Court filing
Motion to Dismiss Individual-Capacity Claims — Blessed Cajuns v. Guzman
Record facts
| Court | U.S. District Court, Northern District of Texas (Fort Worth Division) |
|---|---|
| Filed | 2022-01-24 |
U.S. District Court, Northern District of Texas (Fort Worth Division) · No. 4:21-cv-00677-O · Doc. 54 · 2022-01-24 · Docket on CourtListener
Summary
A motion to dismiss all claims against Administrator Isabella Casillas Guzman in her individual capacity, with a supporting memorandum of law, filed January 24, 2022 as Document 54 in Blessed Cajuns, LLC v. Guzman, Civil Action No. 4:21-cv-677, in the U.S. District Court for the Northern District of Texas, Fort Worth Division. It is brought under Federal Rules of Civil Procedure 12(b)(2) and 12(b)(6) and answers claims by restaurants and their owners that race- and sex-based preferences in administering the Restaurant Revitalization Fund violated their Fifth Amendment right to equal protection. The memorandum argues a lack of personal jurisdiction, that no Bivens remedy should be implied, and qualified immunity. Its background describes section 5003, which appropriated $28.6 billion for the Fund. The filing is 32 pages.
Summary drafted by a model from the document's text below and checked by script against that text before publication. It is a navigation aid, not a reading of what the document proves. Where AI is used
Full text
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF TEXAS
FORT WORTH DIVISION
____________________________________
)
BLESSED CAJUNS, LLC, et al.
)
)
Plaintiffs,
)
)
Civil Action No. 4:21-cv-677
v.
)
)
ISABELLA CASILLAS GUZMAN, et al. )
)
Defendants.
)
____________________________________)
MOTION TO DISMISS CLAIMS AGAINST ADMINISTRATOR ISABELLA
CASILLAS GUZMAN IN HER INDIVIDUAL CAPACITY
AND SUPPORTING MEMORANDUM OF LAW
BRIAN M. BOYNTON
Acting Assistant Attorney General
Civil Division
C. SALVATORE D’ALESSIO, JR.
Acting Director, Constitutional Tort Staff
Torts Branch, Civil Division
ANDREA W. MCCARTHY
Senior Trial Counsel, Constitutional Tort Staff
Torts Branch, Civil Division
Juliana MacPherson Barrett
Trial Attorney, Constitutional Tort Staff
Torts Branch, Civil Division
U.S. Department of Justice
Ben Franklin Station, P.O. Box 7146
Washington, D.C. 20044
T: (202) 616-4326; F: (202) 616-4314
Juliana.M.Barrett@usdoj.gov
Counsel for Administrator Guzman
in her Individual Capacity
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TABLE OF CONTENTS
TABLE OF AUTHORITIES ............................................................................................. iii
INTRODUCTION .............................................................................................................. 1
BACKGROUND ................................................................................................................ 2
I.
The American Rescue Plan Act and the Restaurant Revitalization Fund ............... 2
II.
Plaintiffs Allege Unconstitutional Race- and Sex-Based Preferences in the
Administration of the RRF...................................................................................... 5
ARGUMENT ...................................................................................................................... 6
I.
The Court Should Dismiss the Claims Against Administrator Guzman in Her
Individual Capacity for Lack of Personal Jurisdiction ........................................... 6
II.
The Court Should Not Imply a Bivens Remedy Against a Federal Official
Overseeing a Nationwide COVID-19 Relief Program ........................................... 9
A.
This Case Presents a New Context Requiring a Special Factors Analysis10
B.
Available Alternative Processes, Including Injunctive Relief, Safeguard
the Constitutional Interest ......................................................................... 11
C.
Special Factors Raising Separation-of-Powers Concerns Counsel
Hesitation in Implying a Bivens Remedy .................................................. 13
1.
Legislative Action in the Areas of COVID-19 Relief and
Antidiscrimination Suggests that Congress Did Not Intend to
Authorize a Bivens Remedy .......................................................... 13
2.
A Bivens Action is Not Appropriate Because Plaintiffs Seek to
Challenge Government Policy ...................................................... 15
3.
Implying a Bivens Action Would Consume Extensive Time and
Resources During a Global Pandemic ......................................... 16
III.
Administrator Guzman Is Entitled to Qualified Immunity ................................... 17
A.
The Unfunded Plaintiffs Have Not Plausibly Alleged that Administrator
Guzman Violated Their Clearly Established Right to Equal Protection .. 19
B.
The Unfunded Plaintiffs Have Not Established that Administrator Guzman
Personally Participated in the Alleged Unlawful Conduct ....................... 24
CONCLUSION ................................................................................................................. 25
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TABLE OF AUTHORITIES
Federal Cases
Adams v. Johnson,
355 F.3d 1179 (9th Cir. 2004) ...................................................................................... 12
Adarand Constructors, Inc. v. Pena,
515 U.S. 200 (1995) ...................................................................................................... 19
Air Sunshine, Inc. v. Carl,
663 F.3d 27 (1st Cir. 2011) ........................................................................................... 12
Anderson v. Creighton,
483 U.S. 635 (1987) ................................................................................................ 18, 24
Anderson v. United States,
No. 4:18-cv-0871-O, 2021 WL 4990798 (N.D. Tex. Oct. 26, 2021) ........................... 10
Arar v. Ashcroft,
585 F.3d 559 (2d Cir. 2009).......................................................................................... 13
Ashcroft v. al-Kidd,
563 U.S. 731 (2011) ...................................................................................................... 20
Ashcroft v. Iqbal,
556 U.S. 662 (2009) .......................................................................................... 18, 24, 25
Attkisson v. Holder,
925 F.3d 606 (4th Cir. 2019) ........................................................................................ 13
Bagola v. Kindt,
131 F.3d 632 (7th Cir. 1997) ........................................................................................ 12
Bell Atl. Corp. v. Twombly,
550 U.S. 544 (2007) ...................................................................................................... 18
Bivens v. Six Unknown Named Agents of the Federal Bureau of Narcotics,
403 U.S. 388 (1971) ................................................................................................ 1, 3, 4
Brown v. Callahan,
623 F.3d 249 (5th Cir. 2010) ........................................................................................ 23
Burger King Corp. v. Rudzewicz,
471 U.S. 462 (1985) ........................................................................................................ 7
Bush v. Lucas,
462 U.S. 367 (1983) ................................................................................................ 12, 17
Califano v. Webster,
430 U.S. 313 (1977) ...................................................................................................... 22
Canada v. United States,
950 F.3d 299 (5th Cir. 2020) ............................................................................ 10, 13, 15
Cantú v. Moody,
933 F.3d 414 (5th Cir. 2019) ........................................................................................ 10
Carlson v. Green,
446 U.S. 14 (1980) ........................................................................................................ 10
Cinel v. Connick,
15 F.3d 1338 (5th Cir. 1994) ...................................................................................... 4, 5
City of Cleburne v. Cleburne Living Ctr.,
473 U.S. 432 (1985) ...................................................................................................... 19
City of Richmond v. J.A. Croson Co.,
488 U.S. 469 (1989) ...................................................................................................... 21
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iv
Corr. Servs. Corp. v. Malesko,
534 U.S. 61 (2001) ........................................................................................................ 16
Cortez III Serv. Corp. v. NASA,
950 F. Supp. 357 (D.D.C. 1996) ................................................................................... 22
Davis v. Passman,
442 U.S. 228 (1979) ........................................................................................................ 9
District of Columbia v. Wesby,
138 S. Ct. 577 (2018) .................................................................................................... 19
Doe v. Am. Nat'l Red Cross,
112 F.3d 1048 (9th Cir. 1997) ........................................................................................ 8
Dudley v. United States,
No. 4:19-cv-317-O, 2020 WL 532338 (N.D. Tex. Feb. 3, 2020) ........................... 12, 15
Dyer v. Houston,
964 F.3d 374 (5th Cir. 2020) ........................................................................................ 18
Farah v. Weyker,
926 F.3d 492 (8th Cir. 2019) ........................................................................................ 12
Goodyear Dunlop Tires Operations, S.A. v. Brown,
564 U.S. 915 (2011) ........................................................................................................ 7
Greer’s Ranch Cafe v. Guzman,
No. 4:21-CV-00651-O, 2021 WL 2092995 (N.D. Tex. May 18, 2021) ....................... 20
