YOU ARE HERE: LAT HomeCollections

Rockwell Loses Bid to Exclude Government From Suit

Litigation: Supreme Court allows Justice Department to join whistle-blower case accusing Costa Mesa electronics maker of fraud.

April 28, 1998|From Bloomberg News

Rockwell International Corp. lost a U.S. Supreme Court bid Monday to prevent the federal government from taking part in a whistle-blower suit that charges the company with wrongdoing at a Colorado nuclear weapons plant.

The decision means the government can throw its weight behind a civil lawsuit that accuses Rockwell of fraudulently overbilling the government and seeks damages of several hundred million dollars. Trial is set to begin July 6.

The Costa Mesa electronics maker argued unsuccessfully that the Justice Department promised not to join the suit in 1992 when it reached an $18.5-million plea bargain with Rockwell. That agreement resolved criminal environmental charges over Rockwell's operation of its Rocky Flats plant.

The high court, without opinion, rejected Rockwell's appeal. Under federal law, whistle-blowers may file lawsuits against government contractors on behalf of the government, then share in any recovery. If the Justice Department decides a suit has merit, it may take over the case.

Former Rockwell engineer James Stone filed the Rocky Flats suit in a federal court in Colorado in 1989. The Justice Department originally opted not to take over the case, then changed its mind in 1995.

Rockwell contended that switch violated the 1992 plea bargain. The company said it agreed to pay an extra $3 million in exchange for a government promise not to join Stone's lawsuit unless it uncovered significant new evidence.

A Denver federal appeals court disagreed, saying the plea agreement contained no such promises.

Rockwell operated the Rocky Flats plant, located near Denver, from 1975 to 1989, when it was shut down after a raid by federal agents. They found that toxic waste had been allowed to leak from outdoor containers.

Los Angeles Times Articles