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

Background

This omnibus order addresses pending motions in three related False Claims Act (FCA) cases. The court had previously dismissed allegations in the relators’ Combined Second Amended Complaint under the FCA’s first-to-file bar and public disclosure bar. Anthony Smith and the Wadsworth relators—Donald K. Wadsworth and Robert McLean—were allowed to amend and filed a Combined Third Amended Complaint. Tetra Tech and Shaw again moved to dismiss claims in that complaint.

Motions to Dismiss the Relators’ Complaint

First cause of action. The court did not dismiss the Hunters Point PCB hot-spot soil fraud claim. It rejected Tetra Tech’s arguments based on the public disclosure bar and first-to-file bar, concluding that the complaint alleged more specific conduct than the general problems described in the cited public disclosures and that the claim did not repeat the wrongdoing alleged in the earlier related proceeding. The court also rejected Tetra Tech’s statute-of-limitations argument because the complaint and materials cited by Tetra Tech did not establish when the responsible government official knew or reasonably should have known the material facts.

Second cause of action. The court concluded that the claim’s allegations about soil sampling and pipe scanning were related to, but distinct from, allegations in the earlier related proceeding. However, it dismissed with prejudice the soil-sampling “vicinity fraud” allegations under the FCA’s public disclosure bar. The court denied Smith’s request for further leave to amend those allegations. The pipe-scanning allegations will go forward.

Third cause of action. The court denied Tetra Tech’s first-to-file argument but dismissed with prejudice Smith’s building-survey scanning claim because it overlapped too closely with claims in which the United States had already intervened. The court stated that the United States would prosecute its intervened claims and that relators were not to pursue duplicative or overlapping claims.

Fourth cause of action. The court denied dismissal of Smith’s Hunters Point copper-removal and sale claim. It concluded that the claim concerned alleged copper scavenging and theft of valuable metals, rather than the truck-screening conduct addressed in the earlier related proceeding. The court also denied Tetra Tech’s statute-of-limitations argument and declined to consider a new argument raised for the first time in reply that the alleged copper theft fell outside Tetra Tech’s remediation contracts.

Fifth and sixth causes of action. The court denied Shaw’s statute-of-limitations request as to Smith’s Treasure Island copper-removal claim. The complaint did not rule out tolling under the FCA’s limitations provision, and Shaw had not supplied materials outside the pleadings establishing otherwise. The court also denied Shaw’s request to dismiss the sixth cause of action concerning false reports and certifications about handling, retaining, or disposing of radioactive samples and materials. The court found that this claim focused on allegations different from the allegations previously barred.

Seventh cause of action. The court denied Tetra Tech’s and Shaw’s public disclosure arguments concerning Smith’s Treasure Island radiological-scans-and-soil-samples claim. The cited news articles and meeting minutes were too general or concerned different subjects, such as air monitoring, rather than the alleged radiological scans and soil samples.

Eighth and ninth causes of action. The court dismissed with prejudice Smith’s eighth cause of action concerning demolition and disposal at Treasure Island and his ninth cause of action concerning movement of soil from Site 12 to Site 6. The court held that the allegations were substantially similar to facts disclosed in earlier news reports and were close enough to have put the government on notice to investigate. Smith did not allege that he was an original source for these claims.

Tenth through thirteenth causes of action. Smith acknowledged that news reports disclosed information relevant to the tenth and eleventh causes of action, but he alleged that he qualified as an original source. The court found those allegations sufficient at this stage and denied dismissal. The court similarly denied dismissal of the twelfth cause of action because Smith adequately alleged that he was an original source. The court denied Tetra Tech’s request to dismiss the thirteenth cause of action because the cited YouTube postings and news article did not disclose a direct claim of fraud or facts from which fraud could be inferred.

Fourteenth cause of action. The court dismissed with prejudice the Wadsworth relators’ allegations that individuals were hired without due diligence and that Tetra Tech and its subcontractors intentionally avoided taking samples from the most radioactive areas. Those allegations repeated the type of wrongdoing alleged in the earlier related proceeding and were barred by the first-to-file bar. The remaining conspiracy allegations were allowed to go forward because Tetra Tech offered no other reason to dismiss them.

Shaw’s general arguments. The court denied Shaw’s overarching dismissal arguments. It found that Shaw had not shown that the original Jahr complaint and Smith’s claims against Shaw alleged the same material elements of fraud. The court also denied Shaw’s arguments based on the government-action bar and the government’s intervention, as well as its arguments under Federal Rules of Civil Procedure 8 and 9.

Motion to Strike Affirmative Defenses

In the United States’ intervened action, Tetra Tech EC, Inc. asserted twenty-nine affirmative defenses. The United States moved under Federal Rule of Civil Procedure 12(f), which permits a court to strike an insufficient, redundant, immaterial, impertinent, or scandalous defense.

The court denied the request to strike defenses nos. 3-4, 13, 16, 19, 21, and 27-28 based on alleged discovery and litigation burdens. It struck defenses nos. 1, 5, 6, 7, 8, 17, and 18 because they were not appropriate affirmative defenses: failure to state a claim, no falsity, no scienter, no corporate liability, no materiality, no causation, and failure to plead with particularity. The court denied the request to strike the defenses grounded in equity, without prejudice to renewing the dismissal request later if appropriate. It also denied the United States’ additional arguments, including its request concerning waiver and comparative fault, and concluded that other challenged defenses were understandable and could be explored in discovery.

Motion to Amend

The court granted the United States’ request under Rule 15(a)(2) for leave to file a second amended complaint. The proposed complaint would include factual updates and two additional claims: claims under the Comprehensive Environmental Response, Compensation, and Liability Act and for common-law fraud. The court found the proposed amendments sufficiently related to the United States’ existing allegations. It directed the United States to file the amendment and stated that the time to join other parties or amend the pleadings was otherwise closed. The parties were directed to meet and confer about whether the case schedule needed to change.

Disposition

Judge James Donato therefore dismissed specified claims and allegations with prejudice, denied the remaining dismissal requests, struck the seven identified affirmative defenses, denied the other specified requests to strike defenses—including the equitable-defense request without prejudice—and granted the United States leave to file a second amended complaint.