Harrison & Burrowes Bridge Constructors, Inc. v. Cuomo,
981 F.2d 50 (2d Cir. 1992)............................................................................................ 20
Helicopteros Nacionales de Colombia, S.A. v. Hall,
466 U.S. 408 (1984) ........................................................................................................ 7
Hernandez v. Mesa,
140 S. Ct. 735 (2020) ................................................................................................ 9, 13
Int’l Shoe Co. v. Washington,
326 U.S. 310 (1945) ........................................................................................................ 7
Johnston v. Multidata Sys. Int’l Corp.,
523 F.3d 602 (5th Cir. 2008) .......................................................................................... 7
Juan Antonio Sanchez, PC v. Bank of S. Tex.,
494 F. Supp. 3d 421 (S.D. Tex. 2020) .......................................................................... 14
Liff v. Off. of Inspector Gen. for the U.S. Dep’t of Lab.,
881 F.3d 912 (D.C. Cir. 2018) ...................................................................................... 12
Malley v. Briggs,
475 U.S. 335 (1986) ................................................................................................ 19, 20
Maria S. ex rel. E.H.F. v. Garza,
912 F.3d 778 (5th Cir. 2019) ........................................................................................ 13
McCabe v. Basham,
450 F. Supp. 2d 916 (N.D. Iowa 2006) ........................................................................... 8
McClendon v. City of Columbia,
305 F.3d 314 (5th Cir. 2002) ........................................................................................ 17
Meyers v. Textron, Inc.,
540 F. App’x 408 (5th Cir. 2013) ................................................................................... 4
Miller v. U.S. Dep’t of Agric. Farm Servs. Agency,
143 F.3d 1413 (11th Cir. 1998) .................................................................................... 12
Munns v. Clinton,
822 F. Supp. 2d 1048 (E.D. Cal. 2011)........................................................................... 9
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v
Oliva v. Nivar,
973 F.3d 438 (5th Cir. 2020) ........................................................................................ 10
Pearson v. Callahan,
555 U.S. 223 (2009) ...................................................................................................... 18
Price ex rel. Price v. La. Dep’t of Educ.,
329 F. App’x 559 (5th Cir. 2009) ................................................................................. 15
Rudebusch v. Hughes,
313 F.3d 506 (9th Cir. 2002) ........................................................................................ 20
Sangha v. Navig8 ShipManagement Private Ltd.,
882 F.3d 96 (5th Cir. 2018) ............................................................................................ 8
Saucier v. Katz,
533 U.S. 194 (2001) ................................................................................................ 18, 20
Schweiker v. Chilicky,
487 U.S. 412 (1988) ................................................................................................ 13, 14
Shaw v. Hunt,
517 U.S. 899 (1996) ...................................................................................................... 21
Shotz v. City of Plantation,
344 F.3d 1161 (11th Cir. 2003) .................................................................................... 15
Shumpert v. City of Tupelo,
905 F.3d 310 (5th Cir. 2018) ........................................................................................ 18
Tun-Cos v. Perrotte,
922 F.3d 514 (4th Cir. 2019) ........................................................................................ 11
United States v. Paradise,
480 U.S. 149 (1987) .......................................................................................... 22, 23, 24
United States v. Virginia,
518 U.S. 515 (1996) ................................................................................................ 19, 22
Vitolo v. Guzman,
999 F.3d 353 (6th Cir. 2021) ........................................................................................ 20
Vu v. Meese,
755 F. Supp. 1375 (E.D. La. 1991) ................................................................................. 8
W. Radio Servs. Co. v. U.S. Forest Serv.,
578 F.3d 1116 (9th Cir. 2009) ...................................................................................... 12
W. States Paving Co. v. Wash. State Dep't of Transp.,
407 F.3d 983 (9th Cir. 2005) ........................................................................................ 21
Walden v. Fiore,
571 U.S. 277 (2014) .................................................................................................... 7, 8
Wilkie v. Robbins,
551 U.S. 537 (2007) .................................................................................................. 9, 15
Wygant v. Jackson Bd. of Educ.,
476 U.S. 267 (1986) ...................................................................................................... 21
Ziglar v. Abbasi,
137 S. Ct. 1843 (2017) ........................................................................................... passim
Federal Statutes
5 U.S.C. § 706 ................................................................................................................... 12
15 U.S.C. § 632(n) .............................................................................................................. 2
15 U.S.C. § 632(q) .............................................................................................................. 2
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15 U.S.C. § 637(a)(4)(A) ................................................................................................ 2, 3
20 U.S.C. § 1681 ............................................................................................................... 15
42 U.S.C. § 2000d ............................................................................................................. 15
Pub. L. No. 116-123 .......................................................................................................... 14
Pub. L. No. 116-136 .......................................................................................................... 14
Pub. L. No. 116-139 .......................................................................................................... 14
Pub. L. No. 116-142 .......................................................................................................... 14
Pub. L. No. 116-147 .......................................................................................................... 14
Pub. L. No. 116-260 .......................................................................................................... 14
State Statutes
Tex. Civ. Prac. & Rem. Code Ann. § 17.042 ..................................................................... 7
Federal Rules
Fed. R. Civ. P. 4(k)(1)(A) ................................................................................................... 6
Fed. R. Civ. P. 12(b)(2)................................................................................................... 1, 6
Fed. R. Civ. P. 12(b)(6)................................................................................................... 1, 9
Federal Regulations
13 C.F.R. § 124.103(b)(1) ............................................................................................... 3, 4
13 C.F.R. § 124.103(b)(3) ............................................................................................. 3, 23
13 C.F.R. § 124.103(c).................................................................................................. 3, 23
13 C.F.R. § 124.104(c)........................................................................................................ 3
Official Government Publications
Memo. from N. Velázquez to Members, Chairwoman, Comm. on Small Bus., Full
Committee Hearing: “Long-Lasting Solutions for a Small Business Recovery” (July
15, 2020), https://perma.cc/QKC9-DQQS .................................................................... 21
Memo. from N. Velázquez to Members, Chairwoman, Comm. on Small Bus., Full
Committee Hybrid Hearing: “State of the Small Business Economy in the era of
COVID-19” (Feb. 4, 2021), https://perma.cc/JH7Z-26K8 ........................................... 23
SBA, The SBA Funds 16,000 Restaurant Revitalization Fund Awards (May 10, 2021),
https://perma.cc/UN7P-APEZ ........................................................................................ 4
SBA, Recovery for the Smallest Restaurants and Bars: Administrator Guzman
Announces Latest Application Data Results for the Restaurant Revitalization Fund
(May 12, 2021), https://perma.cc/3SQB-TWYF ............................................................ 4
SBA, SBA Administrator Announces Closure of Restaurant Revitalization Fund Program
(July 2, 2021), https://perma.cc/YU44-PJWV ................................................................ 5
SBA, Restaurant Revitalization Funding Program: Program Guide as of April 28, 2021,
https://perma.cc/WS6A-9L45 ......................................................................................... 4
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INTRODUCTION
Defendant Isabella Casillas Guzman, Administrator of the Small Business
Administration (“SBA”), hereby moves to dismiss all claims against her in her individual
capacity pursuant to Federal Rules of Civil Procedure 12(b)(2) and 12(b)(6). See Second
Am. Compl. (“SAC”), ECF No. 40.
