Cheeks v. Fort Myer Construction Corporation , 216 F. Supp. 3d 146 ( 2016 )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
)
JOHN C. CHEEKS, et al. )
)
)
Plaintiffs, )
)
v. ) Case No: 14-cv-00914-RCL
)
FORT MYER CONSTRUCTION )
CORPORATION, et al. )
)
Defendants. )
)
MEMORANDUM OPINION
I. INTRODUCTION
This case concerns allegations brought by plaintiffs John C. Cheeks, Cheeks of North
America, Inc. (“CNA”),1 and Juanita Gallardo of a vast bid rigging conspiracy undertaken by
numerous defendants participating in a Racketeer Influenced and Corrupt Organizations Act
(“RICO”) enterprise. On October 17, 2014, this Court granted several motions to dismiss, thereby
dismissing nineteen defendants from this action, and ordered plaintiffs’ to file a motion for leave
to amend their Complaint in response to the remaining defendants’ motions for a more definite
statement. Plaintiffs have now moved three times for leave to amend their already amended
complaint. Currently pending before this Court are plaintiffs’ Motion for Leave to File a Third
Amended Complaint, ECF No. 103, plaintiffs’ Motion for Leave to File a Fourth Amended
Complaint, ECF No. 118, and plaintiffs’ Cross Motion for Order to Show Cause as to Evidence
1
One of the insurance defendants in this action is named either CNA Surety or CNA Financial. These entities are
not associated with plaintiff Cheeks of North America, which is referred to simply as CNA. When this Court
discusses the insurance defendant, it will refer to it as either CNA Surety or CNA Financial.
1
Adduced Supporting RICO Existence and Violations of Law, ECF No. 127. Due to the existence
of plaintiffs’ Motion for Leave to File a Fourth Amended Complaint, plaintiffs’ Motion for Leave
to File a Third Amended Complaint will be denied as moot. For the reasons stated below,
plaintiffs’ Motion for Leave to File a Fourth Amended Complaint will be denied. In addition, the
Court finds that plaintiffs have failed to show cause as to why defendant CNA Surety should not
be dismissed, and has not shown why previously dismissed insurance defendants should be added
back in to this action. Plaintiffs’ Motion for Order to Show Cause will also be denied.
Accordingly, the Court looks back to plaintiff’s First Amended Complaint. The Court’s
dismissal of nineteen defendants remains intact, leaving those defendants who filed motions for a
more definite statement. Because plaintiffs’ have failed to adequately respond to this Court’s
Order granting defendants’ motions for a more definite statement, and its instructions to file a
motion for leave to file a second amended complaint that complied with the requirements noted
by the Court, this Court concludes that this action should be dismissed.
II. BACKGROUND
This case is brought by three plaintiffs: John Cheeks, CNA, and Juanita Gallardo. Plaintiffs
Cheeks and CNA (of which John Cheeks is the principal owner) allege that they are the targets of
a vast bid rigging conspiracy in which dozens of defendants—namely, other construction
companies, their principals, and insurance entities—have engaged in antitrust and RICO
violations. Plaintiffs claim that the “Rodriguez(s)-Shrensky Family Rico Enterprise,” along with
an insurance carrier CNA Surety/CNA Financial, “unlawfully collude[ed] over the last 20 years in
the District of Columbia[] to monopolize District of Columbia infrastructure cont[r]acts.”2 Fourth
2
Plaintiffs’ Complaint is replete with spelling and grammatical errors. Although this Court quotes from the Complaint
and plaintiffs’ other written submissions at length, it will not endeavor to correct every mistake.
2
Am. Compl. ¶ 1, ECF. No. 118-1. According to plaintiffs’ Complaint, the members of the alleged
enterprise have engaged in “attempted murder, death threats[,] at least 2 likely murders,
obstruction of justice, witness intimidation, [and] malicious prosecution” in order to continue
monopolizing long-term contracts to the exclusion of minority business like CNA. Id. at ¶ 1–2.
The insurance carrier is alleged to have been “a willing accomplice because of multiple rake-offs
received from insurance underwriting of each single contract.” Id. at ¶ 2. Plaintiff Gallardo alleges
that she was once employed by a member of the alleged RICO enterprise, and that after witnessing
collusion among members of the enterprise, she was targeted and framed for embezzlement, was
denied her civil rights, and was prevented from testifying against the enterprise. Id. at ¶ 28.
On May 19, 2014, plaintiffs filed their First Amended Complaint. See Court’s Oct. 17,
2014 Mem. Op. 3, ECF No. 67. The following defendants filed motions to dismiss: Western Surety
Company, Paul T. Bruflat (the “Western Surety defendants”); Committee on Transportation and
the Environment, Phillip Mendelson, Mary M. Cheh, Jim Graham, David Grosso, Kenyan
McDuffie, Tommy Wells (the “Council defendants”); and the Government of the District of
Columbia, Mayor Vincent Gray, the Executive Office of the Mayor, the D.C. Department of Small
and Local Business Development, Robert N. Summers, Harold B. Pettigrew Jr., the District of
Columbia, James D. Staton, the Department of Transportation, and Terry Bellamy (the “District
defendants”). Id. at 2. The other defendants filed motions for a more definite statement: Fort Myer
Construction Corp., Francisco Rodrigues Neto, Jose Rodrigues(z), Lewis Shrensky, Anchor
Construction Corporation, Florentino Gregorio, Cristina Rodrigues Minton, Dora Rodrigues
Cooper, Civil Construction, and Capitol Paving of D.C. Id. at 2. This Court granted those motions
and dismissed nineteen defendants from this case (the Western Surety defendants, the Council
defendants, and the District defendants). Id. at 13. In response to various defendants’ motions for
3
a more definite statement, this Court ordered plaintiffs to file a motion for leave to file a second
amended complaint. Id. It specifically ordered plaintiffs to “provide[] a complete list of statutory
violations alleged and which defendant(s) engaged in each violation, in an orderly, clear, and non-
repetitive arrangement,” and to “identif[y] all known defendants and plaintiffs and how each
individual or entity named in the Second Amended Complaint and attached exhibits is involved in
the violations raised by plaintiffs.” Id. at 7–8.
Plaintiffs filed a Motion for Leave to file a Second Amended Complaint, ECF No. 72, but
before the Court ruled on that motion, filed a Motion for Leave to file a Third Amended Complaint,
and again, before the Court ruled, filed a Motion for Leave to File a Fourth Amended Complaint.
Thus, the Court previously found that the Motion for Leave to file a Second Amended Complaint
was moot, ECF No. 104, and now finds that the Motion for Leave to file a Third Amended
Complaint is also moot. The Court now examines plaintiffs’ Motion for Leave to File a Fourth
Amended Complaint and the proposed Fourth Amended Complaint attached to that motion, as
well as plaintiffs’ attempts to bring claims against the insurance defendants, and plaintiffs’ request
for an order to show cause as to why a RICO entity should not be found to exist.
III. LEGAL STANDARDS
Parties have a right to amend their pleadings once as a matter of course. Fed. R. Civ. P.
15(a)(1). After this, a party may amend if the opposing party consents, or if the court grants leave.
Fed. R. Civ. P. 15(a)(2). Courts “should freely give leave when justice so requires.” Id. Whether
to grant leave is within the discretion of the District Court. Foman v. Davis, 371 U.S. 178, 182
(1962). Reasons for denying leave to amend include “undue delay, bad faith or dilatory motive on
the part of the movant, repeated failure to cure deficiencies by amendments previously allowed,
undue prejudice to the opposing party by virtue of allowance of the amendment, [or] futility of
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amendment.” Id. “An amendment would be futile if it merely restates the same facts as the original
complaint in different terms, reasserts a claim on which the court previously ruled, fails to state a
legal theory, or could not withstand a motion to dismiss.” Robinson v. Detroit News, Inc., 211 F.
Supp. 2d 101, 114 (D.D.C. 2002).
If a party alleges that amendment would be futile because the amended complaint could
not withstand a motion to dismiss, the court’s “review . . . is, for practical purposes, identical to
review of a Rule 12(b)(6) dismissal based on the allegations in the amended complaint.” In re
Interbank Funding Corp. Sec. Litig., 629 F.3d 213, 216 (D.C. Cir. 2010) (internal quotation marks
omitted). To survive a 12(b)(b) motion to dismiss “a complaint must contain sufficient factual
matter, accepted as true, to state a claim to relief that is plausible on its face. 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.” Ashcroft v. Iqbal, 556 U.S. 662,
678 (2009) (internal citations and quotation marks omitted). Plaintiffs must provide more than
labels, conclusions, or “formulaic recitation of the elements of a cause of action.” Bell Atl. Corp.
v. Twombly, 550 U.S. 544, 555 (2007). “Factual allegations must be enough to raise a right to
relief above the speculative level.” Id.Plaintiffs bring claims for violations of RICO, 18 U.S.C. § 1962(c), for a RICO conspiracy,
18 U.S.C. § 1962(d), and for violations of the Sherman Antitrust Act and the Clayton Antitrust
Act. To have standing under RICO, a plaintiff must claim that “he has been injured in his business
or property by the conduct constituting the violation.” Sedima, S.P.R.L. v. Imrex Co., 473 U.S.
