Court filing
Defendants' Opposition to Class Certification — Blessed Cajuns v. Guzman
Record facts
| Court | U.S. District Court, Northern District of Texas (Fort Worth Division) |
|---|---|
| Filed | 2021-06-14 |
U.S. District Court, Northern District of Texas (Fort Worth Division) · No. 4:21-cv-00677-O · Doc. 30 · 2021-06-14 · Docket on CourtListener
Summary
Defendants' opposition to the plaintiffs' motion for class certification in Blessed Cajuns LLC, et al. v. Isabella Casillas Guzman, et al., Civil Action No. 4:21-cv-00677-O, in the U.S. District Court for the Northern District of Texas, filed June 14, 2021 as Document 30. The proposed class is of restaurant owners said to face race or sex discrimination from the Small Business Administration on account of section 5003 of the American Rescue Plan Act. The brief argues that the original named plaintiffs, Blessed Cajuns LLC and PSBH LLC, no longer have live claims because their Restaurant Revitalization Fund claims were paid in full on June 1, 2021, and that no amended certification motion has been filed. It further argues that the requirements of Rule 23(a) and Rule 23(b)(2) are not met. The brief asks the court to deny the motion and runs 21 pages.
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IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF TEXAS
FORT WORTH DIVISION
_____________________________________
BLESSED CAJUNS LLC, et al.,
Plaintiffs,
v.
ISABELLA CASILLAS GUZMAN, et al.,
Defendants.
Civil Action No. 4:21-cv-00677-O
DEFENDANTS’ OPPOSITION TO PLAINTIFFS’ MOTION FOR CLASS
CERTIFICATION
Respectfully submitted,
BRIAN M. BOYNTON
Acting Assistant Attorney General
LESLEY FARBY
Assistant Branch Director
/s/ Christopher D. Dodge
Christopher D. Dodge (MA No. 696172)
Trial Attorney
United States Department of Justice
Civil Division, Federal Programs Branch
1100 L Street N.W.
Washington, DC 20005
Tel: (202) 598-5571
Email: christopher.d.dodge@usdoj.gov
Attorneys for Defendants
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Defs.’ Opp. to Mot. for Class Cert. – Page i
TABLE OF CONTENTS
INTRODUCTION ........................................................................................................................................... 1
BACKGROUND .............................................................................................................................................. 1
LEGAL STANDARD ...................................................................................................................................... 3
DISCUSSION .................................................................................................................................................... 4
I.
The Original Named Plaintiffs No Longer Possess Live Claims And
Therefore May Not Serve As Class Representatives ......................................................... 4
II.
Plaintiffs Cannot Satisfy The Prerequisites For Certifying A Class
Even With The New Named Plaintiffs ............................................................................... 6
A.
Plaintiffs have not established the existence of a sufficiently
numerous or ascertainable class .............................................................................. 7
B.
Plaintiffs have failed to show their claims raise common questions
with other class members. ....................................................................................... 9
C.
Plaintiffs have failed to show their claims are typical of the class as a
whole. ........................................................................................................................ 11
D.
The new named Plaintiffs' claims are in conflict with the interests of
the proposed class. .................................................................................................. 12
E.
Plaintiffs have failed to show that Defendants have acted
or refused to act on grounds that apply generally to the class. ........................ 13
CONCLUSION ............................................................................................................................................... 14
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TABLE OF AUTHORITIES
Cases
ACA Fin. Guar. Corp. v. City of Buena Vista,
298 F. Supp. 3d 834 (W.D. Va. 2018) ........................................................................................................ 5
Amchem Prod., Inc. v. Windsor,
521 U.S. 591 (1997) ..................................................................................................................................... 10
Bolin v. Sears, Roebuck & Co.,
231 F.3d 970 (5th Cir. 2000) ............................................................................................................... 13, 14
Boucher v. First Am. Title Ins. Co.,
No. C10-199RAJ, 2011 WL 1655598 (W.D. Wash. May 2, 2011) ......................................................... 7
Califano v. Yamasaki,
442 U.S. 682 (1979) ....................................................................................................................................... 3
Casa Orlando Apartments, Ltd. v. Fed. Nat'l Mortg. Ass'n,
624 F.3d 185 (5th Cir. 2010) ...................................................................................................................... 13
City of Los Angeles v. Lyons,
461 U.S. 95 (1983) ......................................................................................................................................... 8
Denney v. Deutsche Bank AG,
443 F.3d 253 (2d Cir. 2006) ......................................................................................................................... 8
E. Tex. Motor Freight Sys. Inc. v. Rodriguez,
431 U.S. 395 (1977) .................................................................................................................................. 3, 5
Flecha v. Medicredit, Inc.,
946 F.3d 762 (5th Cir. 2020) ..................................................................................................... 4, 11, 12, 13
Gen. Tel. Co. of Sw. v. Falcon,
457 U.S. 147 (1982) ..................................................................................................................................... 11
Genesis Healthcare Corp. v. Symczyk,