Plaintiffs are restaurants and their owners who claim unlawful discrimination in the
administration of the Restaurant Revitalization Fund (“RRF”), an economic relief program
created by Congress to assist small businesses in the food and beverage industry harmed by
the COVID-19 pandemic. Plaintiffs GBB Hospitality Group LLC1 and 7th Avenue Property
Management Inc., and their owners Jimmy Loup and Eric Schiller, contend that their
applications for RRF funding were not approved because the SBA and Administrator
Guzman deployed unconstitutional race- and sex-based preferences in administering the
program, thereby violating their Fifth Amendment right to equal protection. These
Plaintiffs now seek monetary relief in the amount of their requested RRF grants directly
from the personal assets of Administrator Guzman pursuant to Bivens v. Six Unknown
Named Agents of the Federal Bureau of Narcotics, 403 U.S. 388 (1971), without regard to
the restrictions of the program. See SAC ¶ 44. The claims fail as a matter of law.
First, the Court lacks personal jurisdiction over Administrator Guzman because
Plaintiffs have not established that she has the requisite minimum contacts with Texas.
Second, a Bivens remedy is not available under the unique circumstances of this case
because alternative processes exist to safeguard the constitutional interest and because
1 GBB Services LLC, a pass-through payroll company owned by GBB Hospitality Group
LLC, is also a Plaintiff. See SAC ¶ 14. Because it appears that only one RRF application
was submitted on behalf of the two entities, see SAC, Ex. 2, we will refer to them
collectively herein as “GBB Hospitality Group LLC.”
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special factors—including significant separation-of-powers concerns—make implying a
judge-made remedy within the context of federal COVID-19 relief inappropriate. Finally,
even if a Bivens remedy were available, Administrator Guzman is entitled to qualified
immunity because Plaintiffs have failed to plausibly allege that she violated clearly
established law or personally participated in the alleged unconstitutional conduct.
BACKGROUND
I.
The American Rescue Plan Act and the Restaurant Revitalization Fund
In March 2021, Congress passed the American Rescue Plan Act of 2021 (“ARPA”),
which provided widespread relief related to the ongoing COVID-19 pandemic. Relevant
here, section 5003 of the Act appropriated $28.6 billion to create the Restaurant
Revitalization Fund (“RRF”). See ARPA § 5003(b); SAC at 1, ¶ 20. The RRF, which has
since closed, was administered by the SBA and provided grants to restaurants adversely
impacted by the pandemic. See SAC at 1, ¶ 20. Grant recipients were not required to repay
the funds provided they were used on specified eligible expenses. See ARPA §§
5003(c)(5)-(6). The Act further provided that, during the first twenty-one days of the RRF’s
operation, the SBA Administrator:
shall prioritize awarding grants to eligible entities that are small business concerns
owned and controlled by women (as defined in section 3(n) of the Small Business
Act (15 U.S.C. 632(n))), small business concerns owned and controlled by veterans
(as defined in section 3(q) of such Act (15 U.S.C. 632(q))), or socially and
economically disadvantaged small business concerns (as defined in section
8(a)(4)(A) of the Small Business Act (15 U.S.C. 637(a)(4)(A))).
ARPA § 5003(c)(3)(A).
Under the Small Business Act, a business is “owned and controlled by women” if
“at least 51 percent of [the] small business concern is owned by one or more women” and
“the management and daily business operations of the business are controlled by one or
more women.” 15 U.S.C. § 632(n). Section 8(a) of the Act defines “[s]ocially
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disadvantaged individuals” as “those who have been subjected to racial or ethnic prejudice
or cultural bias because of their identity as a member of a group without regard to their
individual qualities.” Id. § 637(a)(5). “Economically disadvantaged individuals,” in turn,
are “socially disadvantaged individuals whose ability to compete in the free enterprise
system has been impaired due to diminished capital and credit opportunities as compared to
others in the same business area who are not socially disadvantaged.” Id. § 637(a)(6)(A).
Because the priority period was open to “socially and economically disadvantaged small
business concerns,” applicants must meet both criteria to qualify.
SBA regulations provide additional guidance regarding these categories. For
instance, there is a presumption that certain minority groups—“Black Americans; Hispanic
Americans; Native Americans . . . ; Asian Pacific Americans . . . ; [and] Subcontinent
Asian Americans . . .”— are “socially disadvantaged.” See 13 C.F.R. § 124.103(b)(1). This
presumption may be rebutted with “credible evidence to the contrary.” Id. § 124.103(b)(3).
Additionally, those who are not presumptively socially disadvantaged may establish
individual social disadvantage by providing evidence of a distinguishing feature that has
limited their advancement or entry into the business world. See id. §§ 124.103(c)(1)-(2).
Distinguishing features are not limited to race and may include, for example, a “physical
handicap.” Id. § 124.103(c)(1). Consequently, individuals of any race may qualify as
socially disadvantaged.
To determine whether an individual qualifies as economically disadvantaged, the
SBA “examine[s] factors relating to the personal financial condition of [the] individual . . .,
including income for the past three years . . . , personal net worth, and the fair market value
of all assets . . . .” Id. § 124.104(c). “An individual who exceeds any one of the
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thresholds”—for example, a net worth of over $750,000—“will generally be deemed . . .
not economically disadvantaged.” Id.
The RRF application period opened on May 3, 2021. SBA, The SBA Funds 16,000
Restaurant Revitalization Fund Awards (May 10, 2021), https://perma.cc/UN7P-APEZ
(“May 10 Press Release”).2 In accordance with section 5003(c)(3)(A) of the ARPA, the
SBA announced that, during the first twenty-one days of the program, it would “accept
applications from all eligible Applicants” but would “distribute funds only for approved
applications where the Applicant . . . meets the eligibility requirements for a small business
concern at least 51 percent owned and controlled by women, veterans, or socially and
economically disadvantaged individuals.” SBA, Restaurant Revitalization Funding
Program: Program Guide as of April 28, 2021, at 16, https://perma.cc/WS6A-9L45.
Within days of the program’s launch, it became clear that the demand for RRF awards far
outweighed the appropriated funds. On May 10, 2021, the SBA announced that “the
number of applications received so far could exhaust the funds authorized to fund the
RRF.” May 10 Press Release. Moreover, “[a]pplications from women, veterans, and
socially and economically disadvantaged business owners” totaled $29 billion. SBA,
Recovery for the Smallest Restaurants and Bars: Administrator Guzman Announces Latest
Application Data Results for the Restaurant Revitalization Fund (May 12, 2021),
https://perma.cc/3SQB-TWYF. These announcements raised concerns that the RRF funds
could be depleted before the 21-day priority period expired and the SBA began processing
applications from other eligible businesses.
2 In ruling on a motion to dismiss, a court “may take into account . . . items subject to
judicial notice [and] matters of public record,” such as government press releases and
official congressional documents. Meyers v. Textron, Inc., 540 F. App’x 408, 409-10 (5th
Cir. 2013); accord Cinel v. Connick, 15 F.3d 1338, 1343 n.6 (5th Cir. 1994).
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The SBA announced the closure of the RRF on July 2, 2021. SBA, SBA
Administrator Announces Closure of Restaurant Revitalization Fund Program (July 2,
2021), https://perma.cc/YU44-PJWV. As of June 30, 2021, approximately 101,000
restaurants had been awarded RRF funds. Id. The requests for funds far exceeded the
amount available, with more than 278,000 eligible applications requesting over $72.2
billion. Id. According to the SBA, approximately $18 billion in RRF funds were awarded to
underserved populations, including women-owned businesses, veteran-owned businesses,
and businesses owned by socially and economically disadvantaged populations. Id.
II.
Plaintiffs Allege Unconstitutional Race- and Sex-Based Preferences in the
Administration of the RRF
Plaintiffs allege unconstitutional race- and sex-based discrimination in the
administration of the RRF because they were not eligible for the 21-day priority period.
Plaintiffs filed their original complaint against the SBA and Administrator Guzman in her
official capacity on May 23, 2021. Compl., ECF No. 1. On May 24, 2021, Plaintiffs sought a
preliminary injunction to prevent the disbursement of RRF funds on race- or sex-based
grounds. Mot. for Prelim. Inj. and Mem. in Supp., ECF Nos. 6, 7. After expedited briefing,
the Court granted Plaintiffs’ motion, finding that they were likely to succeed on the merits of
their equal protection claim. Order, ECF No. 18, at 7-9. The Court ordered Defendants to
process Plaintiffs’ applications for RRF funding “as if the SBA had initiated processing of
those applications at the time the applications were filed.” Id. at 11.
