Opposition Brief — United States ex rel. Brensilber v. Bausch & Lomb Optical Co.

amended complaint fails to state a cause of

action under the False Claims Statute ...........-

II. The question presented by petitioners is not

open for consideration. In any event sum-

mary judgment for respondents was required

since petitioners failed to present any gen-

uine issue of fact

III. There is no conflict of decisions and the case

is of no general importance ........----------------------

CONCLUSION ----0--0--c--cceccecveneeecencesceeoseneeseess

APPENDIX

Citations

Cases

Altman v. Curtiss-Wright Corporation, 124 F. (2d)

177 (C.C.A. 2, 1941) ...

Baran v. Goodyear Tire & Rubber Co., 256 Fed. 571

(S.D. N.Y., 1919)

Barnsdall Refining Corp. v. Birnamwood Oil Co., 32

F, Supp. 308 (E.D. Wis., 1940) . .

PAGE

OPINION BELOW ......----------oesceseensenseesseneeensenes 1

JURISDICTION -...--.---cn--o-eenerensensenssensennenssenennnsnnsnnssnnsensenssnnsensseess 1

QUESTION PRESENTED -..-------cccssvssns-eeeeeeeeeeeeeeeeeeeennnnnnnncseretes 2

GTATUTES INVOLVED ......------c--co-sccesseossenseeeneeensenenennnecenssecnennes 2

QPATEMENT .22.--ccccocvsosecccscssnsseccesennssesessenssnesserecsnnnnsssceescensssaeeten 2

ARGUMENT. .....-.------0-0-eereeree-0e0 cece Te 6

L The decision below was correct; the proposed

13

11

ii

PAGE

Black & Yates, Ine. v. Mahogany Association, Inc., 34

F. Supp. 450 (D. Del., 1940), reversed on other

grounds, 129 F. (2d) 227 (C.C.A. 3, 1942), cert.

den. 87 L.E. 49 (Oct. 26, 1942) -........ — i

Blair v. Oesterlein, 275 U.S. 220 (1927) .........22222... 12

Curacao Trading Co. Inc. v. William Stake & Co. Inc.,

5 F. R. S. 64 (S.D. N.Y., 1941, not officially re.

ported) . an 8

Denver Stocky ard Co. v. United States, 304 U.S. 470

SETI cassseurhctntersctiateniehinnpussieninneieenainaietatanamnaiannihintetieaataate 12

Duignan v. United States, 274 U.S. 195 (1927) ............ 12

Glenn Coal Company v. Dickinson Fuel Co., 72 F. (2d)

ee Eh a 7

Gnozzo v. Marine Trust Company of Buffalo, 258 App.

Div. 298° (1939), aff’d. without opinion 284 N.Y. 617 14

Helvering 7. Minnesota Tea Co., 296 U.S. 378 (1935) 12

Helvering v. Tex-Penn Co., 300 U.S. 481 (1987) -......... 12

Holland v. Majestic Radio & Tel. Corp., 27 F. Supp.

Ff 3 88 ee 8

Lipson v. Socony-Vacuum Corp., 76 F. (2d) 213

(C.C.A. 1, 1935), appeal dism’d. by stip. 301 U.S.

ek NED ccitetesdectesestiiesnenicnnsinditeadincenninianennitotinnaninitn 7

MeMullen v. Hoffman, 174 U.S. 6389 (1899) 0... 21

McJunkin v. Richfield Oil C shan .. 08 F. Supp. 466 (N.D.

ee 7

Murphy v. Mitchell, 249 Fed. 499 (N.D. N.Y., 1918)... 8

Prudential Ins. Co. of America v. Goldstein, 43 F.

og gs 2 ee | ee 13

Standard Oil Co. v. United States, 283 U. S. 163

STUIINEE TD csicsshstsciissitinsueimtccnphecoialeniidiceadeistiahiimaebeinatiinineitiemaiaian 9

Stanfa v. Bynum, 37 F. Supp. 962 (W.D. La., 1941)... 8

Sun Oil Co. v. Blevins, 29 F. Supp. 901 (W.D. La.,

1939), aff’d. 110 F. (2d) 566 (C.C.A. 5, 1940).......... 8

Triangle Conduit & Cable Co., 38 F. Supp. 533 (D.

Del., 1941); reversed on other grounds, 125 F.

(2d) 1008 (C.C.A. 3, 1942)

ili

PAGE

Twin Ports Oil Co. v. Pure Oil Co., 26 F. Supp. 366

(D. Mimm., 1939) .....---.-----ssssesessseesceconeeseenneesenneenennessenness 11

United States rt. Newbury Mfg. Co., 123 F. (2d) 453

(CCA, 1, 1941) .n.--eeeeeeeecoeecseesssssenssensesenseenennnnnenneennesennsss

United States ex rel. Kessler v. Mereur Corp., 13 F.

Supp. 742 (S.D. N.Y., 1935) aff’d. 83 F. (2d) 178

(C.C.A. 2, 1936) cert. den. 299 U.S. 576 (1936)........ 7

United States ex rel. Mareus v. Hess, 87 Law. Kd.

374 (Jan. 18, 1943) ............-csceceseeeseseseseneees 2, 7, 8, 18, 21, 22

Welch v. T. W. Warner Co., 47 F. (2d) 2381 (S.D.

N.Y., 1930) ; aff’d. 47 F. (2d) 232 (C.C.A. 2, 1981) 6

Zimmerman v. National Dairy Products Co., 30 F.

Supp. 438 (S.D. NvY., 1989) ...------sceseeseeseeseeseeeneentees 8

Statutes

RS. Secs. 3490-4 and 5438 (31 U.S.C.A., Sees. 231-5) 2, 25

Act of October 15, 1914, ¢. 328, See. 5 (Clayton Act),

28 Stat. 730, 731 (15 1.S.C.A. See. 16) .........-.cc0ceese 11

RS. See. 3721 (34 U.S.C.A. See. 569)......--------cee-e-00- 17

Act of Mareh 2, 1901, ¢. 803, 31 Stat. 895, 905 (10

UFROLA. Bee. UBBB) cncencececeresecsessesressseceewsnsevevensensveneccoors 17

Act of June 30, 1902, ¢. 1328, 32 Stat. 507, 514 (10

te SS }) a, 17

Act of May 11, 1908, ¢. 163, 35 Stat. 106, 125 (10

VELC.A. Bee. TIGD) -<cccecerversesecceesencesesersnosensssessereevsessese 17

Act of June 30, 1914, ¢. 130, 38 Stat. 392, 399 (34

ite -) 18

Act of June 30, 1921, c. 33, 42 Stat. 68, 90 .............--.--.-- 18

Act of June 30, 1922, ec. 253, 42 Stat. 716, 742-3, 754... 18

Act of February 28, 1931, ¢. 326, 46 Stat. 1431, 1442.... 17

Act of June 30, 1932, ¢. 318, 47 Stat. 421, 441-442........ 18

Act of March 3, 1933, ¢. 213, 47 Stat. 1521, 1540............ 18

Act of March 3, 1933, ec. 212, Title 3, Sec. 2, 47 Stat.

