Cheeks of North America, Inc. v. Fort Myer Construction Corporation

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA

CHEEKS OF NORTH AMERICA, INC.,

Plaintiff,

v. Civil Action No. 10-1746 (CKK)
FORT MYER CONSTRUCTION
CORPORATION, et al.,

Defendants.

MEMORANDUM OPINION
(August 16, 2011)

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.

I. BACKGROUND

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.

A. The Parties

1. CNA

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”)1 serves as President of Fort

1
In the First Amended Complaint, CNA sometimes spells Rodriguez’s name as
“Rodrigues.” The Court adopts the spelling used by Rodriguez in the papers he has filed with the
Court.

2
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”)2 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.

2
This defendant has entered an appearance in this action as “Paulo J. Baptista.”

3
 3. Western Surety

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

4
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

5
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.3 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, 15.4 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

3
CNA states in the First Amended Complaint that there are five contracts alleged to be
unlawful. See FAC ¶ 30. However, the facts alleged by CNA involve six contracts. Because
CNA’s allegations are inconsistent regarding the number of contracts at issue in this case, the
Court shall discuss all six contracts.
4
Although CNA alleges that all five of these companies were part of the alleged
conspiracy, see, e.g., FAC ¶¶ 4, 8, 15, the First Amended Complaint often refers to only four
companies as defendants, omitting A&M. See, e.g., id. ¶¶ 70, 135.

6
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.7.5.5 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,

20086 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

5
The record shows that CNA submitted two checks in equal amounts signed by Cheeks
to cover this amount. See FAC Ex. D.7.5.
6
CNA misidentifies the date of this protest as September 28, 2009 in the First Amended
Complaint. See FAC ¶ 142.

7
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

8
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

9
steering by DDOT. See id., Exs. K.4.2-5. CNA’s protest did not raise the bid security issue. See

id.7 The contract was ultimately awarded to Fort Myer. See id., Ex. L.1.3 & Att. 1.

5. DDOT Contract No. DCKA-2009-B-0193

CNA submitted a bid in response to DDOT’s IFP No. DCKA-2009-B-0193 (“Safe

Routes to School”). See FAC ¶¶ 130, 149 & Ex. D.11.3. CNA’s corrected bid was

$2,376,095.90. Id., Ex. D.11.3. Fort Myer, Capitol Paving, Civil, Anchor, and A&M also

submitted bids. Id. CNA’s corrected bid was the fourth lowest after those submitted by Anchor,

Capitol Paving, and Fort Myer. See id. ¶ 130(v)8 & Ex. D.11.3.9 The contract was awarded to

Anchor.

CNA filed a bid protest with the D.C. Contract Appeals Board challenging the award to

Anchor. See D.C. Defs.’ Mot. to Dismiss or, in the Alternative, for Summ. J., Ex. 1 (Protest of

CNA Corp. Solicitation No. DCKA-2009-B-0193, CAB No. P-0826). The District of Columbia

moved to dismiss the bid protest on the grounds that, inter alia, CNA’s bid was non-responsive

because it failed to include proper bid security. See id. at 1. The Contract Appeals Board found

that CNA had submitted a “bid bond” in the form of an unsigned letter from a company

7
It is unclear from the record how CNA’s bid protest was resolved, although CNA does
not allege that its bid protest was successful. CNA does allege that Adrian Fenty ignored a stop
work order issued by the judge presiding over the bid protest. See FAC ¶ 301. However, it is
unclear how this allegation relates to CNA’s claims.
8
Paragraph 130(v) references Ex. D.11.1 in support of this claim, but that exhibit is the
bid tabulation sheet for a different contract.
9
Paragraph 149 of the First Amended Complaint describes each of the bids submitted and
lists CNA as the sixth lowest bidder, with lower bids also submitted by Omni Excavators and
Potomac Construction Co. See id. ¶ 149. However, this information is clearly contradicted by
other evidence in the record showing that CNA was the fourth lowest bidder. Ultimately, this
factual dispute is immaterial to the Court’s ruling with respect to this contract solicitation.

10
promising to purchase invoices from CNA upon the completion of performance, and only if the

procurement officer verifies that the work has been performed. See id. at 4. The Contract

Appeals Board determined that this was not adequate bid security under the procurement

regulations and therefore CNA’s bid was non-responsive. Id. Because CNA was not in line for

the award, the Board ruled that CNA lacked standing to raise other challenges to the award. Id.

6. DPW Contract No. DCKT-2009-B-0003

CNA submitted a bid in response to DPW’s IFB No. DCKT-2009-B-0003 (“On-Site

Preventive Maintenance Services”). See FAC ¶ 130 & Ex. D.11.1. CNA was the lowest of three

bidders; the other bidders were Fleet Pro and Twilbar & Arnold, Inc. Id., Ex. D.11.1. On

December 30, 2008, DPW Contracting Officer James Roberts sent Cheeks a letter asking for

more information about CNA’s bid. See id., Ex. D.19.2-4. The letter explained that DPW was

not required to award the contract to the lowest bidder if that bidder is not responsible, and the

contracting officer may determine that the bidder is not responsible if there are doubts regarding

the productive capacity or financial strength of the bidder. Id. Roberts asked CNA to provide,

inter alia, a cash flow statement, a list of any back taxes owed to the D.C. or federal

governments, a list of current and expired contracts relative to the services to be provided, a list

of employees, proof of insurance, and a statement describing how the services would be

provided. See id. The allegations in the First Amended Complaint do not describe what

response CNA provided to DPW, but apparently DPW was not satisfied with CNA’s response.

C. The Claims Asserted in the First Amended Complaint

The Court begins by noting that the claims and allegations in this action are substantially

the same as those raised by Cheeks in a prior action filed pro se in this Court. See Cheeks v. Fort

11
Myer Constr. Corp., 722 F. Supp. 2d 93 (D.D.C. 2010). The Court dismissed Cheeks’s prior

lawsuit, holding that Cheeks lacked standing to assert claims that were based on competitive

injuries to CNA. See id. CNA has now filed this action seeking recovery for many of the same

alleged injuries. Although CNA is represented by counsel (as it must, being a corporate entity),

the wording of many of the claims and allegations is largely unchanged from the pro se

complaint filed by Cheeks. The First Amended Complaint is a sprawling, prolix document that

contains nearly two hundred pages of allegations in 754 separately numbered paragraphs,

incorporating by reference over five hundred pages of exhibits that were attached to the initial

complaint. Ultimately, CNA’s claims are outlined in thirteen counts, which the Court shall

describe below.

1. Counts One Through Four: Violations of § 1 of the Sherman Act

In Counts One, Two, Three, and Four of the First Amended Complaint, CNA asserts

claims under § 1 of the Sherman Act, which provides that “[e]very contract, combination in the

form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several

States, or with foreign nations, is declared to be illegal.” 15 U.S.C. § 1.