Plaintiffs filed their First Amended Complaint on June 3, 2021. ECF No. 21. The
same day, the Court held a hearing during which the parties discussed whether Plaintiffs’
claims had become moot. See ECF No. 35-3. On July 30, 2021, Plaintiffs moved to file
another amended complaint adding new plaintiffs who, for the first time, sought to assert
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claims for damages against Administrator Guzman in her individual capacity. ECF No. 33.
The Court granted the motion over the government’s objection. ECF No. 39.
The Second Amended Complaint, which is the operative complaint, was filed on
August 11, 2021. ECF No. 40. The newly added plaintiffs—GBB Hospitality Group LLC
and 7th Avenue Property Management Inc., and their owners Jimmy Loup and Eric Schiller
(the “Unfunded Plaintiffs”)—allege that their RRF applications were submitted during the
first days of the program and “would have been approved if Administrator Guzman had not
deployed the patently unconstitutional use of race and sex preferences that the plaintiffs
sued to enjoin.” SAC at 2-3, ¶¶ 26-27, 35-36. The Unfunded Plaintiffs seek damages from
the Administrator’s personal assets under Bivens for alleged violations of their Fifth
Amendment right to equal protection.
Plaintiffs also sought an injunction and declaratory relief against the official-
capacity defendants. See SAC ¶¶ 45-46. On November 2, 2021, the government filed a
partial motion to dismiss those claims. ECF No. 43. Plaintiffs responded on November 23,
2021, forfeiting their official capacity claims and stating their intention to “prepare a third
amended complaint limited to the parties alleging damages under Bivens . . . .” ECF No.
52. To date, Plaintiffs have not sought to amend a third time. Thus, the Second Amended
Complaint remains the operative complaint for purposes of the individual-capacity claims
against Administrator Guzman.
ARGUMENT
I.
The Court Should Dismiss the Claims Against Administrator Guzman in Her
Individual Capacity for Lack of Personal Jurisdiction
The Unfunded Plaintiffs’ claims against Administrator Guzman should be
dismissed under Rule 12(b)(2) because the Court lacks personal jurisdiction over her in her
individual capacity. Federal Rule of Civil Procedure 4(k)(1)(A) authorizes a federal court
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to exercise personal jurisdiction over a defendant to the same extent as a state court of
general jurisdiction. The Fifth Circuit has observed that “the Texas long-arm statute,” Tex.
Civ. Prac. & Rem. Code Ann. § 17.042, “extends to the limits of federal due process.”
Johnston v. Multidata Sys. Int’l Corp., 523 F.3d 602, 609 (5th Cir. 2008). Accordingly, the
personal jurisdiction “inquiry collapses into one federal due process analysis.” Id.3
Due process requires that a defendant “have certain minimum contacts with [the
jurisdiction] such that the maintenance of the suit does not offend traditional notions of fair
play and substantial justice.” Int’l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)
(internal quotations omitted). The defendant’s relationship with the forum “must arise out
of contacts that the ‘defendant himself’ creates with the forum State.” Walden v. Fiore, 571
U.S. 277, 284 (2014) (quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475 (1985)).
In other words, the defendant must have “purposefully established ‘minimum contacts’ in
the forum State” and intended to derive benefits from his actions there. Burger King Corp.,
471 U.S. at 474-76 (emphasis added). In contrast, “the mere fact that [a defendant’s]
conduct affected plaintiffs with connections to the forum State does not suffice to authorize
jurisdiction.” Walden, 571 U.S. at 291.
The Court lacks personal jurisdiction over Administrator Guzman in her individual
capacity because the Second Amended Complaint does not allege that she has any contacts
in Texas. Rather, any connection to the forum results solely from Plaintiffs’ connection to
3 Jurisdiction may be either general or specific. General jurisdiction allows a court to
“hear any and all claims” against a non-resident defendant when her “affiliations with the
State are so ‘continuous and systematic’ as to render them essentially at home in the
forum State.” Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 919
(2011) (quoting Int’l Shoe Co. v. Washington, 326 U.S. 310, 317 (1945)). Because
Plaintiffs do not allege that Administrator Guzman has any continuous contacts within
Texas, we address only specific jurisdiction, which exists when a case “aris[es] out of or
relate[s] to the defendant’s contacts with the forum.” Helicopteros Nacionales de
Colombia, S.A. v. Hall, 466 U.S. 408, 414 n.8 (1984).
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the state.4 Walden forecloses personal jurisdiction under these circumstances. “The proper
question is not whether [Plaintiffs] experienced an injury or effect in a particular location,
but whether [the Administrator]’s conduct connects [her] to the forum in a meaningful
way.” Sangha v. Navig8 ShipManagement Private Ltd., 882 F.3d 96, 103-04 (5th Cir.
2018). Nothing in the complaint suggests that Administrator Guzman’s alleged actions in
administering a nationwide program were directed at Texas. Indeed, even if the
Administrator purposefully “directed h[er] conduct at plaintiffs whom [s]he knew had
[Texas] connections, that still would “not create sufficient contacts” to establish personal
jurisdiction. Walden, 571 U.S. at 289.
Courts have consistently held that broad, supervisory authority by high-level federal
officials over nationwide policies does not establish personal jurisdiction. See, e.g., Doe v.
Am. Nat’l Red Cross, 112 F.3d 1048, 1051 (9th Cir. 1997) (no personal jurisdiction in
Arizona over FDA Director in Washington, DC, who oversaw regulatory process); McCabe
v. Basham, 450 F. Supp. 2d 916, 924 (N.D. Iowa 2006) (allegations that federal officials
created or followed an unlawful policy “do[] not indicate any act by which [the officials],
in their individual capacities, purposefully availed themselves of the privilege of
conducting activities within [the forum state]”); Vu v. Meese, 755 F. Supp. 1375, 1378
(E.D. La. 1991) (“that federal government officials enforce federal laws and policies on a
nationwide basis is not sufficient . . . to maintain personal jurisdiction . . . against those
same governmental officials in their individual capacities”). This is the logical
conclusion—if “allegations limited to national policy implementation and oversight” were
4 While GBB Hospitality Group LLC is headquartered in Texas and presumably suffered
injury there, 7th Avenue Property Management Inc. is headquartered in Florida. SAC ¶¶
16-17. There is therefore no indication that Plaintiff 7th Avenue or its owner would have
suffered any harm in Texas.
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sufficient to support a finding of personal jurisdiction, it would “subject [Administrator
Guzman] to personal liability in every state . . . regardless of how tenuous [her] actual
contacts with a particular forum might be.” Munns v. Clinton, 822 F. Supp. 2d 1048, 1078
(E.D. Cal. 2011). Because the Unfunded Plaintiffs have failed to allege minimum contacts
between Administrator Guzman and Texas, their individual-capacity claims against her
must be dismissed.
II.
The Court Should Not Imply a Bivens Remedy Against a Federal Official
Overseeing a Nationwide COVID-19 Relief Program
The Unfunded Plaintiffs’ Bivens claims are subject to dismissal under Rule 12(b)(6)
because an implied cause of action under the Constitution is not available under the
circumstances of this case. Whenever a plaintiff brings a damages claim against a federal
employee for an alleged constitutional violation, a court must decide the antecedent
question of whether a Bivens cause of action exists at all. See Ziglar v. Abbasi, 137 S. Ct.
1843, 1857 (2017). A Bivens remedy “is not an automatic entitlement,” and is “in most
instances . . . unjustified.” Wilkie v. Robbins, 551 U.S. 537, 550 (2007). In fact, in the more
than fifty years since Bivens was decided, the Supreme Court has endorsed such a remedy
on only two other occasions and has otherwise “consistently rebuffed requests to add to the
claims allowed under Bivens.” Hernandez v. Mesa, 140 S. Ct. 735, 741, 743 (2020).