479, 496 (1985); see also Hourani v. Mirtchev, 796 F.3d 1, 11 (D.C. Cir. 2015). RICO makes it
“unlawful for any person employed by or associated with any enterprise engaged in, or the
activities of which affect, interstate or foreign commerce, to conduct or participate, directly or
5
indirectly, in the conduct of such enterprise’s affairs through a pattern of racketeering activity or
collection of unlawful debt,” 18 U.S.C. § 1962(c), and to conspire to commit the above offense,
18 U.S.C. § 1962(d). The elements of a civil RICO violation are “(1) the conduct (2) of an
enterprise (3) through a pattern of racketeering activity.” Salinas v. United States, 522 U.S. 52, 62
(1997). “Racketeering activity,” also known as “predicate acts” or “predicate offenses,” is defined
in a lengthy statutory provision which enumerates various criminal acts under both state and
federal law. See 18 U.S.C. § 1961(1). Thus, plaintiffs must allege that the defendants committed
predicate acts to state a civil RICO claim. In addition, to succeed on a civil RICO claim, plaintiffs
must also show proximate cause—“that a RICO predicate offense ‘not only was a “but for” cause
of his injury, but was the proximate cause as well.’” Hemi Grp., LLC v. City of N.Y., N.Y., 559
U.S. 1, 9 (2010). There must be “some direct relation between the injury asserted and the injurious
conduct alleged. A link that is too remote, purely contingent, or indirect[t] is insufficient.” Id.(internal citations and quotation marks omitted).
The elements of a RICO conspiracy claim are “that (1) two or more people agreed to
commit a [18 U.S.C. § 1962(c)] offense, and (2) a defendant agreed to further that endeavor.” RSM
Prod. Corp. v. Freshfields Bruckhaus Deringer U.S. LLP, 682 F.3d 1043, 1048 (D.C. Cir. 2012).
A court need not find that a defendant is liable for underlying RICO violations in order to find that
he is liable for a RICO conspiracy. See United States v. Philip Morris USA, Inc., 327 F. Supp. 2d
13, 18 (D.D.C. 2004) (citing Salinas, 522 U.S. at 66). To be liable for conspiracy, “[a] conspirator
must intend to further an endeavor which, if completed, would satisfy all of the elements of a
substantive criminal offense, but it suffices that he adopt the goal of furthering or facilitating the
criminal endeavor.” Salinas, 522 U.S. at 65.
6
It is unclear what provisions of the Sherman Act and the Clayton Act that plaintiffs allege
violations of; their Complaint merely mentions the Acts in their entirety. The Clayton Act allows
“any person injured in his business or property by reason of anything forbidden in the antitrust
laws,” which include both the Sherman Act and the Clayton Act, to recover damages. See 15
U.S.C. § 15(a). It appears that plaintiffs may be alleging general antitrust/monopolization
violations under these Acts, see 15 U.S.C. § 1–2, or violations of the prohibition on interlocking
directorates and officers, see 15 U.S.C. § 19.
IV. ANALYSIS
The major issue before this Court, which is analyzed first, is whether to grant leave to file
a fourth amended complaint. The Court first finds that granting leave to file a fourth amendment
complaint would be futile because plaintiffs’ claims are unable to survive a motion to dismiss, and
that plaintiffs have repeatedly failed to cure the deficiencies in their complaints. Second, the Court
finds plaintiffs have failed to show cause as to why defendant CNA Surety should not be dismissed
and that the insurance defendants should remain dismissed from this action. Third, the Court finds
that plaintiffs’ request for an order to show cause as to why a RICO entity should not be found to
exist is inappropriate. Finally, the Court concludes that this action should be dismissed with
prejudice.
A. Futility of Amendment for Failure to State a Claim
Defendants Dora Monica Rodrigues, Cristina Rodrigues Minton, Capitol Paving of D.C.,
Inc., Francisco Rodrigues Neto, Fort Myer Construction Corp., Jose Rodriguez, Lewis Shrensky,
and Civil Construction LLC have filed oppositions to plaintiffs’ motion for leave to amend. See
ECF Nos. 120, 122, 123, 124. They all argue that amendment would be futile because the
allegations in the amended complaint do not survive a Rule 12(b)(6) analysis. Defendants Dora
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Monica Rodrigues and Cristina Rodrigues Minton argue that the allegations against them “are
utterly conclusory and lack any specific facts linking [them] to any actual wrongdoing.” Defs.
Dora Monica Rodrigues & Cristina Rodrigues Minton’s Opp’n 2, ECF No. 120. Defendants
Capitol Paving of D.C., Inc. and Francisco Rodrigues Neto argue that plaintiffs have “continued
to assert broad outlandish legal conclusions rather than pleading specific allegations of fact.” Defs.
Capitol Paving of D.C., Inc. & Francisco Rodrigues Neto’s Opp’n 2, ECF No. 122. Defendants
Fort Myer Construction Corp., Jose Rodriguez, and Lewis Shrensky argue that “[p]laintiffs remain
unable to connect any of the unsubstantiated actions imputed to the [d]efendants to a specific harm
that has befallen them” and that “[i]t is abundantly clear that the failure of [p]laintiffs to be awarded
public procurement contracts is solely the result of [p]laintiffs own actions, and therefore, any
RICO claim is improper.” Defs. Fort Myer Construction Corp., Jose Rodriguez, & Lewis
Shrensky’s Opp’n 3, ECF No. 123. Finally, defendant Civil Construction argues that “[p]laintiffs
still have failed to allege any facts about what Civil purportedly did to cause injury to them,” and
that “[p]laintiffs fail to allege that Civil had anything to do with any of their other outrageous
claims concerning alleged wrongful conduct by purported (and often unnamed) members of the
RICO Enterprise.” Def. Civil Construction’s Opp’n 2–3, ECF No. 124.
In reply to the defendants’ oppositions, plaintiffs argue that they have obtained new facts
and added them to the complaint regarding witness/potential plaintiff Juanita Gallardo which “state
more detail which links named Defendants, through the common ownership and/or management
of the Enterprise to the obstruction of justice regarding Gallardo, her malicious prosecution and
incarceration.” Pls.’ Reply to Defs.’ Opp’n 2, ECF No. 126. They argue that some of the
defendants are incorrect in arguing that plaintiffs would have never have received a contract award,
stating that “if the alleged RICO family were disqualified for their actual illegal monopolistic
8
collusive bidding and perjured Non Collusion Affidavits, Plaintiff would have been the only bidder
remaining and be entitled to the award.” Id. at 5. Plaintiffs further contend that they have complied
with this Court’s Opinion and Order of October 17, 2014 because they “specified and corrected
charges against all RICO members and entities known to exist at this time,” and “provided
specificity as to dates, locations, events and persons in Exhibit K and body of the Proposed Third
and Fourth Amended Complaints and stated claims upon which relief can be sought.” Id. at 6. In
response to the defendants’ arguments that the complaint contains no allegations that the
defendants directly committed RICO violations, plaintiffs rely on the Pinkerton doctrine, which
provides for “co-conspiratorial liability premised upon the defendants’ facilitation and furtherance
of the conduct of co-conspirators’ engaging in the participation and conducting the affairs of the
RICO enterprises.” Id. at 7–8. Finally, plaintiffs argue that the defendants failed to address claims
independent of the RICO claims, citing the underlying illegal “predicate acts,” and state law
violations including “attempted murder, perjury, intimidation of witness, stalking and obstruction
of justice.” Id. at 9–10.
The Court finds that amendment here would be futile because plaintiffs have failed to
sufficiently state claims for relief, and nothing indicates that they would be able to state claims for
relief if allowed to amend in the future. Plaintiffs have not sufficiently pleaded two elements of
civil RICO claims: predicate acts and proximate cause. With respect to their RICO conspiracy
claims, plaintiffs have not sufficiently alleged the existence of any agreement, nor have they shown
proximate cause. Finally, plaintiffs have alleged virtually no facts supporting their Sherman and
Clayton Act claims.
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1. Civil RICO
Amendment would be futile because plaintiffs have failed to establish with particularity
that the defendants committed the underlying predicate acts alleged, an essential element of RICO
claims. Plaintiffs generally allege the following categories of predicate acts: 1) violent criminal
acts directed towards plaintiff Cheeks; 2) fraud committed in the course of submitting non-
collusion affidavits as part of contract solicitations; 3) various violations in connection with the
incarceration of plaintiff Gallardo; and 4) other criminal acts. The Court will take each of these
categories in turn. In addition, plaintiffs have failed to allege proximate cause.
a) Predicate Acts
i. Violent Criminal Acts towards Plaintiff Cheeks
With regard to the violent criminal acts directed towards plaintiff Cheeks—including death
threats, attempted murder, destruction of property, theft, stalking (in the name of witness
intimidation), and witness retaliation (by doing the aforementioned acts)—the Complaint only
alleges that an “unknown associate” of the alleged enterprise committed each of these crimes.
