonably low as to be detrimental to the commerce of the United States, contrary to the public interest, and, in consequence, violative of 46 U.S.C. § 814.* Counsel for plain- tiff and Sapphire promptly drew the attention of the Federal Maritime Admini- Stration, Maritime Subsidy Board to the FMC decision and to the provisions of 46 U.S.C. § 1227, and demanded that action be taken to recover all subsidy payments made after March 29, 1965, and to cease making subsidy payments currently. No action having been taken by the Maritime Administration plaintiff, Sapphire Steamship Lines and Arnold Weissberger commenced an action in the Eastern District of New York , 68 C 643, on June 24, 1968, to compel the Maritime Admini- Stration, Maritime Subsidy Board and the Secretary of Commerce to cease making *The decision was not appealed. 29a subsidy payments to AGAFBO members and to initiate suits to recover from them subsidy payments therefore made. The district court dismissed the complaint, but on appeal the Court of Appeals held that the Maritime Administrator could not refuse to proceed against the AGAFBO members without at least considering the interest of the victim and was at least required to make a considered decision whether to recover the subsidies paid in the past, and that plaintiff had standing to question the Administrator's failure to seek recovery of the subsidies paid during the period of violation. Safir v. Gibson, 2d Cir. 1969, 417 F.2d 972 (Safir I). A second appeal settled that, although current subsidies to the AGAFBO members would not be enjoined in the absence of a showing of violation of 46 U.S.C. §§ 814, 1227, the Maritime Administration was not to redetermine the issue whether the AGAFBO carriers' concerted action in reducing their rates to an unreasonably low level and holding them there for eleven months was un- justly discriminatory or unfair to Sapphire but was to give the FMC's determination the effect of collateral estoppel; the court noted that the Maritime Administration could investigate the nature and extent of individual carriers' participation in the illegal action if it found that relevant to its ultimate decision on whether to seek recovery of subsidies paid during the violation, and, if so, how much and from whom. Safir v. Gibson, 2d Cir. 1970, 432 F.2d 137 (Safir II). 30a The Maritime Administration, Maritime Subsidy Board, conducted a proceeding (No.S-243) before its Chief Hearing Examiner and a Recommended Decision rendered on April 24, 1972, would have fixed liabilities as follows: American Export Isbrandtsen Lines 169,000. Moore-McCormack Lines, Inc. 1,135,000. United States Lines, Inc. 3,452,000. Plaintiff was dissatisfied with the decision, and after an unrelated injunc- tion matter had been disposed of (2d Cir. 1972, 469 F.2d 1061), the Maritime Subsidy Board of decisions of April 9 and October 10, 1973, fixed the liabili- ties at the following amounts. American Export $ 38,050.25 Bloomfield 121,893.67 Lykes 762,891.99 Mormac 386,776.56 United States Lines 1,061,704.76 Plaintiff sought to review the April 1973 decision of the Maritime Subsidy Board in the Court of Appeals for the Second Circuit, but by order of May 16, 1973, the application was denied. An appeal by the carriers to the Secretary of Commerce resulted in an order of September 9, 1974, adjusting the liabili- ty amounts "to reflect the effect of the United States Government action" in actively inducing the rate reductions in issue to its substantial financial benefit. The adjusted liabilities were: 3la American Export $ 18,160.82 Bloomfield 46,346.54 Lykes 381,446.00 Mormac 193,276.76 United States Lines 487,292.14 Plaintiff sought review of the liability determinations in the United States District Court for the District of Columbia; that action was dismissed but, on appeal to the Court of Appeals for the District of Columbia Circuit, the dismissal was reversed and the case remanded to the District Court to try the issues, which the Court of Appeals outlined as including the propriety of the administrative action in mitigating the penalties assessed and reducing the subsidy recovery to reflect the propor- tion of military cargo carried "by the predatory lines", and as extending to the arbitrariness of the precise action taken, determining whether the various factors other than those cited as just- ifying mitigation can properly be con- sidered and whether in light of all factors appropriate for consideration, the administrative action was arbi- trary, capricious, or an abuse of dis- cretion on all the facts developed in the hearing before the Administrative Law Judge (Chief Hearing Examiner); the Court of Appeals left determination of the applicable standards of review qualifiedly open for the district court to determine on remand, but indicated the view that the Secretary's decision to mitigate on the basis he expressed appeared to reflect a failure to come to 32a grips with the difficulties in the evidence in the record, gave little assurance that his order resulted from a reasoned decisionmaking and might, upon the District Court's scrutiny of the record, show the necessity of a remand to the Secretary for a clarification of reasons. Safir v. Kreps, D.C.Cir. 1977, 551 F.2d 447. ke 1. Plaintiff moved on September 13, 1977, to amend the complaint in 68 C 643, which, as noted, sought to compel the Federal Maritime Administration, Maritime Subsidy Board, to stop paying subsidies to AGAFBO members and to recover from them any subsidies paid to them after March 25, 1965. The amend- ment would add a claim under 31 U.S.C. §§ 231 et seq., alleging, in addition to the earlier allegations of violations of 46 U.S.C. §§ 814, 817(b)(5) and 1227, and of consequent liability by virtue of 46 U.S.C.§1227 to refund past subsidies to the United States, that during the eleven months period of violation the carriers received over $ 227,000,000 of Subsidies that in May 1971 after defendants were advised that a prima facie case of violation of Section 1227 had been made out, defendants continued to submit vouchers supporting claims for subsidies allocable to the eleven month period of violation knowing them to be false in that defendants, to their knowledge, 33a were not entitled to subsidy payments while in violation of the provision of their subsidy agreements by which they agreed nct to be parties to any agreement among carriers which is unjustly discriminatory or unfair to another American flag carrier, and defendants Signed and submitted affidavits in support of their vouchers stating that they had fully complied with the subsidy agreement and regulations and were entitled to the payments requested, and submitted annual accountings asserting that they had complied with the terms of the subsidy agreenent knowing that they had not done so. Plaintiff argues that the amendment is proper and should relate back to the date the action was filed. Under Rule 15(a) plaintiff may amend only by leave of court, a leave that is to be freely granted when justice so requires; where amendment is allowable, the claim asser- ted relates back to the date of the Original pleading provided that "ee the cleaia .«.. erosee out of the conduct, transaction, Or occurrence set forth or = attempted to be set forth in the original pleading ..." 34a There is no reason to allow this closed case to be revived by amendment. The original complaint made no claim against any of the defendants. It did, however, clearly pray an adjudication that the making of any subsidy payments to the AGAFBO carriers during the viola- tion months was illegal under 46 U.S.C. § 1227, that continuing subsidy payments to the AGAFBO carriers should be forbidden, and that the public officer defendants should be directed to sue the AGAFBO members to recover the subsidy payments illegally made to them. However, the AGAFBO parties intervened some time before June 18, 1970, after the decision of the Court of Appeals in Safir II, in order to petition for a rehearing (432 F.2d at 145), and after that date were heard in the further district court proceedings in 68 C 643. Plaintiff raised in the case as well as before the Chief Hearing Examiner his point that the United States should recover all the subsidies, and that, on some basis, he should participate in or benefit by the recovery, and in connection with plain- ‘tiff's motion by order to show cause of May 4, 1972, and the related appeal, there was discussion during oral argument on May 31, 1972, of plaintiff's possible qui tam interest and reference was made to the "False Claims Act" (31 U.S.C. §§ 2311 et seq.) in the context of Connecticut Action Now, Inc. v. Roberts Plating Co., Inc., 2d Cir. 1972, 457 F.2d 81; plain- tifE's affidavit of August 21, 1972, submitted in the Court of Appeals plaintiff, asserted that he had been 35a actively concerned that the public officials take proper safeguards to protect the interest of the United States ",.. and his (plaintiff's) own in later action under 3l U.S.C. See. 231, 232, 233 & 235 after extent of these recovered are decided on." Plaintiff presented, as an issue for the Court of Appeals to decide, the question of his "statutory interest under 3] U.S.C. Sec. 231-233, 235 in any forfeiture mandated by the violation of 46 U.S.C. Sec. 1227, Sec. 810 by the offending ocean carriers as Sec. 819 has been interpreted by (the Court of Appeals) decisions in Safir v. Gibson". Plaintiff argued in the affidavit, after quoting language from the brief before the Chief Hearing Examiner concerning the AGAFBO carriers' making the offending rate agreement despite the Section 810 compli- ance clause in the subsidy contracts, that "The deceit is obvious. The respondents unlawful behavior during that period violated both a clear provision in the subsidy agreement as well as an explicit statute and in presenting their claims for subsidy payments corres- ponding to that period the respon- dents received government monies to which they were not entitled. 