The first question in determining whether a cause of action exists is whether the
claim at issue seeks to extend Bivens into a new context. A case presents a new context
when it differs “in a meaningful way from [any of the three] previous Bivens cases decided
by th[e] [Supreme] Court.” Abbasi, 137 S. Ct. at 1859. These are Bivens itself, which
involved “manacling the plaintiff in front of his family in his home and strip-searching him
in violation of the Fourth Amendment”; Davis v. Passman, 442 U.S. 228 (1979), which
alleged “discrimination on the basis of sex by a congressman against a staff person in
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violation of the Fifth Amendment”; and Carlson v. Green, 446 U.S. 14 (1980), which
alleged “failure to provide medical attention to an asthmatic prisoner in federal custody in
violation of the Eighth Amendment.” Oliva v. Nivar, 973 F.3d 438, 442 (5th Cir. 2020).
“Virtually everything else is a ‘new context.’” Id.
Whenever a case presents a new context, a court must determine whether it is
appropriate to “expand[]” Bivens into that context, mindful that doing so is “a disfavored
judicial activity.” Abbasi, 137 S. Ct. at 1857 (internal citation omitted). Courts should
consider “any alternative, existing process[es] for protecting the [injured party’s] interest,”
as well as any “special factors counselling hesitation” in implying a remedy. Id. at 1857-58.
“[S]eparation-of-powers principles” are “central to th[is] analysis.” Id. at 1857. The court
should ask “whether the Judiciary is well suited, absent congressional action or instruction,
to consider and weigh the costs and benefits of allowing a damages action to proceed.” Id.
at 1858. “The answer most often will be” no. Id. at 1857.
A.
This Case Presents a New Context Requiring a Special Factors Analysis
This case presents a new context because it differs in several material aspects from
the three Bivens claims recognized by the Supreme Court. Although this case bears the
closest resemblance to Davis, which also involved an equal protection claim, Plaintiffs’
“reliance on Davis is misplaced.” Canada v. United States, 950 F.3d 299, 307 (5th Cir.
2020); SAC ¶ 44. Indeed, a context may be new even if a plaintiff “asserts a violation of
the same clause of the same amendment in the same way” as one of Supreme Court’s prior
Bivens cases. Cantú v. Moody, 933 F.3d 414, 422 (5th Cir. 2019) (emphasis removed).
This Court has recognized that “[t]he types of differences that are meaningful
enough to make the context ‘new’ are myriad . . . .” Anderson v. United States, No. 4:18-
cv-0871-O, 2021 WL 4990798, at *10 (N.D. Tex. Oct. 26, 2021) (O’Connor, J.). Here, the
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individual-capacity claims asserted against Administrator Guzman differ in a number of
significant ways from the claim in Davis. First, the Unfunded Plaintiffs seek money
damages from a high-ranking official of the executive branch involved in nationwide
policymaking. Not only does Administrator Guzman operate under a different “legal
mandate” than the congressman sued in Davis, she is part of an entirely distinct branch of
government. Abbasi, 137 S. Ct. at 1860. The Unfunded Plaintiffs thus seek to extend
Bivens to a new category of defendants. Id. at 1857.
The individual-capacity claims against Administrator Guzman also “implicate[]
broad policy concerns” that were not present in prior Bivens cases. Tun-Cos v. Perrotte,
922 F.3d 514, 524 (4th Cir. 2019). The RRF was created to assist small businesses
impacted by an unprecedented global pandemic. In creating the program, Congress and the
SBA made judgments about how to allocate finite funding to ensure that the most
underserved communities could benefit. No such concerns were present in Bivens, Carlson,
or Davis. For these reasons, the Unfunded Plaintiffs’ claims against the Administrator
plainly present a new context and a special factors analysis is “required before allowing
this damages suit to proceed.” Abbasi, 137 S. Ct. at 1860.
B.
Available Alternative Processes, Including Injunctive Relief, Safeguard
the Constitutional Interest
The Court should decline to extend Bivens to this new context because alternative
processes exist to protect the constitutional interest at stake. Where, as here, “alternative
methods of relief are available, a Bivens remedy usually is not.” Id. at 1863.
First, the Unfunded Plaintiffs could have sought injunctive relief. Indeed, a number
of the original Plaintiffs in this lawsuit did so successfully and were ultimately awarded
funds under the RRF. See Order, ECF No. 18; SAC ¶¶ 31. The availability of an avenue to
pursue injunctive relief is “of central importance” in deciding whether to imply a Bivens
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remedy. Abbasi, 137 S. Ct. at 1862; accord Dudley v. United States, No. 4:19-cv-317-O,
2020 WL 532338, at *8 (N.D. Tex. Feb. 3, 2020) (O’Connor, J.) (finding the ability to seek
an injunction was an alternative remedy precluding a Bivens claim). The Administrative
Procedure Act (“APA”), for example, allows for judicial review of final agency actions and
provides for various forms of relief. See 5 U.S.C. § 706. Courts have consistently declined
to supplement the APA’s procedures with a judicially implied cause of action under Bivens.
See, e.g., Air Sunshine, Inc. v. Carl, 663 F.3d 27, 37 (1st Cir. 2011); W. Radio Servs. Co. v.
U.S. Forest Serv., 578 F.3d 1116, 1123 (9th Cir. 2009); Miller v. U.S. Dep’t of Agric. Farm
Servs. Agency, 143 F.3d 1413, 1416 (11th Cir. 1998).
Importantly, it does not matter whether the Unfunded Plaintiffs could ultimately
recover under the APA or whether the APA provides them with “complete relief.” Bush v.
Lucas, 462 U.S. 367, 388 (1983). The deciding factor is that, in fashioning the APA,
Congress “‘provided what [it] believes to be adequate remedies’” with respect to
challenged agency actions. W. Radio Servs., 578 F.3d at 1123 (quoting Adams v. Johnson,
355 F.3d 1179, 1185 (9th Cir. 2004)). Implying an additional judge-made remedy would
“upset the . . . ‘remedial structure’” fashioned by Congress. Farah v. Weyker, 926 F.3d 492,
502 (8th Cir. 2019) (quoting Abbasi, 137 S. Ct. at 1858).
Finally, Plaintiffs may have additional options for relief available to them, including
access to other federal programs intended to support small businesses during the pandemic.
See infra II.C.1. It is not necessary to divine all potential avenues for alternative forms of
relief, however. See Liff v. Off. of Inspector Gen. for the U.S. Dep’t of Lab., 881 F.3d 912,
921 (D.C. Cir. 2018). Provided there is “a forum where the allegedly unconstitutional
conduct would come to light”—as there is here—a Bivens remedy ought not to be implied.
Bagola v. Kindt, 131 F.3d 632, 642-43 (7th Cir. 1997).
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C.
Special Factors Raising Separation-of-Powers Concerns Counsel
Hesitation in Implying a Bivens Remedy
Aside from the foregoing alternative processes, there are “sound reasons to think
Congress might doubt the efficacy or necessity of a damages remedy” in this case. Abbasi,
137 S. Ct. at 1858. Courts should decline to imply a Bivens cause of action if there are
“special factors counselling hesitation.” Id. at 1857. This is a “remarkably low” standard,
Arar v. Ashcroft, 585 F.3d 559, 574 (2d Cir. 2009), which applies whenever a court “ha[s]
reason to pause before applying Bivens in a new context or to a new class of defendants.”
Hernandez, 140 S. Ct. at 743. “If any special factors do exist, the[] ‘court[] must refrain
from creating’ an implied cause of action.” Canada, 950 F.3d at 309 (quoting Maria S. ex
rel. E.H.F. v. Garza, 912 F.3d 778, 784 (5th Cir. 2019)) (emphasis in original).
1.