In Count One, CNA alleges that Fort Myer, Anchor, Civil, and Capitol Paving were

engaged in a bid-rigging conspiracy in violation of the Sherman Act.10 CNA contends that these

four defendants collusively submitted bids for contracts so as to make the winning bid appear

competitive and reasonable. See FAC ¶ 159. “[C]onspiracies to submit collusive,

noncompetitive, rigged bids . . . are per se violations of the Sherman Act.” United States v. Rose,

10
CNA specifically identifies the defendants named with respect to each count under the
heading of each count in the First Amended Complaint. The Court accepts this as CNA’s official
statement of which claims are asserted against which defendants, notwithstanding the fact that
CNA references other parties within the description of each count.

12
449 F.3d 627, 630 (5th Cir. 2006) (internal citations omitted). CNA does not allege any specific

facts that indicate an agreement among these defendants. Rather, CNA alleges that these

companies shared directors and managers and therefore had common and overlapping interests.

See FAC ¶¶ 5-7, 9, 30-31, 43, 67, 162-67, 171. CNA contends that these defendants’ collusive

bidding prevented CNA from winning the contracts described above.11 CNA seeks damages

from Fort Myer, Anchor, Civil and Capitol Paving in the amount of $582,175,180,80. Id. ¶ 177.

Count Two asserts a claim against Western Surety. CNA alleges that Western Surety

issued bid bonds to Fort Myer, Anchor, Civil, and Capitol Paving in connection with the contract

solicitations and that therefore Western Surety should have known that these companies were

colluding and had interlocking directorates. Id. ¶¶ 184-85. CNA alleges that “but for the

intentional failure of [Western Surety] to recognize violations of federal law, none of the surety

bonds would have issued, and consequently, none of the contracts would have been awarded to

the conspiring and affiliated contractors.” Id. ¶ 188. CNA prays for damages from Western

Surety in the amount of $91,900,488.70. Id. ¶ 197.

Count Three asserts a claim against Fort Myer, Anchor, Civil, Capitol Paving, A&M,

WASA (and its Board of Directors and Retail Services Committee), the District of Columbia

(including DDOT and its Office of Contracting and Procurement), the Public Works Committee,

and Alves and A. Batista in their personal capacities. See FAC at 50. With respect to the Fort

Myer, Anchor, Civil, and Capitol Paving, the claims in Count Three appear to be identical to

those raised in Count One. Count Three alleges that A&M was also a part of the alleged bid-

11
CNA focuses almost entirely on the five contracts solicited by WASA and DDOT
throughout the First Amended Complaint. However, because CNA also makes references to the
DPW contract solicitation at various places, see FAC ¶¶ 128, 130, 373, 529, the Court shall
assume that CNA intends to assert claims based on all six contract solicitations described above.

13
rigging conspiracy and seeks damages in the amount of $500,000 from A&M and $100,000 from

G. Batista (who is not explicitly named as a defendant for Count Three). Id. ¶ 213. CNA alleges

that WASA and the District of Columbia became a part of the alleged conspiracy by “violat[ing]

a myriad of duties to control the actions of [their] own agents, officials, and boards.” Id. ¶¶ 203-

04. CNA claims that WASA and DDOT accepted bids from the defendant construction

companies when it had knowledge that they shared common ownership. Id. ¶¶ 208-09. CNA

contends that employees of WASA and DDOT should have known that the entire bidding

process would be voided by the alleged conspiracy. Id. ¶ 209. Although they are named as

defendants for Count Three, there are no specific allegations pertaining to Defendants Alves and

A. Batista. CNA concedes in its opposition brief that it has failed to allege any facts pertaining

to Alves and agrees that Alves may be dismissed as a defendant. See Pl.’s Opp’n to Defs. A&M,

Alves & A. Batista’s Mot. to Dismiss at 1.

Count Four asserts a claim for “price fixing” against Fort Myer, Anchor, Civil, and

Capitol Paving in violation of § 1 of the Sherman Act.12 CNA alleges that these companies

determined in advance what prices to use in the bids that were submitted to WASA and DDOT.

See FAC ¶ 220. CNA further alleges that the companies arranged their bids so as to completely

cover the range of bidding with the apparent intent to exclude competition. Id. ¶ 226. The Court

understands this claim to be essentially duplicative of the claim in Count One.

The Court notes that in paragraph 30 of the First Amended Complaint, CNA makes

reference to § 8 of the Clayton Act, 15 U.S.C. § 19, which prohibits interlocking directorates

among competing corporations whose capital, surplus, and undivided profits exceed a threshold

12
CNA also purports to name A&M as a defendant in this count. See FAC ¶ 228.

14
jurisdictional amount in excess of $10 million, subject to certain exceptions.13 See FAC ¶ 30

(“The presentation of the affiliation and interlocking nature of these four principal bidders and

their saffiliates establishes patent violations of 15 U.S.C. § 19 (prohibition against interlocking

directorates).”). Although CNA makes general references to the Clayton Act several times in the

First Amended Complaint, see FAC ¶¶ 3, 42, 233, 265, 317, 604, 750, the Court does not

understand CNA to be asserting a claim based on any alleged violation of § 8. CNA does not

identify § 8 of the Clayton Act as one of the thirteen counts it is asserting against the defendants

in this action, nor does it raise this claim in any of its briefs in opposition to defendants’ motions

to dismiss. CNA also does not specifically request relief in the form of an injunction against the

alleged interlocking directorates, which is the presumptive form of relief for a § 8 violation.

Furthermore, CNA does not plead facts that establish that the defendant construction companies

alleged to have interlocking directorates exceed the jurisdictional thresholds of § 8. See Reading

Int’l, Inc. v. Oaktree Capital Mgmt. LLC, 317 F. Supp. 2d 301, 326 n.16 (S.D.N.Y. 2003) (“In

order to state a claim under section 8, a plaintiff must also demonstrate that the corporations in

question are actual ‘competitors’ within the meaning of the antitrust laws, and that each

corporation meets a certain threshold for competitive sales, capital, surplus, and undivided

profits.”). Accordingly, the Court concludes that the First Amended Complaint does not state a

claim for violation of § 8 of the Clayton Act, and the Court shall not consider this to be a part of

CNA’s claims in this action.

13
Currently, competitor corporations are covered by Section 8 if each one has capital,
surplus, and undivided profits aggregating no more than $26,867,000, except that no corporation
is covered if the competitive sales of either corporation are less than $2,686,700. See Revised
Jurisdictional Thresholds for Section 8 of the Clayton Act, 76 Fed. Reg. 4349 (Jan. 25, 2011).

15
 2. Counts Five and Six: Monopoly in Violation of § 2 of the Sherman Act

In Counts Five and Six of the First Amended Complaint, CNA purports to assert claims

for unlawful monopolization under § 2 of the Sherman Act, 15 U.S.C. § 2.

In Count Five, CNA generally reasserts its claims regarding the bid-rigging conspiracy

and alleges that Fort Myer, Anchor, Civil, and Capitol Paving “have achieved a near total

monopoly of infrastructure contracts in the District of Columbia.” FAC ¶ 239. CNA contends

that these companies achieved this monopoly power through their bid-rigging conspiracy. Id.

