The opinion of the court was delivered by: Colleen Kollar-kotelly United States District Judge
This action was filed on October 15, 2010 by Plaintiff Cheeks of North America, Inc. ("CNA") seeking relief for injuries allegedly suffered when CNA lost a series of competitive bids for construction contracts that were awarded by the D.C. Department of Transportation ("DDOT"), the D.C. Department of Public Works ("DPW"), and the D.C. Water and Sewer Authority ("WASA"). Among the claims asserted in its thirteen-count First Amended Complaint, CNA alleges that it is the victim of a bid-rigging conspiracy by five of its main competitors and their surety and that contracting officials at DDOT and WASA were negligent for failing to stop the alleged conspiracy. CNA also asserts a variety of claims alleging antitrust violations, fraud, and breach of procurement regulations. Presently pending before the Court are motions to dismiss filed by nearly all of the defendants in this action, a motion for sanctions, and a motion for discovery filed by CNA. These motions have been fully briefed by the parties and are therefore ripe for resolution by this Court.
Based on a thorough review of the pleadings, the parties' briefs, the applicable authorities, and the record as a whole, the Court finds that CNA lacks standing to assert most of the claims asserted in the First Amended Complaint and that where CNA does have standing, CNA has failed to state a claim upon which relief can be granted. The Court also finds that sanctions are not warranted against CNA's counsel. Therefore, for the reasons explained below, the Court shall grant the pending motions to dismiss, deny the motion for sanctions, and deny CNA's pending motion for discovery as moot.
The facts set forth in this section are derived from the First Amended Complaint, which the Court must accept as true for purposes of evaluating a motion to dismiss.
Plaintiff Cheeks of North America, Inc. ("CNA") is a District of Columbia corporation with its principal office at Suite 350, 1425 K Street, NW, Washington, DC 20005. First Am. Compl. ("FAC") ¶ 80. CNA is engaged primarily in specialized purchasing, contracting, infrastructure, and strategic business planning and development. Id. John C. Cheeks ("Cheeks") is the founder and President of CNA. Id.
2. The Construction Company Defendants Defendant Fort Myer Construction Corporation ("Fort Myer") is a Virginia corporation registered to conduct business in the District of Columbia. FAC ¶ 81. During the relevant time period (August 20, 2008 to September 25, 2009), Fort Myer was engaged in infrastructure construction. Id. ¶ 83. Defendant Jose Rodriguez ("Rodriguez")*fn1 serves as President of Fort Myer; Defendant Francisco R. Neto ("Neto") serves as Vice President; and Defendant Lewis Shrensky ("Shrensky") serves as Treasurer and Secretary. Id. ¶ 81. Defendant George Batista ("G. Batista")*fn2 is an employee of Fort Myer who is involved in pricing contracts for infrastructure services. Id. ¶ 82.
Defendant Anchor Construction Corporation ("Anchor") is a District of Columbia corporation involved in general construction and contracting. FAC ¶ 85. Defendants Neto and Rodriguez serve on the Board of Directors of Anchor. Id. ¶ 84. Defendants Cristina R. Gregorio ("C. Gregorio") and Florentino Gregorio ("F. Gregorio") also served on the Board of Directors of Anchor during the relevant time period. Id.
Defendant Civil Construction, LLC ("Civil") is a Maryland corporation licensed to conduct business in the District of Columbia that engages in construction work. FAC ¶ 87. Defendants Shrensky and Rodriguez serve on the Board of Directors of Civil. Id. ¶ 86.
Defendant Capitol Paving of D.C., Inc. ("Capitol Paving") is a District of Columbia corporation engaged in general and specialty construction. FAC ¶ 88. Defendant Neto is the President and Treasurer of Capitol Paving. Id.
Defendant A&M Concrete Corp. ("A&M") is a Virginia corporation engaged in construction business. FAC ¶ 89. Defendant Joe Alves ("Alves") is the Executive Vice President of A&M. Id. ¶ 90. Defendant Alexandra Batista ("A. Batista") is the Administrative Assistant for A&M. Id. ¶ 91. A. Batista is alleged to be related to G. Batista, who is also alleged to work for A&M as a manager. See id. ¶¶ 7, 213.
Defendant Western Surety Company ("Western Surety") is a commercial fidelity surety bond company. FAC ¶ 92. It is a subsidiary of CNA Surety. Id. ¶ 13. Defendant Paul T. Bruflat ("Bruflat") is a Senior Vice President of Western Surety. Western Surety is alleged to have provided bid bonds for Fort Myer, Anchor, Civil, and Capitol Paving in connection with bids they submitted to WASA and DDOT.