Legislative Action in the Areas of COVID-19 Relief and
Antidiscrimination Suggests that Congress Did Not Intend to
Authorize a Bivens Remedy
First, legislative action “suggests that Congress’s ‘failure to provide a damages
remedy’ . . . is ‘more than inadvertent,’ and strongly counsels hesitation before creating
such a remedy.” Attkisson v. Holder, 925 F.3d 606, 621 (4th Cir. 2019) (quoting Abbasi,
137 S. Ct. at 1862).
Since the early days of the COVID-19 pandemic, “[c]ongressional attention” to the
economic challenges facing small businesses impacted by the public health crisis has been
“frequent and intense.” Schweiker v. Chilicky, 487 U.S. 412, 425 (1988) (no Bivens cause
of action for alleged unconstitutional denial of social security benefits where Congress had
legislated extensively in the field). On March 6, 2020, Congress passed the Coronavirus
Preparedness and Response Supplemental Appropriations Act of 2020, which made the
COVID-19 public health emergency a disaster for purposes of the Small Business Act and
allowed the SBA to make Economic Injury Disaster Loans (“EIDL”) to eligible small
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businesses. Pub. L. No. 116-123, 134 Stat 146 (2020). On March 27, 2020, Congress
passed the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), which
established the Paycheck Protection Program (“PPP”). Pub. L. No. 116-136, 134 Stat. 281
(2020). Congress initially appropriated $349 billion for PPP loans, which are guaranteed by
the SBA and forgivable if used for certain purposes. See CARES Act §§ 1102(b)(1), 1106.
Since March 2020, Congress has continued to supplement and make changes to the
economic relief programs administered by the SBA. Subsequent legislation appropriated
additional funding, amended provisions of the PPP, and created new programs to aid
struggling businesses. See, e.g., Paycheck Protection Program and Health Care
Enhancement Act, Pub. L. No. 116-139, § 101, 134 Stat. 620 (2020); Paycheck Protection
Program Flexibility Act of 2020, Pub. L. No. 116-142, 134 Stat. 641 (2020); Pub. L. No.
116-147, 134 Stat. 660 (2020); Economic Aid to Hard-Hit Small Businesses, Nonprofits, and
Venues Act, Pub. L. No. 116-260, § 324, 134 Stat. 1182 (2020). Despite the legislature’s
demonstrated attention to these economic relief programs, it has chosen not to create a
private cause of action against individual federal officials, and declined to do so yet again
when passing the ARPA. See, e.g., Juan Antonio Sanchez, PC v. Bank of S. Tex., 494 F.
Supp. 3d 421, 434 (S.D. Tex. 2020) (finding no private cause of action under the CARES
Act). That “Congress had specific occasion to consider” authorizing such a claim, Abbasi,
137 S. Ct. at 1865, yet “[a]t no point . . . cho[]se to extend to any person the kind of
remedies [the Unfunded Plaintiffs] seek in this lawsuit,” Schweiker, 487 U.S. at 426, shows
that a Bivens remedy is not appropriate.
Congress has also been very active in the area of antidiscrimination legislation
without ever authorizing the type of claim asserted against Administrator Guzman here. For
example, Title VI of the Civil Rights Act of 1964 prohibits discrimination on the basis of
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race, color, and national origin in programs and activities that receive federal financial
assistance. See 42 U.S.C. § 2000d. Similarly, Title IX of the Educational Amendments of
1972 prohibits discrimination on the basis of sex in any education program or activity
receiving federal financial assistance. See 20 U.S.C. § 1681.5 Other sections of the Civil
Rights Act address discrimination on the basis of race or sex in places of public
accommodation (Title II), in schools (Title IV), and in employment (Title VII). These
represent just a small sample of instances in which Congress has explicitly addressed
discrimination on the basis of sex or race. In other legislation, Congress has addressed
discrimination in contexts such as voting, housing, and banking.
In sum, it is evident that Congress has had ample “opportunity to create a privately-
enforceable damages remedy against federal officials” for the conduct challenged here, yet
has consistently “declined to do so.” Dudley, 2020 WL 532338, at *7. Because Congress’s
actions suggest that it did not see fit to create a constitutional cause of action for damages,
the Court should “stay its Bivens hand.” Wilkie, 551 U.S. at 554.
2.
A Bivens Action is Not Appropriate Because Plaintiffs Seek to
Challenge Government Policy
As previously explained, separation-of-powers principles should guide the Bivens
analysis. See, e.g., Canada, 950 F.3d at 312. Separation-of-powers concerns are
particularly acute here because the Unfunded Plaintiffs’ Bivens claims would “call into
question the formulation and implementation of a general policy.” Abbasi, 137 S. Ct. at
1860. Unlike prior Bivens cases endorsed by the Supreme Court, which “challenge[d]
individual instances of discrimination or [government] overreach,” Plaintiffs’ claims
5 Individuals may not be held liable under Title VI or Title IX. See, e.g., Price ex rel.
Price v. La. Dep’t of Educ., 329 F. App’x 559, 561 (5th Cir. 2009) (unpublished); Shotz
v. City of Plantation, 344 F.3d 1161, 1170-71 & n.12 (11th Cir. 2003).
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challenge “large-scale policy decisions” about how best to allocate finite funds and
implement a nationwide economic relief program. Id. at 1862.
Because Bivens actions “have never [been] considered a proper vehicle for altering
an entity’s policy,” the Unfunded Plaintiffs’ claims against the Administrator should be
dismissed. Corr. Servs. Corp. v. Malesko, 534 U.S. 61, 74 (2001). The Second Amended
Complaint is all but silent as to any allegedly improper actions taken by Administrator
Guzman herself; instead, the complaint makes it eminently clear that Plaintiffs’ true
grievance is with Section 5003(c)(3)(A) of the ARPA and the SBA’s application of the 21-
day priority period. For example, Plaintiffs allege that “[t]he Small Business Administration
violated [Plaintiffs’] rights” and that “[t]he Small Business Administration’s
unconstitutional race and sex preferences are the but-for cause of [Plaintiffs’] failure to
obtain relief from the Restaurant Revitalization Fund.” SAC ¶¶ 42-43 (emphasis added).
No similar allegations are made against the Administrator personally. Moreover, the
complaint specifically seeks a declaration that section 5003(c)(A) is unconstitutional,
revealing that Plaintiffs’ real challenge is to the statute itself. See SAC ¶¶ 45-46. The fact
that Plaintiffs seek to attack policy decisions through the mechanism of a Bivens action is
another special factor counseling hesitation.
3.
Implying a Bivens Action Would Consume Extensive Time and
Resources During a Global Pandemic
Finally, implying a Bivens remedy in this context could lead to expansive litigation
and place undue strain on government resources during a time when they are especially
needed. The Supreme Court has recognized that “the decision to recognize a damages
remedy requires an assessment of its impact on governmental operations systemwide.”
Abbasi, 137 S. Ct. at 1858. Bivens actions not only impose “burdens on . . . employees who
are sued personally,” they also “create substantial costs” for the government. Id. at 1856,
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1858. This is particularly true when the individual-capacity defendants are high-level
executive officials like Administrator Guzman, “for the burden and demand of litigation
might well prevent them . . . from devoting the time and effort required for the proper
discharge of their duties.” Id. at 1860.
Implying a Bivens cause of action here would enable countless entities that did not
qualify for the RRF priority period or did not receive RRF funds to sue the Administrator
in her individual capacity. As discussed above, applications by eligible entities outweighed
the appropriated funds by a factor of nearly 3 to 1—$72 billion to $28.6 billion.
Authorizing a Bivens remedy could thus expose Administrator Guzman to tens of billions
of dollars in personal liability. Moreover, defending these lawsuits would consume
valuable government resources during a time when they are needed to address the current
public health and economic crisis. Under these circumstances, “Congress is in a far better
position than a court to evaluate the impact of a new species of litigation.” Bush, 462 U.S.
at 389. Unlike the judiciary, Congress “may inform itself through factfinding procedures”
and thereby make informed decisions regarding how best to “balanc[e] governmental
efficiency” against individual rights and interests. Id. For these reasons, the Court should
exercise judicial restraint and decline to authorize the expansive Bivens remedy the
Unfunded Plaintiffs seek here.
