Attorney argues whistleblower lawsuit can proceed even in claims the government hasn’t joined

SAN FRANCISCO -- The attorney representing whistleblowers against Navy contractors accused of widespread fraud in the cleanup of contaminated former naval bases urged a federal judge Thursday to allow claims in which federal prosecutors are not participating to proceed.

The government intentionally passed on certain allegations because they are relying on the whistleblowers to pursue them, argued plaintiffs' attorney David C. Anton.

U.S. District Judge James Donato did not make a decision at the hearing but appeared inclined to agree.

"If the government elects not to proceed, the person who initiates the action has a right to conduct the action," Donato said. "It's implied that if the government doesn't pick it up that plaintiffs should be free to go forward, and that makes sense with congressional intent."

The U.S. Department of Justice intervened in a whistleblower suit against Tetra Tech EC Inc., alleging extensive misconduct in the radiological assessment and cleanup of the Hunters Point Naval Shipyard in October 2018. The government chose not to participate in claims against Tetra Tech and other Navy contractors for allegedly fraudulent work at naval bases on Treasure Island and in Alameda.

There are three whistleblower lawsuits accusing Navy contractors of fraud at various sites.

Donato considered whether plaintiffs should be allowed to move forward with their claims concerning misconduct at Treasure Island and Alameda without federal prosecutors in addition to allegations of fraud at Hunters Point which were not included in the DOJ's lawsuit.

As it stands, federal prosecutors will lead litigation over Hunters Point, and Anton will lead litigation over the other sites.

Tetra Tech did not immediately respond to requests for comment.

Seven plaintiffs alleged violations of the False Claims Act, which permits private parties to sue on behalf of the United States and allows the government to intervene if it chooses. United States ex rel. Jahr v. Tetra Tech EC Inc., 13-CV3835 (N.D. Cal., filed Aug. 19, 2013).

The claims in which federal prosecutors did not intervene should be dismissed because the government cannot participate "in part or on certain claims," argued defense attorney Samir J. Abdelnour of Hanson Bridgett LLP. The government can proceed as the lead plaintiff and lead the litigation or the private parties can take over and Anton can lead the case but not both, he said.

"There is no third, middle ground option," he said.

Donato said he was skeptical because "these are different sites." He added it was reasonable for federal prosecutors to choose one lawsuit to intervene in because it "only picks up about a third of False Claims Act [cases] filed."

"The government, to some extent, is probably relying on the plaintiffs to prosecute the claims," he said. "Trust me, I know that."

Anton agreed with the judge's characterization over why federal prosecutors chose not to intervene in all of the claims because it "sometimes doesn't notice what's going on and needs people like my whistleblowers to bring information forward."

He said he has been working with the government on this matter for five years, and they decided to split responsibilities because of limited resources.

Donato ruled for federal prosecutors to submit a master complaint and for Anton to submit another detailing claims unrelated to fraud at Hunters Point to bring "efficiency and rationality" to what he described as an "intra-district, multi-district litigation."

He also paused discovery until the parties submit their amended complaints since there are so many overlapping lawsuits concerning alleged fraud at Hunters Point.

The Navy paid Tetra Tech roughly $270 million for the initial work. Because much of it now needs to be redone, total cleanup expenses are expected to climb to $570 million, according to the Navy's director of base realignment and closure, Laura Duchnak.

Tetra Tech may be on the hook for upwards of $1 billion since the government can seek up to three times the amount of damages in whistleblower suits.

Hunters Point is home to one of the city's largest development projects with more than 5,000 approved homes and 4 million square feet of commercial space. Five Point Holdings LLC has paused the project because the Navy cannot transfer the land designated for development since it is still alleged to be hazardous.