TETRA TECH, INC. v. USA

Filing 49

REPORTED OPINION--Granting 37 Motion for Joinder; Denying 43 Motion to Dismiss 12(b)(1). Status Report due by 9/8/2017. Signed by Senior Judge Robert H. Hodges, Jr. (smm)

United States Court of Federal Claims
No. 14-619 C
(Filed August 28, 2017)
__________________________________

TETRA TECH, INC.,
a Delaware corporation, and
TETRA TECH EC, Inc.,
Plaintiffs,

Motion to Dismiss RCFC 12(b)(1);
Subject Matter Jurisdiction; Motion
for Joinder; Parent vs Subsidiary As
Party Plaintiff; Party Substitution;
Corporate Relationship

v.
UNITED STATES OF AMERICA,
Defendant.
__________________________________
John S. Stewart, Esquire, Stewart, Sokol & Gray, Portland, OR, for plaintiff.
Anand R. Sambhwani, Esquire, United States Department of Justice, Civil Division,
Washington, DC, for defendant.

OPINION AND ORDER
Hodges, Senior Judge.
Plaintiff Tetra Tech sued the United States alleging breach of its construction contract and
subsequent task order for work to be performed at a government facility located in Portal, North
Dakota. Plaintiff’s Complaint alleges that defendant directed it to execute substantial additional
work either not anticipated by the contract or related to unilaterally-issued contract
modifications. These alleged additions to the contract were the subject of a Request for Equitable
Adjustment later submitted by the plaintiff contractor.
The parties conducted extensive discovery in this and a related case also before this court.
See Tetra Tech, Inc. v. United States, No 14-133C. Counsel for defendant determined in
September 2016 that the entity with which the Government had contracted was not the named
plaintiff, Tetra Tech, Inc., but its wholly-owned subsidiary, Tetra Tech EC, Inc. Plaintiff filed a
motion to join Tetra Tech EC, Inc. as a party at the court’s direction in February of this year.
Plaintiff suggested that the Court could permit the parent and its subsidiary to ratify one
another’s actions as they related to the contract at issue if joinder were denied.

Defendant responded to plaintiff’s joinder motion and filed a motion to dismiss pursuant
to RCFC 12(b)(1) on April 4, 2017. Defendant contended that substitution, not joinder or
ratification, was the appropriate solution for the “filing error” that led Tetra Tech, Inc. to being
the named party on the Complaint, rather than its subsidiary Tetra Tech EC. It pointed out that
the subsidiary was the contracting party, and only a party in privity of contract can advance a
claim before the Court of Federal Claims.
The Government argued in the alternative that the court – if it grants plaintiff’s motion to
join – should grant defendant’s motion to dismiss Tetra Tech, Inc. because it was not in privity of
contract and therefore this Court lacked subject matter jurisdiction over its claim. For the reasons
stated below, we grant plaintiff’s motion to join Tetra Tech EC as a party plaintiff and deny
defendant’s motion to dismiss.

JOINDER
Whether to permit joinder is determined by considering prejudice to the defendant, need
for changes to the factual allegations of the complaint, and whether defendant is aware of the
parties in question. Plaintiff contends that defendant would not be prejudiced here. Defendant’s
case with respect to either Tetra Tech or Tetra Tech EC is not materially impacted by joinder. No
changes to the complaint’s factual allegations would be necessary. Defendant was either aware
that Tetra Tech EC is a subsidiary of Tetra Tech, Inc., or learned of it during discovery.
Defendant argues that substitution is the superior option and that joinder is inappropriate
in this context. Tetra Tech EC is in privity, not Tetra Tech, and the latter should not remain a
named party to the suit. Tetra Tech is not an intended third-party beneficiary, a subcontractor, or
some other party allowed to remain in a suit without being in privity. Defendant believes that
jurisdictional problems will pertain if Tetra Tech, Inc. is permitted to remain as a party plaintiff.
We agree with plaintiff that dismissing Tetra Tech, Inc. or substituting one for the other
could lead to substantial additional and duplicative litigation. In any event, replacing the parent
with the subsidiary or dismissing the parent is not necessary at this stage of proceedings. We can
revisit this issue later if somehow it becomes important.

CONCLUSION
Joinder protects the Government in this and similar cases involving related plaintiffs who
could otherwise sue on similar facts. This dispute has created substantial unnecessary delay to
little apparent purpose. The parties have not made clear why either should be concerned
regardless of the result. We have discretion to resolve procedural issues such as this in a way that
avoids excessive delay and controversy, particularly where neither party can be prejudiced by
joinder.

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Counsel take strongly differing views on joinder of a necessary party vice substitution, yet
the rules of this court treat the matter more liberally. See, e.g. RCFC 17(a)(3), regarding real
parties in interest (“After ratification, joinder, or substitution, the action proceeds as if it had been
originally commenced by the real party in interest.”). See generally RCFC 19 and RCFC 20
discussing discretionary factors to consider in ruling on joinder.
Plaintiff’s motion to join Tetra Tech EC, Inc. as a party plaintiff is GRANTED.
Defendant’s motion to dismiss Tetra Tech, Inc. is DENIED. Counsel will meet within 10 days to
discuss a schedule for resolving this case on the merits and advise the court by Joint Status
Report no later than September 8, 2017.

IT IS SO ORDERED.
s/

Robert H. Hodges, Jr.

Robert H. Hodges, Jr.
Senior Judge

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