Plaintiffs rely on the allegation that plaintiff Cheeks has “no other known enemies” to draw this
conclusion. Not a single defendant is named as the perpetrator of these crimes, and there are
absolutely no facts supporting the inference that any of the defendants committed the crimes or
directed others to do so. These allegations fail to plausibly show that any defendant committed a
necessary predicate act under RICO.
ii. Allegations Regarding Plaintiff Gallardo
Next, plaintiffs claim that plaintiff Gallardo, who allegedly witnessed the enterprise’s
unlawful acts as an employee of defendant Dora Monica Rodrigues and Hawk Enterprises, “a now
defunct shell company member of the RICO Enterprise,” Fourth Am. Compl. ¶ 33, was essentially
10
framed for embezzlement by the defendants (a charge which resulted in her conviction and
incarceration) so that she would be prohibited from testifying against the defendants in an
unrelated case, therefore obstructing justice and tampering with a witness. At various points
throughout the Complaint, plaintiffs mention civil rights violations under 42 U.S.C. § 1983committed by defendants against plaintiff Gallardo. To the extent that plaintiffs are relying on
these violations as predicate acts, this argument fails. Section 1983 violations do not constitute
racketeering activities and cannot form the basis of a RICO claim. See Taitz v. Obama, 707 F.
Supp. 2d 1, 6 (D.D.C. 2010). In addition, the other allegations regarding plaintiff Gallardo are
factually insufficient. Plaintiffs claim that four of the defendants—Dora Monica Rodrigues,
Cristina Rodrigues Minton, Christopher Kerns, and James Abely, “aided by others”—obstructed
Gallardo’s testimony in a different case alleging corruption and bribery against D.C. government
officials and Fort Myer Construction, and framed her for false theft charges. Fourth Am. Compl.
¶¶ 128–29. They provide no additional facts beyond these conclusory statements that the
defendants committed criminal acts to show how each of the defendants obstructed plaintiff
Gallardo’s alleged testimony or they framed her. The chart purporting to detail the crimes of these
defendants is similarly of no help. It merely restates (in chart form) the conclusory allegations of
obstruction of justice against these defendants. See Chart of Criminal Violations, Pls.’ Fourth Am.
Compl. Ex. K, ECF No. 118-20.
Furthermore, the Complaint does not sufficiently allege that plaintiff Gallardo suffered a
business injury. It appears from the Complaint that as a result of these alleged activities directed
at plaintiff Gallardo, she suffered injury in the form of improper incarceration and deprivation of
her civil rights. See Fourth Am. Compl. ¶¶ 129, 131. Even if plaintiffs had sufficiently alleged
the existence of the predicate acts regarding plaintiff Gallardo, “mere commission of the predicate
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offenses” is “obviously not in itself a violation of § 1962.” Sedima, S.P.R.L., 473 U.S. at 496.
Plaintiffs have failed to allege that plaintiff Gallardo suffered a business injury as a result.3 They
only allege that “Gallardo was injured by activities designed to remove her as a viable witness by
obstructing justice to cover-up illegal actions of the RICO Enterprise.” Fourth Am. Compl. ¶ 35.
Plaintiff Gallardo appears to be seeking to litigate a claim for wrongful conviction and/or
deprivation of civil rights, both of which occurred in the state of Maryland. A RICO action
revolving around a purported bid rigging scheme in the District of Columbia is clearly not the
appropriate time or venue for such a claim.
iii. Fraud
Plaintiffs also claim that the defendants committed mail and wire fraud by signing non-
collusion affidavits—defendants Jose Rodriguez(s), Francisco Rodrigues Neto, Florentino
Gregorio, “and others”—or aided and abetted in the signing of the affidavits—Jason Shrensky,
Lauren Shrensky, Manuel Fernandes, Anita Bonds, “and others.” Fourth Am. Compl. ¶ 115.
These allegations appear to be the crux of plaintiffs’ Complaint. Plaintiffs essentially claim that
defendants committed fraud by signing affidavits asserting that they had not colluded with others
in connection with contract solicitations, when in fact they had committed such collusion, and then
submitted those affidavits along with their bid proposals. Fourth Am. Compl. ¶ 113–21. Plaintiffs
Cheeks and CNA were then allegedly excluded from being awarded those contracts, despite their
status as low bidder. Accordingly, plaintiffs argue that if the defendants were not engaging in
illegal collusion or had been properly excluded from bidding, plaintiffs would have won the
contracts.
3
Merely stating that “[e]ach Plaintiff herein has been a victim of one or more of the unlawful RICO activities,” Fourth
Am. Compl. ¶ 25, is insufficient to allege that they have each suffered a compensable injury to his or her business.
12
Specifically, plaintiffs claim that the officials who signed the affidavits “would be unable
to demonstrate an absence of the intent to deceive, as to the non-collusion requirement in the face
of public records of interlocking ownership and board of directors of the allegedly colluding RICO
entities,” that “[e]vidence is available from witnesses to the effect [] the preparation of bids for
many year has been accomplished on a joint basis, with discussions amongst bidders preceding
the submission of coordinated bids,” and that “[d]iscovery would increase specificity.” Id. at
¶¶ 116, 120, 121. The chart attached to plaintiffs’ Complaint, which purports to detail the alleged
criminal violations of the enterprise, lists the individual who signed the affidavit, the contract
solicitation at issue, the date of such solicitation (spanning from 2008 to 2013), and the location
of the solicitation (e.g., bid rooms). See Chart of Criminal Violations.
Because plaintiffs are alleging that the defendants committed fraud, they are subject to the
heightened pleading standard of Rule 9(b). See Sandza v. Barclays Bank PLC, 151 F. Supp. 3d
94, 108 (D.D.C. 2015). Plaintiffs must “stat[e] the time, place and content of the false
misrepresentations, the fact misrepresented[,] and what was retained or given up as a consequence
of the fraud.” Id. (internal quotation marks omitted). Courts should exercise caution when
considering RICO claims premised on fraud; they “must be particularly scrutinized because of the
relative ease with which a plaintiff may mold a RICO pattern from allegations that, upon closer
scrutiny, do not support it.” W. Assocs. Ltd. P’ship, ex rel. Ave. Assocs. Ltd. P’ship v. Mkt. Square
Assocs., 235 F.3d 629, 637 (D.C. Cir. 2001).
Plaintiffs may successfully state the time and place of the alleged fraud in their criminal
violations chart. They fall short, however, of successfully pleading the content of the false
misrepresentations. Plaintiffs’ claims of fraud are based solely on the claim that plaintiff Gallardo
has evidence that the defendants were colluding to coordinate their bids. Fourth Am. Compl. ¶¶
13
120, 123. There are several issues with this argument, all of which convince this Court that
plaintiffs have failed to satisfy Rule 9(b)’s pleading standard. First, plaintiffs claim that Gallardo
“was in a key observational position as the accountant and confidant of 2 key enterprise members,”
and “[i]n this position, during the term of her employment, she had access to probative evidence
of the Enterprise’s unlawful operations.” Id. at ¶ 122. The Complaint states, however, that
Gallardo left her employment in 2005—three years before the first of the allegedly fraudulent non-
collusion affidavits was submitted in 2008 according to plaintiffs’ own chart of criminal violations.
See id. at ¶ 124; Chart of Criminal Violations. Second, the Complaint relies primarily on reference
to “Exhibit L,” which purports to contain sworn statements of plaintiff Gallardo regarding the
alleged collusion among bidders. After examining all of the attachments to the Fourth Amended
Complaint, however, the Court is unable to find any document labelled “Exhibit L,” or any
document that contains the sworn statements of plaintiff Gallardo.4 Third, the other documents
referenced—the non-collusion affidavits and a chart constructed by plaintiffs showing the
4
Plaintiffs have again made it difficult for this Court to discern their arguments. The exhibits attached to the Fourth
Amended Complaint are labelled numerically, but are referenced by letter in the Complaint. Furthermore, the
exhibits—once opened—are not labelled alphabetically. The exhibits that are lettered—some inexplicably are lettered
while others are numbered—use letters arbitrarily pulled from the content of the document. The Court has nonetheless
examined each exhibit and has not found an “Exhibit L” or an otherwise labelled exhibit containing the sworn
statements of plaintiff Gallardo.