4. Contracting Agency Defendants
Defendant D.C. Water and Sewer Authority ("WASA") is an independent authority of the District of Columbia that provides water service to the District of Columbia. FAC ¶ 94. Also named as defendants are the WASA Procurement Department, the WASA Board of Directors, and the WASA Retail Services Committee. Id. ¶¶ 95, 98, 99. During the relevant time period, the WASA Procurement Department was engaged in managing water and sewage projects for residential, commercial, governmental, and institutional use in the District of Columbia. Id. ¶ 96. The WASA Board of Directors was engaged in voting on such water and sewage projects. Id. ¶ 98. The WASA Retail Services Committee was responsible for the final voting on contracts for these water and sewage projects. Id. ¶ 100. Defendant Joseph Cotruvo ("Cotruvo") was a member of the WASA Retail Services Committee. Id. Former WASA General Manager Jerry Johnson and Contract Administrator Carlo Enciso are also named as defendants in this action, as are former or present WASA Board of Directors members William M. Walker ("Walker") and Neil Albert ("Albert"). Id. ¶¶ 96-97. CNA also references an individual named Avis Russell ("Russell") in connection with WASA. See FAC at v.
The District of Columbia Department of Public Works ("DPW") is an agency of the District of Columbia government. The DPW Office of Contracting and Procurement is named as a defendant in this action, as is James Roberts, who served as a contracting officer for DPW. FAC ¶ 102.
Defendant D.C. Department of Transportation ("DDOT") is also an agency of the D.C. government. FAC ¶ 103. Defendant Jerry M. Carter ("Carter") served as a Contracting Officer for DDOT during the relevant time period; Defendant Gabe Klein ("Klein") served as the Director of DDOT during the relevant time period; and Defendant David P. Gragan ("Gragan") served as the Chief Procurement Officer during the relevant time period. Id.
5. District of Columbia Government Defendants
In addition to the contracting agency defendants listed above, CNA has named a number of D.C. government officials as defendants in this action. These defendants include the Committee on Public Works and Transportation of the Council of the District of Columbia ("Public Works Committee"); its former chairperson, Councilmember Jim Graham ("Councilmember Graham"); his former Chief of Staff, Ted G. Loza ("Loza"); and the committee's former legislative and budget director, Steven Hernandez ("Hernandez"). See FAC ¶¶ 104-07. CNA has also named former D.C. Mayor Adrian Fenty ("Fenty") and the Executive Office of the Mayor as defendants, as well as former D.C. Attorney General Peter Nickles ("Nickles") and the Office of the Attorney General. Id. ¶¶ 108-11.
CNA has also named the D.C. Department of Small and Local Business Development ("DSLBD") as a defendant. CNA contends that DSLBD officials endorsed Fort Myer, Anchor, Civil, and Capitol Paving with affirmative action points in connection with bids they submitted for contracts. See FAC ¶ 123. CNA also identifies an individual named Lee Smith ("Smith") in connection with DSLBD as a defendant in the First Amended Complaint. See FAC at v.
B. CNA Fails to Win Contracts Through Competitive Bidding Processes The allegations in the First Amended Complaint revolve around six solicitations for bids on construction contracts to be awarded by WASA, DDOT, and DPW.*fn3 CNA submitted a bid for each contract, but its bid was rejected in each case. CNA broadly alleges that the five construction company defendants (Fort Myer, Anchor, Civil, Capitol Paving, and A&M) acted in concert during the bidding process to fix their bids and allocate the contracts among themselves. See FAC ¶¶ 4, 8, 15.*fn4 According to CNA, these companies maintained interlocking directorates and conspired to submit sham bids and submit false affidavits of noncollusion during the bidding process. Id. ¶ 9. CNA further alleges that Western Surety aided and abetted the conspiracy by issuing bid bonds to these five companies with knowledge of their interlocking directorates. Id. ¶ 10. CNA claims that the individual officers and employees of these companies who are named as defendants are liable because they aided and abetted the conspiracy and committed fraud. See id. ¶ 18. CNA also claims that WASA and the District of Columbia government and their officials were negligent or grossly negligent in failing to stop the alleged conspiracy and failing to conduct proper oversight. Id. ¶¶ 19-21.
1. WASA Contract No. 080020
On August 20, 2008, CNA submitted a bid for the total sum of $11,154,500 in response to WASA's Invitation for Bid ("IFB") No. 080020 ("Replacement of Small Diameter Priority Water Mains for 2008 Construction"). See FAC ¶ 136 & Ex. D.9.1. CNA submitted a bid bond representing 5% of the bid ($557,725) in the form of a company check. Id. ¶ 137 & Exs. D.7.1 & D.7.5.*fn5 Anchor, Civil, Fort Myer, and Capitol Paving also submitted bids; CNA alleges that Western Surety issued guaranteed bid bonds on their behalf. Id. ¶¶ 138, 140. WASA procurement officer Carlo Enciso opened the bids on August 20, 2008. Id. ¶ 139. CNA was announced as the lowest bidder; Anchor submitted the next lowest bid. Id. ¶ 141.
