Mountain State Mechanical Insulation, Inc. v. BELL Constructors, LLC

Filing 40

MEMORANDUM OPINION AND ORDER GRANTING MOTION TO DISMISS [DKT. NO. 35] ANDDENYING AS MOOT MOTION TO STRIKE [DKT. NO. 39]. GRANTS the defendants Motion to Dismiss 35 . DISMISSES the Amended Complaint WITH PREJUDICE and ORDERSthat it be STRICKEN from the Courts active docket. DENIES AS MOOT the defendants Motion to Strike 39 . Signed by District Judge Irene M. Keeley on 7/23/2012. (Copy counsel of record via CM/ECF)(jmm)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF WEST VIRGINIA
MOUNTAIN STATE MECHANICAL
INSULATION, INC.,
Plaintiff,
v.

//

CIVIL ACTION NO. 1:11CV180
(Judge Keeley)

BELL CONSTRUCTORS, LLC,
a/k/a The Bell Company,
TURNER CONSTRUCTION, CO., and
SOUTHERN TIER INSULATION
DISTRIBUTORS, INC.
Defendants.

MEMORANDUM OPINION AND ORDER
GRANTING MOTION TO DISMISS [DKT. NO. 35] AND
DENYING AS MOOT MOTION TO STRIKE [DKT. NO. 39]
Pending before the Court are the defendants’ Motion to Dismiss
or, in the Alternative, for Summary Judgment and Motion to Strike
Plaintiff’s Surreply Memorandum. For the reasons discussed below,
the Court GRANTS the Motion to Dismiss, DISMISSES the plaintiff’s
Amended

Complaint

WITH

PREJUDICE,

and

DENIES

AS

MOOT

the

defendants’ Motion to Strike.
I.
The plaintiff, Mountain State Mechanical Insulation, Inc.
(“Mountain State”), filed this action against the defendants, Bell
Constructors, LLC (“Bell”), Turner Construction Co. (“Turner”), and
Southern Tier Insulation Distributors, Inc. (“Southern Tier”),
alleging violations of federal bidding laws, the Sherman Antitrust

MOUNTAIN STATE MECHANICAL v. BELL CONSTRUCTORS

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MEMORANDUM OPINION AND ORDER
Act, 15 U.S.C. § 1, and the West Virginia Antitrust Act, W. Va.
Code § 47-18-1, related to Mountain State’s lost opportunity to bid
on a federally funded construction subcontract.
On September 14, 2010, Turner, the prime contractor for the
United States Department of Justice in the construction of a new
federal building in Clarksburg, Harrison County, West Virginia,
awarded a subcontract to Bell to perform work on the project.
Thereafter, in December of 2010, Bell advertised a “Notice to
Bidders” in a Clarksburg newspaper, seeking subcontractors and
suppliers, in particular those qualified as “Small Business [sic],
Small Disadvantaged

Businesses,

Women

Owned

Small

Businesses,

Veteran Owned Small Businesses, Service Disabled Veteran Owned
Small Businesses, and HUBZone Small Businesses.” (Dkt. No. 17 at
4). The advertisement stated that bids would be accepted through
December 31, 2010 and provided contact information for “further
information

concerning

viewing

plans

and

specifications

and

obtaining bid packages.” Id.
Believing it met the profile described in the advertisement,
Mountain State contacted Bell to request a bid package. In its
view, because a woman owns 51% of Mountain State, it qualified as
a “[s]mall business concern owned and controlled by women” under
the Small Business Act. (Dkt. No. 25 at ¶ 15). Mountain State also

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MEMORANDUM OPINION AND ORDER
asserts

that

Harrison

County,

West

Virginia

qualifies

as

a

Historically Underutilized Business Zone (“HUBZone”) and it thus is
eligible

for

federal

contracts

within

that

HUBZone.