The Court has found a document labelled “Exhibit L” which claims to contain the sworn statements of plaintiff
Gallardo attached to the Third Amended Complaint. That exhibit is not an affidavit or an affirmation or any type of
document signed by plaintiff Gallardo under penalty of perjury. Rather, it appears to be written by plaintiffs’ counsel
of record in this matter, who claims that plaintiff Gallardo was duly sworn, and who has selectively excerpted pieces
of a conversation he had with plaintiff Gallardo. The Court will not accept this document as the sworn statements of
plaintiff Gallardo.
The Court recognizes that for the purposes of dismissal for failure to state a claim, it must presume that all of plaintiffs’
factual allegations are true, and that plaintiffs could submit a properly sworn affidavit from plaintiff Gallardo attesting
to the allegations claimed. Nonetheless, such an affidavit would not change this Court’s conclusion that plaintiff
Gallardo’s allegations of collusion between 2002 and 2005 are unrelated to the claimed bid rigging of contracts
beginning in 2008. Furthermore, this Court doubts whether at the summary judgment stage the Court would find that
a reasonable jury could find plaintiff Gallardo to be a credible witness. As much as plaintiffs claim that plaintiff
Gallardo is the victim of a framing, her conviction still stands; it has not been vacated or overturned. A jury verdict
for plaintiffs at trial based on such testimony is difficult to fathom.
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relationships among the defendants—do not show fraud. The non-collusion affidavits merely
show that the defendants swore that they had not colluded with others in connection with the
submission of bids; there is nothing in these documents showing that these statements were
fraudulent. See Non-Collusion Affidavits, Fourth Am. Compl. Attachment 1, ECF No. 118-3. The
chart of relationships among alleged members of the enterprise shows that the companies alleged
to be part of the enterprise shared officers, some of whom were related; it does not clearly show
that these individuals were improperly colluding and then lied about it in the non-collusion
affidavits. See Chart of Documented Interrelationships, Fourth Am. Compl. Ex. F, ECF No. 118-
13. Finally, merely stating that “[e]vidence is available” to show collusion (and therefore fraud)
and that “[d]iscovery would increase specificity” is not sufficient. Fourth Am. Compl. ¶¶ 120–21.
Plaintiffs bear the burden of sufficiently stating a plausible claim for relief in their Complaint; they
cannot rely on facts that may be discovered in yet to be conducted discovery to meet this burden.
Therefore, the Court is essentially left with the conclusory statements that defendants were
colluding and committing fraud, with no true factual allegations. For these reasons, the Court finds
that the allegations of fraud do not satisfy Rule 9(b)’s pleading standard.
iv. Other Criminal Acts
Finally, there are three allegations that do not fit comfortably in the previous categories,
but that nonetheless fail to show the element of predicate acts. First, plaintiffs claim that “at least
3 suspicious deaths of courier and security employees of Fort Myer Construction Corporation”
have occurred under similar circumstances during the relevant period of time. Fourth Am. Compl.
¶ 104–05. There are no allegations that the deaths were committed by members of the alleged
enterprise, or that they are connected to the alleged pattern of criminal acts here, or even that the
deaths were the result of foul play. It goes without saying that the statement that “[f]urther
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discovery is necessary or criminal investigation to further detail these factual allegations,” id. at
¶ 105, is insufficient to state a plausible claim on the face of the Complaint.
Second, plaintiffs state that members of the enterprise committed and were convicted of
committing bribery. Fourth Am. Compl. ¶ 107–109. Specifically, it alleges that in 2002
Florentino Gregorio and C&F Construction Company (who is not a named defendant) were
convicted of bribery, and that in 2003 Fort Myer Construction was convicted of bribery for acts
taken in 1995–1998. Id. at ¶¶ 108–09. There is no allegation—and no inference—that these crimes
were part of the pattern of alleged racketeering activity aimed at plaintiffs, or in any way connected
to the alleged bid rigging conspiracy at issue. See Ganzi v. Washington-Baltimore Reg’l 2012
Coal., 98 F. Supp. 2d 54, 57 (D.D.C. 2000) (“[A] Plaintiff must show that the predicate acts are
related and that they ‘amount to or pose a threat of continued criminal activity.’”).
Third, plaintiffs allege that members of the alleged enterprise have intimidated D.C.
officials and employees, and that “[o]n information and belief RICO members were instrumental
in conjunction with Mayor Fenty, and Attorney General Peter Nickles in the firing of Stephen
Amos, a District of Columbia whistle blower, employee who attempted to take action against Fort
Myer Construction Corporation.” Fourth Am. Compl. ¶ 132. Again, these conclusory allegations
free of any factual detail are wholly insufficient to state a plausible claim.
In sum, plaintiffs have largely failed to sufficiently allege facts showing an essential
element of a civil RICO claim: that the defendants committed the alleged predicate acts.
b) Proximate Cause
Even if plaintiffs had sufficiently pleaded the existence of predicate acts committed by the
named defendants, plaintiffs have failed to sufficiently plead another essential element of a RICO
claim: causation. To succeed on a civil RICO claim, plaintiffs must show proximate cause; there
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must be “some direct relation between the injury asserted and the injurious conduct alleged. A
link that is too remote, purely contingent, or indirect[t] is insufficient.” Hemi Grp., LLC, 559 U.S.
at 9.
Plaintiffs allege that they have been the victims of bid rigging scheme in which defendants
unfairly colluded and competed for infrastructure contracts. John Cheeks alleges that he was
denied profitable contracts as a result. Fourth Am. Compl. ¶ 27. Remarkably, however, the Fourth
Amended Complaint does not state which specific contracts plaintiffs were denied as a result of
defendants allegedly illegal activity, nor does it state to whom such contracts were awarded.
Nonetheless, the Court will assume that plaintiffs are complaining about the contracts or
invitations for bids (“IFBs”) listed in Exhibit K of the Complaint, which purports to list the
criminal violations of each defendant. Those contracts and IFBs are: IFB 080020, IFB 090080,
IFB 090020, DCKA-2013-B-0029, and DCKA-2009-B-0193. See Chart of Criminal Violations.
Plaintiffs also attach two recent contract solicitations in which they claim to have been the low
bidder: the aforementioned DCKA-2013-B-0029, and DCKA-2013-B-0007. See Two Recent
Contracts wherein CNA, Inc was low Bidder, Pls.’ Fourth Am. Compl. Ex. G, ECF No. 118-4.5
Going even further, this Court has examined plaintiffs’ exhibit of bid tabulations. It appears that
5
These are also the IFBs and contracts listed in Exhibit A to plaintiffs’ Fourth Amended Complaint, see Affidavit of
Ronald J. Bonfilio, Pls.’ Fourth Am. Compl. Ex. A, ECF No. 118-2, and Attachment 1, see Non-Collusion
Affidavits, Fourth Am. Compl. Attachment 1, and Attachment 2, see Bid Bond, Pls.’ Fourth Am. Compl.
Attachment 2 Item 2, ECF No. 118-4.
The Court notes that plaintiff Cheeks submitted an affidavit in which he states that since 2002 he has bid on 15 IFBs
in D.C., refers to the latest two bids which are the “subject of this complaint,” and states that “[t]he prior about 13
contracts involve the same pattern of violations of RICO referred to herein.” Cheeks Affidavit, Pls.’ Fourth Am.
Compl. Ex. CH, ECF No. 118-9. Given that Cheeks states that the two most recent bids (DCKA-2013-B-0029 and
DCKA-2013-B-0007) are the subject of this Complaint, it is unclear whether he is in fact complaining about being
denied any other contracts as a result of RICO violations. In addition, he has not named the other thirteen contracts,
nor has he claimed that he bid against the defendants for them or that he was a low bidder.
17
plaintiffs bid against defendants in one more contract not previously listed: DCKA 2009-B-0025.
See Invitation for Bid Solicitation Documents, Pls.’ Fourth Am. Compl. Ex. D, ECF No. 118-10.
Plaintiffs’ Fourth Amended Complaint never explicitly discusses causation. It never
specifically claims that plaintiffs were not awarded these contracts (the apparent injury) as a result
of defendants’ racketeering activity. Plaintiffs appear to rest their argument on the statements of
plaintiff Gallardo, i.e., that the defendants colluded to coordinate their bids, then fraudulently
attested to non-collusion in affidavits submitted with bids. Had defendants been excluded from
bidding due to this allegedly fraudulent activity, plaintiffs claim that CNA would have been
awarded the contracts. Plaintiff Gallardo allegedly had knowledge of this activity by reason of her
employment with members of the enterprise. Again, as previously discussed, there are no sworn
statements of plaintiff Gallardo attached to the Fourth Amended Complaint. More importantly, as
stated in plaintiffs’ Complaint, plaintiff Gallardo’s employment with members of the enterprise
ceased in 2005. Fourth Am. Compl. ¶ 124. The contracts and IFBs at issue occurred between
2008 and 2013, three years after plaintiff Gallardo claims to have observed collusion. Plaintiffs
have failed to point to any contracts that they were not awarded as a result of collusion witnessed
by plaintiff Gallardo. 6
Furthermore, plaintiffs have failed to adequately respond to defendants’ arguments that
plaintiffs’ failure to be awarded contracts was the result of its own actions, or of the actions of an
entity not named in this lawsuit. See Def. Civil Construction LLC’s Opp’n 2–3; Defs. Fort Myer
Construction Corp., Jose Rodriguez & Lewis F. Shrensky’s Opp’n 2–3; Defs. Capitol Paving &
Francisco Rodrigues Neto’s Opp’n 2. Plaintiffs’ exhibits demonstrate that CNA was outbid on
6
At one point plaintiffs identify the “time in question” as 2006–2012. Fourth Am. Compl. ¶ 132. At others, they
somewhat vaguely allude to unlawful collusion over the last ten to twenty years. See Fourth Am. Compl. ¶¶ 1, 103.
