Help an Owner, Go to Jail?

AGC goes to the U.S. Supreme Court to defend the practice of pre-bid interaction between public owners and contactors that ultimately leads to better RFPs and projects.

AGC of America, with support from AGC of New York State, filed an amicus brief at the U.S. Supreme Court on September 6 to protect the legal and recommended practice of pre-bid interactions between contractors and public owners, prior to a formal solicitation or request for proposals (RFP). The case involves a criminal conviction based on the “right to control” legal theory of fraud where a contractor provided significant input pre-bid for development projects in Buffalo and Syracuse at the request of a public owner and was ultimately selected for the project. 

The issue in the case, Ciminelli v. U.S., No. 21-1170, is whether the U.S. Court of Appeals for the Second Circuit’s “right to control” (RTC) theory — which treats the deprivation of complete and accurate information bearing on a person’s economic decision as a species of property fraud — states a valid basis for liability under the federal wire fraud statute. AGC’s brief provides many examples where authorities in the planning stages of an RFP have reached out to the construction community to learn myriad industry and market conditions to assist them in optimally constructing and timing the RFP. These conversations promote efficiency all around and the effective delivery of public projects. AGC makes a strong case that pre-bid conversations of this type are routine and in the public interest and should not be the basis for criminal prosecution by mail/wire fraud. 

Federal courts have struggled to define the limits of mail and wire fraud statutes. The Supreme Court will hear this case in its October 2022 term (date not yet set for oral arguments) because of a split in circuit courts on the use of the RTC legal theory. A criminal conviction was upheld in the Second Circuit based solely on the deprivation of “potentially valuable economic information” (that could impact a discretionary economic decision), without any proof of actual financial harm to the owner or damage to property interests, or any violation of bid laws. The Eight and Tenth Circuits have joined the Second in recognizing the validity of the RTC theory while the Sixth and Ninth Circuits have rejected it. 

“AGC of America, as amicus curiae, submits this brief to raise the Court’s awareness of this proper and desirable business practice, to show the actual economic benefits this practice promotes, and to demonstrate how such pre-bid contacts are encouraged by existing government policy and are to the real benefit of the public that funds the projects. AGC of America submits this brief in support of Petitioner to the extent that Petitioner urges the rejection of the right-to-control theory for federal criminal wire fraud prosecutions.”

AGC’s Larger Litigation Program

The Construction Advocacy Fund (CAF) of the AGC of America provides the financial resources that the association requires to extend its advocacy into federal and state courtrooms across the country. In conjunction with the association’s legislative, regulatory, and public programs, the association’s litigation program seeks to protect if not enhance the business environment for construction contractors. In other cases, AGC of America is currently seeking:

  • To persuade the U.S. Supreme Court to clarify the outer bounds of federal CWA authority by revisiting its fractured 4-1-4 ruling in Rapanos v. United States (2006) that set two competing “tests” for determining what is a WOTUS. Indeed, “the Court should clarify” that the plurality opinion requiring water and wetlands to have a continuous surface water connection to traditionally navigable waters “provides the proper … more definite test.”  Sackett v. Environmental Protection Agency – learn more.
  • To uphold a favorable decision AGC received from the Tennessee Court of Appeals that reversed a lower court decision awarding punitive damages to a subcontractor and held that the “economic loss rule” applies to a construction contract negotiated by sophisticated commercial entities and prohibits recovery of non-contractual and punitive damages (recovery in tort) from a contractor for alleged misrepresentation. AGC of America and AGC of Tennessee filed an amicus brief in the matter, arguing damages should be limited to those authorized by the contract. The subcontractor filed an appeal that will be heard at the Tennessee Supreme Court. AGC of America and its Tennessee chapter are preparing to submit another amicus brief. Painting Company v. The Weitz Companylearn more.
  • To persuade the U.S. District Court for the Northern District of Texas to issue a preliminary injunction that would shield all AGC members—if not all federal contractors—from enforcement of the federal contractor COVID-19 vaccination mandate. Associated General Contractors of America vs Joseph R. Biden - learn more.

Importantly, the CAF provides AGC the critical legal resources to research the legality of quickly emerging regulations—such as Government-Mandated Project Labor Agreements or Build America Buy America requirements—and to be prepared to successfully challenge them in court.

For more information, please reach out to AGC’s Leah Pilconis at [email protected] or Jordan Howard at [email protected].

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