United States ex rel. Jahr et al. v. Tetra Tech EC

Background

The United States and Tetra Tech EC, Inc. notified the court that they had agreed to settle the first four causes of action in the United States’ Second Amended Complaint in Intervention. Those claims were: (1) presenting false claims under the False Claims Act; (2) making a false statement material to a false claim under that Act; (3) common-law fraud; and (4) breach of contract. Tetra Tech agreed to pay the United States $57,000,000 plus interest.

The settlement agreement allocated $51,870,000 to the “Soil Fraud Allegations” and $5,130,000 to the “Building Scan Fraud Allegations.” The United States asked the court to approve the settlement as fair, adequate, and reasonable under the False Claims Act.

The United States had separately settled its fifth cause of action, a claim under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) for recovery of response costs. The court had entered a consent decree requiring Tetra Tech to pay $40,000,000 to the U.S. Department of the Navy.

CERCLA Settlement

The relators argued that they were entitled to share in the $40 million CERCLA settlement in addition to receiving a share of the separate False Claims Act settlement. The court rejected that position. It explained that the False Claims Act limits qui tam plaintiffs—private parties who sue on behalf of the government—to recoveries based on the types of fraud or falsehoods covered by that statute. The CERCLA claim was not a claim cognizable under the False Claims Act and did not allege the required effort to obtain money or property from the United States through a false or fraudulent claim. The relators therefore were not entitled to a share of the CERCLA payment.

Approval of the False Claims Act Settlement

The court declined to approve the proposed False Claims Act settlement on the record then before it. Although the court stated that it must respect the government’s decision to settle, it also explained that the statute requires judicial review for fairness and does not permit the court simply to accept the government’s reasons without meaningful examination.

The court found that the government had not meaningfully explained why this particular settlement was justified. Its submission offered general reasons such as obtaining a certain $57 million recovery, avoiding further litigation costs, and creating a deterrent effect. The court found those general statements insufficient, particularly because it was not obvious that the settlement was fair and reasonable given radiation-remediation concerns and other serious circumstances in the case.

The court also directed the parties to address what should happen to any disputed portion of the relators’ shares while the settlement proceeds. The government had asked the court to approve the settlement before resolving the relators’ shares but had not substantively addressed that issue.

Relators’ Shares

The relators sought a 23% share of the settlement proceeds as a group, while asking that case-specific allocation be deferred. The government proposed awarding the Jahr relators, as a group, 20% of the $51,870,000 allocated to soil-sampling fraud. It argued that Anthony Smith, Donald K. Wadsworth, and Robert McLean were barred from receiving a share of that amount under the False Claims Act’s first-to-file rule. For the $5,130,000 allocated to building-scan fraud, the government proposed awarding 20% only to Smith.

The court found both sides’ proposals “hopelessly vague and deficient.” It directed the parties to analyze relator shares claim by claim rather than relying on the settlement agreement’s broad allocation between soil fraud and building-scan fraud. The parties also had to provide evidentiary support for their proposed allocations and address, claim by claim, any argument that a relator was barred by the first-to-file rule or another statutory bar.

The court further required concise arguments, supported by specific evidence, concerning whether each relator substantially contributed to prosecuting the action. It struck the relators’ 98-page statement about their contributions and terminated the associated sealing motion. The court also required any proposal to award money jointly to a group of relators to address whether joint awards were legally proper or whether each relator’s award had to be separately specified.

Next Steps and Disposition

The parties were ordered to file supplemental briefs addressing approval of the False Claims Act settlement and the relators’ shares by December 5, 2025. Each side could file up to 30 pages, and the court expected declarations and other evidence. After receiving the submissions, the court would request responses or set an evidentiary hearing if warranted.

The order therefore did not approve the $57 million False Claims Act settlement at that stage. It held that the relators were not entitled to share in the separate $40 million CERCLA settlement, struck the relators’ contribution statement and proposed order, terminated the related sealing motion, and ordered further submissions on settlement approval and the relators’ shares.