Although

Mountain State allegedly made multiple requests for a bid package,
Bell never sent one.
On January 9, 2011, Bell awarded the subcontract to Southern
Tier, a company Bell had worked with before. Mountain State alleges
that Bell and Southern Tier, with Turner’s knowledge and consent,
engaged in a “bid rigging” conspiracy to “unreasonably restrain
trade” in Harrison County by agreeing to give the contract to
Southern Tier based on their past working relationship, thereby
“cutting out” all other eligible small businesses. (Dkt. No. 25 at
§ 46). On December 26, 2011, Mountain State filed an Amended
Complaint1 that asserted three causes of action: (1) declaratory
relief under Fed. R. Civ. P. 57 that the defendants “violated
applicable federal bidding laws;” (2) violation of the Sherman
Antitrust Act, 15 U.S.C. § 1; and (3) violation of the West
Virginia Antitrust Act (“WVATA”), W. Va. Code § 47-18-1. Pursuant
1

The plaintiff’s original Complaint alleged three additional claims
for fraud, civil conspiracy, and breach of contract. The defendants moved
to dismiss the Complaint in its entirety, and, during a hearing on
December 13, 2011, the Court dismissed the fraud, civil conspiracy, and
breach of contract claims without prejudice. It denied the motion to
dismiss as to the declaratory judgment and antitrust claims, but granted
the plaintiff leave to amend the Complaint to clarify these allegations.
(Dkt. No. 23).

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MEMORANDUM OPINION AND ORDER
to Fed. R. Civ. P. 12(b)(6) and 56, the defendants filed a Motion
to Dismiss, or in the Alternative, for Summary Judgment on January
16, 2012 (dkt. no. 35). The plaintiff responded on January 18th
(dkt. no. 36), and the defendants filed a reply on January 25th
(dkt. no. 27). Then, fifty-four days later and, without requesting
leave to do so, on March 12, 2012, Mountain State filed a surreply
styled as a Memorandum of Law in Support of Plaintiff’s Amended
Complaint. (Dkt. No. 38). On March 14, 2012, the defendants filed
a Motion to Strike Plaintiff’s Surreply Memorandum. (Dkt. No. 39).
II.
The

defendants

argue

that

the

Mountain

State’s

Amended

Complaint is subject to dismissal pursuant to Fed. R. Civ. P.
12(b)(6) because it fails to state a claim for relief that is
plausible on its face.
A.
To survive a motion to dismiss filed pursuant to Fed. R. Civ.
P.

12(b)(6),

a

complaint

must

contain

factual

allegations

sufficient to state a plausible claim for relief. Ashcroft v.
Iqbal, 129 S. Ct. 1937, 1949 (2009); Bell Atl. Corp. v. Twombly,
550 U.S. 544, 557 (2007). All well-pled factual allegations in a
complaint are taken as true and construed in the light most
favorable to the plaintiff. Nemet Chevrolet, Ltd. v. Consumeraf

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fairs. com, Inc., 519 F.3d 250, 253 (4th Cir. 2009). Facts derived
from sources beyond the four corners of the complaint also may be
considered,

including

documents

attached

to

the

complaint,

documents attached to the motion to dismiss “so long as they are
integral to the complaint and authentic,” and facts subject to
judicial notice under Fed. R. Evid. 201. Philips v. Pitt Cty. Mem'l
Hosp., 572 F.3d 176, 180 (citing Blankenship v. Manchin, 471 F.3d
523, 526 n. 1 (4th Cir. 2006)); see also Katyle v. Penn Nat.
Gaming, Inc., 637 F.3d 462, 466 (4th Cir. 2011).
B.
Count I of the Amended Complaint seeks a declaration that the
defendants violated “applicable federal bidding laws” when Bell
ignored Mountain State’s request for a bid package and awarded the
subcontract to Southern Tier. (Dkt. No. 25 at 7-8). The defendants
argue that the “federal bidding laws” on which Mountain State
relies do not provide a private right of action and, thus, Mountain
State lacks standing to assert its claim.
As a matter of law, “private plaintiffs may not bring suits to
enforce statutes that do not provide a private cause of action.”
L.J. v. Wilbon, 633 F.3d 297, 307 (4th Cir. 2011) (citing Alexander
v. Sandoval, 532 U.S. 275 (2001)). Here, Mountain State alleges
that the defendants violated the Small Business Act (“SBA”), 15