III.
Administrator Guzman Is Entitled to Qualified Immunity
Finally, even assuming a Bivens remedy were available, the Unfunded Plaintiffs’
individual-capacity claims are nevertheless subject to dismissal because Administrator
Guzman is entitled to qualified immunity. “When a defendant invokes qualified immunity,
the burden is on the plaintiff to demonstrate the inapplicability of the defense.” McClendon
v. City of Columbia, 305 F.3d 314, 323 (5th Cir. 2002). The Supreme Court has provided a
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two-part inquiry for the qualified immunity analysis. See, e.g., Pearson v. Callahan, 555
U.S. 223, 232 (2009). A court first asks whether the facts alleged, viewed in the light most
favorable to the plaintiff, establish that the official’s conduct violated a constitutional right.
Id. (citing Saucier v. Katz, 533 U.S. 194 (2001)). Next, the court must consider whether the
right at issue was “clearly established” at the time of the alleged violation. Id. Courts may
“exercise their sound discretion in deciding which of the two prongs of the qualified
immunity analysis should be addressed first in light of the circumstances in the particular
case at hand.” Id. at 236.
To survive the first prong of qualified immunity on a motion to dismiss, “a
complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief
that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl.
Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A court should accept as true only the
complaint’s well-pleaded factual allegations, setting aside any “formulaic recitation of the
elements” or legal conclusions. Id. (quoting Twombly, 550 U.S. at 555). Under the second
prong of the qualified immunity analysis, the plaintiff must point to case law in a similar
context that clearly establishes the right in question. See Saucier, 533 U.S. at 209. In
determining whether a right is clearly established, the Fifth Circuit looks to controlling
precedent of the Fifth Circuit or the Supreme Court, Dyer v. Houston, 964 F.3d 374, 384
(5th Cir. 2020), but may also consider whether “a robust ‘consensus of cases of persuasive
authority’” plainly establishes the unlawfulness of the challenged conduct. Shumpert v. City
of Tupelo, 905 F.3d 310, 320 (5th Cir. 2018). The case law must define the right in a
“particularized” sense and not merely as a general legal principle. Anderson v. Creighton,
483 U.S. 635, 640 (1987). In other words, “[t]he precedent must be clear enough that every
reasonable official would interpret it to establish the particular rule the plaintiff seeks to
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apply.” District of Columbia v. Wesby, 138 S. Ct. 577, 590 (2018) (emphasis added). Qualified
immunity thus raises a high bar—it protects “all but the plainly incompetent or those who
knowingly violate the law.” Malley v. Briggs, 475 U.S. 335, 341 (1986).
A.
The Unfunded Plaintiffs Have Not Plausibly Alleged that Administrator
Guzman Violated Their Clearly Established Right to Equal Protection
The Unfunded Plaintiffs have failed to plausibly allege that Administrator Guzman
violated their clearly established constitutional right to equal protection. The Fifth
Amendment’s equal protection guarantee “is essentially a direction that all persons
similarly situated should be treated alike.” City of Cleburne v. Cleburne Living Ctr., 473
U.S. 432, 439 (1985).6 Certain classifications are subjected to heightened scrutiny. For
example, strict scrutiny applies to classifications on the basis of race: they “must serve a
compelling governmental interest, and must be narrowly tailored to further that interest.”
Adarand Constructors, Inc. v. Pena, 515 U.S. 200, 235 (1995). The Supreme Court has
cautioned that strict scrutiny should not be “strict in theory, but fatal in fact.” Id. at 237
(internal quotation omitted). Similarly, distinctions on the basis of sex must be
“substantially related to the achievement” of “important governmental objectives.” United
States v. Virginia, 518 U.S. 515, 533 (1996). Because it would not have been evident to
“every reasonable official” that the RRF priority period violated equal protection,
Administrator Guzman is entitled to qualified immunity. Wesby, 138 S. Ct. at 590.
As an initial matter, no Supreme Court or Fifth Circuit case clearly establishes the
right at issue here, nor is there a robust consensus of persuasive authority placing the
6 The Unfunded Plaintiffs are arguably not similarly situated to “socially and
economically disadvantaged” RRF applicants. To qualify for the priority period,
applicants must be both socially disadvantaged—which includes a presumption based on
the applicant’s race—and economically disadvantaged. See supra at 3. Yet the Plaintiffs
concede that they do not “qualify as . . . ‘economically disadvantaged individual[s]’
under the SBA’s regulations.” SAC ¶ 28.
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“constitutional question beyond debate.” Ashcroft v. al-Kidd, 563 U.S. 731, 741 (2011).7
While existing precedent would have provided some guidance regarding the use of race-
and sex-based distinctions intended to remedy prior discrimination, no case law clearly
established the right to equal protection in the novel circumstances presented here—
prioritizing economic relief for a finite period to women- and minority-owned small
businesses harmed by the COVID-19 pandemic. See Harrison & Burrowes Bridge
Constructors, Inc. v. Cuomo, 981 F.2d 50, 61-62 (2d Cir. 1992) (observing that the
Supreme Court had made “broad pronouncements” regarding the legality of programs
targeting past discrimination, but “left the validity of particular plans to be assessed on a
case-by-case basis,” and granting qualified immunity). Because “[i]t is sometimes difficult
for an officer to determine how the relevant legal doctrine . . . will apply to the factual
situation the officer confronts,” Saucier, 533 U.S. at 205, courts have granted qualified
immunity even when a constitutional violation has been found. See, e.g., Rudebusch v.
Hughes, 313 F.3d 506, 517-19 (9th Cir. 2002) (university president who made race-based
pay adjustments in an effort to comply with federal regulations was entitled to qualified
immunity even though the plaintiff had “established an equal protection violation”).
Under the circumstances here, an official could have reasonably, albeit mistakenly,
concluded that the RRF’s priority period was constitutionally sound. See Malley, 475 U.S.
at 343 (qualified immunity provides “ample room for mistaken judgments”). Remedying
the effects of past or present racial discrimination has been recognized as a compelling
7 Courts have since held that the RRF’s priority period did not satisfy equal protection.
See Vitolo v. Guzman, 999 F.3d 353 (6th Cir. 2021); Greer’s Ranch Cafe v. Guzman, No.
4:21-CV-00651-O, 2021 WL 2092995 (N.D. Tex. May 18, 2021). However, those cases
had not been decided at the time of the Unfunded Plaintiffs’ alleged injuries and are not
controlling law within the Fifth Circuit. Therefore, they do not constitute clearly
established precedent for purposes of the qualified immunity analysis.
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government interest. See, e.g., Shaw v. Hunt, 517 U.S. 899, 909 (1996). Relatedly, “[t]he
federal government has a compelling interest in ensuring that its funding is not distributed
in a manner that perpetuates the effects of either public or private discrimination . . . .” W.
States Paving Co. v. Wash. State Dep't of Transp., 407 F.3d 983, 991 (9th Cir. 2005). To
satisfy strict scrutiny, such racial classifications must be grounded in a “‘strong basis in
evidence for [the] conclusion that remedial action was necessary.’” City of Richmond v.
J.A. Croson Co., 488 U.S. 469, 500 (1989) (quoting Wygant v. Jackson Bd. of Educ., 476
U.S. 267, 277 (1986)). Mere “generalized assertion[s]” of past discrimination are
insufficient. Id. at 498.
