Pennington v. Tetra Tech, Inc.

Background

The plaintiffs are current and former homeowners who purchased homes in Parcel A of the former Hunters Point Naval Shipyard. They alleged that the continuing toxic condition of the site diminished their home values. The complaint asserted seven types of claims against each defendant group: public nuisance, private nuisance, unfair and unlawful competition, fraud and false advertising, negligence, negligent misrepresentation, and intentional misrepresentation.

The plaintiffs alleged that the Tetra Tech defendants failed to properly remediate nuclear and toxic materials and falsified soil-test results. They alleged that the Lennar defendants knew or should have known that Tetra Tech was not properly performing cleanup, remediation, or testing responsibilities and failed to investigate or disclose the risk of contamination.

The plaintiffs reached a settlement only with the Lennar defendants. The Lennar defendants agreed to pay $6.3 million to the settlement class. The Tetra Tech defendants objected to the proposed good-faith settlement, arguing that the Lennar defendants were paying too little compared with their alleged share of responsibility.

Good-Faith Settlement

The court granted the Lennar defendants’ request for a good-faith settlement determination under California Code of Civil Procedure sections 877 and 877.6. Those provisions generally protect a settling defendant from contribution or comparative-indemnity claims by other joint tortfeasors when the settlement was made in good faith.

Applying the factors identified by the California Supreme Court in Tech-Bilt, Inc. v. Woodward-Clyde & Associates, the court compared the settlement payment with the plaintiffs’ potential total recovery and the Lennar defendants’ possible proportionate liability. For purposes of the analysis, the plaintiffs’ maximum recovery was treated as $51.5 million, and the plaintiffs had estimated that a factfinder could assign the homebuilders between 10% and 50% of the fault. The court concluded that the $6.3 million payment was within the broad range of settlements that could be considered made in good faith.

The court rejected the Tetra Tech defendants’ arguments that the Lennar defendants were primarily responsible because of alleged disclosure failures. The court also noted that the Tetra Tech defendants did not challenge other settlement factors, such as allocation of the proceeds, collusion, or fraud. The court emphasized that it was not making findings of fact or deciding any defendant’s liability.

Final Class-Settlement Approval

Under Federal Rule of Civil Procedure 23(e), the court granted final approval of the class settlement. The court confirmed the settlement class, consisting of individuals or entities that purchased or obtained title to one or more units in Parcel A between 2014 and the date when all parties executed the settlement agreement. The court also confirmed Linda Parker Pennington as class representative and Cotchett, Pitre & McCarthy, LLP as class counsel.

The court found that notice was provided in the best practicable manner, including postcard notice, email notice, and a settlement website. The individual notice efforts reached 100% of the identified settlement class. No class members objected or requested exclusion from the settlement.

The settlement provides payments based on objective information, including purchase price, purchase date, whether the property was bought at market rate, and, for resold homes, the sale date and price. The court found that the allocation was fair, reasonable, and equitable. Payments were expected to range from hundreds of dollars to tens of thousands of dollars. Settlement administration costs of up to $50,000 would be paid separately by the Lennar defendants. Uncashed amounts would be redistributed to class members or given to the Shipyard Trust for the Arts as a charitable recipient connected to the class’s interests.

Eight people affiliated with the Lennar defendants were excluded from the settlement class: Kofi Sampaney Bonner; Kofi Sampaney Nigel Bonner; Kofi S. Bonner; Noelle A. Bonner; Gladys Moore; Gladys Edna Moore; Brian Christopher Walsh; and Edward John Walsh.

Attorney’s Fees and Costs

The court granted class counsel’s request for $1,494,135 in attorney’s fees. The requested amount represented 23.7% of the settlement fund, which the court found reasonable in light of the work performed, the result obtained, the risks of the litigation, and counsel’s contingent-fee arrangement.

The court also granted reimbursement of $323,461 in litigation expenses. The expenses primarily involved mediation, expert witnesses and consultants, and document-repository fees. The court found the expenses reasonable and adequately documented.

Disposition

The court approved the settlement between the plaintiffs and the Lennar defendants as a good-faith settlement and granted final approval of the class-action settlement. It directed class counsel and the settlement administrator to distribute settlement payments. The court stated that final judgments of dismissal with prejudice would be entered for the Lennar defendants in accordance with the settlement agreement and directed the parties to file proposed judgments.