1489, 1520 (41 U.S.C.A. See. 10a) -...-.-----.0----c-seeese 18

Act of March 15, 1934, c. 69, 48 Stat. 403, 421................ 18

Act of June 24, 1935, ec. 291, 49 Stat. 398, 418................ 18

iv

Federal Rules of Civil Procedure

PAGE

Bae. Ge BR QED ccucecessenesessecsennvesessvcceannesevinmertnsmepmnammcnecees 8, 9, 28

De Ge. Fe snuininsessscenetinenienentniniunmiiaaaiiiaeanan 5, 28

A |} en 5, 6, 28

BB, C. Be FEG GD ccectececscscseessivencrevensinerenssnnecinvinnenememmunsaees 14, 29

Miscellaneous

OE Fae TID ccccsssestnnestineceniegeeesigeiehiipsceaindiniemivebiinseisiariniabaniaietiiaacatesiatiniies 93

New York Times, July 26, 1941 .....22.22.2......c.cccccscccoseseoes 4

New York Times, May 19, 1942 ...............2.--c-ccc-ccscsesscseee 4

New York Times, September 7, 1942-00000... 4

Rep. No. 263, 78th Cong. 1st Sess. .............-.-.c--s-scscscseees 23

Si, III cls ema eeaiundeasbaplniaahamant allel adeihaderieaaiaaitanmaniandiinadans 23

Webster’s New International Dictionary, 2d. Ed. ........ 17

IN THE

Supreme Court of the United States

OCTOBER TERM, 1942

—

No. 761

— a

Usirep States or America, Ex Rel. Murray BreENSILBER,

and EMANUEL THEBNER, and Murray Brensitper and

EmaxveL THEBNER, On their own behalf,

Petitioners,

v.

Bavscu & Lomp Opticar Company, Carv Zeiss, Inc., M. H.

Eis—ENHART, Cart L. Bauscu and Txueopore B. DrescHER.

BRIEF IN OPPOSITION ON BEHALF OF BAUSCH

& LOMB OPTICAL COMPANY, M. H. EISENHART,

CARL L. BAUSCH AND THEODORE B. DRESCHER

Opinion Below

The District Court rendered no opinion. The opinion

of the Cireuit Court of Appeals for the Second Cireuit

(R. 267-269) is reported in 131 F. (2d) 545.

Jurisdiction

The judgment of the Cireuit Court of Appeals sought

to be reviewed was entered November 23, 1942 (R. 270).

2

Petitioners invoke the jurisdiction of this Court under

Section 240(a) of the Judicial Code, as amended by the

Act of February 13, 1925.

Question Presented

Whether, upon the facts in this case, the court below

erred in unanimously affirming a summary judgment for

respondents in an action brought by informers under

Sections 3490-3494 and 5438 of the Revised Statutes (31

U.S.C.A., Sections 231-235), where no cause of action was

alleged, and both courts below have found and the record

shows that no false, fictitious or fraudulent claims were

made upon or against the United States.

Statutes Involved

The action is brought under Sections 3490-3494 and

5438 of the Revised Statutes (31 U.S.C.A., Sections 231-

235), sometimes known and referred to herein as the False

Claims Statute (Appendix, pp. 25-7).

Statement

This is a civil action for damages and penalties, alleged

to aggregate more than $40,000,000, brought by two

lawyers on their own behalf and on behalf of the United

States under the False Claims Statute (R. 8S. 3490-3494;

5438), which statute was recently considered by this Court

in United States ex rel. Marcus v. Hess (U. 8.), 87 L. Ed.

374 (decided January 18, 1943).

This action was instituted a year and a half after the

final disposition in 1940 of certain criminal and civil anti-

trust proceedings brought by the Department of Justice.

3

In those proceedings the Government attacked the validity

of certain agreements between Bausch & Lomb and Carl

Jeiss, of Jena, Germany (not sued herein), dealing with

the manufacture and sale of military optical instruments

under patents owned by Zeiss.* The anti-trust proceedings

terminated in pleas of nolo contendere, payment of fines,

and the entry of a consent decree (R. 243-8).°* Govern-

ment counsel in charge of those proceedings, and under

whose personal supervision the Grand Jury investigation

preceding them was made, expressly stated in open court

at the time of acceptance of the pleas, in response to a

direct question hy the Court, that no charge of fraud was

involved in connection with the acts complained of in the

indictment (R. 24). The indictment, equity complaint,

bills of particulars and exhibits, and consent decree are in

the record (R. 86-248) and were before the courts below.

Petitioners concede that their case is based solely on

the record in the anti-trust proceedings. Yet, when they

served their complaint, long after the anti-trust proceed-

ings had been terminated and ten days after Pearl Harbor

(when these respondents were still more deeply concerned

with war production), petitioners did not adhere to the

allegations made in those proceedings. Instead, peti-

tioners distorted the plain provisions of the written agree-

ments involved in those proceedings and made other false

allegations. Thus, the complaint (R. 3-10) departed from

the facts of record in the anti-trust proceedings (on which

* These agreements made it possible for Bausch & Lomb to obtain for

the use of the United States Government the patented and unpatented technical

advancements of Zeiss in the field of military optical instruments and resulted

in great benefits in the improvement of such instruments supplied to the Gov-

ernment (R. W).

** The agreements had been suspended prior to the entry of the pleas and

decree in the anti-trust proceedings (R. 246). These respondents settled those

proceedings largely because they were too preoccupied with the increasing

American armament program to prepare for and participate in a trial of the

issues (R. 23-4, W).

4

alone it was based) and, in an attempt to frame a com.

plaint against Bausch & Lomb under the False Claims

Statute, falsely alleged that under the agreements, Bausch

& Lomb agreed to and did add 20% to its prices on sales

by it of military optical instruments to the United States

Government, and agreed to and did pay the amount of such

markup to Carl Zeiss of Jena.* (Compare R. 25-7 and

933-6 with R. 5-8 and 221-2.) This was the basic charge

of the complaint and its only material allegation of fact

under the False Claims Statute.

Recognizing the gravity of charges that they had con-

spired to defraud and had defrauded their Government,

and desiring to obtain immediate and definitive relief

against the false charges so made in the complaint, these

respondents moved for an order dismissing the complaint

for failure to state a cause of action under the statute and

for summary judgment.** Respondents submitted affidavits

in support of the motion (R. 17-33), made on knowledge,

setting forth facts showing that there had been no fraud

upon, or submission of fraudulent claims to, the United

States. The affidavits further emphasized the critical

importance of immediate disposition of the case to avoid

interruption of work for the Government (i. i"

Before the return day of the motion, petitioners served

a purported amended complaint (R. 78-85), withdraw-

* The complaint contained other distortions of the facts of record in the

anti-trust proceedings; for example, that the agreements in question (1) were

made between respondent Bausch & Lomb and respondent Carl Zeiss Inc., and

(2) that the individual respondents were officers and directors not only o

Bausch & Lomb, but also of Carl Zeiss Inc. :

** These respondents also attacked the venue of the action, but requested

the district court to decide the case on the merits. Neither of the courts

below passed upon the venue question.

#** Bausch & Lomb’s contribution to our war effort has been repeatedly

recognized. (See, among others, the award to it of the Navy “E” for achieve-

ment on July 26, 1941 (New York Times, July 26, 1941) and the award to it

of the Joint Army and Navy “E” on September 7, 1942 (New York Times,

September 7, 1942). It was the first company to receive the Navy “E” with

Star (New York Times, May 19, 1942) and now has a total of three stars

for continued excellence of production.)

