Mastec Renewables P.R. LLC v. Mammoth Energy Servs., Inc.

494 F.Supp.3d 1233

MASTEC RENEWABLES PUERTO RICO LLC, Plaintiff,

v.MAMMOTH ENERGY SERVICES, INC. and Cobra Acquisitions, LLC, Defendants.

Civil Action No. 20-20263-Civ-Scola

United States District Court, S.D. Florida.

Signed October 14, 2020

Jorge Luis Piedra, Rachel Sullivan, Coral Gables, FL, Tal J. Lifshitz, Benjamin Jacobs Widlanski, Kozyak, Tropin & Throckmorton, P.A., Miami, FL, for Plaintiff.

David Michael Orta, Harry A. Olivar, Jr., Pro Hac Vice, Jacob J. Waldman, Pro Hac Vice, Kristen Bird, Pro Hac Vice, Michael B. Carlinsky, Pro Hac Vice, Quinn Emanuel Urquhart & Sullivan LLP, Washington, DC, for Defendant Mammoth Energy Services, Inc.

Matthew I. Menchel, Daria Pustilnik, Victoria R. Morris, Kobre & Kim, LLP, Gregory J. Trask, Peter W. Homer, Homer Bonner Jacobs, P.A., Miami, FL, David Michael Orta, Harry A. Olivar, Jr., Pro Hac Vice, Jacob J. Waldman, Pro Hac Vice, Kristen Bird, Pro Hac Vice, Michael B. Carlinsky, Pro Hac Vice, Quinn Emanuel Urquhart & Sullivan LLP, Washington, DC, for Defendant Cobra Acquisitions, LLC.

Order Granting in Part and Deferring in Part Motions to Dismiss

Robert N. Scola, Jr., United States District Judge

Plaintiff MasTec Renewables Puerto Rico LLC ("MasTec") seeks to recover damages from Defendants Mammoth Energy Services, Inc. ("Mammoth") and Cobra Acquisitions, LLC ("Cobra") for projects it says the Defendants diverted to themselves, and away from MasTec, through a bribery scheme involving a Federal Emergency Management Administration official in the wake of Hurricane Maria. (Compl., ECF No. 1.) In its complaint, MasTec sets forth claims (1) under the federal Racketeer Influenced and Corrupt Organizations Act (counts one and two), (2) for tortious interference (count three), and (3) for violations of section 5141 of Title 31 of the Laws of Puerto Rico Annotated (count four). (Id. ¶ 11.) Both Defendants have filed motions to dismiss the complaint in which they argue MasTec fails to state claims for relief under RICO, for tortious interference, or for a violation of Puerto Rican law. (Cobra's Mot., ECF No. 17, 12–18, 20–23; Mammoth's Mot., ECF No. 16, 7–10, 11–12.) Both Defendants also maintain the complaint should be dismissed for a lack of personal jurisdiction. (Cobra's Mot. at 12; Mammoth's Mot. at 10–11.) Lastly, Mammoth contends MasTec's claims fail against it for the additional reason that MasTec does not adequately plead that Mammoth is an alter ego of Cobra. (Mammoth's Mot. at 13–16.) After careful review, the Court agrees with the Defendants that MasTec's complaint falls short of pleading RICO violations and grants the Defendants’ motion, in part, on that basis. In reviewing the record, upon dismissing MasTec's federal claims, however, the Court finds itself unsure of whether it has subject-matter jurisdiction over the remaining, non-federal claims and, therefore, defers ruling on those portions of the motions directed at counts three and four. Accordingly, the Court grants the Defendants’ motions to dismiss, in part , and defers ruling on them, in part (ECF Nos. 16, 17 ). The Court orders MasTec to provide a response to the Court's concerns regarding diversity jurisdiction on or before October 23, 2020 .

1. Background and Facts¹

Hurricane Maria made landfall in Puerto Rico as a Category 4 storm on September 20, 2017. (Compl. ¶ 1.) The storm wiped out the island's electricity, destroyed much of its infrastructure, and ultimately caused the deaths of more than 3,000 people. (Id. ) Just two weeks earlier, another storm, Hurricane Irma, had already left about two-thirds of the island without electricity. (Id. ¶ 25.) On the day Hurricane Maria hit Puerto Rico, the president of the United States issued a major disaster declaration, authorizing FEMA to allocate such available disaster-relief funds as were necessary to provide disaster assistance and to cover related administrative expenses. (Id. ¶ 26.) The Puerto Rico Electric Power Authority ("PREPA") triggered an emergency protocol and began searching for private contractors to immediately begin work to restore the island's power. (Id. )

On October 13, less than a month after the storm, PREPA notified MasTec—an infrastructure construction company that specializes, among other things, in the emergency restoration of electrical power after natural disasters—that it was being considered as a potential contractor. (Id. ¶¶ 13, 27.) Less than a week later, however, PREPA executed its first "Emergency Master Services Agreement" with Cobra. (Id. ¶ 29.) Cobra, in stark comparison to MasTec, was new to large-scale electric infrastructure restoration, having been just recently formed by its parent, Mammoth, itself an oilfield-services and fossil-fuel company, just months earlier. (Id. ) Cobra was Mammoth's first foray into the energy infrastructure business. (Id. ) Mammoth's CEO and director, Arty Straehla, negotiated and executed this initial contract on Cobra's behalf. (Id. ) The contract, in its initial form, provided for a one-year term and a maximum compensation to Cobra of $200 million, with a $15 million deposit due upon execution. (Id. ¶ 30.) FEMA reviewed this contract, approving it and committing $200 million in public funds for the costs of the initial contract. (Id. ¶ 31.) This initial contract later evolved, and, after five amendments, by February 27, 2018, Cobra's maximum compensation was increased to $945,429,800, which FEMA also approved. (Id. ¶ 33.)