3fa Moreover, in presenting the claims, the respondents were holding out that the provisions of Sec. 810 which are incorpo- rated in the subsidy agreement had been complied with, in effect misrepresenting their compliance with its terms. Appellant in fact far exceeds the requirements of the doctrine in Marcus ... to justify his gui tam interest." On this point, the Court of Appeals was clear (469 F.2d at 1063): "Plaintiff complains of a statement by the district judge that he would have no interest in any recovery by the Government. This statement was unnecessary to the decision and we have no oc- casion either to approve or to disapprove it." The statement complained of was "Plaintiff argues that he may have an individual right to parti- cipate in any ultimate recovery by the Government under qui tam legis- lation. No statute authorizing a qui tam recovery or qui tam pro- ceedings has been pointed to and the decision in Connecticut Action Now, Inc. v. Roberts Plating Company, Inc. ... makes it reasonably clear that the plaintiff has no qui tam tam interest in the Government recovery 37a under Section 810 of the Merchant Marine Act, 1936 as amended (46 U.S.C. § 1227)." The motion to amend the complaint in 68 C 643 and to consolidate that action with 77 C 1093 must be denied. While, as it would be amended, the conm- plaint would in ultimate substance add a False Claims Act Count, that count does not arise out of the matter of original complaint. The original complaint sought to compel public officers to do what plaintiff contended that it was their duty to do. The claim rested on the contrast between the FMC decision that the AGAFBO rates were unjustly discriminatory and the failure of the Maritime Administration, Maritime Sub- sidy Board, to take appropriate action in the light of 46 U.S.C. § 1227. The new matter would add a completely new claim both as to substantive content and as to the identity of the persons against whom relief was sought. Nothing in the Original case turned on the knowing presentation of a false, fictitious or fraudulent claim. There is no basis for authorizing an amendment that would trans- form the case, in effect dismiss the Original defendants, and pursue a com- pletely different claim. Cf. Rosenberg v. Martin, 2d Cir. 1973, 478 F.2d 520, 526-527; United States v. Templeton, E.D. Tenn. 1961, 199 F.Supp. 179, 183- 184. 38a 2. By motions for summary judgment defendants challenge the False Claims Act complaint of 77 C 1093 on its merits. Plaintiff's testimony was taken on September 28, 1977, with a view to determining what evidence or information he had communicated to the United States that was not already in its possession at the time of suit. He testified that he made available to the Government through the Maritime Administration Public Counsel in 1971 all the informa- tion that he then had to support the False Claims Act suit, 77 C 1093, and that he had not transmitted or offered any Government representative any new information since that time, none having been requested of him. Plaintiff said he did have information to bring forward at the present time, based on the fact that the case, 77 C 1093, had been filed. Annex A sets forth the relevant parts of the testimony that he then gave about the content of the new disclosures to him. The new material, related to a corrupt arrangement to frustrate plain- tiff's endeavor to vindicate his claims, is neither germane to the Flase Claims Act case nor to the Government's claims under 46 U.S.C. § 1227, nor is it material that was not in the possession of the Government since it professedly came from "leaks" from the Watergate Special Prosecutor's office. 39a It is unanswerably clear that the Government had in its possession all the evidence and information upon which plaintiff's False Claims Act suit is based at the time such suit was brought. Within ten days after the offending rates were put in effect plaintiff made a twelve page statement to the Joint Economic Committee, Subcommittee on Federal Procurement and Regulation, in the course of its hearing on Discriminatory Ocean Freight Rates and Balance of Payments, describing in considerable detail, under the questioning of Senator Douglas, the AGAFBO "fighting rates" adopted "in an effort to drive non- AGAFBO members out of business." Speci- fic reference was made to the fact that certain AGAFBO carriers were subsidized and Sapphire was not; the subcommittee was advised that "the Managing Director has been in touch with Sapphire on the matter and is attempting to collect data on this rate with a view toward possible investigation of it." In a May 1966 communication to the same sub-committee plaintiff asserted that “American sub- sidized lines should be denied sub- sidy on that portion of their cargoes for which no foreign flag competition exists." In March 1971 plaintiff presented to the Merchant Marine Subcommittee considering §.1220 (a bill that would have authorized certain appropriations) that it should not authorize appropriations to be disbursed without the considered decision mandated by the decisions of the Court of Appeals for the Second Circuit and provoked Senator Hatfield to inquire 40a whether it would not be more appropriate to bring court action on the question of the disbursement of the funds. These disclosures, to which must be added those incident to the proceedings before the Maritime Subsidy Board, the present district court, the Courts of Appeals of the Second and of the District of Columbia Circuits and the United States District Court for the District of Columbia, and the material underlying the original Federal Maritime Commission decision on the rates, presented to the Government all the information and evidence bearing on the issues save for the matter of directing the Government to the contention that for the AGAFBO members to have filed claims for sub- sidy payments while they were operating in violation of Section 810 (46 U.S.C. § 1227) or in respect of the period during which they were operating in violation of the section was arguably to have filed claims “knowing such claim(s) to be false, fictitious or fradulent" or claims which'were supported by vouchers known “to contain any fradulent or fictitious statement or entry." But even that very contention was laid before the Government with explicit reference to the False Claims Act in the August 21, 1972, affidavit in the Court of Appeals. 4la The Government, then, was on May 26, 1977, when suit was started, in possession of the evidence and information upon which the suit is based. It is equally probable that a great deal of the information and evidence possessed by the Government, and much of the impetus to action, derived from plain- tiff. That olaintiff is the source of a Substantial part of the evidence and information that was in the Government's possession does not authorize continuance of the action. United States and Aloff v. Aster, 3rd Cir. 1960, 275 F.2d 281, affirming Judge Hastie's decision, E.D.Pa. 1959, 176 F. Supp. 208, make clear that Section 232 prohibits "any qui tam action based on information already in the possession of the United States, regardless of the source from which that information has come." The present case, one in which plaintiff in Substance directs the Government's attention to its possible riahts under Section 231 as applied to the facts brought out in the Federal Maritime Commission and the Maritime Subsidy Board proceedings, resembles United States v. Armour & Co., L.C. 1956, 146 F. Supp. 546, @&t"a, D.C. Cie. 1958, 254 F.2d 90. The Aster case was followed in United States ex rel. Vance v. Westing- house Flectric Corp., W.D.Pa. 1973, 363 F.Supp. 1038, 1042, with an intimation of reluctance. United States ex rel. Cavis v. Long's Drugs, inc., S.D. Cal. 1976, 411 F.Supp. 1144, held that Medicaid 42a claims presented to the states were within the False Claims Act, but that the facts in the possession of the state in question should not be considered facts in the possession of the United States for Section 232 (C) purposes. However, the court in Long's Drugs expressed “serious reservations" about the validity of Aster. The court con- sidered that the clause in Section 232(C) was intended to deny the right to sue only to parasitical suitors who had derived their facts from the public record of the Government's own investi- gations and was not meant to exclude those who voluntarily furnished informa- tion to the Government before starting Suit upon the Government's failure to do so. That, the court considered, flowed from the liberal interpretation of the Act adopted in United States v. Neifert- White Co., 1968, 390 U. S. 228. But Neifert-White was liberal in reading the statute as embracing a wide range of Government interests, and throws no light on the Court's attitude toward the clause in Section 232(C). And the statute itself answers the serious reservation of Long's Drugs about the validity of Aster. Under Section 232(E) (2) if the United States rejects the suit and the plaintiff presses it to a conclu- sion, the plaintiff may receive up to one-fourth of the recovery as “fair and reasonable compensation ... for the collection of any forfeiture and damages", plus the reasonable costs and expenses of suit. If the United States comes in and takes the suit over, however, then 43a under Section 232(E)(1) the court may award the original suitor "an amount which in the judgment of the court is fair and reasonable compensation to such person for disclosure of the informa- tion or evidence not in the possession of the United States when such suit was brought." The award may not exceed one- tenth of the recovery. These provisions have taken the place of the older pro- vision, Section 6 of the Act of March 2, 1763,2 Stat. 698, (Revised Statutes § 3493) which gave the private suitor one- half the damages and forfeitures that he should "recover and collect" as well as the costs of the suit. The older statute gave the United States neither a right to notice of the suit's pendency, nor a right of intervention in it; its sole right was to one-half the recovery and the power to veto a withdrawal or dis- continuance of the suit. See Bush v. United States, C.C. Oreg. 1882, 13 Fed. 625, 629; United States v. Griswold, D.Oreg., 1885, 24 Fed. 361,366, aff'd, C.C.Oreg. 1887, 30 Fed. 762. In United States ex rel. Marcus v. Hess, 1943, 317 U.S. 537, the United States appeared only as amicus curiae, at the request of the Court (317 U.S. at 545). Under the present statue the United States is given control of the suit at its option, and it may altogether exclude the private suitor from participation in the conduct of the case. The emphasis is on limiting the informer's award precisely to what he adds to the store of information and evidence that was in the Government's possession when the suit was started. 