569 U.S. 66 (2013) ......................................................................................................................................... 4
Hirsch v. USHealth Advisors, LLC,
337 F.R.D. 118 (N.D. Tex. 2020) ............................................................................................................. 13
In re Deepwater Horizon,
739 F.3d 790 (5th Cir. 2014) ........................................................................................................................ 8
In re Phenylpropanolamine (PPA) Prod. Liab. Litig.,
214 F.R.D. 614 (W.D. Wash. 2003) .......................................................................................................... 14
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John v. Nat’l Sec. Fire & Cas. Co.,
501 F.3d 443 (5th Cir. 2007) ................................................................................................................... 4, 8
Lehocky v. Tidel Techs., Inc.,
220 F.R.D. 491 (S.D. Tex. 2004) ............................................................................................................... 13
Lewis v. Continental Bank Corp.,
494 U.S. 472 (1990) ....................................................................................................................................... 4
M.D. ex rel. Stukenberg v. Perry,
675 F.3d 832 (5th Cir. 2012) ................................................................................................................... 4, 7
Maldonado v. Ochsner Clinic Found.,
493 F.3d 521 (5th Cir. 2007) ...................................................................................................................... 13
Robinson v. Tex. Auto. Dealers Ass’n,
387 F.3d 416 (5th Cir. 2004) ........................................................................................................................ 4
Schlesinger v. Reservists Comm. to Stop the War,
418 U.S. 208 (1974) ....................................................................................................................................... 5
Shelton v. Bledsoe,
775 F.3d 554 (3d Cir. 2015) ......................................................................................................................... 7
St. Bus. Partners LLC v. Abbott,
No. 1:20-CV-706-RP, 2020 WL 4274589 (W.D. Tex. July 24, 2020) .................................................... 8
Sustainable Forest, L.L.C. v. Qwest Commc'ns Int'l, Inc.,
No. CV 0:01-2935-CMC, 2005 WL 8146267 (D.S.C. Nov. 28, 2005) ................................................ 11
Trujillo v. UnitedHealth Grp., Inc.,
No. EDCV172547JFWKKX, 2018 WL 4694041 (C.D. Cal. Sept. 14, 2018) .................................... 11
Unger v. Amedisys Inc.,
401 F.3d 316 (5th Cir. 2005) ........................................................................................................................ 4
Wal-Mart Stores, Inc. v. Dukes,
564 U.S. 338 (2011) ............................................................................................................................... passim
Ward v. Hellerstedt,
753 Fed. App’x 236 (5th Cir. 2018) ............................................................................................................ 9
Regulations
13 C.F.R. § 124.104(c) ....................................................................................................................................... 9
Federal Rule of Civil Procedure 5(b)(2) ........................................................................................................ 15
Federal Rule of Civil Procedure 23(a) ............................................................................................................. 4
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Federal Rule of Civil Procedure 68 ................................................................................................................. 5
Rule 23(b)(2) .............................................................................................................................................. 13, 14
Other Authorities
Fed. Prac. & Proc. Civ. § 1763 (3d ed. 2005) ............................................................................................... 10
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Defs.’ Opp. to Mot. for Class Cert. – Page 1
INTRODUCTION
Plaintiffs filed this action on May 23, 2021 and on the same day moved to certify a class led
by the original named Plaintiffs—Blessed Cajuns LLC, PSBH LLC, and their respective owners—on
behalf of “all restaurant owners and restaurants in the United States who are encountering or who will
encounter race or sex discrimination from the Small Business Administration on account of section
5003 of the American Rescue Plan Act.” Class Cert. Mot., ECF No. 4. But there is no dispute that
the original named Plaintiffs are no longer suitable class representatives—their claims are moot and
they lack any outstanding injuries to redress. Even assuming the Court retains any Article III
jurisdiction over their specific claims, those Plaintiffs are no longer similarly situated to other
nonpriority applicants who have yet to be paid and cannot be expected to represent their interests.
The Court should therefore deny Plaintiffs’ pending motion for class certification.
Recognizing that the original named Plaintiffs are no longer suitable class representatives,
Plaintiffs represented at the June 3, 2021 hearing that they intended to file an amended class
certification motion substituting in the new named Plaintiffs as proposed class representatives. But
Plaintiffs have yet to do so. The Court should not address class certification until the Plaintiffs file
such a new or amended motion, if at all, particularly in view of the fact that SBA continues to process
nonpriority applications in the ordinary course as the RRF approaches exhaustion.
Even if the Court treated Plaintiffs’ pending motion as applying to the new named Plaintiffs,
it should still be denied. Plaintiffs acknowledge both that they are presently receiving all of their
requested relief from Defendants and, further, that this case will be moot in its entirety once the funds
in the Restaurant Revitalization Fund (“RRF”) are exhausted. In view of these admissions, and other
deficiencies in their original proposed class, Plaintiffs cannot meet their heavy burden of showing
entitlement to class certification.