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MEMORANDUM OPINION AND ORDER
U.S.C. § 631, et seq, the Competition in Contracting Act (“CCA”),
41 U.S.C. § 3101, et seq, and the Federal Acquisition Regulation
(“FAR”), 48 C.F.R. § 44.000, et seq. These federal laws establish
goals for federal government agencies to procure contracts with
small businesses, but none provides a cause of action for a private
plaintiff to sue a private contractor or subcontractor, even one
employed by a government agency.
Mountain State alleges violations of two provisions of the
SBA, Section 8(a) and the “liquidated damages provision” at 15
U.S.C. § 637(d). (Dkt. No. 25 at ¶ 17). It is well settled,
however, that “the Small Business Act does not create a private
right of action in individuals.” Crandal v. Ball, Ball & Brosamer,
Inc., 99 F.3d 907, 909 (9th Cir. 1996) (citing Aardwoolf Corp. v.
Nelson Capital Corp., 861 F.2d 46, 48 (2d Cir. 1998); Integrity
Mgmt. Int’l, Inc. v. Tombs & Sons, Inc., 836 F.2d 485, 487 n.4
(10th Cir. 1987); Tectonics, Inc. of Fla. v. Castle Constr. Co.,
753 F.3d 957, 959 (11th Cir. 1985).
Neither of the provisions cited by the plaintiff imposes a
duty on subcontractors like Bell to entertain bids from prospective
subcontractors like Mountain State. Section 8(a) establishes the
Business Development Program (“BD program”), which authorizes the
Small Business Administration (the “Administration”) to contract

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MEMORANDUM OPINION AND ORDER
with government agencies for performance of services and supplies
and then to subcontract these duties to economically disadvantaged
small businesses. 15 U.S.C. § 637(a). Eligible businesses must
apply to the program in order to be considered as potential
subcontractors, but there is no indication that Mountain State ever
attempted to register. Moreover, even had Mountain State been
registered in the BD program, the regulation clearly states that
“[a]dmission into the 8(a) BD program does not guarantee that a
Participant will receive 8(a) contracts.” 13 C.F.R. § 124.501. As
such, § 8(a) does not establish a remedy for Mountain State and is
therefore inapplicable to the plaintiff’s claims.
The liquidated damages provision of the SBA requires that all
contracts between any federal agency and a prime contractor contain
a clause obligating the prime contractor to carry out the federal
government’s policy of maximizing opportunities to subcontract with
disadvantaged

small

business

concerns

“to

the

fullest

extent

consistent with the efficient performance of this contract.” 15
U.S.C. § 637(d)(3). That clause also provides “for the payment of
liquidated damages upon a finding that a prime contractor has
failed to make a good faith effort to comply.” Id. § 637(d)(4)(F).
While this provision establishes a remedy for the government to
seek damages where one of its contractors breaches its agreement to

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MEMORANDUM OPINION AND ORDER
comply with federal policy, it does not create a private cause of
action for a prospective subcontractor such as Mountain State. See
id.; Crandall, 99 F.3d at 909.
The plaintiff’s attempt to assert an action under the CCA is
also futile. The CCA obligates federal agencies to “obtain full and
open competition through the use of competitive procedures” for
government procurement contracts, 41 U.S.C. § 3301(a), but it does
not provide for a private cause of action against a contractor. The
CCA

only

companies

imposes
with

duties

whom

the

on

government

government

has

agencies,

not

contracted.

private
See

id.