44a That the private suitor, in the pursuit of his own interest and to secure a relief that he could obtain only through the Government, may have disclosed facts and evidence to the Government that arguably might also arm it to pursue a Section 231 claim against the defendants, does not create an exception to the pro- visions of Section 232(C), no in principle should it. Plaintiff's submissions of evidence to the Federal Maritime Commission, to the Maritime Subsidy Board and to the Senate Subcommittees were directed to specific substantive reliefs to which plaintiff claimed entitlement for Sapphire and for himself by reason of his interest in Sapphire and its business. But the Submissions were thereafter in the Government's possession for all purposes, including its determining from them the measure of its own rights, and what relief it would seek in its own considered judgment. Since so much of Section 232(C) as deals with the effect of the Government's prior possession of the evidence and information on which the suit is based is treated as strictly jurisdictional, United States (by Greenberg) v. The Burmah Oil Co. Ltd., 2d Cir. I977, 558 F. 2a 43, 46, it follows that the action must be dismissed. In the circumstances it would not be proper to pass on the questions of fraud and of limitations presented by defendants. 45a It is ORDERED that the motions of defen- dants for summary judgment in 77 C 1093 are granted, and the motion of plaintiff to amend the complaint in 68 C 643 and to consolidate that action with 77 C 1093 is denied; and it is further ORDERED that the Clerk enter judgment that plaintiff take nothing in 77 C 1093 and that the action is dismissed for want of jurisdiction, Brooklyn, New York December 2U, 1977. /s/ D.J. Dooling U. Ss D. J. 46a ANNEX A 47a 6 Safir employee or representative of the govern- ment? A I have offered it. It has not been requested of me. Q Will you tell us what you have offered to them? A Well, I haven't offered anything specific to them. I have information which now based on the fact that this case is filed will be brought forward. Q I now ask you to give us the information which you intend to bring forward. A Well, upon information and belief, at some time in 1968 an arrange- ment was made between members of this group and the then Republican Party for the consideration of a considerable sum of money, to see to it that the subsidies which formed the basis of a complaint filed in 1968, in June that that case, if the Republican Party was elected to office, would be made difficult for the plaintiff to succeed. Q May I ask you whether you have any documents to support this arrangement that the Republican Party had? 6 cont. 48a Safir A I have no documents, but I have -- that my information came from -- I will put it this way. It came in 1973, about October of 1973, by a telephone call from a newspaper reporter who asked me whether I knew anything about a deal involving approximately $7,000,000 in which -- 49a Safir and he mentioned by name one Spyros Skouras, Senior, had through someone in the Republican Party -- and I am not Sure whether it was Mr. Stans that he mentioned by name or not -- had arranged for this $7,000,000 to be paid over, over a period of time, to parties with- in the Republican Party for the purpose of settling or disposing of the anti- trust case which was then filed by the Trustee in Bankruptcy of Safir Steamship Lines, and also my case, which at that time was in the nature of mandamus and which was the original action that I filed in 1968. @) Could you tell me the name of the newspaper reporter? A The name of the newSpaper re- porter was -- his name was Louis Kohlmeyer, and I understand that he is a Pulitzer prize winning reporter who worked for the Wall Street Journal at the time I first knew him, and at the time he called to inquire about my information, about this information, was working for the Chicago Sun Times syndicate in Washington. I told him at that time that like a husband whose wife was cheatina, I would be the last to know the answer to his question, as to whether I had any information on the subject. My answer to him was no, but from that point on I knew that there would be a point in this 50a Safir litigation when under a False Claims Act amendment, in one case or in a new case filed as this one is here, that we are here today, filed last May, that new information would be supplied to the government in order to firm up the specific intent to defraud, which I felt as far as my case was concerned, this form of contribution would represent. Q You say this inquiry was in 1973? A Yes, sir. Q Did you ever tell anyone in the government about the inquiry? A No. 9 Why didn't you tell them? A Because at that time I had no proof, and I had no basis on which to act, except and distinct from perhaps a Special Prosecutor's office and others who were interested at that time. Mr. Kohlmeyer mentioned, however, if this will be helpful to you, Mr. Fort, and it’ might be, that certain of this information that he was basing his call to me on was based on leaks from the Special Prosecutor's investigation in the Nixon impeachment case. Make the most of it. Q So that what you are saying is that the 5la Safir information in essence was in the possess- ion of the government at the time he called you, because he had heard about it through leaks from the Special Prosecutor? A If you think so. As I said, make the most of it. I don't think so. I don't think that that could be consi- dered in the hands of the Attorney General, Department of Justice, since they were not involved in the Special Prosecutor's office. Q Were any other companies men- tioned by this reporter? A Not by name. Q Now, return to the affidavit, Mr. Safir. A Yes. Q Paragraph 5, Page 7. A I seem to have a problem there, Mr. Fort. Paragraph 5? Q Five begins on Page 6 and it goes on to Page 7. A I beg your pardon. Go right ahead, sir. i 52a 9 cont. Safir 0 I would like to read you a sentence from that paragraph, starting off with "Thus, the conduct and trans- actions which were in issue before the Maritime Subsidy Roard, as a result of the 1968 comolaint and are now res judicata, are the same as which formed the basis for the proposed amended complaint." 33 53a Safir I did, and there was no answer and then he called me back at home. Q Mr. Kohlmeyer? A Yes. Now, I think I tried to get him back at the Wall Street Journal, but he wasn't there and then he called me and he told me that he was no longer with the Journal, but with the Sun Times Syndicate. Q Do you remember what time of day you were called by Mr. Kohlmeyer? A I think it was late afternoon. Q Where was your office at this A No, he called me back at home. Q What office did he call? A He called the office at 41 Flatbush Avenue, Brooklyn. Q And where were you living at that time? A I was living in 8 Southview Lane in Kingspoint, New York. So there was a relay of calls from my office to my home. 33 cont. 54a Safir Q What are you using to place -- what information are you using to place the date of the call some time in Sep- tember or October of 1973? A My own memory. Just my recall because of the nature of what was going on at that time, the events 34 55a Safir of the time and the timing of his state- ment that leaks are coming out of the Watergate Hearings and he went further, he went further on this thing, I haven't told you all that he told me. Q Before we get into the actual conversation, I am just going for informa- tion that -- the information which you base your memory of the date of the conversation. A I did not quite finish that question. I based it on the fact that the Watergate Hearings were on, that as a special prosecutor -- no, I wasn't even sure of that, that the Maritime, the head of the Maritime Commission had been called by the Watergate Committee. He said at that time or a few days prior to that, Helen Bentley by name had been called by the Watergate Committee, so I placed the timing to be more accurate, perhaps others can too, to place it about the time that she was called before the Watergate Hearings. Q So the conversation was after she had testified? A After she testified and certain newspaper type leaks had emanated. Q How did the conversation begin, who spoke first? A He did. He said, do you remember me, I 35 56a Safir said, of course I remember you. Q Could you give us the rest of the conversation as you remember it? A Then he started to ask me questions. In fact, he said, have you felt that you are having a very difficult time in making progress on your case and I said, I sure have felt it. Q What was your understanding of what he meant by your case? A The case that I was pursuing in the Maritime Subsidy Board, S 243, which was the outcome of my initial action in 68 C 643 in the Eastern District of New York. Q He asked you a question and you responded. Was that your only response to the question? A Yes. I said, why do you ask. That was my next question, Q What was his response? A He said, well, we are getting words and I am quoting now on the basis of a conversation of six years aqo, so there is some license or liberty involved. 