BACKGROUND
Plaintiffs filed this action on May 23, 2021. See Compl., ECF No. 1. They moved for both a
preliminary injunction and class certification the same day. See ECF Nos. 4-7. Defendants responded
to the motion for a preliminary injunction on May 25, 2021 explaining that the case was moot—the
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statutorily-prescribed priority period had concluded; the Small Business Administration (“SBA”) had
begun reviewing nonpriority applications in the ordinary course; and SBA had further stopped
processing priority applications pending either approval from the Court or until the agency completed
review of all previously filed nonpriority applications.1 See Response to PI Mot., ECF No. 11; see also
ECF No. 11.1 (“First Miller Decl.”); ECF No. 14 (“Second Miller Decl.”); ECF No. 20.1 (“Third
Miller Decl.”); ECF No. 28.1 (“Fourth Miller Decl.”). Defendants began processing Plaintiffs’
applications in the ordinary course during this time. See Third Miller Decl. ¶¶ 10-11.
The Court issued a preliminary injunction applying specifically to the original named Plaintiffs
on May 28, 2021. See PI Order, ECF No. 18. The order enjoined Defendants to process Plaintiffs’
applications as if the SBA had initiated processing of those applications at the time the applications
were filed, and further enjoined SBA from “processing or considering any RRF application filed later
in time” than Plaintiffs’ applications “until [Plaintiffs’] applications have been processed and
considered in accordance with a ‘race-neutral, sex neutral ‘first come, first served’ policy.” Id. at 11.
Defendants were already in substantial compliance with the Court’s order at the time it issued, as they
had already commenced processing all nonpriority applications—including Plaintiffs’ applications—
in the ordinary course. See Third Miller Decl. ¶¶ 10-11; 16. However, to ensure compliance with the
Court’s order and the continued review and processing of all nonpriority applications, Defendants
paid both Blessed Cajuns LLC’s and PSBH LLC’s full claims on June 1, 2021. See id. ¶¶ 23-24.
On June 3, 2021, Plaintiffs filed an amended complaint adding two new RRF applicants—
Lynds Inn LLC (“Lynds”), OCF Café LLC (“OCF”), and their respective owners—as new named
Plaintiffs. See Am. Compl, ECF No. 21. Prior to being added to the case, Lynds’s and OCF’s RRF
applications were also already actively under review by SBA. See Fifth Miller Decl. ¶¶ 4-5; Third Miller
Decl. ¶ 7. OCF’s application had already been deemed “fully approved” prior to the filing of the
amended complaint and it subsequently had its application booked in SBA’s E-Tran system on June
1 As Defendants explained in the Fourth Miller Declaration, some priority applications were
processed—but not ultimately paid—by SBA up until 11:35am ET on May 28, 2021. See Fourth Miller
Decl. ¶ 10.
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7, 2021 for disbursement of funds by the Treasury Department. See Fifth Miller Decl. ¶ 5. It has, in
all likelihood, already received its RRF grant. Id. Lynds’s application had been under review by SBA
prior to the filing of the amended complaint. Id. ¶ 4. SBA’s review subsequently determined Lynds’s
application required corrections. Id. The application was resubmitted to SBA on June 3, 2021 and
continues to be reviewed in the ordinary course. Id..
On June 3, the Court held a hearing at which the parties addressed the issues of mootness,
class certification, and further relief in the case. See generally 6/3/21 Hrg. Tr. Plaintiffs agreed at the
hearing that they were already receiving all of their requested relief, stating that “there really is no
daylight between what the government is actually doing and what [Plaintiffs] are asking for, even on a
classwide basis.” 6/3/21 Hrg. Tr. at 12:13-15. And Plaintiffs further acknowledged that dismissing
the case as moot will “be the appropriate disposition” once “the money is gone.” Id. at 13:23-14:8; see
also id. 37:3-5 (recognizing that “mootness may be the ultimate disposition of this case”); id. 42:9-10
(acknowledging the Defendants “may ultimately win on the mootness question”).
Nonetheless, Plaintiffs indicated that they intended to move forward with class certification.
See, e.g., 6/3/21 Hrg. Tr. at 9:2-4. Recognizing that the original named Plaintiffs were no longer
suitable class representatives, Plaintiffs stated that they intended to amend their class certification
motion. See 6/3/21 Hrg. Tr. at 5:4-8 (“So at the very least, those new proposed class representatives,
their claims are not yet moot. We have not yet amended our motion for class certification to ask for
them to be named as representative plaintiffs, but we intend to do so.”); see also id. at 42:5-8
(acknowledging that if the “new plaintiffs” are “quickly paid” then Plaintiffs “have to find another
lead plaintiff to seek class certification”). Plaintiffs have yet to file a new or amended class certification
motion, and their original motion remains pending.
LEGAL STANDARD
Class actions are an exception to the ordinary course of American legal practice. See, e.g., Wal-
Mart Stores, Inc. v. Dukes, 564 U.S. 338, 348 (2011); Califano v. Yamasaki, 442 U.S. 682, 700-701 (1979).
A putative class representative may litigate the class’s claims only if he is “part of the class and
‘possess[es] the same interest and suffer[s] the same injury’ as the class members.” Wal-Mart, 564 U.S.
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at 348-49 (quoting E. Tex. Motor Freight Sys. Inc. v. Rodriguez, 431 U.S. 395, 403 (1977)). To obtain
certification of a non-opt-out class under Rule 23(b)(2), as Plaintiffs seek, they must show that an
ascertainable class exists and also meet the requirements of both Rule 23(a) and 23(b)(2): (1)
numerosity, (2) commonality, (3) typicality, (4) adequacy, and (5) that Defendant has “acted or refused
to act on grounds that apply generally to the class, so that final injunctive relief or corresponding
declaratory relief is appropriate respecting the class as a whole.” Fed. R. Civ. P. 23(a), (b)(2); see John
v. Nat’l Sec. Fire & Cas. Co., 501 F.3d 443, 445 (5th Cir. 2007).