¶ 240. In Count Six, CNA asserts claims against the four construction companies along with

Defendants Neto, Rodriguez, Shrensky, F. Gregorio, C. Gregorio, and the District of Columbia

government. See id. at 67. CNA alleges that the individual defendants named actively

participated in the unlawful monopolization. Id. ¶ 263. CNA further alleges that District of

Columbia government employees gave preferential treatment to the defendant contracting

companies in connection with the contract solicitations. Id. ¶ 264. CNA contends that it is

entitled to damages in Counts Five and Six relating to its loss of the contracts during the bid

solicitations at issue. See id. ¶¶ 267-71.

3. Count Seven: Contract Steering

In Count Seven, which is captioned “Contract Steering,” CNA names as defendants the

District of Columbia, Fenty, Gragan, Carter, Klein, WASA, Carlo Enciso, and Jerry Johnson.

See FAC at 77. CNA alleges that these individuals were involved in contract steering and that

they steered contracts to Fort Myer, Anchor, Civil, and Capitol Paving. Id. ¶¶ 286-87. CNA

alleges that Carter planned Amendment 6 to IFB No. DCKA-B-2009-0025 to favor Fort Myer

and Capitol Paving. Id. ¶¶ 289-91. CNA further alleges that DDOT, along with the Executive

16
Office of the Mayor and former Mayor Fenty, steered several “unsolicited” contracts in July and

August 2009. See id. ¶ 302 & Exs. L.1.3-4. CNA alleges that WASA and Defendants Johnson

and Enciso steered contracts to Anchor between August 19, 2008 and May 15, 2009. Id. ¶ 303.

CNA contends that Johnson and Enciso should have known that Anchor was affiliated with Fort

Myer, Civil, and Capitol Paving. Id. ¶ 304. CNA also alleges that Defendants Johnson and

Enciso jointly steered WASA Contract Nos. 080020 and 090020 by removing CNA’s bid

package from the procurement department, failing to respond to his bid protest, failing to

document fraud, and failing to acknowledge the common ownership of the defendant

construction companies. Id. ¶ 305. CNA fails to cite any legal authority in Count Seven, so the

legal basis for CNA’s “contract steering” claim is unclear.

4. Count Eight: Violation of Non-Collusion Affidavit

In Count Eight, CNA appears to claim that various defendants violated solicitation rules

by falsely signing non-collusion affidavits in connection with their bids for contracts. See FAC

¶¶ 314, 316. The named defendants in this count are Fort Myer, Anchor, Civil, Capitol Paving,

Neto, Rodriguez, Shrensky, F. Gregorio, C. Gregorio, Western Surety, Bruflat, WASA, Johnson,

A&M, Alves, and A. Batista. See FAC at 84-85.

5. Count Nine: Violation of D.C. Code § 28-4502

In Count Nine, CNA asserts a claim under D.C. Code § 28-4502, which provides that

“[e]very contract, combination in the form of a trust or otherwise, or conspiracy in restraint of

trade or commerce all or any part of which is within the District of Columbia is declared to be

illegal.” The named defendants in this court are Fort Myer, Anchor, Civil, Capitol Paving, Neto,

Rodriguez, Shrensky, F. Gregorio, and C. Gregorio. See FAC at 90. CNA’s allegations for

17
Count Nine generally mirror his allegations with respect to Count One for a bid-rigging

conspiracy in violation of § 1 of the Sherman Act, and CNA makes clear that Count Nine is

based on the same conduct alleged to violate the Sherman Act. See id. ¶ 329.

6. Count Ten: Violations of Procurement Regulations

In Count Ten, CNA alleges that WASA and its defendant officials Johnson and Enciso

violated WASA procurement regulations by failing to notify CNA of mistakes in its bids and

allowing CNA time to cure them. See FAC ¶¶ 346-47. CNA contends that the procurement

regulations required the contracting officer to allow CNA to correct mistakes in its bids after they

were submitted. Id. ¶¶ 349-54.

7. Counts Eleven and Twelve: Common Law Fraud & Oversight Failure

Count Eleven of the First Amended Complaint purports to assert a claim for fraud against

Fort Myer, Anchor, Civil, Capitol Paving, Western Surety, Neto, Rodriguez, Shrensky, F.

Gregorio, C. Gregorio, Bruflat, the District of Columbia, Nickles, Gragan, Carter, WASA (and

its Board of Directors and Retail Services Committee), Johnson, Councilmember Graham, Loza,

Hernandez, and the DSLBD.14 See FAC at 100-01. CNA generally alleges that these defendants

committed fraud by participating in the bid-rigging conspiracy, submitting false non-collusion

affidavits, and failing to follow applicable laws and regulations. See id. ¶¶ 371-89. CNA also

alleges that DDOT unilaterally awarded a contract to Fort Myer without bidding, see id. ¶ 390,

but the record clearly shows that Fort Myer received the contract after CNA’s bid was deemed

non-responsive at the bid price that Fort Myer had previously submitted, see id., Exs. D.10.3 &

Att. 1.

14
CNA also lists as defendants “[a]bout 25 unknown Conspirators with unknown
addresses.” FAC at 101.

18
 Count Twelve asserts a claim against Fort Myer, Anchor, Civil, Capitol Paving, Neto,

Rodriguez, Shrensky, F. Gregorio, C. Gregorio, the District of Columbia, Nickles, WASA, the

members of the Public Works Committee, Councilmember Graham, Hernandez, and Fenty. Id.

¶¶ 537-557. Count Twelve is captioned, “Oversight Failure, Gross Negligence and Fraud of

Governance Boards, Corporate Boards and the District of Columbia Government.” CNA

generally alleges that D.C. government and WASA officials enabled the bid-rigging conspiracy

by failing to engage in effective oversight and through gross negligence. Id. ¶¶ 566-67.

8. Count Thirteen: Tortious Interference with Business Relationships

In Count Thirteen, CNA asserts a claim against Fort Myer, Anchor, Rodriguez, WASA,

DDOT, Western Surety, and Bruflat for tortious interference with business relationships and with

contracts. FAC at 162. CNA alleges that the actions of the defendant construction companies

blocked CNA’s entry into the market for infrastructure contracts, causing CNA to be unable to

pay its debtors. Id. ¶ 605. CNA further alleges that these companies spread false information

that CNA owed a debt to Fort Myer (although CNA concedes it owed $56.00 to Fort Myer) in

order to ruin CNA’s reputation. Id. ¶ 606-07.