57a 35 cont. Safir Q Is it six years or four years ago? A Excuse me, ‘73 is four years ago. I was thinking of the first one. Anyway, in connection with the one of four years ago, I asked him, why do you ask 36 58a Safir and he said, because there are cer- tain things emanating from the Watergate Hearings that show a relationship between your case and certain things that have happened in regard to campaign contribu- tions and things like that. He said, do you know of a payoff to Nixon at that time, he said, in the neighborhood of five and a half million dollars. I said, unheard of and I said, I would be the last to know if that were the case, because I mentioned in connection with being like a cuckolded husband, always being the last to know. He said, did I see any relation- ship between the City of Baltimore and the problems I was having. I said, no. I said, why do you bring that up. He said, well, isn't it interesting to you that Andrew Gibson and Helen Bentley and also the Vice President of the United States comes from Baltimore. I said, well, I cannot see what the relationship is. He said, well, there is evidence involved which we are hearing about that connects a payoff of this five and a half million dollars on your case, to the relationship of Andrew Gibson, who was a vice president of Prudential Grace Lines, and an employee of Skouras coming into the administration as the Maritime Administrator. A relation- ship between Helen Bentley, 37 59a Safir a Baltimore reporter, becoming the head of the Federal Maritime Commission and the vice president. So, I said, I still cannot see the relationship between the vice president and these people. He said, well, Skouras is a Greek. I said, that is right, or Greek extraction. He said, well, we hear it down here and this is what he said, that for the money that he paid into the Nixon administration to buy your case and the problems that you are having, he additionally recommended to Nixon at the time that he would like if his Greek-American compatriot becomes the vice president of the United States for the same five and a half million dollars. I said, I find that very hard to believe, but that is a lot and if the next time I am in Washington, I will be very glad to discuss this thing further and I did. I came down to Washington soon thereafter. I came down, I called him up and I met him in his office at this National Press Building. Q. Are we going onto another conversation? A Yes. We are going onto another conversation. Q All right. Let'’s go back to the telephone call to you. Did Mr. Kohlmeyer tell you where he had gotten this information? 6%a 38 Safir A No, he did not. @) Did he indicate that he had gotten it from the testimony at the hearings? A No, he did not. He indicated that it came in the form of a leak. 9 From -- A From one of the bureaus, appa- rently some agency, apparently the special prosecutor or the Ervin Committe at the time. I don't know, but it was a kind of a leak thing that he was trying to check out, as to whether I knew anything about it. a) You mentioned that he was using the pronoun, we have gotten this informa- tion. Co you know if he was working with anyone else in this investigation? A I don't know. Q Did he mention any other re- porter's name? A He did not. 9 Did he tell you when Mr. Skouras had been in contact with Mr. Nixon? 38 cont. 6la Safir A He did not. Q Did he mention any dates -- A Well, there is a determining factor in that, because Mr. Skouras died soon after Nixon came -— 50 62a Safir magnificant sum out in order to presumably settle the antitrust case, and see to it that the subsidies not be withheld from the lines, from the steamship lines, who were then receiving them and who were apparently guilty of the violation. Q Have you had any contacts with Mr. Kohlmeyer since your October or September, 1973 telephone conversation? A Yes. I mentioned the fact that I visited with him a month or two or three thereafter. Q Do you remember if it was in 1973 or 1974? A It might have been in early '74. I told him, I told you that he had an office, he was in this little office all by himself in that building. Q What building is that? A National Press Building. Apparently he was a pipe smoker, because the room smelled like a gas bin. You could not breathe in it. I said, look, I am prepared to cooperate and help you on this thing, if you want some help. I am surprised that you hadn't gotten back to me earlier. 50 cont. 63a Safir He had nothing much to say. He looked like he was unhappy with the whole conversation, and perhaps he shouldn't have called me in the first place. So at that point I decided that was the end 51 64a Safir of it, at least for then, and I certainly -- I had nothing further to go on. Everybody and his broth.r was investigating everybody else at that particular time, and I had my own problems, most of which were based on the ongoing fight with you people. So I did nothing further about it. Q Had you initiated this meeting? A The second meeting, yes, it was me. Q And do you remember what Mr. Kohlmeyer said? A He said he would think about going further with it, and that he would get in touch with me, which he never did. Q Did he ask you any additional questions? A Not a one. Q Did he give you any additional information? A I don't recall. Q Did he give you any documents? 51 cont. 65a Safir A No. 9 Do you remember him giving you any more details or mentioning any names? A I said no. He was reluctant to, from being practically garrulous in the telephone conversation, he was very reluctant to do any talking on that visit. Q Do you remember how long this second meeting F6a UNITED STATES DISTRICT COURT EASTERN DISTPICT OF NEW YORK Plaintiff, -against- AMERICAN EXPOPT LINES, Cefendant. Plaintiff, -against- BLACKWELL, Defendant. 77-C-1093 68-C-643 United States Courthouse Erooklyn, New York October 28, 1977 5:00 o'clock P.M. Before: HONORABLE JOHN F. DOOLING, JR., U.S.D.J. PERRY AUERBACH ACTING OFFICIAL COURT REPORTER que eee —— 67a ¥. é. Appearances: MR. MARSHALL SAFIR, PRO SE GILBERT FLEISCHER, ESQ. U. S. Government ELMER MADDY, ESC. Attorney for Trade-Line Defendants ROBERT T. BASSECHES, ESQ. Attorney for Non-Trade-Line Defendants, et al. ; 6Ra CP. BS would hope that if, as I hope in the case you rule in our favor, that that would be dispos- itive of that element of the case as well. Thank you, your Honor. MR. SAFIR: Your Honor, in Paragraph ll of Trade Defendant's statement of material facts as to which there could be no issue -- THE COURT: Trade Defendants? MR. SAFIR: Trade, and I'll say non- trade as well -- (Pause.) All the trade defendants THE COURT: I have a separate stating. MR. SAFIR: Let's take the trade first. In Paragraph 11 of the Trade Defendant's Statement of material facts, as to which there could be no issue, there is a misstate- ment of facts, of paramount significance. This affiant never admitted that the subject matter of the Colemire conversations is impro- bable in its judgment. What the transcript States, Page 40, Line 13 is as follows: "I felt the whole conversation -- THE COURT: Let me turn to it. (Pause.) All right. MR. SAFIR: “I felt the whole conversa- tion at the time was bizarre anyway, and it was highly improbable. It still does." 69a 34->S A re-hearing of the tape made during the deposition further clarifies the sen- tence, wherein I clearly stated that it "sounded highly improbable." Not that it was highly improbable. I have a copy of the tape with me, your Honor, and as it happens it fits this little machine here, so that I could leave it with the Court rather than try to figure out the exact point in the tape where this comes for- ward. But on oath, the word "sounded" is in there. In other words, the purpose of bringing this to the Court's attention is to inform the Court that I believe that the Colemire information was factual. I believe that the Defendants entered into an agreement with Richard Nixon and certain officials of his campaign in 1968 prior to the election; that in the event of an election Nixon would, for the gross contribiton of 7 million dol- lars, protect and defend the interests of the subsidized line defendants, the first by pro- tecting the lines from jeopardy of a 250 million dollar subsidy recovery; and second, by ordering the Justice Department to agree to a settlement of the case of Safir Steam- ship Lines versus AGAFBO, for the Government creditors' obligations alone, and that was the sum of approximately 1 million 600 thousand dollars. Whether the remainder of the 7 million dollars would go to the campaign cof- fers of the 1972 election or be siphoned off for other purposes is not yet known. That the Court of Appeals decision, and this I be- lieve, too, in Safir-l, the 1969 decision, seriously compromised the original plan that these people had; and 0a 3S-3G Safir-2, which was the one where the collateral estoppel effect was decided by the Court, further impaired that scheme's viabil- ity. That when the procurium decision in Safir--we'll call Safir-2a took place, this opened the door to investigation of quote, and this was the quote in the decision, "that the Government had a right to deter- mination in S-243 whether a wider conspiracy existed." But this was used by the Nixon Adminis- tration through Secretary Stans in the De- partment of Commerce for a multi-year delay in the investigation to protect these lines from the finding of violation, and to protect the ability of the lines to accrue the 5.6 million dollar obligations that they took on with Nixon by their continued collection of Government subsidy payments; That when the anti-trust -- Safir Anti- trust Case as a result of the Second Cir- cuit's decision in Safir's 2 and 2a, the creditors of the bankrupt opposed the million six settlement offer which would have denied any recovery to them. The Department of Justice reduced, and this was -- this is in the record -- to $795 thousand dollars, the amount that would be acceptable to the cred- itor, United States, if the creditors, the Trade creditors would settle for a new offer which would give all creditors and the trus- tees and -- as counsel -- the sum of two mil- lion four. The referee cepted this pro- posal, the second prop and it was approv- ed by the District Cou of the District of Columbia in the antitrust case. eer Jla 3G -37 The Department of Justice since Nixon's resignation disowned the Nixon Administration agreement to reduce its claim. The 2.4 mil- lion settlement leaves open the question of the collection and disposal of the remaining 4.6 million dollar payoff, since the 2.4 mil- lion dollars is undoubtedly traceable, to appropriate entries on the books of these defendants. It is in the area of this re- maining fund that