5

ing the above mentioned allegations. Their falsity thus

stood admitted.* In this document petitioners merely

plagiarized the Government’s charges in the anti-trust

proceedings and added conclusory allegations of fraud

substantially in the words of the False Claims Statute.

Respondents took immediate steps to prevent the peti-

tioners from delaying final decision by this manoeuver.

The purported amendment was rejected because it was

untimely under Rule 15(a)** of the Federal Rules of

Civil Procedure (R. 51, 54-6). Respondents then moved

for an order declaring the purported amended complaint

a nullity and not a proper amendment as of course

under Rule 15(a); and, in addition, that leave to amend

in accordance therewith, if requested, should be denied.

Respondents asked, however, that the purported amended

complaint be considered by the district court, on the

motion for summary judgment, as an admission by peti-

tioners of the falsity of the charges in the original com-

plaint. In the event that amendment were permitted,

respondents, in the alternative, renewed the motion to dis-

miss and for summary judgment.

The district court held the attempted amendment a

nullity, and denied leave to amend in accordance there-

* Although no explanation of the distortion of facts in the complaint was

ever offered below, the petitioners now assert that it was an inadvertence

(Pet. pp. 8, 20). For two lawyer-plaintiffs (one of whom was the sole counsel

of record in the district court) to make so many inadvertent mistakes in

plagiarizing matters of record in a suit by which they sought to recover more

than $20,000,000 for themselves is rather unusual.

The amount of the claim itself also shows a reckless disregard for facts.

The royalty record (R. 144) shows that the amount of $8,000,000 claimed by

petitioners as damages for the year 1938 alone (R. 8-9) exceeded the total

sales of military optical instruments by Bausch & Lomb in that year by over

800%. The ingenuous device of expanding the period covered by this claim

in the purported amended complaint to include the last two months of 1937

(R. 84) only makes the distortion more obvious.

Such disregard of the responsibilities of verification by counsel imposed

by Rule 11 of the Federal Rules (Appendix p. 28) furnishes some measure of

the weight to be given to the conclusory allegations of fraud in the purported

— complaint as against the statements on knowledge in the respondents’

davits.

** Appendix pp. 28-9.

,.

6

with on the ground that the proposed amended complaint

did not state a cause of action under the statute. It

thereupon dismissed the complaint and granted summary

judgment to respondents (R. 254-62). The Cireuit Court

of Appeals unanimously affirmed, per curiam, the orders

and judgment of the District Court, being of the opinion

that, whether amendment should have been permitted or

not, respondents were entitled to summary judgment

since this ‘‘action is of precisely the sort which a motion

for summary judgment was intended to nip in the bud”

(R. 267-9).°

ARGUMENT

POINT I

The decision below was correct; the proposed

amended complaint fails to state a cause of action

under the False Claims Statute.

Petitioners disavow the complaint with its false allega-

tions. They stand on the purported amended complaint

(R. 78-85). The courts below were clearly right in treat-

ing the purported amended complaint as insufficient to

* While the Circuit Court of Appeals found it unnecessary to decide

whether the time for petitioners to amend as of course had expired, since in

any event summary judgment for respondents was required, the district court

appears to have been correct in holding that the attempted amendment was a

nullity because respondents, by moving for summary judgment, had interposed

a “responsive pleading” to the complaint within the meaning of Rule 15(a),

after which petitioners lost their right to amend as of course. In so ruling,

the district court followed the only decision on the point, Triangle Conduit

& Cable Co. v. Nat. Elec. Products Corp., 38 F. Supp. 533 (D. Del., 1941),

rev'd on other grounds, 125 F. (2d) 1008 (C.C.A. 3, 1942). Compare U. S.

v. Newbury Mfg. Co., 123 F. (2d) 453 (C.C.A. 1, 1941), which deals, how-

ever, with a motion to dismiss rather than a motion for summary judgment,

to which a different rule is applicable.

In further denying leave to amend where the proposed amendment does

not state a cause of action and would, therefore, merely require the court to

entertain and grant a subsequent motion to dismiss, the district court fol-

lowed the salutary doctrine applied in Welch v. T. W. Warner Co., 47 F.

(2d) 231 (S. D.N. Y., 1930, aff'd 47 F. (2d) 232 (C.C.A. 2, 1931), and other

cases.

7

block summary judgment, as they were plainly right in

granting summary judgment for respondents on the entire

record (Point II, infra*). Consideration of the record

throws light on the reasons for petitioners’ failure to

comply with the fundamental rules of pleading discussed

below. They could not plead the necessary factual alle-

gations of the making of false or fraudulent claims by

respondents because the record shows that no such facts

exist. Thus, insistence on the insufficiency of the plead-

ings involves no mere technicality; it is necessary to pro-

tect these respondents from harassment and the courts

from further consideration of utterly unfounded and in-

sufficient allegations.

To state a cause of action under the False Claims

Statute, facts, not conclusions of law, must be alleged to

show that a false, fictitious and fraudulent claim against

the United States has been actually paid or allowed.

United States ex rel. Kessler v. Mercur Corp., 13 F. Supp.

742 (S.D. N.Y., 1935), aff’d 83 F. (2d) 178 (C.C.A. 2,

1936), cert. den. 299 U.S. 576 (1936); Cf. United States

ex rel. Marcus v. Hess, supra.

Nor is it enough to plead generally in the language

of the Statute. Glenn Coal Company v. Dickinson Fuel Co.,

72 F. (2d) 885 (C.C.A. 4, 1934) ; Lipson v. Socony-Vacuum

Corp. 76 F. (2d) 213 (C.C.A. 1, 1935), appeal dism’d.

by stip. 301 U. S. 711 (1937); Baran v. Goodyear Tire &

Rubber Co., 256 Fed. 571, 574 (S.D. N.Y., 1919) ; McJunkin

v. Richfield Oil Corp., 33 F. Supp. 466 (N.D. Calif., 1940);

Black & Yates, Inc. v. Mahogany Association, Inc., 34 F.

Supp. 450 (D. Del., 1940), reversed on other grounds, 129

_ *It is also shown in Point II that the question presented by the Petition

is not open on the record.

8

F. (2d) 227 (C.C.A. 3, 1942), cert. den. 87 L.E. 49 (Oct. 26,

1942). If facts to corroborate conclusory charges are not

alleged, the court may properly take the view that the

failure of the pleader to allege these facts creates the

presumption that they do not exist. Sun Oil Co, y,

Blevins, 29 F. Supp. 901 (W.D. La. 1939), aff’d 110 F.

(2d) 566 (C.C.A. 5, 1940).

Since actions under the False Claims Statute are in

essence actions for fraud (United States ex rel. Marcus y,

Hess, supra), the pleader must comply with Rule 9(b) of

the Federal Rules of Civil Procedure, which requires that

in all averments of fraud the circumstances constituting

the fraud must be stated with particularity.” General, un-

specific and unsupported charges of fraud are insufficient.

Holland v. Majestic Radio & Tel. Corp., 27 F. Supp. 990,

992 (S.D. N.Y., 1939); Zimmerman v. National Dairy

Products Corp., 30 F. Supp. 438 (S.D. N.Y., 1939) ; Curacao

Trading Co. Inc. v. William Stake € Co. Inc., 5 F. B.S.