The plaintiff bears the burden to prove that these requirements have been met, and its offer
of proof is subject to “rigorous analysis” in light of the “claims, defenses, relevant facts, and applicable
substantive law.” M.D. ex rel. Stukenberg v. Perry, 675 F.3d 832, 837 (5th Cir. 2012) (citations omitted);
see also Robinson v. Tex. Auto. Dealers Ass’n, 387 F.3d 416, 420 (5th Cir. 2004) (“To make a determination
on class certification, a district court must conduct an intense factual investigation.”); Unger v. Amedisys
Inc., 401 F.3d 316, 321 (5th Cir. 2005).
DISCUSSION
I.
The Original Named Plaintiffs No Longer Possess Live Claims And Therefore May
Not Serve As Class Representatives
Plaintiffs moved for class certification at the outset of this action, proposing that the original
named Plaintiffs—Blessed Cajuns LLC, PSBH LLC, and their respective owners—serve as class
representatives. See Class Cert. Mot. (proposing class led by named plaintiffs); Class Cert. Mem., ECF
No. 5 (same); see also Compl. ¶¶ 23-29 (class action allegations). But there is no dispute that these
original named Plaintiffs are presently suffering no injury at all, as Defendants began processing their
applications in the ordinary course and ultimately paid out their claims in full in response to the Court’s
injunction. See Third Miller Decl. ¶¶ 10-11; 23-24. Their claims are therefore moot and this Court
lacks Article III jurisdiction over their claims. See Flecha v. Medicredit, Inc., 946 F.3d 762, 769 (5th Cir.
2020) (“[I]f the class representative lacks standing, then there is no Article III suit to begin with—
class certification or otherwise.”); see also Genesis Healthcare Corp. v. Symczyk, 569 U.S. 66, 72 (2013) (“If
an intervening circumstance deprives the plaintiff of a ‘personal stake in the outcome of the lawsuit,’
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at any point during litigation, the action can no longer proceed and must be dismissed as moot.”
(quoting Lewis v. Continental Bank Corp., 494 U.S. 472, 477-478 (1990)). And even if the original named
Plaintiffs possessed live claims, they no longer possess the same interest and injury as unpaid class
members. See E. Tex. Motor Freight System, Inc., 431 U.S. at 403 (“[A] class representative must be part
of the class and ‘possess the same interest and suffer the same injury’ as the class members.” (quoting
Schlesinger v. Reservists Comm. to Stop the War, 418 U.S. 208, 216 (1974))).
Plaintiffs acknowledged the need for new class representatives at the June 3, 2021 hearing,
indicating that they intended to file an amended claim for class certification, though they have yet to
do so. See 6/3/21 Hrg. Tr. at 5:4-8; 42:5-8. Accordingly, the Court should deny Plaintiffs’ pending
motion for class certification.2
Plaintiffs also suggest that Defendants have improperly attempted to “pick off” the lead
plaintiffs. See ECF No. 22 at 2. That is not correct. Defendants began processing the applications
of the original named plaintiffs in the ordinary course. See Third Miller Decl. ¶¶ 6-7; 10-11. After the
Court issued its injunction on May 28, 2021, Defendants promptly paid out the original Plaintiffs to
ensure compliance with the Court’s order that no later-filed applications—priority or otherwise—be
processed or considered until the original named plaintiffs had their applications “processed and
considered.” See PI Order at 11; Third Miller Decl. ¶¶ 16-27. The main case relied upon by Plaintiffs
for this suggestion, Campbell-Ewald Co. v. Gomez, concerned an unaccepted offer of settlement under
Federal Rule of Civil Procedure 68. See 577 U.S. 153, 161 (2016). The Court held there that because
such an unaccepted offer, as a matter of contract law, became void once rejected, the plaintiff retained
an interest in the litigation and its claims were not moot. Id. That holding has no relevance here
because the original named plaintiffs have been paid, and thus no longer have an interest in the
2 As discussed infra, class certification is inappropriate at this juncture even with the substitution of
new class representatives, though the Court should not reach the issue unless and until Plaintiffs file
a new motion for class certification identifying the relevant representatives and proposed parameters
of the class. See ACA Fin. Guar. Corp. v. City of Buena Vista, 298 F. Supp. 3d 834, 852 (W.D. Va. 2018)
(“Courts are not expected to fashion even a pro se litigant’s arguments for it, much less one represented
by counsel.”).
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litigation. See Third Miller Decl. ¶¶ 16-27. Moreover, their claims were in the process of being paid
in the ordinary course and were ultimately paid in response to a Court order, rather than through a
voluntary offer of settlement intended to moot the case. Id.3 In other words, this is not an instance
of Defendants attempting to “pick off” lead plaintiffs to frustrate class certification—the original
named plaintiffs were already receiving their requested relief as early as May 27, see Third Miller Decl.