D. Procedural Background

CNA filed this action on October 15, 2010. CNA filed its First Amended Complaint on

November 9, 2010. On November 19, 2010, Defendants A&M, Alves, and A. Batista filed a

[28] Motion to Dismiss Pursuant to Fed. R. Civ. P. 12(b)(6). On November 24, 2010,

Defendants Western Surety and Bruflat filed a [29] Rule 12(b)(6) Motion to Dismiss the First

Amended Complaint. On January 10, 2011, Defendant Anchor filed a [46] Motion to Dismiss

and Defendants Capitol Paving and Neto filed a [47] Motion to Dismiss the First Amended

19
Complaint. That same date, Defendants Shrensky, Rodriguez, and G. Batista filed a [49] Motion

to Quash Service of Process. Also on that date, Defendant Fort Myer filed a [50] Motion to

Dismiss Amended Complaint Pursuant to Fed. R. Civ. P. 12(b)(6); Defendant Civil filed a [51]

Motion to Dismiss Amended Complaint; Defendants WASA, Albert, Cotruvo, Enciso, Johnson,

Russell, and Walker filed a [52] Motion to Dismiss the Amended Complaint; Defendants District

of Columbia, Fenty, Executive Office of the Mayor, Nickles, Gragan, DDOT Office of

Contracting and Procurement, Carter, Klein, DPW Office of Contracting and Procurement,

Roberts, Smith, and DSLBD filed a [56] Motion to Dismiss the Complaint or, in the Alternative,

for Summary Judgment; and Defendants Councilmember Graham, Hernandez, and Loza filed a

[57] Motion to Dismiss. CNA filed oppositions to all of these motions (several of which were

consolidated into a single brief), and the defendants filed replies. On May 20, 2011, Fort Myer

filed a [88] supplemental brief in support of its motion to dismiss; CNA filed an opposition brief

in response and a [92] cross-motion to strike and for sanctions.15 Fort Myer then filed an

opposition to CNA’s cross-motion; CNA filed a reply; and Fort Myer filed a surreply.

On January 24, 2011, Defendants A&M, Alves, and A. Batista filed a [63] Motion for

Sanctions Against Plaintiff and Its Counsel pursuant to Federal Rule of Civil Procedure 11.

These defendants contend that the claims asserted against them by CNA are frivolous and

without factual basis. CNA has filed an opposition to the motion for sanctions, and these

defendants have filed a reply.

On March 1, 2011, Defendant F. Gregorio filed a [72] Second Motion to Quash Service

15
Although CNA is correct that Fort Myer did not seek leave to file a supplemental brief
in support of its motion to dismiss, the Court shall deny CNA’s cross-motion to strike and for
sanctions. The Court shall consider Fort Myer’s supplemental brief to the extent it is helpful to
the Court’s resolution of the disputed issues.

20
claiming that he had not been validly served with process pursuant to Rule 4. CNA filed an

opposition to this motion, and F. Gregorio filed a reply.

On March 17, 2011, CNA filed a [85] Motion for Voluntary Dismissal of Claims Against

Two Individual Defendants Without Prejudice with respect to Defendants Roberts and C.

Gregorio. Defendant Roberts filed an opposition to CNA’s motion, arguing that the Court should

proceed to rule on his pending motion to dismiss. The Court agrees that it is appropriate to rule

on the pending motions to dismiss rather than allow CNA to voluntarily dismiss these defendants

without prejudice. Accordingly, the Court shall deny CNA’s motion without prejudice.

On May 30, 2011, CNA filed a [89] Motion for Leave to Take One Deposition to

Preserve Evidence. The motion seeks permission to take the deposition of Defendant Loza prior

to the Rule 26(f) conference. Defendant Loza and the District of Columbia defendants filed an

opposition and [96] cross-motion for protective order to preclude the deposition. Defendants

argue that Loza enjoys legislative immunity and cannot be compelled to testify; furthermore, they

argue that his testimony is unnecessary because the First Amended Complaint fails to state a

claim upon which relief can be granted. These motions have been fully briefed and are ripe for

resolution.

II. LEGAL STANDARD

The defendants move to dismiss the First Amended Complaint in part for lack of subject

matter jurisdiction based on a lack of standing and in part for failure to state claim upon which

relief can be granted.

A. Motion to Dismiss Pursuant to Federal Rule of Civil Procedure 12(b)(1)

A court must dismiss a case pursuant to Rule 12(b)(1) when it lacks subject matter

21
jurisdiction. In determining whether there is jurisdiction, the Court may “consider the complaint

supplemented by undisputed facts evidenced in the record, or the complaint supplemented by

undisputed facts plus the court’s resolution of disputed facts.” Coalition for Underground

Expansion v. Mineta, 333 F.3d 193, 198 (D.C. Cir. 2003) (citations omitted); see also Jerome

Stevens Pharm., Inc. v. Food & Drug Admin., 402 F.3d 1249, 1253 (D.C. Cir. 2005) (“[T]he

district court may consider materials outside the pleadings in deciding whether to grant a motion

to dismiss for lack of jurisdiction.”). “At the motion to dismiss stage, counseled complaints, as

well as pro se complaints, are to be construed with sufficient liberality to afford all possible

inferences favorable to the pleader on allegations of fact.” Settles v. U.S. Parole Comm’n, 429

F.3d 1098, 1106 (D.C. Cir. 2005). In spite of the favorable inferences that a plaintiff receives on

a motion to dismiss, it remains the plaintiff’s burden to prove subject matter jurisdiction by a

preponderance of the evidence. Am. Farm Bureau v. Envtl. Prot. Agency, 121 F. Supp. 2d 84, 90

(D.D.C. 2000). “Although a court must accept as true all factual allegations contained in the

complaint when reviewing a motion to dismiss pursuant to Rule 12(b)(1), [a] plaintiff[’s] factual

allegations in the complaint . . . will bear closer scrutiny in resolving a 12(b)(1) motion than in

resolving a 12(b)(6) motion for failure to state a claim.” Wright v. Foreign Serv. Grievance Bd.,

503 F. Supp. 2d 163, 170 (D.D.C. 2007) (internal citations and quotation marks omitted).

B. Motion to Dismiss Pursuant to Federal Rule of Civil Procedure 12(b)(6)

Under the Federal Rules of Civil Procedure, a complaint must contain “a short and plain

statement of the claim showing that the pleader is entitled to relief,” Fed. R. Civ. P. (8)(a), “in

order to ‘give the defendant fair notice of what the . . . claim is and the grounds upon which it

rests.’” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Conley v. Gibson, 355

22
U.S. 41, 47 (1957)). Although “detailed factual allegations” are not necessary to withstand a

Rule 12(b)(6) motion to dismiss for failure to state a claim, a plaintiff must furnish “more than

labels and conclusions” or “a formulaic recitation of the elements of a cause of action.” Id. “Nor

does a complaint suffice if it tenders ‘naked assertion[s]’ devoid of ‘further factual

enhancement.’” Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009) (quoting Twombly, 550 U.S. at

557). Rather, a complaint must contain sufficient factual allegations that if accepted as true,

“state a claim to relief that is plausible on its face.” Twombly, 550 U.S. at 570. “A claim has

facial plausibility when the plaintiff pleads factual content that allows the court to draw the

reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 129 S.Ct.

1949 (citing Twombly, 550 U.S. at 556).

When considering a motion to dismiss for failure to state a claim, the court must construe

the complaint in a light most favorable to the plaintiff and must accept as true all reasonable

factual inferences drawn from well-pleaded factual allegations. In re United Mine Workers of

Am. Employee Benefit Plans Litig., 854 F. Supp. 914, 915 (D.D.C. 1994); see also Schuler v.

