A federal judge ruled that two wrongful death lawsuits filed by the families of Fallon leukemia cluster patients belong in state court.
U.S. District Judge Brian Sandoval also dismissed a third-party lawsuit against the Navy filed by a Fallon metals firm.
"This action proceeded for three years in state courts prior to its removal, during which time the state court issued rulings on important aspects of the case," Sandoval wrote in a decision issued Tuesday.
"Moreover, the underlying merits involve complex toxic tort claims, an area of law traditionally left to state courts."
The lawsuits will now continue in Washoe District Court with the discovery of evidence.
The families of Stephanie Sands, 21, and Adam Jernee, 10 filed lawsuits in 2003.
They allege that pollution - including jet fuel, tungsten products, or both - caused the leukemia that has sickened 17 children and killed three of them since 1997.
The defendants are Kinder-Morgan Energy Partners, owner of the jet fuel pipeline that runs through Fallon; Kennametal, a company that manufactures tungsten carbide in a kiln north of Fallon and also operates a manufacturing plant in town; and other firms associated with the pipeline.
Scientists have put the odds of the Fallon cluster being random at one in 232 million.
Federal researchers in 2004 were unable to determine an environmental cause for the outbreak, but research at universities continues.
Kinder-Morgan officials have denied their pipeline has anything to do with the cancer cluster.
Kennametal officials also deny any causative connection to the outbreak and countersued the U.S. Navy, the federal government and
27 former Fallon Naval Air Station officers.
The case was moved to U.S. District Court because federal entities were defendants.
In arguments last week, lawyers for the families called Kennametal's suit against the Navy a "sham" and an attempt by the defendant to shop for another court venue.
But Steven Baicker-McKee, Kennametal's lawyer, argued the Navy is a "logical defendant" in the case and noted that the Fallon Naval Air Station has had "substantial releases" of jet fuel into the environment over the years.
He said Kennametal shouldn't have to defend against lawsuits in state court and then have to face the Navy in federal court.
Sandoval ruled that Kennemetal's arguments about jurisdiction, "while clever," were unfounded.