¶¶ 7; 10-11, and ultimately received the relief sought through the Court’s favorable ruling on their
motion for a preliminary injunction, see PI Order at 11. Plaintiffs who obtain their requested relief in
response to their own motion for such relief cannot turn around and complain of being “picked off”
for purposes of class certification.
II.
Plaintiffs Cannot Satisfy The Prerequisites For Certifying A Class Even With The New
Named Plaintiffs
As explained, Plaintiffs indicated that they intended to file a new or amended motion for class
certification but have yet to do so. See 6/3/21 Hrg. Tr. at 5:4-8. The Court should deny the pending
motion not only because the original named Plaintiffs and proposed class representatives no longer
possess live claims, but also because since Plaintiffs filed their original motion and proposed their
original class the SBA has continued to process nonpriority applications in the ordinary course as the
RRF nears exhaustion. See, e.g., Fifth Miller Decl.; Third Miller Decl.; Second Miller Decl. Indeed,
Plaintiffs now admit that “there really is no daylight between what the government is actually doing
and what [Plaintiffs] are asking for, even on a classwide basis.” 6/3/21 Hrg. Tr. at 12:13-15. Plaintiffs
therefore should go back to the drawing board to precisely define the scope of any class that could be
viable in view of the fact that Plaintiffs and putative class members are already receiving full relief. Id.4
3 Similarly, in Deposit Guaranty Nat. Bank v. Roper, “[a]t no time did the named Plaintiffs accept the
tender in settlement of the case,” 445 U.S. 326, 332 (1980), and moreover the named plaintiffs retained
an interest in appealing the district court’s denial of their motion for class certification due to the
plaintiffs’ “desire to shift part of the costs of litigation to those who will share in its benefits if the
class is certified and ultimately prevails,” id. at 336. But unlike Roper, Plaintiffs here do not seek class-
wide damages under Rule 23(b)(3), and therefore have no similar interest in spreading the cost of
attorneys’ fees among the class as a whole. See Compl. ¶ 30; Am. Compl. ¶ 40.
4 In the event Plaintiffs do ultimately file a new or amended class certification motion, Defendants
respectfully request the opportunity to address the arguments raised in that motion in due course.
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Even if Plaintiffs had simply substituted the new named Plaintiffs—Lynds, OCF, and their
respective owners—as the proposed class representatives in their pending motion, class certification
would still be inappropriate. Plaintiffs’ barebones motion for class certification fails to supply the
necessary information for this Court to perform the “rigorous analysis” necessary to certify a class.
Sukenberg, 675 F.3d at 837. Further, Plaintiffs’ recognition that they are already receiving their
requested relief, 6/3/21 Hrg. Tr. at 12:13-15, and their further recognition that the case will be moot
once the RRF is exhausted, which may happen in a matter of hours or days, altogether undermines
any rationale for certifying a class at this juncture, see id. at 13:23-14:8 (“When there really is zero
possibility of [further relief] because the money is gone, then we do think mootness would be the
appropriate disposition.”); see also id. 37:3-5; id. 42:9-10. The Court should further deny Plaintiffs’
motion for class certification for these reasons.
A.
Plaintiffs have not established the existence of a sufficiently numerous or
ascertainable class.
Plaintiffs propose certifying a class of “restaurant owners who have been or are being
discriminated against because of their race, ethnicity, or sex,” suggesting at the outset of the case that
such a class would consist of approximately 130,000 class members. See Class Cert. Mem. at 1-2. But
as Plaintiffs admit, no such class presently exists because all putative class members are now receiving
the relief initially sought in the complaint. See 6/3/21 H’rng Tr. at 12:13-15. While Plaintiffs also
seek to certify a class of applicants who “have been” allegedly discriminated against, they also admit
that no backwards-looking relief is available to such applicants here. See PI Mem., ECF No. 7 at 7
(recognizing “the defendants’ sovereign immunity makes it impossible for the plaintiffs to recover
damages” and that “no mechanism to ‘claw back’” funds exists); see also Compl. ¶ 30 (seeking only
forward-looking relief and asserting no claim for damages); Am. Compl. ¶ 40 (same). In other words,
Plaintiffs propose a class whose membership by their own admission presently consists of zero
members or alternatively a class that Plaintiffs admit can receive no relief from this Court.
In the former scenario, Plaintiffs plainly cannot establish the existence of a sufficiently
numerous class to warrant certifying a class. See Shelton v. Bledsoe, 775 F.3d 554, 559 (3d Cir. 2015)
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(“[A]n essential prerequisite of an action under Rule 23 is that there must be a ‘class.’” (quoting 7A C.
Wright, A. Miller, & M. Kane, Fed. Prac. & Proc. Civ. § 1760 (3d ed. 2005)); cf. Boucher v. First Am.