Accordingly, Mountain State’s attempt to assert a claim against
these private defendants under the CCA is misplaced.
Finally, Mountain State cites two provisions of the FAR, but
these also do not provide a remedy for its asserted claims.
Although the Amended Complaint states that “Subchapter G, Part 44
establishes ‘subcontracting policies and procedures,’” (Dkt. No. 25
at ¶ 18), this provision of the FAR actually sets forth the
responsibilities of a federal administrative contracting officer in
reviewing a prime contractor’s purchasing system, and does not
relate to the plaintiff’s allegations. 48 C.F.R. § 44.301. Mountain
State also mistakenly cites 13 C.F.R. § 125.6 for the proposition
that “[p]rime contractors have ‘limitations on subcontracting’

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MEMORANDUM OPINION AND ORDER
. . . which includes the HUBZone goal requirements for awarding
federal contracts.” (Dkt. No. 25 at ¶ 18). Contrary to this
assertion, what § 125.6 limits is the amount of work that small
business

concerns

already

serving

as

prime

contractors

may

subcontract to other parties. It does not provide a private cause
of action for potential subcontractors and is entirely inapplicable
to Mountain State’s claims.
Mountain State has failed to articulate any statutory basis to
sustain its claim for declaratory judgment because none of the
“federal bidding laws” to which it cites provides for a private
cause of action. Accordingly, Count I fails to state a plausible
claim for relief and must be dismissed.
C.
Counts II and III of the Amended Complaint alleges that the
defendants violated the Sherman Antitrust Act and the WVATA by
conspiring

to

“unreasonably

restrain

trade

in

the

relevant

marketplace, i.e., the HUBZone of Harrison County, West Virginia,
by agreeing to give the contract to Southern Tier based on their
past working relationship and cutting out all eligible qualified
small businesses within the HUBZone.” (Dkt. No. 25 at ¶ 46). The
defendants argue that these claims should be dismissed because

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MEMORANDUM OPINION AND ORDER
Mountain State cannot allege plausible facts in support its claim
that the defendants imposed an unreasonable restraint on trade.
The Supreme Court of Appeals of West Virginia has held that
courts should analyze the WVATA “under the guidance provided by
federal law.” Kessel v. Monongalia Cnty. Gen. Hosp. Co., 648 S.E.2d
366, 381 (W. Va. 2007); see W. Va. Code § 47–18–16. Accordingly,
the adequacy of the plaintiff’s WVATA claim rises or falls on the
viability of its federal antitrust claim. To state a claim under 15
U.S.C. § 1, a plaintiff must prove (1) an agreement between at
least two legally distinct persons or entities that (2) imposed an
unreasonable restraint on trade. Dickson v. Microsoft Corp., 309
F.3d 193, 202 (4th Cir.) (citing Estate Constr. Co. v. Miller &
Smith Holding Co., 14 F.3d 213, 220–21 (4th Cir. 1994)).
With respect to the first element, “[p]roof of concerted
action requires evidence of a relationship between at least two
legally distinct persons or entities.” Oksanen v. Page Mem. Hosp.,
945

F.2d

696,

702

(4th

Cir.

1991).

The

Fourth

Circuit

has

recognized that an adequate allegation of an antitrust conspiracy
must “provide, whenever possible, some details of the time, place
and alleged effect of the conspiracy; it is not enough merely to
state that a conspiracy has taken place.” Estate Const. Co., 14

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F.3d at 221. “Dismissal of a ‘bare bones’ allegation of antitrust
conspiracy without any supporting facts is appropriate.” Id.
Here, Mountain State’s Amended Complaint alleges only that
Bell and Southern Tier “agreed to unreasonably restrain trade” by
awarding the subcontract to Southern Tier without entertaining bids
from Mountain State and other eligible qualified businesses. (Dkt.
No. 25 at ¶ 46). However, it pleads no facts in support of its
accusation that the defendants conspired to violate the “federal
competitive bidding laws” described in Count I. Id. Without more,
Mountain State’s conclusory allegation of an antitrust conspiracy
fails because it lacks any detail about when, where, and how such
a conspiracy took shape. See Estate Const. Co., 14 F.3d at 221.
Even if the Court could infer from the allegations in the
Amended Complaint that a conspiracy did exist, Mountain State’s
claims fail to show that any agreement among the defendants imposed
an unreasonable restraint on trade. To prove the second element of
an antitrust claim, a plaintiff must establish that the defendants’
conspiracy resulted “in ‘unreasonable burdens on the free and
uninterrupted flow’ of goods and services in interstate commerce.”
Id. (citing Hosp. Bldg. Co. v. Rex Hosp., 425 U.S. 738, 746
(1976)).