investigation and discov- ery will be helpful in '77 C 1093. MR. SAFIR: (continuing) Now that the recent Supreme Court decision on the Nixon tapes for civil actions becomes -- I'll put it this way -- the recent decision makes the ability to get -- THE COURT: Makes them available. MR. SAFIR: Makes them available. This is a significant development. Plaintiffs contend in passing that Nixon lived down (up to) his obligation to these defendants as long as he was in office. It was not until after Nixon resigned in August 1974 that on September 5, 1974, just a month later, the Secretary of “ommerce, then Dent by name, was free to file his order confirming the viola- tion itself. Even then, the order was tainted by the unsupported charge that Federal offic- ials of the Department of Defense induced the illegal action to attempt to apply the doctrine of collateral estoppel -- excuse me, not the doctrine of collateral estoppel -- the doc- trine of estoppel to the Government's recov- ery under Section 810, or alternatively under the False Claims Act, and handicapped the Department of Justice under a new administra- tion from providing, under the False Claims 72a 37-38 Act, the ability to pursue False Claims action, because the Government's hands were not clean. By the way, this last approach that took place in the order of the Secretary in 1974, that the blaming the Department of Defense officials in 1965, was rejected by Judge Wright in his decision last February. There- fore, either on a denial of the defendant's motion for summary judgment or on a grant of a continuance to this plaintiff to complete his basic discovery prior to taking on, on your part, the decision on the motion for summary judgment, I'll require several sub- poenas: A subpoena to the General Service Admin- istration for those Nixon tapes during the period, May 15th to June 15th, 1969; the time at or about the first Safir decision in the Court of Appeals, wherein, to be specific, the name S-A-P-P-H-I-R-E or Sapphire, my name, or William Sapphire, my borhter's name or Skouras, S-K-O-R-A-S or Spiros Skouras or Spiros or the word "Fair Star" or Gem Stone would appear. THE COURT: Those were the vessels? MR. SAFIR: There was a vessel called the S.S. FAIR STAR that was not one of my vessels, but it was a vessel which may have a bearing on this case. The name Arthur Becker might also be added to the subpeona. The Nixon tape list, if such a name appears in connection with a Maritime conversation. 73a 38-39-40 Second, I would need any record of White House calls to the home of Marshall Sapphire (se) by John Erlichmann, collect or paid, for the months of June and July of 1970 and 1971; and those Nixon tapes immediately preceding and following such calls. Four, I would need a subpeona duces tecum for one Arthur Becker, Esquire, of Washington, D.C., with his diary for the dates of June lst, 2nd and 3rd, 1969, and all records in his possession of a transaction concerning the refurbishing of the troop ship S.S. FAIR STAR in September and October 1968. Number five, a subpoena for the quest record for the Regency Hotel of New York for the dates of June lst, 2nd and 3rd, 1969; and paragraph six, a subpoena duces tecum for Spiros Skouras, president of Prudential Lines, with his diaries of August ‘through October 1968. The records of Prudential Lines are either travel arrangements for Mr. Skouras or his late father during that per- iod, and diary and appointment records of his late father for that period, if such were available, if such are in existence, rather. I would also need the cash disbursements and accounts payable records of Prudential Lines for the years 1968, '69, '70, ;71 and ‘72 and also those for the Prudential Grace Lines (pause) for a start. The records for the other lines would follow. 74a 40-4 \ Now, the reason I asked for such an in depth and for such a serious thing, your Honor, is that most normal people, most Amer- icans would consider it bizarre. They would have considered it bizarre until 1973 in Watergate for any person, lawyer or layman, to get up and make such statements and say he believes them about the President of the United States. And so, it was bizarre when I heard this conversation of Colemire to me. But it's no longer bizarre, and it's no longer improbable. When you look at the history of this, the clients at this table -- the clients of these people at this table, and the recent history as to the bribes, payoffs, indictments of Federal officials that have been involved in the last few months, the general smelly aura of this whole industry, there has to be a time when somebody who has a stake, as I have, and not just an ordinary citizen's desire to do good, but a monetary stake, takes the pos- ition and goes all the way, and am prepared to go all the way on this case. A dismissal of 77-C-1093 at this stage, and prior to discovery would be a miscarriage of justice. MR. SAFIR: (continuing) What little law I know, and I pick up occasionally from my son who went to Yale Law School, he's in Washington, and I still get the Yale Law School books at my home where he used to get them, so I avidly read as I go along, and in March '74 there was an article on Federal Summary Judgment Doctrine, “a critical anal- ysis" by one Martin B. Lewy,”%and on page 767, and in answer to Mr. Basseches', there is an Uw\42 75a article about excusing an insufficient re- sponse, and it has to do with sometimes the opposing party cannot make a sufficient re- sponse because the affidavits and other Supporting materials available to him do not represent a realistic preview of the evidence you will be able to present at trial. I don't have to read any more to you. You probably wrote it. Anyway, my feelings about it are, that I must be given the opportunity to pursue this to its conclusion. The tools are available now. The Supreme Court has put them in our hands. I ask that the motion to dismiss or for summary judgment be denied, and that the Subpoenas issued that I've requested. Thank you. MR. MADDY: Mr. Safir seems to be sug- gesting or is suggesting that he be given the chance to do further discovery before your Honor rules on the motion for summary judgment, or he be given this opportunity, but I don't think that's appropriate under -- when he files his qui-tam's action. The basis of the claim is that there was a false claim filed, and all of these other Suspicions that Mr. Safir may have for various reasons is unsupported. He didn't have any information when we took his deposi- tion. I don't think he should be given leave to go out and just take all these depositions. There's no -- there doesn't seem to be any possible relevance of those matters to the question of whether or not a false claim was filed with respect to thses particular subsidy vouchers. They may have interest for U2-43 76a Other reasons, but they have no bearing on the question on filing a false claim. Also, with respect to the way the deposi- tion reads, I think we fairly quoted or re- ferred to what the deposition said, and Mr. Safir signed it and swore to it. So we rest upon what's in that deposition, and not what Mr. Safir may say now when he seems to, in effect, seems to be changing his testimony given on that day. THE COURT: No, he said he had it on tape. MR. MADDY: Yes, your Honor. I must say we were basing it upon his sworn -- signed and sworn to deposition. MR. SAFIR: I have the tape, your Honor, if I may interject, and to put it in the custody of the Court, where on side number 2, halfway through, the word "sounded" is the word, the word that was in the sentence. (Can I leave this with Mr. Bachman? \ THE COURT: Yes. \ MR. SAFIR: Thank you. \ THE COURT: Well, I will reserve decision on it. I don't think that I could at this time authorize the taking of depositions on the scale indicated before dealing with the papers that are now before me, because in a way, that taking would be more formidable than the case itself. ee Seen 3.4 ub 77a If in attempting to decide this I find that it cannot fairly be decided one way or the other without such further discovery, then I will act at that time. MR. MADDY: Your Honor, we received Mr. Safir's papers yesterday. Could we have a short period of time to file a response thereto? THE COURT: You received some of his papers yesterday? MR. MADDY: Well, we got his latest version. THE COURT: All right, yes, I see it is October 27th. Very well. MR. MADDY: By next Friday then? THE COURT: Yes. MR. MADDY: Thank you. MR. BASSECHES: Excuse me, your Honor, I mentioned a case which my colleague, Mr. Lewis, cautioned me to -- I don't know whether it's relevant or not, but let me put it in the record. The case is United States v. Borin, B-O-R-I-N. THE COURT: That's in the briefs. uu 78a MR. BASSECHES: Right. That is cited in the briefs. That does address the issue of fraudulent concealment with respect to the Statute of Limitations. THE COURT: Thank you, gentlemen, (Whereupon Court stood in recess for the day.) 7%a UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF NEW YORK ee rr 4 MARSHALL P. SAFIR, Pro Se, and : on Behalf of the United States of America, Plaintiff : Affidavit and -against- Complaint AMERICAN EXPORT LINES ¢ 1093 AMERICAN PRESIDENT LINLS LYKES BROS. STEAMSHIP CO., INC. : MOORE McCORMACK LINES, Incorporated UNITED STATES LINES, INC. FARRELL LINES, INC. g BLOOMFIELD STEAMSHIP CO. PRUDENTIAL GRACE LINES, INC. PRUDENTIAL STEAMSHIP CO., INC., Defendants MARSHALL P. SAFIR, Plaintiff, Pro Se, on this 26th day of May, 1977, having been duly sworn, deposes and says: I. I am a citizen of the United States and of the State of New York who, in the year 1965, brought to the attention of the Joint Economic Committee of the Congress certain il- legal concerted actions by these defendants. The Chairman, Senator Paul Douglas, after an open hearing then referred the matter to the Federal Maritime Commission for investigation. ee 80a The FMC then instituted a lengthy investiga- tion (Docket 65-13)*, which culminated in a finding that these subsidized ocean carriers, acting in concert with others, violated Sec. 15 of the Shipping Act of 1916. This find- | ing, inter alia, was incorporated in the