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

Background

Plaintiffs John C. Cheeks, Cheeks of North America, Inc. (CNA), and Juanita Gallardo allege a long-running bid‑rigging RICO and antitrust conspiracy among several construction companies and insurance entities that excluded CNA from D.C. public contracts.
Plaintiffs filed multiple amended complaints and exhibits alleging predicate crimes (e.g., fraud via false non‑collusion affidavits; obstruction related to Gallardo’s prosecution; violent acts), overlapping officer/director relationships among bidders, and insurer participation.
The Court previously dismissed nineteen defendants and ordered a clearer amended complaint identifying specific statutory violations and each defendant’s role; plaintiffs repeatedly sought leave to amend (up to a proposed Fourth Amended Complaint).
Defendants moved to dismiss or for a more definite statement, arguing plaintiffs’ allegations are conclusory, fail Rule 9(b) for fraud, and do not establish proximate cause linking defendants’ conduct to plaintiffs’ business injury.
The Court held plaintiffs’ Fourth Amended Complaint would be futile: it fails to plead predicate acts with particularity, fails to plead proximate causation, fails to allege a RICO agreement for conspiracy claims, and provides no plausible Sherman/Clayton Act theory.
The Court also dismissed attempts to revive insurance defendants (Western Surety, Paul Bruflat, CNA Surety/CNA Financial) for failure to show service or to plead actionable conduct, denied plaintiffs’ request for an order to show cause (an evidentiary hearing), and dismissed the action with prejudice.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether leave to file a Fourth Amended Complaint should be granted	Plaintiffs contend new facts (esp. Gallardo’s observations) and exhibits cure prior defects and satisfy Court’s specificity order	Defendants argue amendments are futile: allegations remain conclusory, lack particularized predicate acts, and would not survive Rule 12(b)(6) or Rule 9(b) where applicable	Denied as futile; leave to amend denied and earlier third‑amend motion moot
Whether plaintiffs pleaded predicate RICO acts with required particularity (including fraud)	Plaintiffs rely on Gallardo’s purported observations and charts linking interlocking officers and bid submissions; urge Pinkerton/co‑conspirator liability	Defendants contend allegations lack time/place/content of false statements, no sworn Gallardo affidavit in operative filing, and many asserted facts predate relevant bids; Rule 9(b) not met	Predicate acts inadequately pleaded; fraud allegations fail Rule 9(b); predicates insufficient to support RICO
Whether plaintiffs pleaded proximate cause between alleged racketeering and plaintiffs’ lost contract awards	Plaintiffs assert that had alleged wrongdoers been disqualified CNA would have been lowest bidder and received awards; cure would have been permitted	Defendants show many contracts were lost to non‑defendant bidders or rejected for plaintiffs’ own noncompliance (e.g., missing bid security), breaking causal chain	No proximate cause; injuries too remote/contingent; RICO and conspiracy claims fail on causation grounds
Whether insurance defendants (Western Surety, Bruflat, CNA Surety/CNA Financial) may be added or maintained	Plaintiffs assert insurers knew or should have known of collusion and aided enterprise (profit motive), and ask to substitute CNA Financial for CNA Surety	Defendants note prior dismissal, lack of service on CNA Surety, and that insurer knowledge/relationship alone does not allege predicate criminal acts or RICO participation	Claims against insurance entities remain insufficient; CNA Surety dismissed for lack of service; attempts to re‑add Western Surety/Bruflat/CNA Financial fail

Key Cases Cited

Foman v. Davis, 371 U.S. 178 (1962) (standards for granting leave to amend)
Ashcroft v. Iqbal, 556 U.S. 662 (2009) (plausibility standard for federal complaints)
Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (plausible‑pleading requirement and limits on conclusory allegations)
Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479 (1985) (RICO standing requirement: injury to business or property)
Salinas v. United States, 522 U.S. 52 (1997) (elements of civil RICO: conduct of an enterprise through a pattern of racketeering)
Hemi Group, LLC v. City of N.Y., N.Y., 559 U.S. 1 (2010) (RICO proximate‑cause requirement)
RSM Prod. Corp. v. Freshfields Bruckhaus Deringer U.S. LLP, 682 F.3d 1043 (D.C. Cir. 2012) (RICO conspiracy pleading and limits of liability based on knowledge alone)
In re Interbank Funding Corp. Sec. Litig., 629 F.3d 213 (D.C. Cir. 2010) (futility review parallels Rule 12(b)(6) analysis)
W. Assocs. Ltd. P’ship v. Market Square Assocs., 235 F.3d 629 (D.C. Cir. 2001) (caution in crafting RICO patterns from scant allegations)
Pinkerton v. United States, 328 U.S. 640 (1946) (doctrine imposing liability for co‑conspirators’ acts within scope of conspiracy)