Still, however, the harm that plaintiffs’ appear to be complaining of began in 2008. The Court cannot find any
allegations that plaintiffs were harmed as a result of collusion or other illegal activity prior to 2008.
18
IFB 090020 by Nastos Construction, and was outbid on IFB 090080 by Corinthian Contractor,
Invitation for Bid Solicitation Documents at 3, 4, neither of whom are named defendants in this
action or named as part of the alleged RICO enterprise. Another court in this district—in a
different case brought by Cheeks against Fort Myers—previously confirmed these events. See
Cheeks v. Fort Myer Const. Co., 722 F. Supp. 2d 93, 100 (D.D.C. 2010). Clearly, plaintiffs’
argument that “if the alleged RICO family were disqualified for their actual illegal monopolistic
collusive bidding and perjured Non Collusion Affidavits, Plaintiff would have been the only bidder
remaining and be entitled to the award,” Pls.’ Reply at 5, is belied by these facts. There were
others involved in the bidding process who plaintiffs have not named as part of the “RICO family.”
The actions of those companies are the clear cause of plaintiffs’ “injury,” i.e., that they did not
receive the contract awards.
With respect to the remaining contracts/IFBs, plaintiffs fail to respond to the argument that
they did not receive these awards due to their own actions. The District of Columbia procurement
regulations state that the contracting officer may accept three forms of security: bonds provided
by a surety, certified checks or irrevocable letters of credit, or U.S. government securities. 27
DCMR § 2700.4. They also state that “[i]f a bid fails to comply with the bid security requirements
set forth in the solicitation, the contracting officer shall reject the bid,” but may accept the bid if
“(a) The bid or proposal meets the criteria set forth in this section; and (b) Acceptance of the bid
or proposal would be in the best interests of the District.” 27 DCMR § 2701.1. Plaintiffs do not
state in their Complaint that they properly submitted bid security. They do not claim in their Reply
brief that they properly submitted bid security. Plaintiffs’ own exhibits show that DCKA 2009-B-
0025, DCKA 2013-B-0007, and DCKA 2013-B-0029 were accompanied by checks, but plaintiffs
do not argue that the contracting officer accepted the bid in accordance with Section 2701.1.
19
Furthermore, other courts in this District have found that plaintiffs’ bids on IFB 080020 and
DCKA-2009-B-01937 were rejected specifically because they failed to include the required bid
security. See Cheeks v. Fort Myer Const. Co., 722 F. Supp. 2d 93, 99–100 (D.D.C. 2010); Cheeks
of N. Am., Inc. v. Fort Myer Const. Corp., 807 F. Supp. 2d 77, 94 (D.D.C. 2011), aff’d, No. 11-
7117, 2012 WL 3068449 (D.C. Cir. July 26, 2012).
Rather, plaintiffs argue that “[m]inor matters involving cash bonds or bid bonds or
adequate financing would have been routinely and easily cured.” Pls.’ Reply at 5–6. This wholly
fails to respond to the argument that their bids simply did not comply with D.C. law. Plaintiffs
essentially argue that even though they submitted noncompliant bids, they would have nonetheless
been awarded the contracts if defendants had been disqualified and if they had the chance to cure
the defects in their bids and if the District then accepted the non-defective bids. This line of
inferences contains far too many contingencies to establish proximate cause. See Hemi Grp., LLC,
559 U.S. at 9.
Furthermore, leaving aside any alleged fraud in bid submission process, the Complaint fails
to allege that other predicate acts were the proximate cause of the injury to plaintiffs Cheeks and
CNA. With regard to the acts alleged to have been committed in the course of the prosecution and
incarceration of plaintiff Gallardo, the Complaint states that the defendants “obstructed justice
successfully by obstructing her probable testimony as an adverse witness in this case potentially
fatal to the Enterprise.” Fourth Am. Compl. ¶ 128. There are no allegations that these actions
were the proximate cause of the injuries to plaintiffs Cheeks and CNA—the illegal monopolization
7
Plaintiffs’ exhibits show that plaintiff was also not the low bidder on this contract. See Invitation for Bid Solicitation
Documents.
20
of infrastructure contracts to the exclusion of plaintiffs Cheeks and CNA—nor are they even
alleged to be the but for cause of the injuries.
Therefore, not only have plaintiffs failed to sufficiently allege facts showing that
defendants committed predicate acts of racketeering activity, they have failed to plead that these
acts were the proximate cause of harm to plaintiffs Cheeks and CNA. Therefore, plaintiffs have
failed to state a claim for civil RICO violations.
2. RICO Conspiracy
Plaintiffs have also failed to sufficiently allege a RICO conspiracy (Claims Two, Three,
and Four). Plaintiffs allege that “at a time unknown” several of the defendants “conspired to
violate [RICO] (i.e., each Defendant agreed that a conspirator would conduct or participate in the
affairs of the Enterprise) through a pattern of racketeering, (i.e., the commission of acts
indictable . . . all in violation of 18 U.S.C. § 1962(d)).” Fourth Am. Compl. ¶ 154. They allege
that all of the defendants are liable under the Pinkerton Doctrine. Id. The Court finds, however
that plaintiffs have failed to allege both the existence of any agreements or that the conspiracy was
the proximate cause of their injuries.
To plead a RICO conspiracy, plaintiffs must allege agreements—agreements to commit
RICO offenses and agreements to further the endeavor to commit RICO offenses. See RSM Prod.
Corp., 682 F.3d at 1048. Plaintiffs here have failed to allege any facts directly showing such
agreements. In fact, the only time an agreement is even mentioned in the Complaint is in the
excerpt quoted above, i.e., the conclusory statement that each defendant agreed that a conspirator
would conduct or participate in the affairs of the Enterprise. See Twombly, 550 U.S. at 555 (“[A]
plaintiff’s obligation to provide the ‘grounds’ of his ‘entitle[ment] to relief’ requires more than
21
labels and conclusions, and a formulaic recitation of the elements of a cause of action will not
do.”). There are no further details.
It is true that the Court may infer the existence of a conspiracy from the relationships and
circumstances alleged. See e.g., United States v. Mellen, 393 F.3d 175, 191 (D.C. Cir. 2004) (“[A]
conspiracy can be inferred from a combination of close relationships or knowing presence and
other supporting circumstantial evidence.”); Gagan v. Am. Cablevision, Inc., 77 F.3d 951, 961 (7th
Cir. 1996) (“A ‘RICO conspiracy, like all conspiracies, does not require direct evidence of
agreement; an agreement can be inferred from the circumstances.’”). The Court here is unable,
however, to infer an agreement to commit RICO offenses or to infer an agreement to further the
enterprise’s endeavors to commit RICO offenses. Beyond the conclusory allegations described
above, the only factual allegations that would begin to allow the Court to infer the existence of a
conspiracy are 1) that the members of the alleged enterprise had interlocking or overlapping
directorates or officers; and 2) that they colluded to coordinate bids and shared employees and
equipment, as attested to by plaintiff Gallardo.
Plaintiffs’ second point—that plaintiff Gallardo witnessed collusion—suffers from the
same defects as previously discussed. Not only does the Fourth Amended Complaint not include
as an exhibit actual sworn statements of plaintiff Gallardo, any collusion that she observed would
be relevant to the time period prior to the termination of her employment in 2005, not the time
period in which plaintiffs’ allegedly conspired to rig bids and exclude plaintiffs from fairly
competing for infrastructure contracts, the earliest of which occurred in 2008. The Court therefore
does not credit her statements as circumstantial evidence of a conspiracy during the relevant time
frame. In support of the first point, plaintiffs provide charts and tables that show the relationships
among individuals associated with the companies at the center of the alleged conspiracy—Fort
22
Myer, Anchor Construction, Capitol Paving, and Civil Construction—and positions each held as
officers of the aforementioned companies. See Chart of Documented Interrelationships;
Defendants Affiliation Matrix, Fourth Am. Compl. Ex. O, ECF No. 118-22. Plaintiffs also submit
an affidavit of Ronald J. Bonfilio, a retired auditor once employed by the U.S. Government
Accountability Office, who states that the relationships among members of the alleged enterprise
“appear to be contradictive of claims of the affidavits of independence and non-collusion,” and
that “the long-term pattern contained in the documents examined appears to demonstrate that
actual independence in bidding could not reasonably exist.” Affidavit of Ronald J. Bonfilio, Pls.’