Title Ins. Co., No. C10-199RAJ, 2011 WL 1655598, at *5 (W.D. Wash. May 2, 2011) (explaining that a
class that “would have no members” in the event defendants prevail on the merits would not meet
ascertainability requirement). And in the latter case—that of a class composed of applicants who
previously faced alleged discrimination but who no longer do—the proposed definition would result in
a class consisting exclusively of applicants who lack standing to seek any relief. Such class members
lack any existing or real or immediate injury necessary to supply standing for forward-looking claims, see
City of Los Angeles v. Lyons, 461 U.S. 95, 102 (1983), and at most would have backwards-looking claims
for damages that Plaintiffs admit cannot be redressed due to sovereign immunity, see 6th St. Bus. Partners
LLC v. Abbott, No. 1:20-CV-706-RP, 2020 WL 4274589, at *4 (W.D. Tex. July 24, 2020) (recognizing
sovereign immunity barred retrospective claims for damages); see also PI Mem. at 7; Compl. ¶ 30; Am.
Compl. ¶ 40. Courts may not certify classes so evidently lacking Article III standing. See In re Deepwater
Horizon, 739 F.3d 790, 801 (5th Cir. 2014) (scrutinizing proposed class definition to determine if
proposed class consisted of persons and entities possessing Article III standing); see also Denney v.
Deutsche Bank AG, 443 F.3d 253, 263-264 (2d Cir. 2006) (explaining that “no class may be certified
that contains members lacking Article III standing” and that class must be “defined in such a way that
anyone within it would have standing.”); accord Wal-Mart, 564 U.S. at 364-365 (class improperly
certified under Rule 23(b)(2) where substantial portion of class had “no claim for injunctive or
declaratory relief at all” due to only backwards-looking injuries).
Finally, even setting aside that Plaintiffs are already receiving their requested relief, their
proposed class is defined using terms that are fundamentally too vague to permit ascertainability.
Plaintiffs seek to certify a class consisting of applicants “who have been or are being discriminated
against because of their race, ethnicity, or sex discrimination from the small Business Administration
on account of section 5003 of the American Rescue Plan Act,” ECF No. 4, which could include
numerous applicants who believe they are being discriminated against for reasons unrelated to the
priority period provision of the statute. Plaintiffs’ proposed class definition sweeps broadly to include
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any RRF applicant with any race or sex-based discrimination claim against the program, rather than
those claiming injury attributable to the priority period. This fails to supply the “precise definition”
needed for class certification. John, 501 F.3d at 445 n.3 (“[A] class must not only exist, the class must
be susceptible of precise definition. There can be no class action if the proposed class is ‘amorphous’
or ‘imprecise.’”).
B.
Plaintiffs have failed to show their claims raise common questions with other
class members.
“[W]hat is significant with respect to a commonality determination is ‘not the raising of
common questions—even in droves—but, rather the capacity of a class-wide proceeding to generate
common answers apt to drive the resolution of the litigation.’” Ward v. Hellerstedt, 753 Fed. App’x 236,
245 (5th Cir. 2018) (quoting Wal-Mart, 564 U.S. at 350)). “Dissimilarities within the proposed class are
what have the potential to impede the generation of common answers.” Wal-Mart, 564 U.S. at 350
(citation omitted). Plaintiffs’ proposed class lacks sufficient commonality to permit common answers
to resolve the litigation on behalf of all proposed class members.
First, both the original and new named Plaintiffs in the amended complaint allege that they do
not qualify as “economically disadvantaged individuals” under SBA’s regulations. See Am. Compl. ¶
21; see also Compl. ¶ 14. But many members of the proposed class likely do qualify as “economically
disadvantaged,” even if they otherwise are not veterans, women, or “socially disadvantaged
individuals.” The SBA’s definition of those who are economically disadvantaged is race- and sex-
neutral, broadly including individuals who fall within certain income, net worth, and net asset ranges.
See 13 C.F.R. § 124.104(c). Plaintiffs do not allege that prioritizing RRF grants for businesses owned
by economically-disadvantaged individuals is unconstitutional. See generally Am. Compl.
The inclusion of economically-disadvantaged and non-economically-disadvantaged members
within the same class demonstrates a significant lack of commonality between Plaintiffs’ claims and
many other class members’ potential claims. For example, if the Court were to issue class-wide relief
enjoining operation of the term “socially disadvantaged individual” in the text of the statute, SBA
would still be permitted to prioritize processing claims and paying grants to businesses owned by
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economically-disadvantaged individuals—including a substantial but unknown number of putative
class members. These members have a strong interest in maintaining prioritization of economically-
disadvantaged applicants as it would improve their own ability to access a limited supply of funds. By
contrast, Plaintiffs—who are not economically disadvantaged (Am. Compl. ¶ 21)—have the opposite
incentive. Striking the term “socially disadvantaged” from the statute would afford them no relief if
all economically disadvantaged applicants retained priority over Plaintiffs’ claims. In fact, the named
Plaintiffs would potentially be harmed by such an outcome because enjoining operation of the “socially
disadvantaged individual” provision would expand the universe of prioritized applicants to include non-
socially disadvantaged applicants (including presumably thousands of class members) who are
otherwise economically disadvantaged. Plaintiffs are therefore incorrect to assert that each proposed
class member suffers the same injury and could not have their applications “prioritized” for access to
funds. See Class Cert. Mem., ECF No. 5 at 2. Plaintiffs have proposed a class where “the interests of
those within the single class are not aligned.” Amchem Prod., Inc. v. Windsor, 521 U.S. 591, 626 (1997);
see also 7A C. Wright, A. Miller, & M. Kane, 7A Fed. Prac. & Proc. Civ. § 1763 (3d ed. 2005) (explaining
“common questions may not be found when the decision regarding the propriety of injunctive or
declaratory relief turns on consideration of the individual circumstances of each class member or when
the defendant has not engaged in a common course of conduct toward them”).5
Second, Plaintiffs have further failed to establish commonality because their proposed class
fails to account for how various nonpriority applicants are differently situated now that SBA is
processing their applications in the ordinary course. For example, Plaintiffs fail to address how
different putative class members’ interests and claims may turn on issues relating to when they applied,
the present status of their applications, whether their applications required corrections, and the size
of the grant sought in their applications. As Defendants have explained, different kinds of applications
are reviewed, processed, and ultimately paid out at different speeds for reasons unrelated to race or
5 Because the priority period is over and Defendants are no longer prioritizing certain claims over
others, this issue is now moot. See generally ECF Nos. 20, 20-1. Defendants note the issue here to
emphasize Plaintiffs’ failure to show sufficient commonality for the proposed class.