On September 9, 2008, Cheeks received a letter from WASA informing him that CNA's bid had been declared non-responsive and therefore not eligible for award. Id. ¶ 141 & Ex. H.1.1. The letter stated that "[e]lements considered in this decision were that your bid did not include a completed Bid Bond with sureties or certified check(s) for five percent (5%) of the bid amount." Id., Ex. H.1.1. The record shows that on the Bid Form submitted with CNA's bid, Cheeks checked a box indicating that the bid guaranty would be submitted in the form of a certified check. See id., Ex. D.7.1. The checks that Cheeks submitted for CNA were not certified. See id.,D.7.5. Cheeks also filled out a "Bid Bond" form that identified CNA as the principal but did not identify a surety. Id., Ex. D.7.2. CNA filed a bid protest on September 30, 2008*fn6 alleging bid rigging, discrimination, and failure to give adequate notice and time to cure. See id., Ex. K.1.1-2. On October 23, 2008, WASA Director of Procurement John P. Christodoulakis sent Cheeks a letter informing him that CNA's bid protest had been denied because it was not filed within five days as required by WASA procurement regulations. See id., Ex. K.1.4-5. The letter also reiterated that procurement regulations require that bids be guaranteed and that uncertified checks will not be accepted. Id. CNA was not provided an opportunity to resubmit its bid with a proper guaranty. Id. ¶¶ 143, 169.
On November 6, 2008, the WASA Board of Directors resolved that the contract be awarded to Anchor, the next-lowest bidder. Id. ¶ 143 & Ex. G.1.11.
2. WASA Contract No. 090080
On March 25, 2009, CNA submitted a bid in response to WASA's IFB No. 090080 ("Sanitary Sewer Lateral Replacements"). See FAC ¶ 144 & Exs. D.1.10 & D.9.2. According to the bid tabulation sheet, CNA's bid was the highest out of seven bidders, including Fort Myer, Civil, Anchor, and Capitol Paving. Id., Ex. D.9.2. The lowest bid was submitted by Corinthian Contractors in the amount of $6,424,140. Id. CNA's bid amount was $11,298,320; the other bids submitted were all less than $8 million. Id.
On March 29, 2009, CNA filed a bid protest with WASA indicating that it had made a calculation error in its initial bid and that its actual bid should have been $5,040,000, which would make CNA the lowest bidder. See id., Ex. K.2.1-2. CNA contends that WASA never responded to CNA's bid protest and awarded the contract to Corinthian Contractors. Id. ¶ 145.
3. WASA Contract No. 090020
On April 1, 2009, CNA submitted a bid in response to WASA's IFB No. 090020 ("Fire Hydrant Replacement Contract 4"). See FAC, Exs. D.7.3-4 & D.9.3. According to the bid tabulation sheet, CNA's bid of $2,817,600 was the second lowest received. Id., Ex. D.9.3. The lowest bid was submitted by Nastos Construction, Inc. in the amount of $2,703,160. Id. Fort Myer, Civil, Anchor, and Capitol Paving also submitted bids. Id. WASA ultimately awarded the contract to Nastos Construction, Inc. Id., Ex. D.1.10. CNA's bid form indicates that neither a bid bond nor a certified check was provided as a bid guaranty; the "Bid Bond" form submitted by CNA was signed by Cheeks alone and lacked a surety. See id., Ex. D.7.3-4.
4. DDOT Contract No. DCKA-2009-B-0025
On March 18, 2009, CNA submitted a bid in response to DDOT's IFB No. DCKA-2009-B-0025 ("Pavement Restoration City-Wide"). See FAC, Exs. D.8.1 & D.10.3. Two days prior to the opening of the sealed bids, on March 16, 2009, Cheeks received an email with information regarding an amendment of the solicitation ("Amendment 6"). Id. ¶ 290. The amendment addressed two issues, one involving insurance requirements and one involving subcontracting requirements from the Office of Local, Small and Disadvantaged Business Enterprise. See id., Ex. D.14.1. CNA alleges that Amendment 6 was engineered by DDOT so as to favor Fort Myer and Capitol Paving in the bidding. Id. ¶¶ 289, 291. CNA had to readjust its bid so as to strategically compete for the contract award. Id. ¶ 292. CNA ultimately submitted a bid in the amount of $54,252,805. Id., Ex. D.10.3. CNA was determined to be the lowest bidder, beating five other bidders including Fort Myer and Capitol Paving. Id.
On May 27, 2009, DDOT Contracting Officer Jerry M. Carter sent CNA a letter indicating that its bid was non-responsive and ineligible for award because CNA had incorrectly submitted five separate, uncertified checks for the bid security. See id. ¶ 299 & Ex. H.4.1. The record confirms that CNA submitted five separate uncertified checks. See id., Ex. D.8.1-3. Carter did not allow CNA time to cure this defect. Id. ¶ 296. CNA filed a bid protest with the D.C. Contract Appeals Board on June 17, 2009 alleging a bid-rigging conspiracy and contract steering by DDOT. See id., Exs. ...