Fourth Am. Compl. Ex. A. However, the non-collusion affidavits submitted by plaintiffs do not
on their face state that the defendant companies did not have officers or board members in
common; they state that the signatory company “has not, either directly or indirectly, entered,
entered into any agreement, participated in any collusion, or otherwise taken any action in restraint
of free competitive proposal submitted in connected with proposed contract.” Non Collusion
Affidavits for IFBs. The Court therefore disagrees that the non-collusion affidavits are clearly
contradicted by the relationships among the companies.
Left only with allegations regarding the relationships among members of the alleged
enterprise, parts of which do not indicate fraud or collusion at all, the Court finds that plaintiffs
have failed to sufficiently allege circumstances from which it could infer the necessary agreements
of a RICO conspiracy. See RSM Prod. Corp., 682 F.3d at 1052 (“[B]ecause RSM failed to allege
facts sufficient to support a plausible inference that Freshfields knew of and agreed to further the
bribery-racketeering conspiracy, the complaint fails to state a claim against Freshfields for RICO
civil conspiracy under § 1962(d).”); Son Ly v. Solin, Inc., 910 F. Supp. 2d 22, 27–28 (D.D.C. 2012)
(finding that the plaintiffs failed to state a claim for conspiracy to violate RICO because they
23
“merely incorporate by reference their allegations of a single-event RICO violation based on
alleged securities fraud committed by [defendants]” and “other than plaintiffs’ conclusory
allegations, plaintiffs have not set forth any allegations that any defendants agreed to further any
such RICO conspiracy”).
Moreover, plaintiffs have again failed to sufficiently allege proximate causation. Plaintiffs
allege that the “conspiratorial conduct violates RICO § 1962(d), and such conduct caused direct
injury to [p]laintiffs.” Fourth Am. Compl. ¶ 156. This Court has already found, however, that
plaintiffs failed to respond to defendants’ arguments that plaintiffs’ failure to be awarded the
contracts at issue was the result of its own actions, or of the actions of an entity not named in this
lawsuit, and that plaintiffs’ have failed to sufficiently plead proximate causation. Therefore, even
if the Court were to infer the existence of a conspiracy, plaintiff has still failed to state a claim for
relief under Section 1962(d) for RICO conspiracy. See Knit With v. Knitting Fever, Inc., No.
CIV.A. 08-4221, 2011 WL 891871, at *11 (E.D. Pa. Mar. 10, 2011) (“[E]ven assuming arguendo
that Plaintiff’s allegations as to [defendant’s] participation in the purported conspiracy to cover-
up the initial fraud were adequate to allege a new RICO conspiracy under § 1962(d), Plaintiff
cannot demonstrate that the cover-up was the proximate cause of its monetary losses.”).
Plaintiffs’ reliance on the Pinkerton Doctrine is misplaced. The Pinkerton Doctrine holds
that members of a conspiracy are liable for reasonably foreseeable substantive criminal acts
committed by other co-conspirators in furtherance of the conspiracy. See Pinkerton v. United
States, 328 U.S. 640, 646–48 (1946). Pinkerton liability presupposes the existence of a conspiracy,
and for a conspiracy to exist, the defendants must have agreed to commit a RICO offense. See
RSM Prod. Corp., 682 F.3d at 1048. As stated above, plaintiffs have failed to sufficiently allege
the existence of a conspiracy, so the Pinkerton Doctrine is inapplicable.
24
3. Sherman and Clayton Acts
Finally, plaintiffs have failed to sufficiently allege violations of the Sherman and Clayton
Acts (Claim Five).8 The only allegations with regard to the Sherman and Clayton Acts are as
follows:
Plaintiffs allege the above facts and those that follow violate provisions of the Sherman
Anti Trust Act and Clayton Acts in the continuation of the monopolistic practices. Two
recent contracts and their bid tabulations demonstrate the Defendants companies still enter
bids as independent companies, when they are not independent. (See Exhibit G and Exhibit
D for previous bids). Furthermore the District of Columbia Government, Office of
Contracting and Procurement accepted these bid demonstrating that the District of
Columbia Government is aiding and abetting the RICO Enterprise in violating Federal Anti
Trust law.
Fourth Am. Compl. ¶ 167.9 Again, plaintiffs rely on future discovery to demonstrate violations of
the statutes. Id. at ¶ 168 (“The evidence on hand and to be gathered by minimal discovery shall
demonstrate to the extent required by statute, violation of 15 U.S.C. Chapter 1 Monopolies And
Combinations In Restraint of Trade.”). This is not the standard. A plaintiff “must plead sufficient
facts, taken as true, to provide ‘plausible grounds’ that discovery will reveal evidence to support
the plaintiffs’ allegations.” Long v. Safeway, Inc., 842 F. Supp. 2d 141, 145 (D.D.C. 2012). The
Court has already found that plaintiffs’ RICO allegations are factually insufficient, and plaintiffs
have pleaded no additional specific facts with respect to their Sherman and Clayton Act claims.
These “unadorned, the-defendant-unlawfully-harmed-me accusation[s]” are insufficient to state a
plausible claim for relief. Iqbal, 556 U.S. at 678.10
8
It is unclear from the Complaint which provisions of the Sherman and Clayton Acts plaintiffs are attempting to allege
violations of.
9
The District of Columbia government and the D.C. Office of Contracting and Procuring are no longer defendants in
this action.
10
To the extent that plaintiffs are alleging violations of the prohibition on interlocking directorates and officers under
15 U.S.C. § 19, which is again unclear, plaintiffs have not pleaded that each of the corporations has capital, surplus,
and undivided profits aggregating more than the amount required by statute. See 15 U.S.C. § 19(a)(1), (a)(5).
25
Plaintiffs have now filed five complaints11 in this action and have had two years to
adequately respond to this Court’s October 17, 2014 Order. Several of the amended claims are the
same as those that have already been dismissed by this Court. Cf. BEG Investments, LLC v. Alberti,
85 F. Supp. 3d 13, 27 (D.D.C. 2015) (“[T]he RICO and RICO conspiracy claims in Plaintiff’s
amended complaint are virtually identical to those previously considered and dismissed by this
Court, reflecting only two changes.”). The other claims are factually insufficient or fail to plead
essential elements. Plaintiffs have not adequately responded to the arguments of the defendants
who noted these deficiencies. Furthermore, plaintiffs may not, as they have tried repeatedly to do,
rely on the promise of evidence to be uncovered by hypothetical future discovery as a basis for
bringing these claims. Cf. Confederate Mem’l Ass’n, Inc. v. Hines, 995 F.2d 295, 299 (D.C. Cir.
1993) (“Appellants argue that if allowed to proceed with their RICO claim, they would allege and
prove facts entitling them to recovery under RICO. But we are not told what those facts might be.
Appellees, by contrast, assert that the complaint was fatally defective in that it failed to allege an
enterprise, the elements of any predicate act, or legally cognizable injury to appellants; because
each of these is required under RICO, and because appellants could not possibly make allegations
to satisfy all of them, they argue, dismissal with prejudice under Rule 12(b)(6) was proper. We
agree.”). The Court therefore finds that because plaintiffs’ Fourth Amended Complaint cannot
withstand a motion to dismiss under Rule 12(b)(6), amendment would be futile. Plaintiffs’ motion
for leave to amend will be denied.
11
Not to mention, Cheeks and CNA have previously brought similar claims against many of the same defendants in
prior actions before another member of this District Court, and have lost. See Cheeks of N. Am., Inc. v. Fort Myer
Const. Corp., 807 F. Supp. 2d 77 (D.D.C. 2011) (finding that plaintiffs either lacked standing or failed to state claims
for violations of the Sherman Act, contract steering, violations on non-collusion affidavits, violations of procurement
regulations, common law fraud and oversight failure, and tortious interference with business relations); Cheeks v. Fort
Myer Const. Co., 722 F. Supp. 2d 93 (D.D.C. 2010) (finding that plaintiffs lacked standing or failed to state claims
for antitrust violations for bid rigging conspiracy, violations of WASA procurement regulations, tortious interference,
violations of non-collusion affidavits, discrimination in bid solicitations, contract steering, oversight failure, and
violations of civil liberties).