64 (S.D. N.Y., 1941, not officially reported); Stanfa v.

Bynum, 37 F. Supp. 962 (W.D. La., 1941); see Murphy v.

Mitchell, 249 Fed. 499 (N.D. N.Y., 1918.)

Measured by these established requirements, it seems

obvious that even were amendment otherwise proper

(which we do not concede) the proposed amended com-

plaint could not be sustained. Nowhere does it allege

facts constituting a single instance in which a false, ficti-

tious or fraudulent claim was submitted to the United

States by these respondents and allowed or paid. It also

fails to allege such an instance with respect to Carl Zeiss

of Jena (not named as a defendant in the action). The

conclusory allegation that Bausch & Lomb and Carl Zeiss

of Jena sold military optical instruments to the United

* See Appendix p. 28.

)

States ‘‘at arbitrary, artificial and unreasonable and non-

competitive prices agreed upon’’ between them, certainly

does not constitute the required specification, however

proper the allegation might have been in an indictment

under the Sherman Act or the Wilson Tariff Act, to which

different rules of pleading apply. Similarly defective is

the charge that Bausch & Lomb (not Zeiss) submitted

«shids’’? to the United States ‘‘at prices that pretended to

be and were represented to be, and which the Government

* * * believed to be, the normal, prevailing and com-

petitive prices for such * * * instruments’’, but which

in fact were not, ‘‘but were in excess’’ of such prices. See

Standard Oil Co. v. United States, 983 U. S. 163, 172

(1931). This allegation cannot be considered the state-

ment of circumstances constituting fraud with the par-

ticularity required by Rule 9(b). The allegation imme-

diately following does not even charge that ‘‘such bids’’

were accepted by the Government, but only that “various

bids, submitted by the defendant Bausch & Lomb at vari-

ous times’’, were so accepted, the dates, prices, amounts

and other particulars of which are unknown. Information

sufficient to claim damages in the astronomical amounts

demanded should, if it existed, have permitted the specifi-

cation of at least one instance of the misconduct charged

as an earnest of petitioners’ right to proceed. Finally it

is alleged, in the words of the statute, that ‘‘the defend-

ant * * * presented for payment and approval * * *

bids, claims, invoices, bills, vouchers and statements and

aceounts’? knowing the same to be ‘‘excessive, false, ficti-

tious and fraudulent by reasons aforesaid, in that said

defendants added to the normal, prevailing and competi-

tive prices, an arbitrary amount pursuant to the con-

spiracy * * *’, and that the said claims, ete. were paid

and satisfied, But, unless suits such as this are to enjoy

10

some immunity ‘from the rules of pleading enforced in all

other fraud actions to prevent imposition on the courts,

such conclusory statements, in the statutory language, are

wholly insufficient.

It is apparent, therefore, that the District Court cor-

rectly held the purported amended complaint insufficient.

Whether the amendment was recognized or allowed and

then dismissed, or rejected at the outset, was immaterial.

Petitioners have made two attempts, on the basis of the

records in the anti-trust proceedings, to demonstrate that

they have a case within the statute on which they rely,

In their first attempt they concededly distorted the facts;

in their second, they have failed to comply with settled

requirements applicable to pleading in such actions and

have failed to allege a cause of action. The courts below

correctly concluded that this failure was due to the

absence of facts to support the serious charge made. Sum-

mary disposition was required; this litigation does not

deserve to be further prolonged.

POINT Il

The question presented by petitioners is not open

for consideration. In any event summary judgment

for respondents was required since petitioners failed

to present any genuine issue of fact.

Briefly stated, the question presented by petitioners

(Pet. p. 2) is whether an action lies under the False

Claims Statute ‘‘where the record before the Court

shows’’ that Carl Zeiss, of Jena, pursuant to agreements

with Bausch & Lomb, ‘‘when invited by the United States

to make a bid, was required to submit, and did in fact

11

submit excessive prices (so-called ‘‘protective offers’’)

fixed by the American corporation’? (Bausch & Lomb).*

Before passing to the fundamental misconstruction of

the record embraced in petitioners’ statement of the ques-

tion, it should be noted that the question is not open on

the record since no such question is tendered by or within

petitioners’ pleadings and no such claim was made in the

courts below.

It is unnecessary to look to the complaint, which peti-

tioners have abandoned. Its basic charge, that Bausch &

Lomb added 20% to its prices on sales of military optical

instruments to the United States, is concededly false.

The proposed amended complaint, the material and

legally insufficient allegations of which are set forth under

Point I, supra, likewise does not make the charge tendered

for review. It carefully distinguishes between Carl Zeiss,

Inc., a respondent to the instant petition, and Carl Zeiss,

of Jena, not named as a defendant in the action (R. 79-

80). The allegation with respect to the former is not

that it bid and submitted excessive prices, but expressly

that, pursuant to the conspiracy, it refused to bid (R. 81).

The only allegation charging affirmative action with re-

spect to the United States by Carl Zeiss, of Jena, is that

*In addition to the fundamental errors of fact embraced in petitioners’

statement of the question presented which we point out infra, pages 12-18,

there are several others which deserve mention. These respondents have not ad-

mitted that the patent licensing agreements with Zeiss were unlawful. Their

pleas of nolo contendere to the anti-trust indictment did not constitute such

admissions. See Twin Ports Oil Co. v. Pure Oil Co., 26 F. Supp. 366 (D.

Minn., 1939); Barnsdall Refining Corp. v. Birnamwood Oil Co., 32 F. Supp.

308 (E. D. Wis., 1940). The consent decree in the equity anti-trust case

(R. 243-8) expressly recognizes the respondents’ claim of innocence of viola-

tion of law (R. 243) and Section 5 of the Clayton Act (15 U.S.C.A., Sec. 16)

provides that such consent decrees are not to be treated as admissions.

Also, the question as stated in the petition infers that summary judgment

was granted by the courts below solely on the ground that “the complaint and

the unlawful agreements showed no false representations in deceit of the United

States” and that the lower courts did not consider the bills of particulars and

exhibits in the anti-trust proceedings. The fact is, of course, that the summary

judgment for respondents was necessarily based on the entire record before the

courts below.

12

“* © *® Bausch & Lomb and Carl Zeiss, of Jena, * * *

by concerted action, * * * sold, shipped and delivered

military optical instruments to the Government of the

United States at arbitrary, artificial and unreasonable and

non-competitive prices agreed on by the defendant Bausch

& Lomb with Carl Zeiss, of Jena * * *’’ (R. 81). Itis

not alleged that Zeiss ever received payments from the

United States Government for the sale of military optical

instruments, but only that Bausch & Lomb did (R. 83).

The remaining allegations, by reference to Bausch &

Lomb, or to ‘‘the defendants,’’ in terms exclude Carl

Zeiss, of Jena (R. 83-5). The proposed amended com-

plaint is not predicated upon the claim of the use of

‘‘protective offers’ by Carl Zeiss of Jena to throw busi-

ness to Bausch & Lomb (now asserted in the petition), but

wholly on alleged sales by Zeiss and Bausch & Lomb at

what are claimed to be fraudulent prices, thus making

their several claims fraudulent. What petitioners seek is

a review of a charge which they have not even pleaded, an

omission which is fatal to review here. Denver Stockyard

Co. v. United States, 304 U. S. 470, 485 (1938).

