Court Backs 2 Fired Transit Investigators : Litigation: Appellate ruling means they can use key claims in suit against MTA at trial. They say they were discharged after alleging contract cover-up.

An appellate court has found that two Los Angeles transit investigators appear to have been fired in 1990 for raising allegations of an agency cover-up and confronting their boss about it.

The state 2nd District Court of Appeal, in a ruling issued last week, refused to throw out several key claims made by the investigators. That clears the way for the two men to press their case at an upcoming trial that promises to shed light on several controversial practices in the awarding of lucrative contracts by the Metropolitan Transportation Authority.

To throw out the claims and shield transit officials from any liability in the firings, the appellate justices said in their decision, “would emasculate the entire effect and purpose” of state laws that protect so-called whistle-blowers.

Allen Laster, 57, of Garden Grove and Richard N. Yeats, 49, of Los Angeles were fired as investigators for the Southern California Rapid Transit District in the summer of 1990.

“It’s a great vindication for us. We’re just thrilled to death,” Laster said. “We haven’t won a penny . . . but finally it looks like somebody is saying there was a lot of truth in what we were saying.”

Laster and Yeats contend that they were fired for simply doing their jobs too well. But lawyers for the MTA, created in 1993 after the RTD merged with another transit agency, said they hope to show at the trial that transit officials were well within their rights in dismissing them--for reasons that the MTA refuses to divulge.

The dispute centers on allegations that an Atlanta telecommunications firm was fraudulently awarded hundreds of thousands of dollars in RTD contracts in the 1980s as a disadvantaged minority business--in part through the forged signature of a district employee.

Laster and Yeats were assigned to investigate the allegations in early 1990.

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They said they uncovered evidence of wrongdoing in the awarding of the contract to Communications International Inc., suggesting that the company might be a front for a non-minority business. But the investigators said they were stymied by the refusal of top RTD officials to cooperate with their inquiry.

One district employee critical to the probe told the investigators that he was warned by RTD Inspector General Ernesto V. Fuentes that his career was “stagnant” and that he should not cooperate any further in the investigation, according to the appellate court record.

Laster and Yeats met with Fuentes in July, 1990, to discuss the issue, telling the inspector general that they had named him in their investigative report for allegedly making “intimidating” statements to the district employee, the appellate court said.

“Fuentes angrily retorted: ‘Are you accusing me of a crime?’ ” and threw the investigators out of his office, the court wrote. But later that same day, he summoned them back under an armed escort and fired them, ordering them to clean out their desks immediately.

Fuentes no longer works for the district, and he could not be reached for comment.

The appellate court said Laster and Yeats uncovered evidence of a cover-up and were not--as the MTA’s lawyers claimed--merely repeating complaints that had already been made.

“In fact,” the court said, “their findings appear to confirm that (Laster and Yeats) were summarily terminated after raising allegations of a cover-up and reporting criticism of Fuentes for his alleged role in intimidating a key witness.”

The court said the firings may have violated the investigators’ 1st Amendment rights and, in light of their “exemplary” records and the absence of any other reasons for their removal, may have been “retaliatory.” A trial court should now decide, the justices said.

Deputy County Counsel Charles M. Safer, one of the lawyers representing the MTA, said the appellate decision “wasn’t a total surprise” after the questions the justices had raised during oral arguments. But he said the MTA will now have a chance to defend itself.

“We did not put our case on,” he said. “Other than the fact that these two employees were terminated, there are still a lot of disputed facts.”

Safer said the investigators were serving at the pleasure of RTD officials so they could be fired.

He declined to discuss in detail why the men were fired or whether the decision related to their investigation into Communication International, but he said: “Essentially what it comes down to is their work product and whether their employers had confidence in their work.”

Carolyn Yee, attorney for the investigators, said she expects a trial date to be set Friday in Los Angeles County Superior Court.

Laster, who has worked sporadically in racetrack security since his firing, and Yeats, a tax law researcher, are each seeking $1 million in damages from the district. Both say they have been unable to find steady work in the investigative field since their dismissals.

The civil suit is not the first time that Communications International and its minority-business contracts have proven controversial.

Former U.S. Treasurer Catalina Vasquez Villalpando, once a prominent Latina in the Bush Administration, pleaded guilty earlier this year to concealing her business ties to the Atlanta company, among other charges. The Los Angeles County district attorney’s office investigated the question of whether the company was fraudulently awarded minority business contracts, but did not bring any charges. And the FBI is now looking at that same issue in Los Angeles and elsewhere.