26
B. Failure to Cure Deficiencies
In addition to futility of amendment, courts may deny leave to amend for repeated failure
to cure deficiencies. Foman, 371 U.S. at 182. This Court identified several issues with plaintiffs’
First Amended Complaint and ordered plaintiffs two years ago to submit an orderly, clear, and
non-repetitive Complaint which identified how each defendant was involved in the many alleged
violations claimed by plaintiffs. Plaintiffs have since submitted three amended complaints, but
have been unable to satisfactorily comply with the Court’s Order. Plaintiffs still do not identify
who committed many of the alleged crimes targeting plaintiff Cheeks (e.g., attempted murder),
they have included crimes and violations of the law that appear to have no relation to the injuries
here (e.g., bribery, deprivation of civil rights), and they rely on the statements of plaintiff Gallardo
about alleged collusion that occurred at least three years before any alleged fraud took place. Thus,
the Court finds that not only would amendment be futile, plaintiffs’ motion for leave to file an
amended complaint will be denied because of plaintiffs’ repeated failure to cure deficiencies.
C. The Insurance Defendants
After finding that amendment would be futile and that plaintiffs have failed to cure the
deficiencies in their complaints, the court now turns to the issue of the insurance defendants.
Plaintiffs originally brought claims against several insurance entities and individuals in their First
Amended Complaint: Western Surety, CNA Surety, and Paul T. Bruflat. This Court dismissed
defendants Western Surety and Paul T. Bruflat from this action, and, finding that defendant CNA
Surety had not been served, ordered plaintiffs to show cause why defendant CNA Surety should
not be dismissed from this action under Rule 4(m). Court’s Oct. 17, 2014 Order, ECF No. 66;
Court’s Oct. 17, 2014 Mem. Op. 2 n.2. Plaintiffs now attempt to add defendants Western Surety
and Paul T. Bruflat back into this actions and to bring claims against “CNA Financial.”
27
The Court first addresses its order to show cause why defendant CNA Surety should not
be dismissed under Rule 4(m), issued on October 17, 2014. Rule 4(m) states that “[i]f a defendant
is not served within 90 days after the complaint is filed, the court—on motion or on its own after
notice to the plaintiff—must dismiss the action without prejudice against that defendant or order
that service be made within a specified time. But if the plaintiff shows good cause for the failure,
the court must extend the time for service for an appropriate period.” FED. R. CIV. PROC. 4(m).
Plaintiffs responded to the Court’s order to show cause on December 17, 2014. They argue that
“it is very likely, as an ordinary and necessary business practice, that the parent company (CNA
Surety) exercised some supervision over the actions of the officials of its subsidiary Western,” but
that due to lack of availability of discovery, “the success or failure of plaintiffs’ effort to show
cause as to why this action should not be dismissed with regard to CNA Surety depends upon
whether the Court will allow plaintiffs to supplement the record for the specificity documentation
held at this time, or not.” Pls.’ Response to Court Order to Show Cause 3–4, ECF No. 73. They
then argue that the insurance companies are necessary parties and that “CNA Surety should not be
dismissed from this case until all of the facts as to necessary parties are known.” Id. at 4.
Nowhere in plaintiffs’ response do they address the crux of the issue or the Court’s
directive—why defendant CNA Surety should not be dismissed under Rule 4(m) for failure to
timely serve. In an apparent—and inexplicably belated—attempt to respond to the Court’s Order,
and to defendants’ argument that CNA Surety is not a legal entity that can be served, plaintiffs
now argue that CNA Financial Inc. is doing business as CNA Surety in the District of Columbia.
Pls.’ Reply to Defs. Western Surety & Paul T. Bruflat’s Opp’n to Pls.’ Mot. for Leave to File a
Fourth Am. Compl. 4–5, ECF No. 121. Plaintiffs appear to concede, however, that the entity they
wish to sue is CNA Financial Corporation, not CNA Surety, stating “[o]n information and belief
28
the correct name of the Defendant entity appears to be CNA Financial Corporation.” Id. at 5.12
Therefore, the Court finds that plaintiffs have not shown cause as to why defendant “CNA Surety”
should not dismissed.
The Court now turns to the claims against the insurance entities and individuals in the
Fourth Amended Complaint. Plaintiffs now seek to bring claims against CNA Financial, and
attempt to add previously dismissed defendants Western Surety and Paul Bruflat back into this
action. See Fourth Am. Compl. ¶¶ 11, 44, 57, 58, 135–148. This Court previously dismissed the
claims against Western Surety and Bruflat, finding that “Plaintiffs’ irregular inclusion of facts
regarding activities of the . . . Western Surety defendants is not sufficient to make out a claim for
predicate criminal activity, much less a pattern of racketeering activity necessary for a RICO
claim” and that “[i]t is unclear precisely what predicate criminal activities the . . . Western Surety
defendants engaged in, if any.” Court’s Oct. 17, 2014 Mem. Op. It also found that “with regards
to the Western Surety defendants, plaintiffs’ allegations are consistent with lawful conduct [i.e.,
providing surety bonds].” Id. at 12. Western Surety and Bruflat now argue that “the proposed
Fourth Amended Complaint contain[s] no substantive allegations that were not already addressed
by [d]efendants’ Motion to Dismiss and this Court’s Orders granting same,” and that the
allegations now lodged against CNA Financial “are essentially the same as those that led to the
dismissal of Western and Mr. Bruflat and are a transparent attempt to circumvent this Courts
October 17, 2014 Orders.” Defs. Western Surety & Paul T. Bruflat’s Opp’n 2, ECF No. 119.
12
The confusing nature of plaintiffs’ written submissions to this Court make it very difficult to determine their
argument. They argue that “CNA Surety was served with a green card and signed for by someone” and that “CNA
Financial Corporation does business using the name CNA Surety,” which does not have a registered agent in the
District of Columbia. Pls.’ Reply to Western Surety & Bruflat at 5. It appears, however, that despite these arguments,
plaintiffs concede that the entity which they want to sue is CNA Financial Corporation, not CNA Surety.
29
The Court agrees with defendants. The allegations against the insurance defendants in the
First Amended Complaint—which led to the dismissal of defendants Western Surety and Paul
Bruflat—are as follows: the insurance companies knew or should have known the facts relevant
to the unlawful alleged acts committed by the enterprise and they had a duty to refrain from aiding
and abetting or participating in those acts; the insurance defendants also knew or should have
known of the alleged bid rigging conspiracy, the racketeering collaboration, interlocking
directorates and management, and bribery as a result of information received from the enterprise;
and as a result of joint bidding, the insurance defendants have held a monopoly on insurance for
bid bonds and have profited from the bidding monopoly created by the enterprise. First Am.
Compl., ¶¶ 97–102, ECF No. 10-1. The First Amended Complaint goes on to allege that the
insurance defendants furnished bid bonds, knew or should have known that the bidders were in
violation of their non-collusion affidavits, and knew that the D.C. government was being deceived
because the purportedly competitive bids were actually being made by the same interlocking
group. Id. at 103–06. Finally, the Complaint alleges that the unlawful acts committed by the
enterprise would not have been possible, but for the actions of the insurance defendants. Id. at
107–09.
The Fourth Amended Complaint makes essentially the same allegations, all of which center
around the claim that the insurance defendants knew or should have known about illegal activity
committed by the enterprise, and issued bid bonds anyway. See Fourth Am. Compl. ¶¶ 135–48.
The only apparent basis for this argument is that the insurance companies knew the owners/officers
of the companies involved in the alleged enterprise. Indeed, plaintiffs state that the question is
“whether it is ‘plausible’ after doing more than 15 consistent years of substantial business with the
30
Fort Myer Construction Corporation’s family of companies, the insurance companies knew their
owners, executives, and/or managers.” Fourth Am. Compl. ¶ 147.13
Again, these allegations are insufficient to demonstrate predicate criminal activity
conducted by the insurance defendants, or a pattern of racketeering activity. Whether or not the
insurance defendants knew the owners of the construction companies—or whether they knew of
an alleged racketeering conspiracy—does not answer the question of whether the insurance
companies undertook predicate criminal acts (or a pattern of such) as required for RICO liability.
Knowledge of a racketeering activity alone is insufficient to impose RICO liability. See RSM
Prod. Corp., 682 F.3d at 1051 (finding that the complaint did not allege that the defendant itself
committed any predicate acts, that the plaintiff’s argument relying on the defendant’s “knowledge
of the bribery-racketeering conspiracy” was insufficient, and that the defendant’s actions were
more likely explained by its normal business practices).
