A proposed legal settlement over the botched environmental cleanup of Hunters Point Shipyard would leave thousands of affected residents with just $606 per person.
A federal judge denied the agreement between developers FivePoint Holdings and Lennar and lawyers behind the $1 billion lawsuit — calling it a “sweetheart deal” for the builders and the “worst settlement” he’s ever seen, the San Francisco Chronicle reported.
In a scathing order, U.S. District Judge James Donato called the proposed payout to 6,500 residents of Hunters Point “paltry,” and accused the plaintiff’s lawyers of selling out their clients.
“No question that the proposed terms are unfair to the class members,” he said during a January hearing.
Residents of Hunters Point filed a lawsuit in 2018 alleging they were the victims of fraud and had suffered health defects in connection with the former shipyard’s ongoing toxic cleanup.
In the latest attempt by Irvine-based FivePoint and Miami-based Lennar to settle, the developers and Sausalito law firm Bonner & Bonner had asked the court to approve a $5.4 million deal.
But with $1.4 million for attorney fees and $4 million in community payouts, it worked out to $606 per person. A settlement proposal in 2022 for 9,000 residents, also rejected by the judge, would have worked out to $400 per person.
Donato accused the residents’ attorneys, Charles and Cabral Bonner, of colluding against Tetra Tech EC, a third defendant in the lawsuit but left out of the settlement talks. The unit of Tetra Tech was hired two decades ago to clean hazardous radiation and toxic substances from the shipyard once owned by the U.S. Navy.
The developers and the Bonners had entered into a “common interest agreement,” which allows parties with shared legal interests to share information in order to collaborate on defense strategies. But the judge said the residents and developers are “adverse parties” who cut a deal to target Tetra Tech EC.
Such a settlement “becomes collusive when it is aimed to injure the interests” of an absent defendant, Donato said.
The Bonners have denied wrongdoing, saying they acted in the best interest of their clients by collaborating with the developers. Lennar declined to comment to the Chronicle, while FivePoint didn’t respond to a request for comment.
Sam Singer, a spokesperson for Pasadena-based Tetra Tech EC said: “The judge’s order speaks for itself.”
After signing the common interest agreement, the Bonners amended the residents’ complaint for the sixth time. The changes “drastically narrowed plaintiff’s claims against the home builder defendants, dropped the class allegations against them, and deleted the damages demand of $1 billion,” Donato wrote in his order.
“The evidence of collusion is striking,” Donato wrote. During the hearing, he questioned why the developers should be allowed to exit a $1 billion lawsuit in exchange for “paying nickels.”
FivePoint, a spinoff of Lennar, has entitlements for thousands of homes and millions of square feet of commercial space at Hunter’s Point.
A trial date for the case is set for next year, but the Bonners said they are talking with the developers about another settlement deal, and reached out to Tetra Tech EC to “see if they are interested in negotiating.”
Tetra Tech EC has faced multiple ongoing lawsuits related to the cleanup of the 500-acre shipyard site, including a lawsuit filed by the developers in 2020. This year, the U.S. Department of Justice agreed to settle a lawsuit brought against the contractor a decade ago, originally by whistleblowers, for $97 million, according to the Chronicle.
The Navy previously said in other court filings that the “negative fiscal impact” of the fraud at the shipyard is between $370 million and $570 million.
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