United States, 617 F.2d 605, 608 (D.C. Cir. 1979) (“The complaint must be liberally construed in

favor of the plaintiff, who must be granted the benefit of all inferences that can be derived from

the facts alleged”) (internal quotation omitted). However, a plaintiff must provide more than just

“a sheer possibility that a defendant has acted unlawfully.” Iqbal, 129 S.Ct. at 1950. When a

complaint’s well-pleaded facts do not enable a court, “draw[ing] on its judicial experience and

common sense,” “to infer more than the mere possibility of misconduct,” the complaint has not

shown that the pleader is entitled to relief. Id.

23
 III. DISCUSSION

The defendants in this action have moved to dismiss the First Amended Complaint on a

variety of grounds. Many of the defendants contend that CNA has failed to allege sufficient facts

regarding their involvement in the alleged bid-rigging conspiracy to state a claim against them.

The construction company defendants (Fort Myer, Civil, Anchor, Capitol Paving) contend that

CNA lacks standing to assert its antitrust claims because the record clearly shows that its injuries

were not caused by any alleged antitrust violation. Other defendants argue that the allegations in

the First Amended Complaint are legally insufficient to state a claim upon which relief can be

granted. The Court shall analyze defendants’ arguments to the extent they are necessary to

resolve each claim asserted by CNA. Because standing is essential to the Court’s subject matter

jurisdiction, the Court shall determine whether CNA has standing before turning to the merits of

the claims asserted in the First Amended Complaint. Steel Co. v. Citizens for a Better Env’t, 523

U.S. 83, 98 (1998).

A. CNA Lacks Standing to Assert Most of Its Claims

To establish the “irreducible constitutional minimum of standing,” a plaintiff must show:

(1) that he or she suffered an injury in fact that is (a) concrete and particularized and (b) actual or

imminent; (2) a causal relationship between the injury and the challenged conduct; and (3) that

the injury will likely be remedied by a favorable court decision. Lujan v. Defenders of Wildlife,

504 U.S. 555, 560-61 (1992). In this case, it is the second prong of the standing

inquiry—causation—that poses a problem for CNA. Nearly all of the claims asserted in the First

Amended Complaint seek redress for CNA’s failure to obtain a final contract through the six

challenged solicitations. However, the facts as pled in the First Amended Complaint and

24
supporting exhibits reveal that CNA lost the contracts because of its own mistakes in the bidding

process or because it was outbid by companies that are not alleged to be a part of the bid-rigging

conspiracy. The Court shall review the facts relating to each contract solicitation to explain why

CNA lacks standing to assert claims based on these injuries.

1. Contracts for Which CNA’s Bid Was Deemed Non-responsive

With respect to both WASA Contract No. 080020 and DDOT Contract No. DCKA-2009-

B-0025, CNA was initially deemed the winning bidder but its bid was rejected as non-responsive

because it failed to include the required bid security. With respect to DPW Contract No. DCKT-

2009-B-0003, the record shows that DPW declined to award CNA the contract despite being the

lowest bidder because CNA did not establish that it was a responsible bidder in response to

DPW’s request for documentation. Therefore, with respect to these contract awards, CNA’s

injury was not caused by any alleged anticompetitive conduct among CNA’s competitors, but

rather by CNA’s own failure to comply with the bidding requirements.16 Consequently, CNA has

no standing to assert claims that his competitors were engaged in a bid-rigging conspiracy with

respect to these contracts.

CNA does have standing to challenge the actions of the contracting officers and agencies

in deeming its bids non-responsive, as it does in Count Ten alleging violations of procurement

regulations. However, the Court does not understand CNA to be claiming that the contracting

officers and agencies were an active part of the alleged bid-rigging conspiracy. Alternatively, to

the extent that CNA is alleging that the procurement agencies and officials were a part of the bid-

16
In addition, CNA does not allege that the other two bidders for DPW Contract No.
DCKT-2009-B-0003 (neither of which are defendants in this action) were engaged in the bid-
rigging conspiracy. Therefore, CNA has clearly failed to state any antitrust claim based on that
contract solicitation.

25
rigging conspiracy, the Court finds that CNA has failed to state a claim upon which relief can be

granted. Nowhere in the First Amended Complaint does CNA allege facts that plausibly suggest

there was an actual agreement between any of the contracting officials and the alleged conspiring

contracting companies to disadvantage CNA by disqualifying its bids.17 Rather, CNA contends

that the contracting officials and agencies aided and abetted the bid-rigging conspiracy by

accepting the collusive bids and that they were negligent in failing to stop the contracting

companies from colluding through the use of interlocking directorates. However, because the

contracting officers’ decisions to reject CNA’s bids are not causally connected to the alleged

conspiracy, CNA lacks standing to challenge that alleged conspiracy with respect to these

contract awards.

2. Contract Lost Due to CNA’s Own Bidding Error

With respect to WASA Contract No. 090080, CNA admits that it lost the bid because it

was the highest bidder due to CNA’s own error in submitting its bid. Therefore, CNA’s failure

to win the contract was not the result of any alleged bid-rigging conspiracy, and CNA lacks

standing to assert any such claim based on this contract solicitation. CNA does contend that it

filed a bid protest seeking to correct its error and that WASA failed to respond to it. CNA does

have standing to challenge WASA’s failure to respond, but this is a separate claim from CNA’s

antitrust claims.

17
The closest CNA comes to such an allegation is its claim that DDOT engineered
Amendment 6 to IFB No. DCKA-2009-B-0025 so as to favor Fort Myer. However, CNA was
the lowest bidder for that contract and its bid was disqualified for failure to submit proper bid
security; therefore, CNA cannot rely on this allegation to establish a connection between
DDOT’s rejection of its bid and the alleged bid-rigging conspiracy.

26
 3. Contracts Where CNA Was Not the Lowest Bidder

a. WASA Contract No. 090020

With respect to WASA Contract No. 090020, CNA alleges that the contract was awarded

to Nastos Construction, Inc. (“Nastos”), the lowest bidder. CNA makes only three references to

Nastos throughout its entire First Amended Complaint. See FAC ¶¶ 146, 243, 585. These

references indicate only that Nastos submitted the lowest bid and that it was awarded the

contract. In one paragraph, CNA writes in parentheses that Nastos is “(Other [company] in

question), see id. ¶ 243; and in another paragraph, CNA marks Nastos with a double asterisk and

a note stating “Others affiliated with Defendants,” id. ¶ 146. To the extent that these minor

notations are intended to imply that Nastos was conspiring with the other alleged conspirators,

they are wholly inadequate. Alleging that Nastos was “in question” or “affiliated” with the

defendant companies is not the same as alleging that Nastos was involved in the conspiracy.