FMC | decision dated December 11, 1967. Soon thereafter, this plaintiff filed an action in the nature of mandamus in this District (68c643) to compel the Secretary | of Commerce to cease subsidy payments to the | violators of Sec. 15 of the Shipping Act and ! to recover payments made to the violators Since the violation on the theory that colla- teral estoppel existed between Sec. 15 of the Shipping Act and Sec. 810 of the Merchant Marine Act of 1936 in regard to the subsi- dized carriers. The history of the case from 1968 to 1977 is spelled out in detail in at- tachments A and B. The seminal action, however, was brought in this District. All of the defend- ant violators intervened as defendants here before the learned Judge Dooling ang all of these carriers, with one exception, continue to transact business here. Briefly, these ocean carriers were found to have violated Sec. 810 of the Mer- chant Marine Act (46 USC 1227) by the Mari- c Docket 65-13 Rates on Government Cargo 11FMC263-287 (1967) 18loomfield Steamship Company discontinued operations in 1966 a eee 8la time Administration in April 19732 and later on review by the Secretary of Commerce in September 1974~> in hearings mandated by the Court of Appeals of this Second Circuit. The plaintiff alleges that this finding is now res judicata. II. This Court has jurisdiction under 28 USC 1331, 1337 and 1651 and 31 USC 232. Venue is proper, pursuant to 28 USC Sec. 1391. III. The statutes involved here are Title 46 USC 1227 and Title 31 USC 23l, 232, 233, 235. IV. On May 26, 1971, the Congress of the United States appropriated under the Second Supplemental Appropriation Act 1971 (PL92-18) the sum of $80,000,000 to liquidate past due obligations and about half $40,300,000 was appropriated to liquidate, in final part, un- paid ship operation subsidies for the calendar year 1968 and earlier years, the payment of which had been delayed by disagreements over subsidy amounts due the carriers. The sum of $ 43,150,521.84 was disbursed on and between May 27, 1971 and June 11, 1971 when disburse- ment was arrested pending decision on a motion by this plaintiff for an injuction against payment of these funds. Vv. On June, 1971, Judge John Dooling of this Court, issued an order enjoining the payment of operating differential subsidy é See Attachment B, page 104a to 1l76a. See Attachment B, page 56a to 58a. 82a funds to the above-named defendants pending the outcome of a fact-finding investigation by the Department of Commerce as to whether Sec. 810 of the Merchant Marine Act of 1936 had been violated by these defendants. (See Memo- randum Incorporating Finding of Fact and Order dated June 23, 1971, page 184A of Attachment B herein.) The significance of the dates com- mencing with May 27, 1971 in regard to subsidy payments made for the offending period in 1965- 1966 must be emphasized here. The payments in May and June of 1971 were explained by Judge Dooling, as follows: "The entire $40,300,000 appropria- ted to pay past-accrued but unliquidated Subsidies is made up not of basic cur- rent operating differential subsidies, which are generally disbursed as earned more or less currently to the extent of about 90% to 95% of the amount ultimate- ly determined to be due, but with the held back amounts consisting of balance amounts due only when finally determined and agreed on between the carrier and the administration." In short, the statute of limitations on those obligations finally settled in 1971 and paid out in May-June of that year has not tolled as of this date in 1977 and the bal- ances (5% to 10%) are inseparable segments of the false claims which were filed during and following the period of violation in 1965 and 1966. VI. The issues involved in the complaint herein are now before the United States Su- preme Court in Docket 76-1505, a copy of which —————S—S ee 83a is enclosed as Attachment A. However, pend- ing the outcome of that petitign and an amend- ed complaint in Docket 68c643, a technical statute of limitations deadline may be argued in extremis by the defendants herein, if this complaint was not filed within the six-year statute of limitations for the anniversay dates of the final false claims disbursement. Hence, this complaint at this time. (See last paragraph page 20, attachment A and footnote.) VII. This is a civil action for a judge- ment declaring the defendants liable for penal- ties and for the refund of double the sums paid out to the lines found in violation of Sec. 810 of the Merchant Marine Act 1936 as a consequence of the collateral estoppel effect of this violation on 31 USC 231, and for an order implementing such recovery on behalf of the plaintiff herein and the United States of America. VIII. Plaintiff alleges that the illegal behavior was in violation of the operating differential subsidy contract signed between the government and the contractors incorpor- ating the wording of Sec. 810, and that the clear provisions of the statute and subsidy contracts, both binding on the defendants, were deceitfully violated when without any overture to the Department of Commerce they 4 The U.S. District Court for the District of Columbia is also open as a forum for amend- ed complaint incorporating 31 USC 231 et seq. covering construction differential subsidies paid during the offending period where no residual balances were paid out in 1971. See Attachment B, page 17a. 84a acted in concert to destroy an unsubsidized American Flag competitor. IX. That these actions were inimicable to the interests of the United States in that the weight and leverage cf subsidy funding was to hurt an American competitor without the knowledge of the contracting agency charged with the responsibility for promoting the welfare of the American Merchant Marine. X. That, simulataneous with the filing of this complaint, a notice of pendency is being served on the U. S. Attorney for the Eastern District and the Attorney General of the United States. That, because of require- ments of 31 USC 232(c), plaintiff Safir is stayed from proceeding with this action during the time reserved to the Government to decide whether to proceed with the prosecution, that he pleads pro se pending prosecution by the Attorney General, or waiver. That, in the event of waiver, plaintiff Safir will engage licensed counsel to proceed as set forth in 31 USC 232(e)(2). WHEREFORE, Plaintiff Prays: (1) That all moneys paid out during the period of violation or reasonably allocable thereto for operating differential subsidies, as set forth in the schedule on page 208A of Attachment B annexed hereto, (and which schedule is subject to final ad- justment) be refunded to the United States, as they were falsely claimed and illegally paid out. (2) That, the provisions of Title 31 USC 231 for penalty plus double the amount of false claims finalized by the payments in 85a May and June of 1971 be assessed on the final audited amounts paid to each in dividual carrier plus the statutory amount for each false voucher submitted. Respectfully submitted, /s/ Marshall P. Safir Marshall P. Safir, Pro Se 41 Flatbush Avenue Brooklyn, New York 11217 Tel. No.: 212 - 858 - 2700 May 26th, 1977 86a Marshall P. Safir 41 Flatbush Avenue Brooklyn, New York 11217 May 26, 1977 Honorable Griffen Bell Attorney General of the United States Department of Justice Washington, D.C. 20530 Dear Sir: This is to notify you of the pendency of an action filed this day in the Federal Dis- trict Court for the Eastern District of New York under Title 31USC Sec. 232(b) on behalf of the undersigned and the United States of America against certain subsidized ocean carriers. Enclosed herewith in accordance with Title 31USC Sec. 232(c) is a copy of the complaint with attachments A and RB comprising Substantially all of the pertinent evidence and. information material to the effective Prosecution if this suit. If additional in- formation is needed the undersigned is pre- pared to cooperate fully. In accordance with this section of the law, if the United States shall fail, or decline in writing to the court after a pe riod of sixty days after service to enter this suit the undersigned will proceed to engage licensed counsel to prosecute the case on be - half of the United States of America and himself. Respectfully yours, /s/ Marshall P. Safir MPS: rl Marshall P. Safir 87a UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK ee x UNITED STATES ex rel. MARSHALL P. SAFIR, : Plaintiffs $ DECLINATION OF APPEARANCE ay * Civil Action AMERICAN EXPORT LINES, No. 77 C 1093 et al., : Defendants. : -—=—eee ee oO OOO OO Oe oO ee Oe ee ee ee x The United States of America, by David G. Trager, United States Attorney for the Eastern District of New York, pursuant to the provisions of the False Claims Act, 31 U.S.C. §§231-235, hereby states as follows: 1. This is a qui tam action brought by plaintiff, Marshall P. Safir on behalf of the United States of America, as well as for him- self pursuant to 31 U.S.C. §232(B). 2. The United States of America, pursu- ant to 31 U.S.C. §232(C), hereby declines to enter this action. 