Notice of Supplemental Authority — Accordius Health at Asheville, LLC v. United States Small Business Administration (Dkt. 49, W.D.N.C.)

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The defendants' Notice of Supplemental Authority in Accordius Health at Asheville, LLC v. United States Small Business Administration, et al., Case No. 1:23-CV-00129-MR, in the U.S. District Court for the Western District of North Carolina, filed January 14, 2025. The notice brings to the court's attention Forest View Rehabilitation & Nursing Center, LLC v. U.S. Small Business Administration, No. 24-cv-1490, in which Judge Georgia N. Alexakis of the Northern District of Illinois granted summary judgment to the government. It quotes that decision as concluding that the SBA acted within its statutory authority in enacting the Corporate Group Rule and that the Rule was not arbitrary and capricious. The defendants note that the court rejected their alternative ratification argument and state that they disagree with that part.

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IN THE UNITED STATES DISTRICT COURT
         FOR THE WESTERN DISTRICT OF NORTH CAROLINA
                       ASHEVILLE DIVISION
                    CASE NO. 1:23-CV-00129-MR

                                             )
 ACCORDIUS HEALTH AT                         )
  ASHEVILLE, LLC,                            )
                                             )
                         Plaintiff,          )
                                             )
                    v.                       )
                                             )
 UNITED STATES SMALL                         )
  BUSINESS ADMINISTRATION,                   )
  et al.,                                    )
                                             )
                         Defendants.         )
                                             )

                NOTICE OF SUPPLEMENTAL AUTHORITY

      The Honorable Georgia N. Alexakis, United States District Judge for the

Northern District of Illinois, granted summary judgment to the Government

defendants and denied summary judgment to the PPP borrower plaintiff in Forest

View Rehabilitation & Nursing Center, LLC v. U.S. Small Business Administration,

No. 24-cv-1490, 2024 WL 5247837 (N.D. Ill. Dec. 30, 2024). The decision, a copy

of which is attached, is persuasive authority pertinent to this action challenging the

Corporate Group Rule, as the decision concluded that “the SBA acted within its

statutory authority when enacting the Corporate Group Rule,” 2024 WL 5247837 at

*9, and that “SBA’s promulgation of the Corporate Group Rule was not arbitrary


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       Case 1:23-cv-00129-MR          Document 49   Filed 01/14/25   Page 1 of 4

and capricious,” id. at *11. Defendants have raised those arguments in this action.

Defs. Br. 12-15 (Dkt. 35). (Although the District Court determined in Forest View

that SBA validly issued the Corporate Group Rule, that court rejected the alternative

contention that the EAA is subsequent legislation that ratified the Rule because the

court could not discern a “judicial consensus” on that point. 2024 WL 5247837 at

*9 n.2. Defendants respectfully disagree with that part of the opinion in Forest View,

which overlooks that a “judicial consensus” is not necessarily required for the

ratification inference to be properly drawn from a statute enacted after an agency

interpretation issues. Defs. Br. 21-22.)

      The District Court further determined that the agency validly applied the

Corporate Group Rule to the borrower plaintiff based on the agency conclusion that

“for purposes of the Corporate Group Rule” there was a relevant de facto

“partnership . . . subject to the $20 million corporate group limit,” 2024 WL 5247837

at *13, also consistent with Defendants’ arguments in this action, Defs. Br. 25-32.




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       Case 1:23-cv-00129-MR      Document 49     Filed 01/14/25   Page 2 of 4

Respectfully submitted, this the 14th day of January, 2025,

DENA J. KING                            BRIAN M. BOYNTON
UNITED STATES ATTORNEY                  Principal Deputy Ass’t Attorney General

s/Gill P. Beck                          BRIAN D. NETTER
GILL P. BECK                            Deputy Assistant Attorney General
Assistant United States Attorney
Chief, Civil Division                   JOSEPH E. BORSON
N.C. Bar No. 13175                      Assistant Branch Director
Room 233, US Courthouse
100 Otis Street                         s/Indraneel Sur
Asheville, NC 28801                     INDRANEEL SUR (DC No. 978017)
Telephone: 828-271-4661                 Senior Counsel
Fax: 828-271-4327                       United States Department of Justice
E-Mail: gill.beck@usdoj.gov             Civil Division, Federal Programs Branch
                                        P.O. Box 883, Ben Franklin Station
                                        Washington, D.C. 20044
                                        Telephone: 202-616-8488
                                        Fax: 202-616-8470
                                        E-mail: indraneel.sur@usdoj.gov
                                        Counsel for Defendants




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       Case 1:23-cv-00129-MR     Document 49     Filed 01/14/25   Page 3 of 4

             Certification Under Standing Order Published June 27, 2024
      Pursuant to the Standing Order of this Court entered June 18, 2024 and
published to the Bar of the Western District on June 27, 2024, the undersigned
hereby certifies:
      1.     No artificial intelligence was employed in doing the research for the
preparation of this document, with the exception of such artificial intelligence
embedded in the standard on-line legal research sources Westlaw, Lexis, FastCase,
and Bloomberg;
      2.     Every statement and every citation to an authority contained in this
document has been checked by an attorney in this case as to the accuracy of the
proposition for which it is offered, and the citation to authority provided.
      This the 14th day of January 2025.
                                          s/Indraneel Sur
                                          INDRANEEL SUR (DC No. 978017)
                                          Senior Counsel
                                          United States Department of Justice
                                          Civil Division, Federal Programs Branch




      Case 1:23-cv-00129-MR     Document 49     Filed 01/14/25   Page 4 of 4

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