This obstacle to review is reinforced by the fact that

no such claim was made in the courts below—it is obvi-

ously a new theory presented for the first time in the

petition. There would appear to be no reason peculiarly

applicable to qui tam cases for departing from the ordi-

nary rule that this Court will not consider questions

not submitted by petitioners to the courts whose judg-

ments they attack. Helvering v. Minnesota Tea Co.,

296 U. S. 378, 380 (1935); Helvering v. Tex-Penn Co., 300

U. S. 481, 498 (1937) ; Duignan v. United States, 274 U.S.

195, 200 (1927) ; Blair v. Oesterlein Co., 275 U. S. 220, 225

(1927).

13

Even if these familiar objections to review are dis-

regarded, it is entirely clear that the decision below was

correct in granting summary judgment to the respond-

ents. The record is barren of any facts to support the

assertions in the petition that the agreements between

Bausch & Lomb and Carl Zeiss of Jena, or conduct under

them, resulted in fraud upon the United States or submis-

sion of fraudulent claims to the United States. Thus, the

petition tenders a wholly hypothetical question which this

Court should not consider.

The remedy of summary judgment is provided to per-

mit speedy determination on motion and without the de-

lays and expense of trial of cases where the record shows

that there is no genuine issue of fact to be tried. Altman v.

Curtiss-Wright Corporation, 124 F. (2d), 177, 180 (C.C.A.

2, 1941); Prudential Ins. Co. of America v. Goldstein, 43

F. Supp. 767, 768 (K.D. N. Y., 1942). Here the courts below

had before them the complete records in the anti-trust

proceedings upon which, alone, petitioners’ action was

predicated. Affidavits on knowledge submitted by these

respondents (R. 17-33) showed not only the falsity of the

complaint (which petitioners immediately admitted by

their attempt to amend) but asserted and set forth facts

showing that Bausch & Lomb had not submitted claims

within the statute. Even if objections to the sufficiency

of the pleadings (Point I, supra) are disregarded, the

petitioners’ general allegations, unsupported by the anti-

trust source material, were shown to be without substance

in fact. It is the purpose of summary judgment to cut

through such sham allegations without trial. Upon a

motion for summary judgment, the court may properly

accept statements of fact in affidavits made on knowledge

against any mere conclusory allegations made on infor-

14

mation and belief in a pleading or elsewhere. This is

the clear import of Rule 56(e), 28 U.S.C.A., following

§723e*, (see Gnozzo v. Marine Trust Company of Buffalo,

258 App. Div. 298 (1939), aff’d. without opinion, 284

N. Y. 617). This is all the more true where, as here, the

petitioners conceded the falsity of charges of fraud in

their original complaint. In the balance of this Point we

shall show in detail how completely the record fails to

show any facts supporting the assertions of fraudulent

conduct which are made for the first time in the petition.

. Petitioners’ new theory of their case requires that the

record present a triable issue on each of the following

points: (1) that competitive bids were necessary on mili-

tary optical instruments; (2) that Carl Zeiss, of Jena, was

invited by the United States Government to bid on the

sale of such instruments in competition with Bausch &

Lomb; (3) that when invited to bid Zeiss was required by

agreement to quote prices, which included an amount (a

so-called ‘‘protective offer’’) named by Bausch & Lomb,

to be added to the price which Zeiss would otherwise have

charged the Government for the particular instrument;

(4) that, in fact, Zeiss quoted such prices to the United

States Government; (5) that a contract was awarded on

the basis of such a quotation; and (6) that a claim based

on such contract was made upon and paid by the United

States. The record is completely barren of any facts sup-

porting any of these points.

At the outset of a scrutiny of the record, it is to be

noted that the provisions of the agreements between

Bausch & Lomb and Zeiss requiring ‘‘ protective offers’’

under certain circumstances, upon which petitioners rely,

were inserted in 1925 and eliminated in 1926 (R. 27,

933-4, 235-6, 241). No facts are alleged or contained in

the record showing that this provision continued in effect

* Anpendix p. 29.

15

thereafter.* On the contrary, the record specifically shows

that ‘‘protective offers’? were never used in connection

with any transaction with the United States Government

(R. 29).

The sole sources on which petitioners rely to gloss over

the deficiencies in their pleadings do not contain any facts

in support of the alleged fraud which petitioners now

claim. Such facts are not alleged in the indictment in the

anti-trust proceedings nor in the complaint in the equity

anti-trust ease. The bills of particulars, which contain the

details of the Government’s allegations in the indictment,

obtained after an exhaustive investigation, mention only

one sale (by Bausch & Lomb) to the United States Gov-

ernment, and only four other instances of any dealings or

communications of any kind involving the United States

Government in connection with Zeiss instruments. Anal-

ysis of these five instances shows that none supports

petitioners’ present claim.** In addition, respondents’

*The 1926 agreement (R. 238-42) contains no provision for “protective

offers.” Indeed, it expressly eliminates that provision (R. 241). In the teeth of

such express agreement by the parties, the provision in the 1926 agreement that

the parties shall “endeavor to give due consideration to one another's interests”

cannot be read as importing into the agreement the very provision which it elim-

inates. While the Government's indictment and equity complaint allege a

continuance in general terms, no facts in support thereof are alleged in the

indictment or equity complaint and in no instance after 1926 does the Gov-

ernment’s bill of particulars refer even to a foreign transaction involving a

“protective offer”. Communication with Zeiss on such foreign transactions is

to be regarded only as compliance by a patent licensee with the provision for

cooperation in the 1926 agreement. In these circumstances the courts below

were entitled to accept the factual statements on knowledge in these respondents’

afidavits, rather than any vague and unsupported general claims on behalf of

petitioners. Respondents had not, of course, conceded the correctness of the

allegations in the indictment or the equity complaint (R. 23-4, 30, 243). The

record thus does not contain any facts showing continuance of the “protective

offer” provision after 1926; even if it had, it would not affect the result since

it is entirely clear on the record that “protective offers” were never used in

connection with any transaction with the United States (R. 29).

** The first concerns the importation, on or about September 15, 1938, of

a stereo-telemeter by Bausch & Lomb from Carl Zeiss, of Jena, which was

sold by Bausch & Lomb to the United States Government for approximately

$24460 (RK. 118-9, 142-3). It is not included in the bill of particulars as an

instance of joint action but only in support of the jurisdiction of the Southern

District over commerce passing through it (Cf. R. 118-9, 142-3). There is

no indication whatever that this transaction was improper, the Government

i ry claim it to be, and the respondents’ affidavits establish its propriety

The second, in 1929 (R. 138), was alleged by the Government to be one

of three instances of Zeiss’ refusal to sell military optical instruments in the

16

affidavits show (R. 28-9) that in the one instance in which

a sample Zeiss instrument was supplied directly to the

United States Government (not included in the Govern.

ment’s bill of particulars and not referred to by these

petitioners) no ‘*protective offer’? was involved.