Furthermore, nowhere in plaintiffs’ table of criminal violations do plaintiffs claim that
Western Surety or Paul Bruflat committed any criminal violation. The only allegation against
CNA Financial Corp. is that it “aided and abetted fraud,” apparently for the benefit of Fort Myer
Construction and Anchor Construction. See id. at 6. The Complaint states that “[b]y ignoring and
failing to report the well known collusion and inter-relationships of the RICO Enterprise, the
insurance company CNA Surety, during the time in question and to this day, aided and abetted the
RICO activities,” and that “[b]ecause of the additional profits in premiums, it is plausible CNA
Financial Corporation knowingly aided and abetted the RICO Enterprise.” Fourth Am. Compl. ¶¶
13
Plaintiffs argue that “[p]roof of [the allegation that the insurance defendants knew the owners/officers of the
construction companies] and evidence supporting ‘plausibility’ could be established through a few depositions of
CNA Surety, Western Surety’s key personnel, and the construction companies.” Fourth Am. Compl. ¶ 148. Again,
plaintiffs’ argument is wholly untenable and demonstrates a lack of understanding of the requirements of a properly
pleaded complaint. Plaintiffs do not get to make factually sparse and insufficiently pleaded claims in a complaint, and
then ask for discovery to obtain the facts necessary to support those claims.
31
137, 139. First, this Court has already found that defendants failed to sufficiently allege fraud by
defendants Fort Myers and Anchor Construction, or that any such fraud was the proximate case of
plaintiffs’ injuries. Furthermore, the conclusory statements that the defendants knew or must have
known about unspecified and generic incidents of alleged perjury, collusion, and bid rigging are
insufficient to state a claim for relief. Finally, while it may be possible that CNA Financial aided
and abetted the alleged enterprise in pursuit of profits from premiums, plaintiffs have not stated
enough facts to “nudge[] their claims across the line from conceivable to plausible.” Twombly,
550 U.S. at 570.
Plaintiffs attempt to save their argument by relying on the Pinkerton Doctrine. Again,
plaintiffs have failed to plead the existence of a conspiracy. The Complaint does not allege with
any level of particularity that the insurance defendants agreed to commit RICO violations, nor do
any of the factual allegations support the inference that the insurance defendant agreed to join a
conspiracy. The Pinkerton Doctrine is therefore inapplicable and the insurance defendants cannot
be liable for the criminal acts allegedly committed by other defendants.14
In sum, because plaintiffs have failed to show cause why CNA Surety should not be
dismissed from this case, the Court will dismiss the entity designated as CNA Surety. In addition,
the Court finds that the allegations against Western Surety, Paul Bruflat, and CNA Financial are
the same as those this Court already found to be insufficient, and that plaintiffs have failed to state
plausible claims against the insurance defendants.
14
The Court’s conclusion regarding failure to state claims under the Sherman and Clayton Acts applies equally to the
insurance defendants.
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D. Plaintiffs’ Request for Order to Show Cause
Finally, plaintiffs also ask that this Court order the defendants to show cause as to why a
RICO entity should not be found to exist. They argue that the defendants have only offered
unsworn statements that fail to sufficiently oppose the plaintiffs’ “proffered probative evidence,”
whereas the plaintiffs have offered “sworn evidence and genuine documents.” Therefore,
according to plaintiffs, “[t]o determine which set of facts are true, and which are false, the situation
needs to be subjected to an evidentiary hearing.” This argument is absurd. It is axiomatic that the
plaintiff bears the burden of stating a claim in his complaint. Defendants are under no requirement
to essentially disprove a plaintiff’s allegations at the pleading stage, particularly before the Court
has even determined the operative complaint in the case.15 Defendants are furthermore under no
obligation to provide “sworn evidence and genuine documents” at this stage. The issues pending
before the Court relate to whether plaintiffs should be granted leave to amend their complaint.
Plaintiffs are attempting to reverse the burden of proof, short circuit this litigation, and jump to an
evidentiary hearing where defendants are supposed to disprove the allegations in the complaint
before the Court has even determined whether plaintiffs may proceed on the basis of their
pleadings. Plaintiffs have cited no legal authority mandating or even allowing the Court to take
such an action. Accordingly, the Court will not order the defendants to show cause as to why a
RICO entity should not be found and plaintiffs’ motion will be denied.
15
Plaintiffs argue that it is “incorrect” and “misleading” for defendants to argue that “[p]laintiffs do not yet have an
operative complaint on file.” Pls.’ Reply to Defs. Dora Monica Rodrigues & Cristina Rodrigues Minton’s Opp’n to
Pls.’ Cross-Mot. for an Order to Show Cause 2, ECF No. 132. Plaintiffs argue that they have addressed this Court’s
Order to provide specificity and that “[d]efendants continue to assert this false and misleading statement as if
repeatedly stating an incorrect statement will make it true.” Id. at 3. On the contrary, plaintiffs are guilty of asserting
an incorrect statement as if it was true. Until this decision of the Court, plaintiffs did not have an operative complaint
on file due to the many times they have asked for leave to amend and file a new complaint. It is furthermore not for
plaintiffs to determine whether they have complied with this Court’s October 17, 2014 Order. That is the province of
this Court.
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E. Dismissal with Prejudice
Defendants have asked this Court to dismiss plaintiffs’ case with prejudice. Plaintiffs have
inundated the docket in this case with five complaints,16 along with clearly improper or premature
requests for discovery and show cause orders. Despite instructions from this Court to submit an
orderly, clear, non-repetitive complaint that contains descriptions of how each defendant was
involved in the alleged violations against the plaintiffs, plaintiffs have failed to do so. Plaintiffs
have moreover failed again to show proximate cause—that they were harmed due to the acts of
the defendants as opposed to their own actions or the actions of others—and nothing convinces
this Court that plaintiffs would be able to do so if given the chance to submit yet another amended
complaint.17
Plaintiffs have had more than their fair share of attempts to bring comprehensible and
plausible claims against the defendants. They do not get another bite at the apple. Furthermore,
the volume of legal memoranda defendants have been forced to file to oppose plaintiffs’ ever
changing complaint is significant. The Court cannot justify inflicting continuing costs on the
defendants for what amounts to an exercise in futility. The Court therefore finds that dismissal
with prejudice is warranted here. See Hines, 995 F.2d at 299 (upholding the dismissal with
prejudice because “appellants effectively have had multiple bites at the apple already” and because
“the law does not require the doing of vain things,” and “appellants have yet to demonstrate that
they can offer an amendment effective of a valid claim for relief”); E. Sav. Bank, FSB v.
16
It appears that plaintiffs are gearing up once again to seek to amend their Complaint. See Fourth Am. Compl. ¶ 205
(“Details of these actions over and above what is specified in this Complaint are expected to be the subject of further
amended complaints subsequent to discovery.”).
17
Plaintiffs cannot complain that they were not on notice of this deficiency in their Complaint. In response to
plaintiffs’ motion for leave to file a third amended complaint, several defendants raised the argument that plaintiffs
had submitted noncompliant bids and that there was no causal relationship between plaintiffs’ alleged injuries and the
alleged conduct of the defendants. Plaintiffs then filed a motion for leave to file a fourth amended complaint and, as
the Court found, did not sufficiently address proximate cause.
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Papageorge, 31 F. Supp. 3d 1, 22 (D.D.C. 2014) (“[D]ismissal with prejudice is warranted here
since there are no allegations in the plaintiff’s fifty-eight page complaint, based on facts gathered
over thirteen years of litigation, that could give rise to legal liability under any of the theories
advanced by the plaintiff.”); Hourani v. Mirtchev, 943 F. Supp. 2d 159, 172 (D.D.C. 2013), aff’d,
796 F.3d 1 (D.C. Cir. 2015) (“[F]inding that Plaintiffs have already had two bites at the proverbial
apple, [the Court] dismisses the Amended Complaint with prejudice.”); Hamrick v. United States,
775 F. Supp. 2d 140, 142 (D.D.C. 2011) (dismissing with prejudice because “given the virtually
undecipherable nature of plaintiff’s allegations, it would be near-impossible for defendants to
determine whether plaintiff’s current lawsuit actually involves ‘the same claims or cause[s] of
action’ as any of his prior cases” and because “plaintiff’s amended complaint merely ‘recycles’
the allegations set forth in his first complaint”); Petrochem Insulation, Inc. v. N. California & N.
Nevada Pipe Trades Council, No. C-90-3628 EFL, 1992 WL 131162, at *12 (N.D. Cal. Mar. 19,
1992), aff’d sub nom. Petrochem Insulation, Inc. v. United Ass’n of Journeymen & Apprentices of
Plumbing & Pipe Fitting Indus. of U.S. & Canada, Local Union No. 38, AFL-CIO, 8 F.3d 29 (9th
Cir. 1993) (dismissing with prejudice after finding that “multiple amendments have already been
attempted; the Court’s specific admonitions to the plaintiff have not been heeded; and the potential
chilling effect on the right to petition guaranteed by the first amendment”).
V. CONCLUSION
For the foregoing reasons, the Court concludes that amendment would be futile and that
plaintiffs have repeatedly failed to cure the deficiencies in their complaints. Plaintiffs’ Motion for
Leave to File a Third Amended Complaint will be denied as moot, and plaintiffs’ Motion for Leave
to File a Fourth Amended Complaint will be denied, along with plaintiffs’ attempt to add
defendants Western Surety and Paul T. Bruflat back into this action. Plaintiffs have also failed to
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