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Commitments and Contingencies
6 Months Ended
Mar. 30, 2014
Commitments and Contingencies  
Commitments and Contingencies

15.          Commitments and Contingencies

 

We are subject to certain claims and lawsuits typically filed against the engineering, consulting and construction profession, alleging primarily professional errors or omissions.  We carry professional liability insurance, subject to certain deductibles and policy limits, against such claims.  However, in some actions, parties are seeking damages that exceed our insurance coverage or for which we are not insured.  While management does not believe that the resolution of these claims will have a material adverse effect, individually or in aggregate, on our financial position, results of operations or cash flows, management acknowledges the uncertainty surrounding the ultimate resolution of these matters.

 

We acquired BPR Inc. (“BPR”), a Quebec-based engineering firm on October 4, 2010.  Subsequently, we have been informed of the following with respect to pre-acquisition activities at BPR:

 

On April 17, 2012, authorities in the province of Quebec, Canada charged two employees of BPR Triax, a subsidiary of BPR, and BPR Triax, under the Canadian Criminal Code with allegations of corruption.  Discovery procedures associated with the charges are currently ongoing, and the legal process is expected to continue through September 2014.  We have conducted an internal investigation concerning this matter and, based on the results of our investigation, we believe these allegations are limited to activities at BPR Triax prior to our acquisition of BPR.

 

During late March 2013, the then-president of BPR gave testimony to the Charbonneau Commission, which is investigating possible corruption in the engineering industry in Quebec.  He stated that, during 2007 and 2008, he and other former BPR shareholders paid personal funds to a political party official in exchange for the award of five government contracts.  Further, prior to the testimony, we were not aware of the misconduct.  We have accepted the resignation of BPR’s former president, and are evaluating the impact of these pre-acquisition actions on our business and results of operations.

 

During March 2013, following the resignation of BPR’s former president, we learned that criminal charges had been filed against BPR and its former president in France.  The charges relate to allegations that, in 2009, a BPR subsidiary had hired an employee of another firm to be CEO of that BPR subsidiary as a part of a corrupt scheme that allegedly damaged, among others, the employee’s former employer.  A trial in this matter is scheduled for May 2014.

 

On April 19, 2013, a class action proceeding was filed in Montreal in which BPR, BPR’s former president, and other Quebec-based engineering firms and individuals are named as defendants.  The plaintiff class includes all individuals and entities that have paid real estate or municipal taxes to the city of Montreal.  The allegations include participation in collusion to share contracts awarded by the City of Montreal, conspiracy to reduce competition and fix prices, payment of bribes to officials, making illegal political contributions, and bid rigging.

 

On June 28, 2013, a purported securities class action lawsuit was filed against Tetra Tech and two of our officers in United States District Court for the Central District of California.  The action was purportedly brought on behalf of purchasers of our publicly traded securities between May 3, 2012 and June 18, 2013.  The complaint alleges generally that we and those officers violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and related rules because we allegedly failed to take unspecified, “necessary” charges to our accounts receivables and earnings during the class period.  In addition, the complaint alleges that the financial guidance we offered during the class period was intentionally or recklessly false and misleading.  The complaint alleges unspecified damages based on the decline in the market price of our shares following the issuance of revised guidance on June 18, 2013.  On October 30, 2013, plaintiff filed an amended complaint for the same purported class period making essentially the same allegations.  On November 29, 2013, we filed a motion to dismiss the amended complaint, and on January 17, 2014, the Court granted our motion and dismissed the case without prejudice meaning the plaintiff would be allowed to amend the case and replead. Plaintiff subsequently decided not to amend and on April 24, 2014 the plaintiff voluntarily dismissed the case with prejudice.

 

Other than the securities class action (which has been terminated) the financial impact to us of the matters discussed above is unknown at this time.