Thus the record is barren of any facts to show the

actual making of any ‘‘protective offer’’ by Zeiss to the

United States and a fortiori that there were ‘‘ protective

offers’? by Zeiss which resulted in the award of any

contract to Bausch & Lomb. Thus the ‘‘ protective offer’

provision, in effect only between 1925 and 1926, resulted

in no conduct or claims affecting the United States which

could possibly be regarded as within that provision. The

prompt excision of the provision by the parties makes

United States unless Bausch & Lomb consented (only this one involving the

Government); there was no claim that there was any “protective offer.”

On the contrary, it indicates that Zeiss submitted no offer at all, much less

a “protective offer.” Whatever may have been the relevance of such conduct

to an anti-trust case, it does not support petitioners’ claim that a fraudulent

claim was made upon the United States.

The third, fourth and fifth (R. 138-9) are stated to be instances in

which Zeiss offered to sell military optical instruments for use in the United

States with the consent of Bausch & Lomb. Of the total of four such cases

given (R. 139), one does not concern the Government. As to Items “(ii)”

in 1928 and “(iii)” in 1935 in the bill (R. 139), there is no indication that

they involved “protective offers” by Carl Zeiss, of Jena, and the Government,

in the anti-trust proceeding, made no claim that they did; nor, for that matter,

did it make any such claim with regard to Item “(i)” (R. 139), which refers

to Exhibit U (R. 188-92). Exhibit U is a copy of a letter, dated March 7,

1928, from Bausch & Lomb to Carl Zeiss, of Jena. It appears therefrom that

the American Embassy in Berlin, presumably on behalf of the Navy Depart-

ment, inquired at Nedinsco (affiliated with Zeiss) with regard to the supply

of three military optical instruments with accessories, in which modern type

Bausch & Lomb had unsuccessfully attempted to interest the authorities at

Washington. Zeiss was apparently of the opinion that, if the Embassy was

interested in the instruments, it might redound to Bausch & Lomb’s benefit in

the future, and that Bausch & Lomb should enter into an agreement with

Nedinsco with respect thereto. “Zeiss will quote date of delivery, usual for-

eign countries’ price, delivered f.o.b. Rotterdam. 10% for you * * *.” As

appears from the cablegram of March 7, 1928 (R. 191), the quoted price was

to include the commission. There is no evidence that the Government sought

competitive bids. On the contrary, it appears that Bausch & Lomb was not

invited to bid and that the inquiry abroad represented a new development in

departmental policy. Furthermore, there is no indication that the quotation

was ever actually made, and certainly none that the transaction matured into

a sale and a subsequent claim on the Government. No consummation of any

such transaction is reflected in the bill of particulars (Cf. R. 142-3). Re-

spondents’ affidavits indicate that this transaction did not in fact materialize

(R. 28-9). Since the price to be quoted was the “usual” price which Zeiss

quoted foreign countries, and included a commission of 10% for Bausch &

Lomb (R. 188), there would, in any event, be no basis for concluding that

such a quotation, if made, involved a “protective offer” or any excessive price.

17

any comment on its propriety quite academic. In further

support of the view that petitioners’ reliance on this pro-

vision is groundless, it is to be noted that there are neither

allegations nor facts indicating that Bausch & Lomb and

Carl Zeiss, of Jena, were at any time requested to make

offers to the United States Government in response to

invitations for competitive bids or that such offers were

made, or, indeed, that competitive bidding by anyone was

required by law. The opposite appears to be true of

military optical instruments.° In any event it is incon-

ceivable that the United States military authorities would

have looked to Carl Zeiss, of Jena, or any other foreign

concern, as its source of supply for such vitally important

equipment as the range finders which control the gunfire

of our ships—any more than they would have had our

battleships constructed on foreign ways.** The only pur-

* Military optical instruments, being of a highly technical and specialized

nature, are in a different category from much of the material which the Gov-

ernment purchases. Neither the Army nor the Navy is required to seek com-

petitive bids on “ordnance.” Webster's New International Dictionary, 2d Ed.,

defines “ordnance” as including range finders, etc., and the definition obviously

is broad enough to cover all military optical instruments as defined in the

complaints (R. 4, 80).

Among the statutes exempting ordnance from requirements of competitive

bidding are:

As to the Army, the Act of May 11, 1908, c. 163, 35 Stat. 106, 125 (10

US.C.A. Sec. 1199), provides :

“Whenever proposals are invited for the furnishing of articles of ord-

nance property, the character of which or the ingredients thereof are of

such a nature that the interests of the public service would be injured

by publicly divulging them, the Chief of Ordnance is authorized to pur-

= such articles in such manner as he may deem most economical and

efficient.”

See also Act of March 2, 1901, c. 803, 31 Stat. 895, 905, Act of June 30,

c. 1328, 32 Stat. 507. 514 (10 U.S.C.A. Sec. 1201).

As to the Navy, R. S. Sec. 3721 (34 U.S.C.A. Sec. 569), provides in part:

“* * * The provisions which require that supplies shall be purchased

by the Secretary of the Navy from the lowest bidder, after advertise-

ment, shall not apply to ordnance, gunpowder, * * *.”

~

1902,

** Aside from the public policy affecting military optical instruments,

during the past twenty years, at least, various Army and Navy appropri-

ation acts have contained provisions manifesting the existence of a “Buy

American” policy. The Act of February 28, 1931, c. 326, 46 Stat. 1431, 1450,

provided in part:

“That in the expenditure of appropriations in this Act, the Secre-

tary of the Navy shall, unless in his discretion the interest of the

18

chases of Zeiss military optical instruments are shown to

have been for sample purposes (R. 28). Nor is there

a single fact indicating that these respondents ever made

a claim containing a representation that was false. In

these respects and others this case differs fundamentally

from that which was recently before this Court in United

States ex rel. Marcus v. Hess, supra. Here the record

diseloses no fraud (in the form of collusive bidding or

otherwise) and, on the contrary, expressly disproves it,

and the two courts below have concurred in finding it

absent and that there exists no issue of fact worthy of

trial. In the Marcus case, fraud had been found by the

jury and was conceded on appeal.

There is no basis for petitioners’ somewhat varied

claims (Cf. Pet. pp. 2, 16 and 18) that there was any

misrepresentation in the transactions with the United

States. The record shows no instance in which a bid

Zeiss or Bausch & Lomb did influence or possibly

could have influenced the bid of the other or the Govern-

ment’s action on any bid. There is wanting any indication

that, in fact, the Government ever purchased anything

from either at excessive prices or that any claim within

the statute was ever submitted by either. These infirmi-

ties do not go merely to the question of damages, as peti-

Government will not permit, purchase or contract for, within the limits

of the United States, only articles of the growth, production or manu-

facture of the United States, notwithstanding that such articles of the

growth, production or manufacture of the United States may cost more,

if such excess of cost be not unreasonable.”

Identical language is to be found in the following Navy Department

appropriation acts: Act of June 30, 1932, c. 318, 47 Stat. 421, 441-2; Act of

March 3, 1933, c. 213, 47 Stat. 1521, 1540; Act of March 15, 1934, ¢. 69,

48 Stat. 403, 421; Act of June 24, 1935, c. 291, 49 Stat. 398, 418.

Army appropriation acts containing provisions of similar import are:

Act of June 30, 1921, c. 33, 42 Stat. 68, 90; Act of June 30, 1922, c. 253,

42 Stat. 716, 742-3, 754.

Furthermore, this “Buy American” policy is given general application by

the Act of March 3, 1933, c. 212, Title 3, Section 2, 47 Stat. 1489, 1520 (41

U.S.C.A. Sec. 10a) (see also Act of June 30, 1914, c. 130, 38 Stat. 392, 399

(34 U.S.C.A. Sec. 568) ).