3. In commencing this action, plaintiff Safir has provided the Department of Justice with a copy of his Petition for Writ of Cer- tiorari to the United States Court of Appeals for the District of Columbia, and a copy of the Appendix thereto, which he has stated com- prises his disclosure, pursuant to 31 U.S.C. §232(C), of substantially all the pertinent 88a evidence and information material to the effective prosecution of this suit. 4. Based upon an examination of this material, the United States has concluded that the central issue of plaintiff Safir's allegations in this action is presently being litigated in the United States District Court for the District of Columbia in an action styled Marshall P. Safir, plaintiff v. Juanita M. Kreps, et al., defendants, Civil Action No. 74-1474. See Safir v. Kreps, 551 F.2d 447 (D.C. Cir. 1977), petition for cert. filed, 45 U.S.L.W. 3733 (U.S. May 10, 1977) (No. 76-1505). Dated: Brooklyn, New York June 21, 1977 Respectfully submitted, DAVID G. TRAGER United States Attorney Eastern District of New York 225 Cadman Plaza East Brooklyn, New York 11201 By: _/s/ Elaine Buck ELAINE BUCK Assistant U. S. Attorney 89a THE SECRETARY OF COMMERCE Washington, D.C. 20230 ORDER In the Matter of: Subsidy Board Docket No. S-243 Investigation of Alleged Violations of Section 810 of the Merchant Marine Act, 1936, as amended. The petitions of American Export Lines, inc., Lykes Bros. Steamship Co., Inc., Moore-McCormack Lines, Inc., Bloomfield Steamship Co. and United States Lines for review of the Maritime Subsidy Board’s decisions of April 9, 1973 and October 10, 1973 are hereby granted, solely with respect to the mitigating circumstances and appro- priate sanctions to be imposed on the trade respondents. In all other respects, the petitions are denied. The peti- tion for review of American President Lines, Ltd., Far- rell Lines, Inc., Prudential-Grace Lines, Inc., and Pru- dential Steamship Company, Inc. is denied. The record before me fully presents the contentions of the parties without need for further submissions or delay. The record indicates that the United States Government actively induced the rate reductions here in issue, and received substantial financial benefit from such reduc- tions. The record further suppports the conclusion that, but for the active inducement, of federal officials, rates found by the Federal Maritime Commission previously not to have been unreasonably high would not have been re- duced to noncompensating levels by respondents. 90a Order of U.S. District Court, District of Columbia, Dated October 21, 1975 Civil Action No. 74-1474 2 oe MARSHALL P. SAFIR, Plaintiff, — FREDERICK DENT, individually and as Secretary of Commerce, Defendant, AMERICAN PRESIDENT LINES, LTD., et al., Intervening Defendants. i Order | Plaintiff Marshall P. Safir, having moved for sum- mary judgment, defendant Frederick Dent, and interven- ing defendants’ Trade Lines and Non-Trade Lines having replied to plaintiff’s motion and cross-moved for summary judgment, the Court having considered the motions, mem- oranda of points and authorities of all parties, it, is hereby ORDERED that the plaintiff's motion for summary judgment is denied, that defendant’s and intervening defendants’ motions for summary judgment are granted and the complaint herein is dismissed with prejudice this 21st day of October, 1975. 9la Order of Secretary of Commerce Dated September 9, 1974 Accordingly, having considered the total circumstances surrounding the rate reductions in question, it is my con- clusion that recovery from each of the trade respondents in the October 10, 1973 Final Order on Recoveries shall be modified by reducing the total amount of subsidy sub- ject to recovery to $1,126,522.26 to be apportioned in ac- cordance with the table attached hereto. The adjustment here ordered is made to reflect the effect of the United States Government action, notwithstanding that the trade respondents shared in a greater or lesser individual degree in the improper conduct that has been determined to have occurred as charged in the petition to the Board. So ORDERED So #8 ee CB ae © OOS © e.46 69 6:4 OS OH 4.8 S Secretary of Commerce Date: September 9, 1974 92a ‘aanZy Sty} 0} peSuvyd eq plnoys sos. 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A Chairman, Robert J. Blackwell; Member, H. Clayton Cook, Jr.; Alternate Mem»er, James S. Dawson, Jr. Ge Served Upon: Marshall P. Safir, 41 Flatbush Avenue, Brooklyn, New York 11217 pro se. James N. Jacobi, Esq., Kurrus & Jacobi, 2000 K Street, N. W., Washington, D. C. 20006 for American Ex- port Lines, Inc. J. Franklin Fort, Esq. and Richard S. Salzman, Esq., Kominers, Fort, Schlefer & Boyer, 1401 K Street, N. W., Washington, D. C. 20005 for Lykes Bros. Steamship Co., Inc. and Moore-McCormack Lines, Incorporated. John Williams, Esq., Kirlin, Campbell & Keating, 120 Broadway, New York, New York 10005 for United States Lines, Inc. 94a Opinion and Order of the Maritime Subsidy Board, Dated April 16th, 1973 Amy Scupi, Esq. and Olga Botkess, Esq., Galland, Kharasch, Calkins & Brown, 1054 3ist Street, N. W., Washington, D, C. 20007 for Bloomfield Steam- ship Co. Robert T. Basseches, Esq., Shea & Gardner, 734 Fif- teenth Street, N. W., Washington, D. C. 20005 and Daniel H, Margolis, Esq., and Murray J. Belman, Esq., 21 Dupont Circle, N. W., Washington, D. C. 20036 for American President Lines, Ltd., Pruden- tial-Grace Lines, Inc. and Prudential Steamship Company, Inc. Verne W. Vance, Esq. and Andrew J. McElaney, Jr., Esq., Foley, Hoag & Eliot, 10 Post Office Square, Boston, Massachusetts 02109 for Farrell Lines, Ine. Michael J. McMorrow, Esq., Maritime Administration, Washington, D. C. 20235, as Public Counsel. Docket No. 8-243 is an investigative proceeding insti- tuted by the Maritime Subsidy Board (Board) on October 24, 1969 to determine whether Section 810 of the Merchant Marine Act, 1936, as amended (Act),’ had been violated by conduct of certain carrier members of the Atlantic and Gulf American Flag Berth Operators (AGAFBO) and the appro- priate action that should be taken. Named as parties to the proceeding were petitioners Sapphire Steamship Company (Sapphire) and its individual owners, Marshall I’. Safir and Arnold Weissberger, who along with others,’ had petitioned 246 U.S.C. § 1227 (1970). ?These were two service organizations, Pioneer Overseas Services Corporation, a traffic management agency wholly owned by Mr. Safir, and Liberty-Pac International Corporation, a freight forwarder specializing in the overseas transportation of house- hold goods wholly owned by Mr. Weissberger. They were ex- tended the opportunity to file petition for leave to intervene in the proceeding but never made such filing. Of all the petitioners, 95a Opinion and Order of the Maritime Subsidy Board, Dated April 16th, 1973 CONCLUSION Based upon the foregoing discussion and findings and after full consideration of the record compiled in this pro- ceeding, including all arguments and presentations by all parties and the Chief Judge’s Recommended Decision, we find and conclude that: 1) All respondents violation Section 810 of the Mer- chant Marine Act, 1936, as amended, and applicable provisions of their ODS contracts by acting in con- cert to reduce rates on selected military cargo car- ried in U.S. Atlantic & Gulf to United Kingdom/ Bordeaux/Hamburg area and holding such rates at such levels during the period March 29, 1965 to March 1, 1966 (but as to respondent Bloomfield only until and including December 31, 1965) in order to unjustly discriminate and unfairly compete against Sapphire Steamship Company, and In consideration of pertinent mitigating circum- stances respondents owe. Subject to documentation by said respondents and Public Counsel, the follow- ing for such violations of Section 810: (a) Respondents APL, Farrell, Grace and Pruden- tial, who did not compete with Sapphire and whose violations are technical only, no amount ; (b) Respondent Lykes about $1,130,123 to be ac- counted for on terms satisfactory to the Gov- ernment; (c) Respondent AEL about $38,036 to be account- ed for on terms satisfactory to the Govern- ment; 96a Memorandum Incorporating Finding of Fact and Order, Dated June 6, 1972 UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YorK 68 C 643 or MARSHALL P. SAFIR, Plaintiff, —against— ANDREW Gibson, Acting Maritime Administrator, Maritime Administration, U.S. Department of Commerce, et al., Defendants. $$$ DooLine, Dw.: Plaintiff moves for an order requiring the Secretary of Commerce to pay the purchase price of the 8.8. UNITED STATES into escrow and to establish an escrow of all amounts payable to the present shipowners upon their sales of the S.S. ARGENTINA, the S.S. BRAZIL, the 8.8. SANTA ROSE, the 8.8. SANTA PAULA, and the S.S. CONSTITUTION; the amounts referred to are cxpected to become payable under the provisions of Public Law 92- 296 effective May 17, 1972 to United States Lines, Ine. (on the Government’s purchase of the S.8S. UNITED STATES under the public Law), to Moore-MeCormack Lines, Incorporated (on the sale of the S.S. ARGENTINA and the S.S. BRAZIL into foreign ownership, registry, and flag pursuant to the provisions of Public Law 92-296 and sub- ject to its limitations), to American Export Isbrandtsen Lines, Inc. (on the sale of the S.S. CONSTITUTION into foreign ownership, registry, and flag pursuant to the same public Law), and to Prudential-Grace Lines, Ine. under the same Public Law. 97a Memorandum Incorporating Finding of Fact and Order, Dated June 6, 1972 It appears that the recommended decision of the Hear- ing Examiner, rendered April 12, 1972, would require re- payments by Moore-McCormack of $759,704, by United States Lines of $3,243,865 and by American Export Lines of $22,373 and that Prudential-Grace would not be required to make any refund payment. The Maritime Subsidy Board of the Maritime Administration has not yet reviewed the recommended decision of the Hearing Examiner. Excep- tions have been taken to the Hearing Examiner's report by both sides and the exceptions are still undetermined. Meanwhile and wholly separately the Congress passed and the President approved Public Law 92-296, effective May 17, 1972. It provides for the disposition of laid-up passenger vessels which had been operated under operating differential subsidy contracts with the United States. The law provides that, except for the vessels INDEPENDENCE and UNITED STATES, the laid-up vessels may be sold and transferred to foreign ownership, registry and flag with the approval of the Secretary of Commerce provided, among other things, that the seller agrees with the Secre- tary that an amount equal to the net proceeds received from the sale in excess of existing obligations and incidental expenses shall within a year of receipt be committed to and thereafter used as equity capital to build new vessels which the Secretary determines are built to effectuate the pur- poses and policies of the Merchant Marine Act of 1936 as amended. Section 2 of the same Act authorizes the Secre- tary to purchase the UNITED STATES at depreciated cost less the unpaid principal and interest on the mortgage on the vessel for lay-up in the National Defense Reserve Fleet. Plaintiff contends that since the