US Navy contractor asks judge to approve $1.5 million settlement in environmental fraud case

SAN FRANCISCO (CN) — A U.S. Navy contractor asked a federal judge Thursday to approve a $1.5 million settlement in a lawsuit that will resolve claims they falsified soil samples to conceal radioactivity at a former shipyard in San Francisco.

The lawsuit arose from accusations that Tetra Tech EC, a wholly owned subsidiary of Tetra Tech Inc., ordered workers to destroy post-cleanup soil samples that “had some of the highest radioactive readings” and replace them with samples from other areas of the site while avoiding “radioactive hot spots.”

The Hunters Point shipyard in San Francisco’s Bayview neighborhood was home to top-secret nuclear tests from 1946 to 1969 and a place where ships returning from hydrogen bomb tests were decontaminated, both potential sources of radioactive waste.

The plaintiffs also named real estate developers Five Point Holdings LLC and the Lennar Corporation as defendants.

The case was referred to a mediator for settlement in 2020. The parties accepted the mediator’s proposal for settlement in October. Claims against the developers were settled separately for $10.8 million.

U.S. District Judge James Donato of the Northern District of California, a Barack Obama appointee, did not rule on whether he would grant preliminary approval and took the motion under submission.

The plaintiffs include 6,500 individuals who opted in to the lawsuit. Under the agreement, those who want to participate in the settlement will be required to submit a release waiving their rights to sue Tetra Tech and its subsidiaries for any settled claims.

The $1.5 million award will be split among qualified plaintiffs, with a minimum estimated individual recovery of $230. Each plaintiff will also be required to pay their own attorneys’ fees.

At the hearing, Geoff Yost of O’Melveny & Myers, an attorney for Five Point Holdings, objected to the settlement agreement, claiming it was not made in good faith. Yost claimed the plaintiffs made no effort to explain why $1.5 million was enough to justify the “broad release” of future claims against Tetra Tech, given the plaintiff’s initial $27 billion claim against the company.

He further argued the $1.5 million Tetra Tech settlement mirrored the $5.4 million initial settlement the developers reached with the plaintiffs, which Donato initially denied and called “paltry.” The developers later agreed to pay $10.8 million to settle the case, more than seven times the amount Tetra Tech agreed to pay.

“Going off of the court’s ruling of our settlement as a massive waiver of rights for plaintiffs, this is not good faith,” Yost said.

Donato responded to Yost’s concerns by saying Tetra Tech’s settlement was not a “sour grapes, sorry I settled first” situation and said the scope of relief was narrower compared to the developer’s settlement.

The judge additionally asked the plaintiffs why they settled with Tetra Tech for $1.5 million, when they negotiated an award of over $10 million from the developer defendants.

Cabral Bonner of Bonner & Bonner, an attorney for the plaintiffs, said the facts they understood to be true at the beginning of the lawsuit had changed as the case progressed, and there were concerns about losing even more of a potential settlement if they could not get past summary judgment.

“You decided after seeing all the evidence that you felt, as the lawyer for this group, that you could not satisfy the legal requirement to get a home run in this case?” Donato asked Bonner.

Bonner agreed, adding there was no way to prove that claims of injury or adverse health effects were tied directly to Tetra Tech’s actions and not other factors.

“Before Tetra Tech contracted with the government, studies showed that people in Hunters Point have higher rates of cancer and asthma,” he said. “How can we actually establish that radioactive material in the ground caused anyone’s death?”

Lawyers for Tetra Tech maintained their denial of the plaintiffs’ claims and said there was no evidence in the record or expert analysis that Tetra Tech’s actions caused any radiation exposures.

Following the hearing, Bonner told Courthouse News that while the settlement amount may not be what the plaintiffs initially hoped for, he is pleased that they secured some relief.

“Sometimes the factual and legal realities don’t support what you want when you first bring it, but what’s undeniable is that for maybe the first time, the residents of Hunters Point are going to be compensated for being the victims of decades of environmental racism,” he said.

Representatives for Five Point Holdings and Tetra Tech did not immediately respond to a request for comment.

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