“Mere

economic

injury

to

[the

plaintiff]

alone

is

insufficient. Instead, [the plaintiff] must demonstrate an impact

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MEMORANDUM OPINION AND ORDER
on the competition as a whole within the relevant market.” Patel v.
Scotland Mem. Hosp., 91 F.3d 132 (4th Cir. 1996) (Table Decision),
1996 WL 383920, at *4.
Here,

Mountain

State’s

Amended

Complaint

alleges

without

factual support that Bell and Southern Tier conspired to “cut out”
all other eligible businesses within “the HUBZone of Harrison
County,” and that, as a result of this conspiracy, “plaintiff has
been injured and continues to be injured in its business and
property in the loss of expenses incurred in preparing to bid and
perform the contract and the value of the contract.” (Dkt. No. 25
at ¶¶ 46, 54). Notwithstanding the inaccuracy of the assertion that
Harrison County qualifies as a HUBZone,2 the Amended Complaint
fails to allege any facts in support of the allegation that the
defendants exerted control over the relevant market. To establish
an unreasonable restraint on trade, Mountain State must prove that
the defendants played a “significant role” in the relevant market.
Oksanen, 945 F.2d at 709. Mountain State’s unsupported assertion
that the defendants “cut out” other qualified bidders for the award
of a single subcontract does not establish the necessary impact on
competition

as

a

whole

within

2

Harrison

County’s

construction

The Administration maintains a list of HUBZone-qualified counties
on its website. Harrison County is identified as a “Non-Qualified”
county. (Dkt. No. 35-8); available at HUBZone Mapping, SBA.gov,
http://map.sba.gov/hubzone/maps/.

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marketplace.

See

Patel,

1996

WL

383920,

at

*4.

The

Amended

Complaint does not identify any role played by the defendants in
the relevant market, much less a “significant role.” See Oksanen,
945 F.2d at 709.
Additionally, the plaintiff’s assertion that “[b]id rigging is
a per-se violation of Section 1 of the Sherman Act” is misplaced.
(Dkt. No. 25 at ¶ 44). “Bid rigging” may constitute an unreasonable
restraint on trade only where “two or more persons agree that one
will submit a bid for a project higher or lower than the others or
that one will not submit a bid at all.” United States v. W.F.
Brinkley & Son Const. Co., Inc., 783 F.2d 1157, 1161 (4th Cir.
1986). Mountain State has made no such allegation against the
defendants in this case. Instead, its claim of lost expenses
resulting from the missed opportunity to submit a bid package
focuses solely on personal economic injury rather than injury to
the relevant marketplace, as required to sustain an antitrust
claim. See Patel, 1996 WL 383920, at *4. Consequently, Mountain
State has failed to state a plausible antitrust claim.
III.
Finally,

dismissal

with

prejudice

is

warranted.

Mountain

State’s Amended Complaint would not be cured through additional
amendment because “it is clear that amendment would be futile in

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MEMORANDUM OPINION AND ORDER
light of the fundamental deficiencies in plaintiff’s theory of
liability.” Cozzarelli v. Inspire Pharms., Inc., 549 F.3d 618, 630
(4th Cir. 2008). Where “a complaint is incurable through amendment,
dismissal is properly rendered with prejudice and without leave to
amend.” McLean v. United States, 566 F.3d 391, 400 (4th Cir. 2009).
IV.
For the reasons discussed, the Court:
1. GRANTS the defendants’ Motion to Dismiss (dkt. no. 35);
2. DISMISSES the Amended Complaint WITH PREJUDICE and ORDERS
that it be STRICKEN from the Court’s active docket; and
3. DENIES AS MOOT the defendants’ Motion to Strike (dkt. no.
39).
It is so ORDERED.
Pursuant to Fed. R. Civ. P. 58, the Court directs the Clerk of
the Court to enter a separate judgment order and to transmit copies
of both Orders to counsel of record.
DATED: July 23, 2012
/s/ Irene M. Keeley
IRENE M. KEELEY
UNITED STATES DISTRICT JUDGE

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