Before passing the ARPA, Congress reviewed evidence about the impact of the
pandemic on small businesses owned by women and minorities and the ability of those
groups to access federal relief programs. For example, legislators considered data showing
that “minority and women business owners ha[d] struggled to receive pandemic relief from
the Federal government.” Memo. from N. Velázquez to Members, Chairwoman, Comm. on
Small Bus., Full Committee Hearing: “Long-Lasting Solutions for a Small Business
Recovery” at 5 (July 15, 2020), https://perma.cc/QKC9-DQQS. This was particularly
problematic in light of the fact that the “COVID-19 public health and economic crisis ha[d]
disproportionally affected Black, Hispanic, and Asian-owned businesses, in addition to
women-owned businesses.” Id. at 4. Moreover, small businesses in the restaurant industry
were some of the “hardest hit.” Id. at 4 & n.19. Far from mere “generalized assertion[s]” of
past discrimination, Congress considered specific data and findings related to small
businesses in the food and beverage industry that had been disproportionately impacted by
the COVID-19 pandemic, and that had not been adequately served by prior federal relief
programs. In light of the above, it would not have been unreasonable for Administrator
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Guzman to believe that Congress had a “strong basis in evidence” for creating a racial
distinction in the RRF, or for her to defer to those findings.8
For similar reasons, it cannot be said that no reasonable official would have
believed that the sex-based classification was “substantially related to the achievement” of
an “important governmental objective[].” Virginia, 518 U.S. at 533. In Califano v. Webster,
the Supreme Court held that “[r]eduction of the disparity in economic condition between
men and women caused by the long history of discrimination. . . [is] an important
governmental objective.” 430 U.S. 313, 317 (1977) (per curiam). A reasonable official
could have believed that the sex-based distinctions applied during the RRF priority period
served an important government objective in light of the evidence before Congress.
Second of all, it was not clearly established that the race- and sex-based distinctions
applied during the priority period were not appropriately tailored to remedying disparities
in access to COVID-related federal relief programs. Courts should consider several factors
in determining whether a distinction is narrowly tailored, “including the necessity for the
relief and the efficacy of alternative remedies; the flexibility and duration of the relief,
including the availability of waiver provisions; the relationship of the numerical goals to
the relevant labor market; and the impact of the relief on the rights of third parties.” United
States v. Paradise, 480 U.S. 149, 171 (1987). The RRF’s priority period satisfied many of
these factors. First, Congress previously considered and tried alternative means of reaching
underserved minority populations. For example, the CARES Act stated that it was “the
sense of the Senate that the [SBA] Administrator should . . . ensure that the processing and
8 This conclusion is underscored by the fact that courts had previously upheld the
constitutionality of section 8(a) of the Small Business Act and the accompanying
regulations challenged here. See Cortez III Serv. Corp. v. NASA, 950 F. Supp. 357, 361
(D.D.C. 1996) (concluding that section “8(a) meets constitutional muster” because “the
legislation and related regulations are narrowly tailored”).
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disbursement of covered loans prioritizes . . . small business concerns owned and
controlled by socially and economically disadvantaged individuals . . . [and] women . . . .”
CARES Act § 1102(a)(2)(36)(P)(iv). In other legislation, Congress made efforts to reach
traditionally underserved communities through the use of set-asides. See Memo. from N.
Velázquez to Members, Chairwoman, Comm. on Small Bus., Full Committee Hybrid
Hearing: “State of the Small Business Economy in the era of COVID-19” at 7 (Feb. 4,
2021), https://perma.cc/JH7Z-26K8. Yet women- and minority-owned small businesses
continued to face challenges accessing federal relief. The racial classifications employed
during the RRF priority period were also “flexible in application,” Paradise, 480 U.S. at
177, because the race-based presumption could be rebutted and the SBA regulations
permitted individuals of any race to qualify as socially disadvantaged. See 13 C.F.R. §§
124.103(b)(3), 124.103(c)(1)-(2). That the priority period was “temporary” is another way
in which it was tailored to the governmental interest. Paradise, 480 U.S. at 178.
Finally, the 21-day priority period—at least in theory—“did not impose an
unacceptable burden on innocent third parties” Id. at 182. It only became problematic
because of the overwhelming demand and the risk that the RRF funds could expire before
the SBA began processing non-priority applications. But, in evaluating an assertion of
qualified immunity, a court must judge “[a]n official’s actions . . . in light of the
circumstances that confronted h[er], without the benefit of hindsight.” Brown v. Callahan,
623 F.3d 249, 253 (5th Cir. 2010). Both at the time the SBA issued its initial RRF guidance
in April 2021 and at the time the Unfunded Plaintiffs submitted their applications in early
May, it was far from clear that the appropriated funds would be so quickly exhausted. And
there was always the possibility that Congress would appropriate additional funds, as it had
for other pandemic-related federal relief programs. See supra II.C.1. If that were the case,
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then the priority period would have “only postpone[d]” access to RRF funds—a much
“lesser burden” than the denial of funding altogether. Paradise, 480 U.S. at 183. Because
the use of race- and sex-based classifications in the RRF were tailored in a number of
important ways, it would not have been evident to every reasonable official that the 21-day
priority period violated equal protection.9
B.
The Unfunded Plaintiffs Have Not Established that Administrator
Guzman Personally Participated in the Alleged Unlawful Conduct
Finally, Administrator Guzman is entitled to qualified immunity because Plaintiffs
have not established that she personally participated in the alleged constitutional violations.
To survive a motion to dismiss, “a plaintiff must plead that each Government-official
defendant, through the official’s own individual actions, has violated the Constitution.”
Iqbal, 556 U.S. at 676 (emphasis added). It is not sufficient, for example, to allege that the
defendant was the “principal architect” of a policy or “instrumental in [its] adoption,
promulgation, and implementation,” for these are conclusory allegations that are not
entitled to the presumption of truth. Id. at 669. Here, the Unfunded Plaintiffs do not allege
that Administrator Guzman personally reviewed or made any decisions regarding their
RRF applications. Nor do they allege that she created either the race- and sex-based
distinctions used during the 21-day priority period at issue here. To the contrary, the
Second Amended Complaint alleges that the ARPA “required Administrator Guzman to
give discriminatory preferences to restaurants owned by women and racial minorities.”
SAC at 1 (emphasis added).
Nor can the Unfunded Plaintiffs “plead sufficient factual matter to show” that
Administrator Guzman took any actions with respect to the RRF “for the purpose of
9 Indeed, members of Congress evidently believed that the classifications were lawful
when they enacted section 5003(c)(3)(A) of the ARPA.
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discriminating.” Iqbal, 556 U.S. at 677 (emphasis added). To overcome qualified
immunity, Plaintiffs must show that the Administrator adopted or implemented an
unconstitutional policy “because of, not merely in spite of, its adverse effects” on a
particular group. Id. at 681 (internal quotations omitted and emphasis added). But here
there is another obvious conclusion—that any challenged actions taken by the
Administrator during the first twenty-one days of the RRF were taken for the purpose of
complying with the statutory demand to “prioritize awarding grants to . . . small business
concerns owned and controlled by women . . ., veterans . . . , or socially and economically
disadvantaged” individuals. ARPA § 5003(c)(3)(A). Because the Unfunded Plaintiffs have
not plausibly alleged that the Administrator personally participated in the alleged unlawful
conduct, she is entitled to qualified immunity.
CONCLUSION
For the foregoing reasons, the motion to dismiss should be granted and Plaintiffs’
claims against Administrator Guzman in her individual capacity should be dismissed.
Dated: January 24, 2022
Respectfully submitted,
BRIAN M. BOYNTON
Acting Assistant Attorney General
Civil Division
C. SALVATORE D’ALESSIO, JR.
Acting Director, Constitutional Tort Staff
Torts Branch, Civil Division
ANDREA W. MCCARTHY
Senior Trial Counsel, Constitutional Tort Staff
Torts Branch, Civil Division
/s/ Juliana MacPherson Barrett
Juliana MacPherson Barrett, Trial Attorney
NY Bar No. 5270848
U.S. Department of Justice
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Civil Division, Constitutional Tort Staff
Ben Franklin Station, P.O. Box 7146
Washington, D.C. 20044
T: (202) 616-4326; F: (202) 616-4314
Juliana.M.Barrett@usdoj.gov
Counsel for Administrator Guzman
in her Individual Capacity
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