Without a competent allegation that Nastos was somehow involved in the conspiracy, however,

CNA cannot establish that it lost WASA Contract No. 090020 as a result of any anticompetitive

conduct. Accordingly, CNA lacks standing to assert any of its claims based on the loss of

WASA Contract No. 090020 to Nastos.

b. DDOT Contract No. DCKA-2009-B-0193

The record shows that CNA was the fourth lowest bidder for DDOT Contract No.

DCKA-2009-B-0193 behind Fort Myer, Anchor, and Civil. See FAC ¶ 130(v) & Ex. D.11.3.

Because these three companies are alleged to have participated in the bid-rigging conspiracy,

CNA may have standing to sue as a disappointed bidder if it can establish that it may have been

awarded the contract in the absence of the bid-rigging conspiracy. Cf. Free Air Corp. v. FCC,

27
130 F.3d 447, 450 (D.C. Cir. 1997) (“[S]ufficiently viable runners-up in a procurement process

have standing to allege that an illegality in the process caused the contract to go to someone else

and not to them.”); Nat’l Maritime Union of Am. v. Commander, Military Sealift Command, 824

F.2d 1228, 1237-38 (D.C. Cir. 1987) (“[I]njury to a bidder’s right to a fair procurement is

obviously an injury both traceable to the alleged illegality in a procurement and redressable by

any remedy that eliminates the alleged illegality.”). Assuming arguendo that the bids submitted

by Fort Myer, Anchor, and Civil would have been higher than CNA’s bid absent any collusion,

CNA could ordinarily establish standing by being the next lowest bidder. However, the Contract

Appeals Board ruled that CNA’s bid was non-responsive because it failed to include the required

bid security. Therefore, CNA could not have been awarded the contract even if it had been the

lowest bidder. Accordingly, CNA lacks standing to assert claims based on its failure to win this

contract.

4. Conclusion

Because the record clearly demonstrates that CNA’s failure to win the six contracts

described in the First Amended Complaint was not caused by any alleged bid-rigging conspiracy,

CNA lacks standing to assert any claims that are premised on the alleged conspiracy. These

claims include: Counts One, Two, Three, and Four, which charge that the various named

defendants violated § 1 of the Sherman Act by engaging in the alleged bid-rigging conspiracy;

Counts Five and Six, which charge that the bid-rigging conspiracy enabled defendants to

monopolize the market for infrastructure contracts in violation of § 2 of the Sherman Act; and

Count Nine, which charges that the bid-rigging conspiracy violates D.C.’s antitrust statute. Each

of these counts seeks to hold defendants directly liable for engaging in anticompetitive conduct,

28
but because CNA cannot demonstrate that it was actually harmed by any such conduct, it lacks

standing to assert these claims. Therefore, the Court shall dismiss these claims for lack of

subject matter jurisdiction.

Several other claims asserted in the First Amended Complaint also fail for lack of

standing. In Count Eight, CNA charges that the defendants violated solicitation rules by falsely

submitting affidavits of non-collusion. Even assuming that there is a private right of action for

such a claim, CNA lacks standing to assert it because it cannot demonstrate that its injury—its

failure to win the contract awards—is traceable to the allegedly false affidavits. In Count

Twelve, CNA charges that various procurement officials were negligent in failing to stop the

alleged bid-rigging conspiracy. However, CNA cannot demonstrate that such alleged negligence

played any causal role in its failure to win a contract. Therefore, these claims must also be

dismissed for lack of standing.

Count Eleven purports to assert a claim for common law fraud against a series of

defendants. However, it is clear from CNA’s allegations that its fraud claim is based on the

defendants’ alleged participation in the bid-rigging conspiracy in some way or another. See FAC

¶¶ 371-89. Therefore, the Court finds that CNA lacks standing to assert its claim for fraud as

alleged in the First Amended Complaint. To the extent that CNA purports to state a claim for

fraud based on other allegations, it is clear to the Court that CNA’s conclusory and generalized

allegations do not satisfy the particularized pleading requirements of Federal Rule of Civil

Procedure 9(b). Accordingly, the Court shall dismiss Count Eleven.

It appears to the Court that Counts Seven, Ten, and Thirteen rely at least in part on factual

allegations that are distinct from the allegations of a bid-rigging conspiracy. Therefore, the Court

29
shall proceed to analyze the merits of those claims. Because the Court shall dismiss the other

counts for lack of standing, the Court declines to reach the alternative arguments in favor of

dismissal raised by the various defendants.

B. CNA Has Failed to State a Claim for Contract Steering

In Count Seven, CNA purports to assert a claim against District of Columbia and WASA

officials for “contract steering.” The basis for CNA’s claim is not entirely clear. In its

opposition brief, CNA states that its contract steering claim is based on “systemic corruption

amongst the individuals, agencies, and corporations that control the IFB Solicitations market.”

See CNA’s [70] Opp’n to D.C. Defs.’ Mot. to Dismiss or, Alternatively, for Summ. J. at 14.

To the extent that CNA is alleging that these officials steered contracts to the defendant contract

companies through actions such as the allegedly preferential Amendment 6, see FAC ¶¶ 289-95,

CNA lacks standing to assert these claims because it cannot demonstrate that its injuries were

caused by the alleged contract steering rather than by its own actions or inactions. To the extent

that CNA is claiming that these defendants violated procurement regulations, see id. ¶ 296, its

claim is duplicative of Count Ten, which the Court shall address below.

CNA also appears to claim in Count Seven that the defendant officials violated D.C.

Code § 1-204.51, a statutory provision which, inter alia, requires that the Council of the District

of Columbia (“D.C. Council”) approve certain multi-year contracts awarded by the District of

Columbia. CNA alleges that defendants violated this provision with respect to three contracts

that were awarded in July and August 2009. See FAC ¶ 302. The D.C. Defendants contend that

this claim must be dismissed because there is no private right of action for violations of § 1-

204.51. The D.C. Court of Appeals has explained that in determining whether a statute creates

30
an implied right of action, courts must look to three factors: (1) whether the plaintiff is “one of

the class for whose especial benefit the statute was enacted”; (2) whether there is any indication

of legislative intent, explicit or implicit, either to create such a remedy or to deny one; and (3)

whether it is consistent with the underlying purposes of the legislative scheme to imply such a

remedy for the plaintiff. In re D.G., 583 A.2d 160, 166 (D.C. 1990) (quoting Cort v. Ash, 422

U.S. 66 (1975)). The ultimate issue is whether the legislature intended to create a particular

cause of action, and the burden is on the plaintiff to demonstrate that the D.C. Council intended

to imply a right of action. Coates v. Elzie, 768 A.2d 997, 1001 (D.C. 2001) (quotation marks and

citations omitted). CNA fails to respond to defendants’ argument, and therefore the Court finds

that CNA has conceded that there is no private right of action to enforce § 1-204.51.

Accordingly, the Court shall dismiss Count Seven insofar as it purports to assert a claim based on

a violation of this provision.

