United States of America v. Tetra Tech EC, Inc.

Background

These related False Claims Act cases concerned alleged fraud by government contractors involved in cleaning radiation contamination at the former Hunters Point Naval Shipyard. Under the Act, a private person called a relator may bring a lawsuit in the government’s name alleging that someone knowingly submitted a false or fraudulent claim for government payment.

Intervention and government-action bar

The defendants argued that, after the United States intervened, the relators could no longer continue litigating their own claims. The court rejected that argument. It held that the False Claims Act gives the government primary responsibility when it intervenes but does not automatically exclude the relators from the case. The court also denied defendants’ request to certify this issue for an immediate appeal.

The defendants separately invoked the government-action bar, which prevents a private whistleblower from bringing a case based on allegations or transactions already the subject of a civil suit or administrative civil-money-penalty proceeding in which the government is already a party. The court denied dismissal on this ground because all four relators filed their cases before the United States became a party in 2019.

First-to-file bar

The first-to-file bar prevents a later relator from bringing a related action based on the same underlying facts as an earlier-filed action. The court held that some of Smith’s allegations were barred because the earlier Jahr complaint gave the government notice of the material facts of those alleged frauds. The barred allegations concerned, among other things, manipulation of a conveyor-belt alarm system and improper removal of radioactive waste through manipulation of the portal monitor. The court declined to dismiss Smith’s other claims under this bar because the defendants had not identified earlier allegations that provided sufficient notice of those claims.

The court dismissed the Wadsworth relators’ allegations concerning the hiring of Thorpe Miller and Karisa Miller because they repeated allegations in the earlier Jahr complaint. The court rejected the argument that the Wadsworth claims were barred merely because the cases were related under the district’s local rules; procedural relatedness is not the same as relatedness under the first-to-file bar.

The court dismissed McLaughlin’s claims in their entirety under the first-to-file bar. McLaughlin acknowledged that his allegations contained the same essential elements as allegations in the Wadsworth complaint. The court rejected the argument that the claims should proceed because they might provide an additional benefit to the government or concerned different parcels of the shipyard. The McLaughlin case, No. 14-1509, was ordered closed.

Public-disclosure bar

The public-disclosure bar generally requires dismissal when substantially similar allegations or transactions were previously disclosed in specified government proceedings or reports, congressional or Government Accountability Office materials, or the news media, unless the government opposes dismissal or the relator qualifies as an original source.

The court held that three 2014 local news reports publicly disclosed allegations substantially similar to portions of the Smith and Wadsworth claims. The disclosures concerned inadequate radiation screening, removal of inadequately tested or uncleared soil, reduced portal-monitor sensitivity, trucks leaving without proper portal-monitor screening, release of trucks that failed screening, and unqualified personnel in safety-sensitive positions. The court dismissed the substantially similar claims. It also dismissed similar allegations concerning Shaw Environmental & Infrastructure and Chicago Bridge and Iron that had been disclosed in other news reports concerning Treasure Island. The court found that the relators’ assertions that they were original sources were conclusory and implausible, and the government had not opposed dismissal under the bar.

Individual motions and pleading organization

The court denied the separate dismissal motions, with one exception. It rejected arguments that the complaints failed merely because they did not identify specific false claims for payment, explaining that a relator may establish the payment element by pleading particular facts supporting a reasonable inference that the government paid money or lost money it was owed.

The exception concerned Rule 10(b), which requires a complaint to organize claims clearly, including through numbered paragraphs and separate counts when practicable. The court held that the Smith and Wadsworth allegations did not clearly identify separate claims or causes of action and that the Jahr combined second amended complaint was so difficult to follow that it did not comply with Rule 10(b). The court dismissed the Jahr combined second amended complaint in its entirety. The order stated that this problem should be fixable through an amended complaint.

Disposition

The Jahr combined second amended complaint and McLaughlin’s third amended complaint were dismissed. Smith and the Wadsworth relators were allowed to file a combined third amended complaint in the Jahr action by July 28, 2022. Claims dismissed in the order had to be removed, and the relators could not add new claims or defendants without prior court approval. Judge Donato denied the remaining requests for judicial notice except as otherwise noted.