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sex. See Third Miller Decl. ¶¶ 16-18; Second Miller Decl. ¶ 7. As a result, different putative class
members have different remedial interests. For example, an applicant with a more complex or larger
application, but who filed early in the program, may desire class-wide relief requiring that applications
be funded sequentially based on the timestamp of each application. By contrast, a later-filing applicant
with a less complex claim potentially subject to quicker processing time, might desire relief that SBA
commence reviewing claims in sequential order based on timestamp, with claims paid as they are approved.
Similarly, many putative class members have likely had their claims paid since Plaintiffs filed their
motion for class certification, while others have claims at varying stages of review and processing.
And notably, Lynds—the only named Plaintiff who has yet to have its claim funded by SBA—stands
in a unique position relative to most RRF applicants because its application was returned due to a
need for corrections. Fifth Miller Decl. ¶ 4.
These different groups of nonpriority applicants have distinct interests, and correspondingly
distinct questions of law and fact, with respect to any injunctive relief the Court may yet issue.
Plaintiffs’ single, all-inclusive class fails to account for the competing interests presented by differently-
situated applicants, particularly when it comes to the shape of any class-wide injunctive relief, and is
therefore over-inclusive of applicants whose claims present different questions of law and fact. See
Trujillo v. UnitedHealth Grp., Inc., No. EDCV172547JFWKKX, 2018 WL 4694041, at *7 (C.D. Cal.
Sept. 14, 2018) (over-inclusive class lacked sufficient commonality and typicality); Sustainable Forest,
L.L.C. v. Qwest Commc’ns Int’l, Inc., No. CV 0:01-2935-CMC, 2005 WL 8146267, at *9 (D.S.C. Nov. 28,
2005) (declining to certify Rule 23(b)(2) class where there were “significant factual differences between
the putative class members’ claims such that many will necessarily receive no relief at all even if
Plaintiffs’ theories prove true”).
C.
Plaintiffs have failed to show their claims are typical of the class as a whole.
Typicality and commonality “tend to merge,” and both ultimately address “whether under the
particular circumstances maintenance of a class action is economical and whether the named plaintiff’s
claim and the class claim are so interrelated that the interests of the class members will be fairly and
adequately protected in their absence.” Wal-Mart, 564 U.S. at 349 n.5 (quoting Gen. Tel. Co. of Sw. v.
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Falcon, 457 U.S. 147, 157-158, n.13 (1982)); see also Flecha, 946 F.3d at 768. Plaintiffs’ claims are
therefore not typical for substantially the same reasons as in Section II.B—each of the named Plaintiffs
alleges that they are not economically disadvantaged and therefore raises claims that are not typical of
a substantial portion of the class. Plaintiffs have also made no showing that their claims are typical of
the differently-situated applicants within the putative class.
Further still, because OCF’s claim has since been funded and likely disbursed in the ordinary
course, Fifth Miller Decl. ¶ 5, its claim is no longer typical of the ordinary class member still seeking
RRF dollars. Similarly, because Lynds’s application was returned for corrections, its claim is not typical
of the majority of remaining putative class members whose application timestamp remains tied to
their original application dates. Id. ¶ 4.
Plaintiffs are therefore again incorrect in alleging their claims “are precisely the same as the
claims belong [to] all members of the proposed class,” ECF No. 5 at 3, and have failed to demonstrate
sufficient typicality to warrant certifying a class.
D.
The new named Plaintiffs’ claims are in conflict with the interests of the
proposed class.
Plaintiffs acknowledged that the original named Plaintiffs are no longer suitable class
representatives. See supra Section I. But the two new named Plaintiffs—Lynds, OCF, and their
respective owners—are similarly ineligible to serve as class representatives because both also received
relief prior to entering the case as named plaintiffs. OCF already had its application “fully approved”
by SBA. Fifth Miller Decl. ¶ 5. And similarly, SBA had already commenced reviewing Lynds’s
application. Id. ¶ 4. Because these named Plaintiffs were already receiving requested relief at the time
they were added to the complaint, see 6/3/21 Hrg. Tr. at 12:13-15, they are not appropriate class
representatives.