19

tioners suggest (Pet. p. 20), they are basic defects in

their cause of action. They required the courts below to

make summary disposition of this case as they did. It

would have been a travesty to interrupt the criticai mili-

tary production of these respondents by requiring tiiem

to submit to examinations before trial and trial (involv-

ing highly confidential work done for the Army and

Navy with the obvious dangers to military security) while

petitioners sought vainly for evidence to support general

charges of fraud which Government counsel found absent

after a Grand Jury investigation.

The failure of the record to sustain petitioners’ claims

of fraud is not surprising. Petitioners’ charges are now

based entirely on the anti-trust proceedings, since they

have recanted the false charges in the original complaint.

And the Government (partial beneficiary of this action)

expressly disclaimed any charge of fraud in connection

with the very transactions which are the sole basis of

this suit. At the time the District Court was asked by

counsel for the Government and for these respondents to

accept nolo contendere pleas to the anti-trust indictment,

the Court specifically asked Hon. Samuel S. Isseks, the

Special Assistant to the Attorney General in personal

charge of those proceedings, whether any charge of fraud

was involved, and Mr. Isseks replied: ‘** * * There

is no charge of fraud against the defendants in connec-

tion with the acts complained of in the indictment’? (R.

24). The Court’s question was not idle; its obvious pur-

pose was to ascertain whether respondents’ conduct justi-

fied the acceptance of mere nolo pleas. The representa-

tion made to the Court by Government counsel in charge

of the case is entitled to great weight. The statement

was made after a thorough investigation, with the aid of

20

Grand Jury subpoenas. It was made, moreover, by an

official acting in the place of the District Attorney whose

statutory duty it is to enforce the False Claims Statute

by appropriate proceedings, civil and criminal, as well

as the anti-trust laws. Thus, petitioners err in implying

that the statement was somehow ultra vires, and it is

hardly fair to Government counsel to imply that he was

seeking to mislead the Court by using words in any tech-

nical sense when making a representation to the Court,

whose purpose in asking for it he fully apprehended. We

submit that the statement of disinterested Governinent

counsel lends strong support to the decisions below. It

casts the gravest doubt on the interested interpretation of

the same transactions by those who made no personal

investigation of them.

The moving affidavits for these respondents categori-

cally stated that bids by Bausch & Lomb to the United

States had not been participated in, or influenced by,

Zeiss, and that such bids were not inflated (R. 27-33).

Similarly, there were explicit statements made on knowl-

edge that no false, fictitious or fraudulent documents had

been submitted to the Government. Thus, upon the whole

record, the courts below were bound to grant summary

judgment for these respondents. The court below said:

‘To subject the defendants to a long harass-

ment hy examination and trial upon a certainly

empty charge could serve no purpose except pos-

sibly to force them to buy their peace, an extortion

against which $232 would not protect them’’ (R.

269).

In this case petitioners have actually done no more

than replead a violation of the anti-trust laws where all the

penalties vrovided for by those laws have heen exacted.

21

They suggest thai the remedies for violation of those laws

are inadequate (Pet. p. 24) and seem to urge that this

action should be maintainable to supplement the remedies

provided by law. But they are pursuing no remedy

authorized by the anti-trust laws, and, if those laws need

additional sanctions, Congress must provide them. Con-

gress has provided very explicitly the essentials to permit

recovery in such actions as this, as this Court has recently

indicated in its opinion in United States ex rel. Marcus v.

Hess, supra. This ease fails to meet those requirements.

POINT Ill

There is no conflict of decisions and the case is of

no general importance.

The agency rule in conspiracy cases is entirely inap-

plicable here. This record contains no facts to show that

Zeiss (or Bausch & Lomb) made false representations to

the United States either in furtherance of an alleged

conspiracy or otherwise. It is obvious that there is no

conflict with the familiar decisions in this field and the

failure of the experienced court below even to advert to

them emphasizes the fact that petitioners are now making

a fresh contention which was not made below.

Nor is there conflict between the decisions helow and

McMullen v. Hoffman, 174 U. S. 639, or the other cases

cited on page 17 of petitioners’ brief. There is not only

no factual allegation of “protective offers’? by Zeiss to

the United States but it affirmatively appears that there

was no inflation of bids by Bausch & Lomb. There was

therefore wholly absent the fraud and misrepresentation

which is the predicate for this claimed conflict.

22

Likewise there is no conflict with the recent decision

in U. S. ex rel. Marcus vy. Hess, supra. The court below

applied to the facts here essentially the same standards

which this Court applied in its decision in the Marcus case

and it pointed out the fundamental distinction between

the facts in the two cases. In the Marcus case there was

collusive bidding and there were false statements in some

if not all bids that bidding was not collusive. F aud was

found by the jury and was not denied on appeal. Here

all of those elements are wholly lacking.

This case depends upon its particular and special facts

and the decision below cannot affect other Government

contract cases with different facts. The contractual pro-

vision principally relied upon by petitioners was in fact

wholly inoperative against the United States and consid-

eration of that provision is academic. The record gives

no support to the general claim (Pet. p. 25) that colorable

bids were submitted and that either party was enabled

thereby to increase its bids, and the decision below cannot

be regarded as upholding such a practice—particularly

where no such contention was even made in the pleadings

or in the courts below.

Since the Court has so recently expounded the applie-

able statute in United States ex rel. Marcus v. Hess, supra,

there is no need to reexamine it when it was correctly

applied below. While in his brief amicus in the Marcus

ease the Solicitor General indicated his belief that the

court below erred in one portion of its opinion (in that

it construed the statute as requiring proof of deceit), he

does not appear to have doubted the correctness of the

final result below. Indeed in a portion of his brief not

quoted by petitioners (p. 45) he seems to have indicated

23

his belief that the decision below was correct in so far as

the particular facts in the case are concerned. In any

event, since the disposition of the case by the courts below

was clearly correct, there is no occasion to grant review

merely to consider the Solicitor General’s comment, which

was obviously made chiefly to preserve the right to argue

for a broader construction of the statute in a proper case.

The Government can always litigate the question so

mooted when it arises in a proper case. Here the charge

is false representation or deceit and it is immaterial to

this ease whether other facts going beyond deceit would

fall within the statute. It would be an undue hardship on

the respondents to grant review merely for the purpose of

considering this criticism, when the result, in this case,

would not be affected.

Furthermore, it may be noted that Congressional action

to repeal the informer provision of the False Claims

Statute appears to be imminent so that subsequent cases

under that provision may not arise. Repeal has been

requested by the Attorney General*, the House has passed

the Bill (H.R. 1203) and the Senate Committee on the

Judiciary has under consideration a similar Bill (S. 920),

at this writing.

Conclusion

The case was correctly decided helow, there is no con-

fict of decisions and, as the decision helow depends upon

the particular facts, it is of no general importance. The

Court has so recently construed the same statute that no

further explication is now needed. The question presented

*See letter of Attorney General Riddle to the Speaker of the House,

dated August 28, 1942, included in Rep. No. 263, 78th Cong. Ist Sess.