amount ultimately pos- sibly recoverable by the Government from the AGAFBO steamship companies may rise as high as half a biilion dol- 98a Memorandum Incorporating Finding of Fact and Order, Dated June 6, 1972 lars if the Examiner’s recommended decision is not adopted, the amounts of money coming into the hands of the steam- ship companies under the new legislation should, in effect, be impounded to secure the payments that the steamship companies might be required to make to the United States under the final decision. The motion must be in all respects denied, The payments being made are not payments of subsidies in respect of the periods during which the offensive conduct was continued. The only ground on which the motion can be made is that a sort of anticipatory execution should be issued to assure that, if the ultimate decision directs greater refunds of operating differential subsidy than the Examiner recommends, funds to pay the refunds will be at hand. llowever, there is no reason to frustrate the functioning of the statute involved. The evidence presented does not in- dicate that the ability of any of the steamship companies to respond will be worsened by carrying out the new statute according to its terms or that any of the steamship companies will be in a position to dissipate the funds. Only in the case of the amounts paid to the United States Lines does it appear that refunds will pass into the un- restricted possession of the steamship company. The evi- dence shows that United States Lines is abundantly solvent. Similarly the evidence is that Moore-McCormack and Ameri- can Export Isbrandtsen Lines, Inc. are solvent and will be able to respond to any requirement that they make re- funds of subsidy. No reason appears why the plaintiff should be entitled at this time to relief which is based essentially on the assumption that the Examiner’s recommended decision is wrong and that the final decision will order vastly larger 99a Memorandum Incorporating Finding of Fact and Order, Dated June 6, 1972 refunds. No such inference can be indulged to support an application for the relief of preliminary injunction. If that inference could be indulged, every other asset and every other pending receipt of any of the steamship com- panies could with equal plausibility be subjected to a de- mand that it be placed in escrow or otherwise set aside for execution in the event that large recoveries were ordered by the Subsidy Board. The aflidavit of the Decided November 29, 1972.) Docket No. 72-1753 > MARSHALL I’, SAFIR, Appellant, V. Roserr J. BLACKWELL, Maritime Administrator, Maritime Administration, U.S. Department of Commerce, et al., MoorkE-MCCORMACK LINES, INC., UNITED STATES LINES, INC., AMERICAN Export LINES, INC., and PRUDENTIAL- GRACE LINES, INC., Appellees. ——E— ee Before: I'RIENDLY, Chief Judge, WATERMAN and Hays, Circuit Judges. , Y a Appeal from an order of the District Court for the astern District of New York, John I’. Dooling, Jr., Judge, denying plaintiff's motion for an order requiring the pay- ment into escrow of sums expected to be received by the ship operator defendants on the sale of certain ships. Affirmed. l0la Decision (Per Curiam) PER CURIAM; In this case, which is now here for the third time, see Safir v. Gibson, 417 F.2d 972 (2 Cir. 1969) ; Safir v. Gibson, 432 F.2d 137 (2 Cir.), cert. denied, 400 U.S. 850 (1970), plaintiff Safir moved to require the ship operator defen- dants to pay into escrow moneys expected to become pay- able to them in consequence of the sale of certain American flag ships authorized by Public Law 92-296, which became effective May 17, 1972. The motion was based on plain- tiff’s fear that the defendants might not be financially able to respond to a direction for the repayment of oper- ating differential subsidies which may be made by the Maritime Administration Maritime Subsidy Board in the proceeding, Docket No. S. 2438, instituted as a result of our first decision. The Assistant Secretary of the Board and of the Administration submitted an affidavit indicating that the Government entertained no doubt of its ability to recover, by set-off or otherwise, any amounts that might ultimately be found to be repayable. Accepting this con- clusion, the district court denied the requested relief. The judge’s order was well within his discretion; he was not bound to accept plaintiff's assertions that the recoveries will run vastly beyond the sums recommended by the Chief Hearing Examiner in respect of three of the four ship operator defendants. We share plaintiff's concern over the time that the Maritime Administration has taken to decide this matter, especially in light of the narrowing of the issues by our 1970 decision. However, we were advised at argument that, at long last, the matter has now been finally submitted, and we expect it to be promptly decided. Plaintiff complains of a statement by the district judge that he would have no interest in any recovery by the Government. This statement was unnecessary to the deci- 102a Decision (Per Curiam) sion and we have no occasion either to approve or to dis- approve it. Affirmed. + Oe MARSHALL IP, SAFIR, Appellant Pro-Se. GILBERT S$, ILEISCHER, Esq., New York, N.Y., Attorney in Charge, New York Office, Ad- miralty and Shipping Section, Department of Justice (Harlington Wood, Jr., Esq., Assistant Attorney General, Robert 6 MARSHALL P. SAFIR and SAPPHIRE STBAMSHIP LINES, INC., Plaintiffs, —against— ANpREW Ginson, Acting Maritime Administrator, Maritime Administration, United States Department of Com- merce, JAMES S. Dawson, Jr., Secretary, Maritime Subsidy Board, Maritime Administration, United States Departmént of Commerce, and MAURICE STANS, Secre- tary of Commerce of the United States, AMERICAN PRESIDENT LINES, LTp., PRUDENTIAL LINES, INC. and Grace Linz, [Nc. (Now operating as “Prudential-Grace Lines, Inc.”") and Farre.t Lines, INc., AMERICAN Ex- PORT ISBRANDTSEN LINES, INC.,, BLOOMFIELD STEAMSHIP Co., LyKes Bros, STEAMSHIP COMPANY, INC., MOORE McCorMAcK LiNngEs, INc., and UNITED STATES LINEs, ING., Defendants. Doo.LinG, D.J.: Plaintiffs move for an injunction pendente lite, against the Maritime Administration’s disbursing to the defendant AGAFBO carriers any part of the $80,000,000 appropriated by the Second Supplemental Appropriation Act, 1971, for the fiscal year ended June 30, 1971 (PL 92-18, approved May 26, 1971). Of the $80,000,000 about half, $40,300,000, is appropriated to liquidate, in part, unpaid ship operation subsidies for the calendar year 1968 and earlier years 104a Memorandum Incorporating Findings of Fact and Order, Dated June 23, 1971 the payment of which has been delayed by disagreements over the subsidy amounts due the carriers. $43,150,521.94 was disbursed on and between May 27, 1971 and June 11, 1971, when disbursement was arrested pending decision of the present motion, leaving about $36,850,000 undisbursed, but how much of each segment comprises a part of the $40,300,000 is not disclosed, perhaps is not quickly deter- minable. The entire $40,300,000 appropriated to pay past- accrued but unliquidated subsidies is made up not of basic current-operating differential subsidies, which are gener- ally disbursed as earned more or less currently to the ex- tent of about 90% to 95% of the amount ultimately deter- mined to be due, but with the held-back amounts consisting of balance-amounts due only when finally determined and agreed upon between carrier and Administration. The Secretary of the Maritime Subsidy Board avers without contradiction that of the $43,150,521.94 already disbursed $9,819,000. is the amount paid to the defendant AGAFBO carriers as past-accrued operating subsidies due for the whole of the two calendar years 1965 and 1966 which, to- gether, include the eleven months of the accused rate- reduction. Eleven twenty-fourths of that total is somewhat over $4,500,000. How much of the undisbursed $36,850,000 will become ascribable to past-accrued operating subsidies of the years 1965 and 1966 is not stated. The defendant carriers, it is said, have unpaid vouchers, still unaudited and unauthenticated, lodged with the Board in the aggre- gate amount of $62,702,765, all of which, if audited and allowed, could, self-evidently, not be paid out of the present appropriation. The matter is urgent because the availability of the appropriated funds will end at June 30, 1971, and re- newal of the appropriation would, it seems, have to await fresh budgetary and Congressional action. 105a Memorandum Incorporating Findings of lact and Order, Dated June 23, 1971 Plaintiffs’ central argument is that the present funds are not, within the meaning of the Court’s decision, “cur- rent subsidy payments” (432 F.2d at 140, col. 2) payment of which ought not be enjoined, but belong to the radically distinguishable class of “payments . . . during the viola- tion” (417 F.2d at 977, 482 F.2d at 140, col. 2), which, adventitiously, are found undisbursed and which, therefore, present afresh the, indeed, related but new question, should the Administratien be required to withhold payment of an amount which the Administration may ultimately deter- mine should! not be paid because of the command of 46 U.S.C, 3 1227, second paragraph (“Section S10") ? | Most of the reasons urged for an injunction are not matters that would warrant judicial interference with the Adninistration’s discharge of its responsibilities under the law as spelled out in the earlier decisions of the Court of Appeals, arjd an injunction could not be granted under the earlier decisions but for a differentiating feature here presented. It may have lurked in earlier determinations, but if so it was not brought forward recognizably. Plainly enough, the issue here is differentiable from that which the Court determined on the injunction appeal. The dispositive difference is that before any disbursement is made that manifestly raises a substantial question under Section 810 there must be a specific and advertent deci- sion by the Administration to make, to detain pending further review, or to ref [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385005_2528%3A2. Public record. Not legal advice.