Court filing
Government Motion to Dismiss for Lack of Jurisdiction — Vitolo v. Guzman (E.D. Tenn.)
Filed August 6, 2021 in Vitolo v. Guzman; one of 25 filings from this case.
Record facts
| Court | U.S. District Court for the Eastern District of Tennessee, Knoxville Division |
|---|---|
| Filed | 2021-08-06 |
U.S. District Court for the Eastern District of Tennessee, Knoxville Division · No. 3:21-cv-00176-TRM-DCP · Doc. 49-1 · 2021-08-06 · Docket on CourtListener
Full text
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IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF TENNESSEE
KNOXVILLE DIVISION
ANTONIO VITOLO, et al.,
Plaintiffs,
v.
ISABELLA CASILLAS GUZMAN,
Defendant.
Case No. 3:21-cv-176-TRM-DCP
Chief Judge Travis R. McDonough
Magistrate Judge Debra C. Poplin
DEFENDANT’S MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT
OF DEFENDANT’S MOTION TO DISMISS THE AMENDED COMPLAINT FOR
LACK OF JURISDICTION
Congress enacted the American Rescue Plan Act (“ARPA” or “Act”) in March 2021 as a
continuation of the federal government’s efforts to provide relief to American individuals and
businesses suffering the economic and public health effects of the COVID-19 pandemic. The Act
allocated $28.6 billion towards a Restaurant Revitalization Fund (“RRF” or “Fund”) to be
administered by the Small Business Administration (“SBA”) that could grant eligible restaurants relief
equal to revenue losses caused by the pandemic. SBA began accepting RRF applications from eligible
restaurants on May 3, 2021. Due to overwhelming demand, claims on the RRF rapidly dwarfed the
allocation of funds set aside by Congress and, accordingly, the SBA stopped accepting RRF
applications on May 24, 2021. It continued paying out RRF awards until June 30, 2021, at which point
the Fund became exhausted. The Fund is now closed.
In creating the RRF, Congress crafted a narrow plan that permitted all eligible restaurants to
apply for relief but that instructed the SBA, for the first 21 days the RRF operated, to prioritize
processing claims from restaurants owned and controlled by women, veterans, and/or socially and
economically disadvantaged individuals.1 This priority period operated from the RRF’s inauguration
1 In crafting this priority period, Congress was motivated by extensive evidence showing its
prior COVID-19 relief efforts exacerbated existing inequalities between different groups of small
business owners—including women and socially and economically disadvantaged restaurant owners—
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on May 3, 2021 through May 24, 2021. But consistent with the statute, after the priority period ended
SBA began processing non-priority applications, including the Plaintiffs’ applications, based on its
ordinary review practices.
Plaintiffs, restaurants and restaurant owners who applied for RRF awards, filed this lawsuit to
challenge the priority period provision of the RRF on the basis that it unconstitutionally discriminates
on the basis of race and sex. But this case no longer presents any type of “live controversy” that falls
within this Court’s jurisdiction, and accordingly the case should be dismissed. First, the SBA disbursed
the full amount of the RRF award sought by Plaintiffs Antonio Vitolo and Jake’s Bar & Grill on June
1, 2021, and thus this Court cannot provide any further relief to those Plaintiffs. Second, by the time
the Amended Complaint added the Additional Plaintiffs to this litigation, the priority period had
ended. As this Court recognized in a prior opinion, once the priority period ended, SBA began
processing non-priority applications (including those submitted by the Additional Plaintiffs) under its
ordinary review practices. Because of these operational changes, the Additional Plaintiffs’ claims are
moot because the injunctive or declaratory relief sought in the Amended Complaint would not affect
their legal rights. Finally, because the RRF is now exhausted, there is no further relief the Court can
provide, and Plaintiffs’ claims are therefore moot. Accordingly, this case should be dismissed for lack
of subject matter jurisdiction.
BACKGROUND
A. The American Rescue Plan Act and the Restaurant Revitalization Fund
On March 11, 2021, Congress enacted the American Rescue Plan Act, which provides
widespread COVID-related relief to the American people and businesses, including restaurants.
American Rescue Plan Act, Pub. L. No. 117-2 (2021) (“ARPA”). As relevant here, section 5003 of
ARPA established the RRF and appropriated $28.6 billion to the fund for fiscal year 2021. ARPA §
due to past and present discrimination within public and private lending markets. Congress also
analyzed similar evidence showing that these businesses have borne an outsized burden during the
pandemic due to past and present discrimination, including the lack of access to earlier COVID-19
relief funds.
