Judge kills $5.4M settlement over cleanup at SF’s Hunters Point

A federal judge has rejected a $5.4 million settlement between San Francisco residents and developers Lennar and FivePoint over the botched cleanup of the Hunters Point Shipyard.

U.S. District Judge James Donato has denied a request for preliminary approval of the November settlement between the developers and qualifying residents of Bayview Hunters Point, the San Francisco Business Times reported.

The residents filed a class-action suit five years ago over the marred toxic cleanup of the 500-acre former U.S. Navy shipyard.

Donato wrote that parties hadn’t adequately explained why a $5.4 million settlement was “fair and reasonable” when the original complaint sought $1 billion in damages and the settlement “contains a broad release of all claims against these defendants, including for wrongful death.”

The judge said both sides may make another attempt to gain approval for the settlement should they “be able to fix the deficiencies” he identified.

Neither the residents’ attorney, Charles Bonner, nor Lennar and FivePoint were available for comment to the Business Times.

The class-action lawsuit lists more than 2,200 plaintiffs, but aims to represent the greater community, which is estimated to include some 35,000 people who live or have lived in Bayview Hunters Point since 2004.

The 2018 lawsuit initially sought to recover $27 billion in damages, but was amended multiple times and ultimately sought $1 billion for “the health problems suffered by previous and current residents and the waste of public funds received to complete the cleanup of Hunters Point.”

The complaint sought a stop on all construction at the shipyard, where FivePoint is approved to build a mixed-use neighborhood, pending confirmation by independent reports that the site is safe for redevelopment. Irvine-based Five Point Holdings is a spinoff of Miami-based Lennar.

The agreement proposed setting aside $3.5 million for the plaintiffs named in the lawsuit as well as current residents of Hunters Point, and $100,000 more for former residents with a $100 per person cap.

It also proposed setting up a $400,000 medical fund to provide monitoring and testing services for exposure to toxic chemicals, plus setting aside up to $1.4 million for attorneys fees and other expenses. The rest would be added to payments made to current residents of the area.

Lennar agreed to provide a weekly site monitoring report detailing the dust mitigation practices implemented at the site for at least a year.

Donato said the proposed medical fund was not adequately explained and that “no good reason” was given for why funding for it would be drawn from the settlement pot.

The Bayview Hunters Point lawsuit also names Tetra Tech, the former U.S. Navy contractor that for a decade was in charge of the radiological remediation of the former naval base.

The U.S. Environmental Protection Agency in 2018 found that as much as 97 percent of Tetra Tech’s cleanup data from two parcels on the site was suspect and should be retested. That same year, two former Tetra Tech supervisors were sentenced to federal prison after admitting they swapped out contaminated soil samples for clean ones.

Tetra Tech has blamed the fraud on a small group of “rogue” employees.

In justifying the proposed settlement, Bonner said that the plaintiffs are aware of the weaknesses of their claims against the developers, who have themselves sued Tetra Tech alleging fraud.

FivePoint plans to develop nearly a dozen parcels into 3,500 homes, 4.2 million square feet of commercial space and 656,000 square feet of retail and entertainment space. Work on the project was largely paused in 2018 in light of the fraud allegations. It has yet to resume.

In 2021, Donato approved a $6.3 million settlement between the developers and new shipyard homeowners who claimed they were misled about the full extent of toxic contamination at the shipyard. That lawsuit was filed in 2018 by four homeowners of Parcel A — the first site developed as part of the larger project — but grew to include 662 plaintiffs in 347 condominiums and townhouses. Residents began moving to the shipyard around 2015.

— Dana Bartholomew