In the meantime, in addition to PREPA's first contract with Cobra, PREPA issued a second request for proposals, on February 16, 2018, seeking more bids from electrical contractors to continue to rebuild and restore Puerto Rico's electric grid. (Id. ¶¶ 26, 34.) After considering this second round of bids, PREPA awarded two more contracts: another contract with Cobra, allowing up to $900 million in compensation; and a contract with MasTec, providing for a maximum of $500 million in compensation. (Id. ¶ 3.) Both contracts, executed in May 2018, were for a term of one year. (Id. ¶ 41.) These contracts covered "the $1.4 billion allotted to FEMA for its recovery efforts in Puerto Rico." (Id. ¶ 3)

After being awarded the $500-million-maximum-compensation contract, MasTec immediately began mobilizing, as it disclosed it would in its proposal to PREPA, initiating the transport of equipment, materials, construction supervision, craft labor, and MasTec's project management team for deployment to Puerto Rico. (Id. ¶¶ 4, 37, 43.) In initiating this massive mobilization effort, MasTec incurred over $15 million in expenses. (Id. ¶¶ 4, 46.)

Months earlier, however, Asha Nateef Tribble, FEMA's Deputy Regional Administrator for Region II—serving New Jersey, New York, Puerto Rico, and the U.S. Virgin Islands—had begun, although it's not clear exactly when, accepting bribes from Donald Keith Ellison, Cobra's president. (Id. ¶ 47.) In providing these bribes, Ellison sought to, and did, induce Tribble into diverting all restoration work to Cobra, to MasTec's detriment. (Id. ¶ 1, 5–7, 17.) Ellison's bribes took many forms: hotel accommodations in New York (from January 31 through February 2, 2018), in Fort Lauderdale (from July 17 to 18, 2018), and in North Carolina (from November 29 to 30, 2018); a helicopter tour of Puerto Rico in February 2018; plane tickets for travel from Miami to Orlando (on July 20, 2018), from San Juan to New York (first class, on September 22, 2018), and from Washington, D.C. to Charlotte, North Carolina, roundtrip (on November 29 and 30, 2018); personal security services in November and December 2018; use of an apartment in San Juan, Puerto Rico; assistance, in February 2018, with securing an apartment in New York City; and access to Ellison's personal credit card for Tribble's own use, extending at least into December 2018. (Id. ¶¶ 7, 66, 69–71.) Additionally, in March 2018, Tribble contacted Ellison about securing a job at Cobra, or a Cobra affiliate, for her friend, Jovanda Patterson. (Id. ¶¶ 48, 67.) Just over a month later, on June 1, 2018, a Cobra affiliate, at Ellison's prompting, it appears, offered Patterson a lucrative position, more than doubling her current salary at FEMA. (Id. ¶¶ 48, 67, 68.) Six days later, PREPA sent MasTec a notice of suspension of work, directing MasTec, without any reason, to stop any work under its contract, including its mobilization efforts. (Id. ¶ 49.) Despite the suspension, a PREPA representative assured MasTec the suspension would be brief, and a new start date would issue soon. (Id. )

The day after the suspension notice issued, and unbeknownst to MasTec at the time, Tribble and Ellison were exchanging emails through their personal accounts, about meeting up at a hotel and discussing Tribble's upcoming travel plans. (Id. ¶ 50.) In the meantime, believing further delays would be brief and that funding for its work under the contract would be secured, MasTec, on June 14, 2018, began actually shipping equipment and supplies from West Palm Beach to Puerto Rico. (Id. ¶ 52.) The anticipated work for MasTec, though, never materialized. Despite assurances and excuses from Tribble during meetings with FEMA, PREPA, MasTec, and Cobra in July and August 2018 and with FEMA, PREPA, and MasTec in January 2019, MasTec remained sidelined while PREPA routinely assigned project after project exclusively to Cobra. (Id. ¶ 54, 58–59, 62.)

While MasTec was strung along by FEMA, through Tribble or her reports, who blamed PREPA for failing to assign any work to MasTec, Tribble and Ellison were in constant communication, often through their personal cell phone and email accounts. (Id. ¶ 67.) As early as December 2017, Tribble, in exchange for bribes from Ellison, shared critical insider information and confidential documents (including, it appears, MasTec's own proprietary information), and the status of Hurricane Maria restoration projects in Puerto Rico. (Id. ¶¶ 72–75.) Throughout their communications, Ellison and Tribble also plotted to...