Subsequent events only reinforce this conclusion. OCF had its application booked into E-
Tran for disbursement on June 7, 2021 and therefore most likely has already received its RRF grant in
the ordinary course. Fifth Miller Decl. ¶ 5. It is therefore no longer a suitable class representative for
the same reasons as the original named Plaintiffs. See supra Section I. Lynds has since had its
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application returned for corrections, and subsequently resubmitted with corrected information. Id. ¶
4. That application continues to be reviewed in the ordinary course. Id.. While it has not yet been
paid, Lynds is nonetheless still receiving all of its requested relief—having its application reviewed and
processed without reference to the sex and race of its owners. Id.; see also Third Miller Decl. ¶¶ 7-8.
Moreover, because of the need to resubmit its application, Lynds’s application is no longer typical of
the class as a whole. See Fifth Miller Decl. ¶ 4. Indeed, the errors in its original application and its
need to file a corrected application raise significant and unique factual questions about whether any
alleged harm to the applicant is traceable to the priority period at all. The Court should not certify a
class led by a single class representative whose claim is so impacted by unique factual circumstances.
See, e.g., Hirsch v. USHealth Advisors, LLC, 337 F.R.D. 118, 134 (N.D. Tex. 2020) (declining to certify a
class where class representative had “unique issues” that “threaten[ed] the absent class members”);
Lehocky v. Tidel Techs., Inc., 220 F.R.D. 491, 500 (S.D. Tex. 2004) (“[C]lass certification is not
appropriate where a class representative is subject to unique defenses that threaten to become the
focus of the litigation.”).
E.
Plaintiffs have failed to show that Defendants have acted or refused to act on
grounds that apply generally to the class.
In addition to the four factors required under Rule 23(a), Plaintiffs seeking to certify a Rule
23(b)(2) class must show that “the party opposing the class has acted or refused to act on grounds
that apply generally to the class, so that final injunctive relief or corresponding declaratory relief is
appropriate respecting the class as a whole.” Fed. R. Civ. P. 23(b)(2). As the Fifth Circuit has
explained, “this rule seeks to redress what are really group as opposed to individual injuries,” thus
“render[ing] the notice and opt-out provisions of (b)(3) unnecessary.” Casa Orlando Apartments, Ltd. v.
Fed. Nat’l Mortg. Ass’n, 624 F.3d 185, 198 (5th Cir. 2010) (quoting Bolin v. Sears, Roebuck & Co., 231
F.3d 970, 975 n.22 (5th Cir. 2000)). Certification under this provision is permissible “only when a
single injunction or declaratory judgment would provide relief to each member of the class.” Wal-
Mart., 564 U.S. at 360. And the relief sought “must be specific.” Maldonado v. Ochsner Clinic Found.,
493 F.3d 521, 524 (5th Cir. 2007).
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Plaintiffs’ original proposed class is no longer tenable under this standard because many
original proposed class members have since had their applications paid in full by SBA due to its
processing of nonpriority applications. And further, SBA is now processing all nonpriority
applications in the ordinary course, meaning that no outstanding group injury remains to be redressed.
Third Miller Decl. ¶ 7. “Rule 23(b)(2) certification is . . . inappropriate when the majority of the class
does not face future harm.” Maldonado, 394 F.3d at 525 (citing Bolin, 231 F.3d at 978). And Plaintiffs
cannot point to a “specific” injunctive or declaratory judgment that could provide relief to each
member of their proposed class. Id. at 524; cf. In re Phenylpropanolamine (PPA) Prod. Liab. Litig., 214
F.R.D. 614, 622 (W.D. Wash. 2003) (“It makes little sense to certify a class where a class mechanism
is unnecessary to afford the class members redress.”). Indeed, while Plaintiffs have represented that
they intend at some point to seek further injunctive relief on behalf of the new named Plaintiffs, see
6/3/21 Hrg. Tr. at 5:9-14, it is not even clear that they presently seek any class-wide injunctive relief
in view of their admission that they are already receiving such relief, id. at 12:12-15. Certification of a
Rule 23(b)(2) class is therefore inappropriate at this time.
CONCLUSION
For the reasons above, Plaintiffs’ motion for class certification (ECF No. 4), should be denied.
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Respectfully submitted,
BRIAN M. BOYNTON
Acting Assistant Attorney General
LESLEY FARBY
Assistant Branch Director
/s/ Christopher D. Dodge
Christopher D. Dodge (MA No. 696172)
Trial Attorney
United States Department of Justice
Civil Division, Federal Programs Branch
1100 L Street N.W.
Washington, DC 20005
Tel: (202) 598-5571
Email: christopher.d.dodge@usdoj.gov
Attorneys for Defendants
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CERTIFICATE OF SERVICE
On June 14, 2021, I electronically submitted the foregoing document with the clerk of court
for the U.S. District Court, Northern District of Texas, using the electronic case filing system of the
court. I hereby certify that I have served all parties electronically or by another manner authorized by
Federal Rule of Civil Procedure 5(b)(2).
/s/ Christopher D. Dodge
Christopher D. Dodge
Trial Attorney
United States Department of Justice
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