C. CNA’s Claims Based on Violations of Procurement Regulations

As the Court noted above, CNA does have standing to challenge violations of

procurement regulations by contracting officials to the extent that those violations can be shown

to have a causal connection to CNA’s failure to win the contract. In this case, CNA contends

that the WASA contracting officials violated procurement regulations by failing to notify CNA

that its bids were deficient and failing to allow CNA to correct the deficiencies. However, a

review of the relevant regulations reveals that the WASA contracting officials did not violate the

procurement regulations in rejecting CNA’s bids as non-responsive.

CNA relies primarily on a procurement regulation then in effect captioned, “Mistakes in

31
Bids Before Award.” See 21 D.C. Mun. Reg. § 5312 (1999).18 That regulation provided in

pertinent part as follows:

5312.1 Contracting Officer shall examine each bid for mistakes. In cases
where the Contracting Officer has reason to believe that a mistake is
contained within a bid/proposal, the Contracting Officer shall request
from the bidder/proposer verification of the mistake.

5312.2 The Contracting Officer may correct an apparent clerical mistake
before award. If the correction is made, the bid shall be corrected to
the intended correct bid and may not be withdrawn.

5312.3 A Contracting Officer’s authority to permit corrections of bids is
limited to bids that are responsive and shall not be used to permit
corrections to make the bid responsive or competitive.

Id. CNA also relies on a regulation captioned, “Mistakes in Bids After Award,” which provided

in pertinent part:

5313.1 If a mistake in a bid or proposal is not discovered until after award,
the Contracting Officer may correct the mistake by contract
amendment if the Contracting Officer makes a written determination
that correcting the mistake would be in the best interest of WASA
and that the correction would not change the essential requirements
of the contract.

Id. § 5313. CNA contends that pursuant to these provisions, WASA contracting officials should

have examined CNA’s bids, notified CNA of its failure to provide proper bid security, and

allowed CNA to correct the mistake. However, the language in these regulations is permissive

rather than mandatory, meaning that the Contracting Officer is not required to correct a mistaken

bid. Furthermore, § 5312 clearly states that the Contracting Officer cannot permit corrections to

make the bid responsive or competitive. The regulations then in effect stated that “[t]o be

18
WASA issued new procurement regulations on June 12, 2009, deleting the former
regulations in their entirety. See 56 D.C. Reg. 4484 (June 12, 2009). Because the contract
solicitations occurred prior to the effective date of the new regulations, the Court refers only to
the then-operative regulations.

32
considered for award, a bid shall be required to comply in all material respects with the

solicitation,” id. § 5310.1, and “[a] Contracting Officer shall reject bids and proposals

determined by the Contracting Officer to be non-responsive,” id. § 5318.7. Because the

solicitations at issue required bid security, CNA’s failure to include proper bid security rendered

its bids non-responsive, and the Contracting Officer could not permit CNA to amend its bid in

order to make it responsive.

CNA also relies on a regulation that provided, “A Contracting Officer shall give the

successful bidder/proposer an opportunity to resolve minor deficiencies in bids and proposals

prior to the award.” 21 D.C. Mun. Regs. § 5321.1 (1999). However, the lack of proper bid

security is not a “minor” deficiency in a bid. The applicable regulations explicitly stated that a

“Contracting Officer may reject bids and proposals that do not include security required to be

submitted with the bid/proposal unless the failure to include the security is waived by the General

Manager.” Id. § 5318.9. Therefore, CNA’s claim that WASA officials violated procurement

regulations by denying CNA the opportunity to correct its deficient bid security is without merit.

CNA also appears to claim that WASA improperly failed to respond to its bid protest

regarding WASA Contract No. 90080, where CNA mistakenly submitted a bid for over $11

million instead of its intended bid of $5,040,000. However, as discussed above, the applicable

procurement regulations would not have required the WASA Contracting Officer to accept

CNA’s corrected bid. Therefore, any failure to respond to CNA’s bid protest was harmless and

did not cause CNA any injury.

For these reasons, the Court shall grant the WASA Defendants’ motion to dismiss Count

Ten of the First Amended Complaint.

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 D. CNA Has Failed to State a Claim for Tortious Interference with Business
Relationships or with Contract

In Count Thirteen of the First Amended Complaint, CNA purports to assert claims for

tortious interference with business relationships and tortious interference with contract. To

survive a motion to dismiss on a claim for tortious interference with a business relationship or a

contract, the plaintiff must plead: (1) the existence of a valid business relationship or contract; (2)

knowledge of the business relationship or contract on the part of the tortfeasor; (3) intentional

interference inducing or causing a breach of the relationship or contract; and (4) damages

resulting from the breach. Browning v. Clinton, 292 F.3d 235, 242 (D.C. Cir. 2002); CASCO

Marina Dev., L.L.C. v. D.C. Redev. Land Agency, 834 A.2d 77, 83 (D.C. 2003).

The First Amended Complaint alleges the following facts in support of CNA’s tortious

interference claims. CNA alleges that Fort Myer, Anchor, Civil, and Capitol Paving spread false

information about CNA’s debts to creditors with the aim of tarnishing CNA’s reputation in the

marketplace. See FAC ¶¶ 606-10. CNA claims that these defendants’ actions “destroyed good

will intentions of [CNA] in fulfilling agreements to its debtor(s).” Id. ¶ 613. CNA lists liabilities

to debtors in the amount of $2,029,352. Id. ¶ 614. CNA claims that it defaulted on some of its

obligations to the debtors as a result of defendants’ actions. See id. ¶ 618. CNA also complains

that Fort Myer took aggressive actions to collect an unpaid debt and then complained about

CNA’s delinquency to DDOT and WASA. See id. ¶¶ 619-20.

The Court finds that CNA has failed to state a claim for tortious interference with

business relationships or contracts. First, CNA fails to allege that any of the defendants in this

count had any knowledge of CNA’s business relationships or contracts. Second, CNA has failed

to plead facts that plausibly suggest that it suffered damages resulting from any alleged

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interference. CNA’s basic claim is that it was injured because it failed to win contracts from

DDOT and WASA and because its capacity to pay off its creditors was somehow diminished.

However, CNA fails to demonstrate a causal connection between any alleged tortious

interference and its failure to win infrastructure contracts (which, as the Court explained above,

was caused by CNA’s own failure to comply with bidding requirements), and CNA fails to

explain how its inability to pay its creditors for existing obligations was exacerbated by the

defendants’ alleged interference. Therefore, CNA has failed to state a plausible tortious

interference claim.

Furthermore, insofar as CNA asserts its claim against the District of Columbia, the claim

is barred by CNA’s noncompliance with D.C. Code § 12-309. CNA concedes that it has failed to

provide notice of its claim against the District of Columbia within six months of the alleged

injury as required by D.C. Code § 12-309. See CNA’s [70] Opp’n to D.C. Defs.’ Mot. to

Dismiss or, Alternatively, for Summ. J. at 9. Compliance with the statutory notice requirement is

mandatory, and a suit filed without the required notice must be dismissed. See Tucci v. District

of Columbia, 956 A.2d 684, 694 (D.C. 2008). Therefore, CNA’s failure to comply with § 12-309

provides an alternative basis for dismissal of this claim against the District of Columbia.

