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United States v. Cherkasky Meat Co.

decided: September 11, 1958.


Author: Staley

Before McLAUGHLIN, KALODNER and STALEY, Circuit Judges.

STALEY, Circuit Judge.

Purely factual issues are presented by this appeal in a civil action brought by the United States for the recovery of double damages and forfeitures under the provisions of the False Claims Act, 31 U.S.C.A. ยง 231.*fn1

From November 1, 1947, through October 31, 1950, the United States entered into 300 contracts or purchase orders with the defendant Cherkasky Meat Company, Inc.,*fn2 whereby defendant undertook to supply the armed forces with "boneless beef" from the carcasses of steers and heifers of the grade "U.S.Good" or better. "Boneless beef" is a product unknown in the civilian market. The bones and much of the fat are removed, and the meat is divided into three classes for shipment. The first consists of cuts for roasting and frying; the second, for braising and stewing; and the third consists of ground beef. By boning the meat, much shipping space is saved, and the resulting product is more readily usable at the army installation.

In his opening statement, counsel for the government informed the court that the Army received information from an anonymous source in November of 1950 that the Cherkasky company was defrauding the government by delivering boneless beef which did not conform to the contract specifications.

Further investigation led in 1953 to criminal prosecution of the company and two of its officers. They were acquitted of all charges.

On October 9, 1953, after the criminal trial was over, a civil action was commenced against the Cherkasky Meat Company, Inc., and the officers of the firm. The complaint charged a conspiracy among Cherkasky, four army Veterinary Corps inspectors, one civilian inspector employed by the government, and "diverse unknown persons." The alleged object of the conspiracy was to defraud the United States by obtaining or aiding to obtain payment of false or fraudulent claims. During the period of years in question the inspectors had supervised the work done for the Army at the Cherkasky plant and had inspected the carcasses, putting a stamp upon those which met with the contract specifications as steer or heifer, graded "U.S.Good" or better.The theory of the government obviously had been that the inspectors, in collusion with Cherkasky, had certified meat other than the class and grade specified in the contracts for delivery to the Army.

On the very first day of trial, however, the government dramatically moved to amend its complaint by striking the names of the inspectors as co-conspirators. Government counsel admitted that as to them he had no evidence on which to base the charges made in the complaint. Although the district court denied the government's motion because of its lateness, it did agree to accept as true that the inspectors were not implicated in any wrongdoing. As a consequence of the government's admission in that regard, it was then compelled to change its theory and attempt to prove that while the inspectors were honest and competent beyond reproach, nonetheless, through the fraud of the defendants, ineligible meat got into the Army shipments, and that this was made possible because there was an insufficient number of inspectors at the Cherkasky plant and because of overtime and week-end work not supervised by the inspectors.

The trial lasted fifteen days; fifty-two witnesses were introduced by the government, along with thousands of exhibits.*fn3 After hearing all of the government's evidence, the district court made findings of fact that the government failed to establish that defendants through fraud delivered substandard meat to the Army; further, it found that defendants had not presented false claims for payment. The complaint was dismissed and judgment entered for defendants.

The government urges that the findings of the district court were clearly erroneous.*fn4 It is the government's position that the character of the evidence was such that we should apply the rule stated in Dollar v. Land, 1950, 87 U.S.App.D.C. 214, 184 F.2d 245, 249, certiorari denied, 340 U.S. 884, 71 S. Ct. 198, 95 L. Ed. 641, where the Court of Appeals for the District of Columbia Circuit quoted with approval the following statement from the opinion of the Second Circuit in Orvis v. Higgins, 2 Cir., 1950, 180 F.2d 537, 539:

"Where a trial judge sits without a jury, the rule varies with the character of the evidence: (a) If he decides a fact issue on written evidence alone, we are as able as he to determine credibility, and so we may disregard his finding. (b) Where the evidence is partly oral and the balance is written or deals with undisputed facts, then we may ignore the trial judge's finding and substitute our own, (1) if the written evidence or some undisputed fact renders the credibility of the oral testimony extremely doubtful, or (2) if the trial judge's finding must rest exclusively on the written evidence or the undisputed facts, so that his evaluation of credibility has no significance."

In addition, we are told that the trial court disregarded the testimony of many witnesses who were not contradicted and whose testimony therefore should have been accepted.

The mere absence, however, of directly conflicting testimony given by witnesses of the opposing parties does not necessarily mean that the evidence in the record is devoid of those characteristics which require a trier of fact to evaluate it. Here, it is abundantly clear not only that a choice had to be made as to the meaning to be given certain equivocal testimony from the same witness, but the district court had to determine the probative value of the testimony of many witnesses where such evaluation could very well turn upon either the lack of opportunity to acquire knowledge of the fact, or the extent of the expertise of the witnesses who had expressed certain opinions. All of these circumstances appearing in this record indicate clearly that the trier of fact had something more to perform than an empty ritual.

The evidence of the plaintiff is divided by it into three classifications. The first is the invoices of Cherkasky's suppliers. The government introduced hundreds of these in an attempt to show from Cherkasky's purchases during the period involved that it would have been impossible for Cherkasky to have supplied the Army with meat of the class and grade specified in the contracts. The second classification is the testimony of Cherkasky's employees that they boned large quantities of cows which were ineligible under the Army contracts and that they worked on Saturdays, Sundays, and at other times in the absence of government inspectors. The third classification, closely related to the second, involves evidence of ...

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