AGC of America, with support from AGC of New York State, filed an amicus brief (explained in the below video with AGC of America CEO Steve Sandherr) 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.”

UPDATE:

In May 2023, the U.S. Supreme Court barred federal prosecutors from using the “right-to-control” theory as part of its May 11 decision to overturn the conviction of construction contractor Louis Ciminelli. Had the original conviction on the basis of right-to-control stood, construction contractors would have faced severe limitations on their ability to communicate with public and private owners who are contemplating new construction projects or programs.

DATE

September 2022

BENEFICIARY

AGC members & the construction industry

PROJECT TYPE

Legal efforts