For these reasons, the Court shall dismiss Count Thirteen of the First Amended

Complaint.

E. Other Pending Motions

Having concluded that all of the claims asserted by CNA in the First Amended Complaint

must be dismissed for either lack of standing or failure to state a claim upon which relief can be

granted, the Court must now address the other motions pending on the docket. Defendants

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Shrensky, Rodriguez, and G. Batista filed a [49] Motion to Quash Service of Process, which the

Court treats as a motion to dismiss lack of insufficient service of process pursuant to Federal

Rule of Civil Procedure 12(b)(5). CNA failed to file an opposition to this motion, and therefore

the Court shall treat it as conceded. See LCvR 7(b). Accordingly, the Court may alternatively

dismiss the claims against Defendants Shrensky, Rodriguez, and G. Batista for insufficient

service of process. Defendant F. Gregorio also filed a [72] Second Motion to Quash Service

claiming that he had not been validly served with process; the Court also construes this as a

motion to dismiss under Rule 12(b)(5). CNA filed an opposition to this motion, and F. Gregorio

filed a reply. However, because the Court has already found that the claims asserted against F.

Gregorio must be dismissed for either lack of standing or failure to state a claim, the Court

declines to rule separately on his motion to dismiss pursuant to Rule 12(b)(5).

Also pending before the Court is CNA’s [89] Motion for Leave to Take One Deposition

to Preserve Evidence and a [96] cross-motion for protective order filed by Defendants Loza and

the District of Columbia Defendants. The Court’s disposition of the defendants’ motions to

dismiss renders these cross-motions moot; therefore, the Court shall deny them.

Finally, the Court must address the [63] Motion for Sanctions Against Plaintiff and Its

Counsel filed by Defendants A&M, Alves, and A. Batista. These defendants seeks sanctions

against CNA and its counsel under Federal Rule of Civil Procedure 11. Rule 11 provides in

relevant part that when an attorney files a pleading with the court, he is certifying to the best of

his knowledge, information, and belief, formed after an inquiry reasonable under the

circumstances, that: (1) the pleading is not being presented for any improper purpose, such as to

harass, cause unnecessary delay, or needlessly increase the cost of litigation; (2) the claims,

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defenses, and other legal contentions are warranted by existing law or by a nonfrivolous

argument for extending, modifying, or reversing existing law or for establishing new law; and (3)

the factual contentions have evidentiary support or will likely have evidentiary support after a

reasonable opportunity for further investigation or discovery. Fed. R. Civ. P. 11(b). If the Court

determines that Rule 11(b) has been violated, “the court may impose an appropriate sanction on

any attorney, law firm, or party that violated the rule or is responsible for the violation.” Fed. R.

Civ. P. 11(c)(1). “[T]he imposition of sanctions is left to the discretion of the district court

judge.” 1443 Chapin Street, LP v. PNC Bank, Nat’l Ass’n, 718 F. Supp. 2d 78, 86 (D.D.C.

2010).

Defendants A&M, Alves, and A. Batista contend that CNA and its counsel have violated

Rule 11 by asserting claims against them in the First Amended Complaint that are legally and

factually unsupported and which they believe are being asserted for the improper purpose of

harassment. They point to the lack of factual allegations pertaining to A&M, Alves, and A.

Batista in the First Amended Complaint and the lack of monetary relief sought against them.

Accordingly, the Court shall review the facts alleged in the First Amended Complaint regarding

each of these defendants.

With respect to A&M, the First Amended Complaint does clearly allege that A&M was a

part of the overall bid-rigging conspiracy along with Fort Myer, Civil, Anchor, and Capitol

Paving. See FAC ¶¶ 4-12. CNA has alleged facts demonstrating that A&M participated in

several of the bid solicitations and has alleged that A&M had connections to at least one of the

other companies through shared officers. A&M contends that sanctions are warranted, however,

because there are no specific factual allegations describing A&M’s involvement in the alleged

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conspiracy. The Court certainly agrees that the First Amended Complaint is not a model of

clarity; it is repetitious, longwinded, rambling, and replete with conclusory allegations of

conspiracy. Indeed, if the Court were not dismissing CNA’s claims for lack of standing, it would

likely dismiss the claims for failure to plead facts that plausibly show an entitlement to relief.

However, the Court shall not award sanctions under Rule 11 simply because CNA’s counsel filed

a pleading that is poorly worded and fails to state a claim for relief. See Tahfs v. Proctor, 316

F.3d 584, 595 (6th Cir. 2003) (“A complaint does not merit sanctions under Rule 11 simply

because it merits dismissal pursuant to Rule 12(b)(6).”).

Defendants Alves and A. Batista have a more tenable argument for sanctions. Although

they are both named as defendants in the First Amended Complaint, the only factual allegations

pertaining to them in the entire pleading are in paragraph 90, where CNA alleges that Alves is the

Executive Vice President of A&M; paragraph 91, where CNA alleges that A. Batista is the

Administrative Assistant of A&M; and paragraph 7, where CNA alleges that A. Batista is related

by blood or marriage to G. Batista. CNA has conceded that it failed to allege any facts pertaining

to Alves and concedes that dismissal is appropriate with respect to him. See Pl.’s Opp’n to Defs.

A&M, Alves & A. Batista’s Mot. to Dismiss at 1. Although CNA has not made a similar

concession with respect to A. Batista, it is clear that there are no allegations against A. Batista

that could support a claim against her. CNA argues that it could not plead specific facts relating

to Alves and A. Batista because it has not had the opportunity to engage in discovery. While that

does not relieve CNA of its burden of pleading a claim against these individual defendants, the

Court is not persuaded that CNA’s sloppy pleading rises to the level of sanctionable conduct.

Accordingly, the Court shall deny the motion for sanctions filed by A&M, Alves, and A. Batista.

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 IV. CONCLUSION

For the foregoing reasons, the Court finds that CNA lacks standing to assert its claims

involving an alleged bid-rigging conspiracy because it cannot demonstrate a causal connection

between the alleged conspiracy and its failure to win infrastructure contracts awarded by DDOT,

DPW, and WASA. The Court also finds that CNA has failed to state a claim against the

contracting officers or agencies for violation of procurement regulations and has failed to state a

claim for tortious interference with a business relationship or contract. Accordingly, the Court

shall grant the pending motions to dismiss pursuant to Rule 12(b)(1) and Rule 12(b)(6) and

dismiss the First Amended Complaint in its entirety. The Court shall also grant the motion to

dismiss for insufficient service of process filed by Defendants Shrensky, Rodriguez, and G.

Batista as conceded and deny without prejudice the motion filed by Defendant F. Gregorio in

light of the Court’s other rulings. Because the Court finds that sanctions against CNA’s counsel

are not warranted under Rule 11, the Court shall deny the motion for sanctions filed by

Defendants A&M, Alves, and A. Batista. All other pending motions shall be denied without

prejudice. An appropriate Order accompanies this Memorandum Opinion.

/s/
COLLEEN KOLLAR-KOTELLY
United States District Judge

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