24

does not appear to be open for review upon this record,

We, therefore, respectfully submit that the petition for

writ of certiorari should be denied.

Wuirney Nortu Seymour,

Counsel for Bausch & Lomb Optical

Company, M. H. Eisenhart, Carl L.

Bausch and Theodore B. Drescher.

Simpson THACHER & BaRTLeTT,

Apert C. BickForD,

Of Counsel.

April 16, 1943.

25

Appendix A

FALSE CLAIMS STATUTE

31 U. S. C. A., Sections 231-235

(R. S., Sections 3490-3494, 5438)

$231. Liasmity or Persons Maxine Fase CLais.

Any person not in the military or naval forces of the

United States, or in the militia called into or actually em-

ployed in the service of the United States, who shall make

or cause to be made, or present or cause to be presented,

for payment or approval, to or by any person or officer

in the civil, military, or naval service of the United States,

any claim upon or against the Government of the United

States, or any department or officer thereof, knowing such

claim to be false, fictitious, or fraudulent, or who, for the

purpose of obtaining or aiding to obtain the payment or

approval of such claim, makes, uses, or causes to be made

or used, any false bill, receipt, voucher, roll, account,

claim, certificate, affidavit or deposition, knowing the same

to contain any fraudulent or fictitious statement or entry,

or who enters into any agreement, combination, or con-

spiracy to defraud the Government of the United States,

or any department or officer thereof, by obtaining or aid-

ing to obtain the payment or allowance of any false or

fraudulent claim, or who, having charge, possession, cus-

tody, or contrel of any money or other public property

used or to be used in the military or naval service, who,

with intent to defraud the United States or willfully to

conceal such money or other property, delivers or causes

to be delivered, to any other person having authority to

receive the same, any amount of such money or other

property less than that for which he received a certificate

or took a receipt, and every person authorized to make

or deliver any certificate, youcher, receipt, or other paper

certifying the receipt of arms, ammunition, provisions,

clothing, or other property so used or to be used, who

makes or delivers the same to any other person without a

26

full knowledge of the truth of the facts stated therein,

and with intent to defraud the United States, and every

person who knowingly purchases or receives in pledge for

any obligation or indebtedness from any soldier, officer,

sailor, or other person called into or employed in the

military or naval service any arms, equipments, ammuni-

tion, clothes, military stores, or other public property,

such soldier, sailor, officer, or other person not having the

lawful right to pledge or sell the same, shal! forfeit and

pay to the United States the sum of $2,000, and, in addi-

tion, double the amount of damages which the United

States may have sustained by reason of the doing or com-

mitting such act, together with the costs of suit; and such

forfeiture and damages shall be sued for in the same suit.

(R. S. $§ 3490, 5438.)

§ 232. Same; Surrs. The several district courts of the

United States, the supreme court of the District of Colum-

bia, the several district courts of the Territories of the

United States, within whose jurisdictional limits the per-

son doing or committing such act shall be found, shall,

wheresoever such act may have been done or committed,

have full power and jurisdiction to hear, try, and deter-

mine such suit. Such suit may be brought and carried on

by any person, as well for himself as for the United

States; the same shall be at the sole cost and charge of

such person, and shall be in the name of the United States,

but shall not be withdrawn or discontinued without the

consent, in writing, of the judge of the court and the

district attorney, first filed in the case, setting forth their

reasons for such consent. (R. 8S. § 3491.)

§ 233. Dury or Districr Atrorney as To Sucn Cases.

It shall be the duty of the several district attorneys of the

United States for the respective districts, for the District

of Columbia, and for the several Territories, to be diligent

in inquiring into any violation of the provisions of section

231 of this title by persons liable to such suit, and found

within their respective districts or Territories, and to

cause them to be proceeded against in due form of law for

27

the recovery of such forfeiture and damages. And such

rson may be arrested and held to bail in such sum as

the district judge may order, not exceeding the sum of

$2,000, and twice the amount of the damages sworn to in

the affidavit of the person bringing the suit. (R. 8. § 3492.)

§ 234. Ricuts or Persons Presentrnc Sucw Suits.

The person bringing said suit and prosecuting it to final

judgment shall be entitled to receive one-half the amount

of such forfeiture, as well as one-half the amount of the

damages he shall recover and collect; and the other half

thereof shall belong to and be paid over to the United

States; and such person shall be entitled to receive to his

own use all costs the court may award against the defend-

ant, to be allowed and taxed according to any provision of

law or rule of court in force, or that shall be in force in

suits between private parties in said court: Provided,

That such person shall be liable for all costs incurred by

himself in the case, and shall have no claim therefor on

the United States. (R. S. § 3493.)

$235. Limrration or Surt. Every such suit shall be

commenced within six years from the commission of the

act, and not afterward. (R. S. $3494.) '

28

Appendix B

RULES OF CIVIL PROCEDURE FOR THE DISTRICT

COURTS OF THE UNITED STATES

28 U.S.C.A. following § 723¢

Rule 9(b). Fraud, Mistake, Condition of the Mind.

In all averments of fraud or mistake, the circumstances

constituting fraud or mistake shall be stated with particu-

larity. Malice, intent, knowledge, and other condition of

mind of a person may be averred generally.

Rule 11. Signing of Pleadings. Every pleading of a

party represented by an attorney shall be signed by at

least one attorney of record in his individual name, whose

address shall be stated. A party who is not represented

by an attorney shall sign his pleading and state his ad-

dress. Except when otherwise specifically provided by

rule or statute, pleadings need not be verified or accom-

panied by affidavit. The rule in equity that the averments

of an answer under oath must be overcome by the testi-

mony of two witnesses or of one witness sustained by

corroborating circumstances is abolished. The signature

of an attorney constitutes a certificate by him that he has

read the pleading; that to the best of his knowledge, in-

formation, and belief there is good ground to support it:

and that it is not interposed for delay. If a pleading is

not signed or is signed with intent to defeat the purpose

of this rule, it may be stricken as sham and false and the

action may proceed as though the pleading had not been

served. For a wilful violation of this rule an attorney

may be subjected to appropriate disciplinary action. Simi-

lar action may be taken if scandalous or indecent matter

is inserted.

Rule 15(a) Amendments. A party may amend his

pleading once as a matter of course at any time before a

29

responsive pleading is served or, if the pleading is one to

which no responsive pleading is permitted and the action

has not been placed upon the trial calendar, he may so

amend it at any time within 20 days after it is served.

Otherwise a party may amend his pleading only by leave

of court or by written consent of the adverse party; and

leave shall be freely given when justice so requires.

party shall plead in response to an amended pleading

within the time remaining for response to the original

pleading or within 10 days after service of the amended

pleading, whichever period may be the longer, unless the

court otherwise orders.

* . . * . * * *

Rule 56—Summary Judgment.

(e) Form of Affidavits; Further Testimony. Support-

ing and opposing affidavits shall be made on personal

knowledge, shall set forth such facts as would be admis-

sible in evidence, and shall show affirmatively that the

affiant is competent to testify to the matters stated therein.

Sworn or certified copies of all papers or parts thereof

referred to in an affidavit shall be attached thereto or

served therewith. The court may permit affidavits to be

supplemented or opposed by depositions or by further

affidavits.