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5003(b)(1)-(2). Section 5003 instructs that in the first 21 days that awards are issued through RRF,
the SBA:
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). The details of that prioritization scheme are set out in detail in Defendant’s
earlier filings and in this Court’s prior order. See, e.g., Def.’s Opp. to Pls’. Mot. for Temporary
Restraining Order 2-8, ECF No. 18 (“Def.’s TRO Opp.”); Mem. Op. 1-5, ECF No. 24 (“First TRO
Op.”).
SBA began accepting applications through the RRF portal on May 3, 2021. See SBA, SBA
Administrator Guzman Announces Application Opening for $28.6 Billion Restaurant Revitalization Fund (Apr.
27,
2021),
https://www.sba.gov/article/2021/apr/27/sba-administrator-guzman-announces-
application-opening-286-billion-restaurant-revitalization-fund. Per section 5003, the opening of the
RRF application process triggered the beginning of the 21-day priority period. Declaration of John
A. Miller ¶¶ 7-8, ECF No. 41-1 (“First Miller Decl.”). Consistent with those provisions, SBA began
processing applications from applicants who self-certified as qualifying for priority status. Id ¶ 12.
Demand for RRF awards was immediate and overwhelming from priority and non-priority
applicants alike. On May 5, 2021, SBA reported that it had received approximately 186,000
applications in two days from both priority and non-priority businesses. See SBA, Administrator Isabella
Casillas Guzman Announces Initial Results of Restaurant Revitalization Fund (May 5, 2021),
https://www.sba.gov/article/2021/may/05/administrator-isabella-casillas-guzman-announces-
initial-results-restaurant-revitalization-fund. On May 18, 2021, SBA announced that it had received
more than 303,000 applications, requesting over $69 billion in funds. SBA, Last Call: Administrator
Guzman Announces Final Push for Restaurant Revitalization Fund Applications (May 18, 2021),
https://www.sba.gov/article/2021/may/18/last-call-administrator-guzman-announces-final-push-
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restaurant-revitalization-fund-applications. SBA announced that it would close the RRF application
portal on Monday, May 24, at 8 p.m. ET. Id.
During the priority period from May 3 to May 24, 2021, SBA prioritized initiating processing
of RRF applications from veteran-owned and women-owned restaurants, as well as restaurants owned
by socially and economically disadvantaged individuals. First Miller Decl. ¶ 12. After the expiration
of the priority period, SBA made operational changes in order to comply with section 5003’s
instruction that the agency prioritize “awarding grants to eligible entities” only during the “initial 21-
day period.” ARPA § 5003(c)(3)(A). On May 25, 2021, SBA began processing applications from non-
priority applicants with FY 2019 gross revenues less than $50,000. First Miller Decl. ¶ 13. On May
27, 2021, SBA began initiating the processing of non-priority applications. Id. ¶ 14. SBA booked the
final priority applications that were funded into SBA’s E-Tran system for disbursement of funds on
the afternoon of May 27, 2021. Id. ¶ 16; see also Supp. Decl. of John Miller ¶ 10, ECF No. 46-1
(“Second Miller Decl.”). This group of approximately 2,002 priority applicants had previously been
approved prior to the time SBA stopped further processing of priority applications on May 26, 2021,
but the applications were returned due to technical errors. First Miller Decl. ¶ 16. The funds for these
applicants were disbursed by the Treasury Department on the morning of May 28, 2021. Id.
On June 30, 2021, SBA completed distribution of the $28.6 billion allocated to the RRF and
announced that the fund had become exhausted. See SBA, SBA Administrator Announces Closure of
Restaurant Revitalization Fund Program (July 2, 2021), https://www.sba.gov/article/2021/jul/02/sba-
administrator-announces-closure-restaurant-revitalization-fund-program.
B. Plaintiffs and This Litigation
On May 12, 2021, Plaintiffs Antonio Vitolo and Jake’s Bar and Grill LLC (collectively, the
“Original Plaintiffs”) filed the initial complaint in this action challenging the RRF priority period. See
generally Compl., ECF No. 1. The Original Plaintiffs moved for a temporary restraining order and a
preliminary injunction, both of which were denied by this Court. See Order, ECF No. 20; Order,
Mem. Op. 7, ECF No. 32 (“PI Op.”). On May 27, 2021, the Sixth Circuit issued an opinion enjoining
the SBA to “fund the plaintiffs’ grant application, if approved, before all later-filed applications,
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without regard to processing time or the applicants’ race or sex.” Vitolo v. Guzman, 999 F.3d 353, 366
(6th Cir. 2021). On June 1, 2021, SBA disbursed $104,590.20 in RRF funds to Jake’s Bar and Grill
LLC. First Miller Decl. ¶ 20.
Also on June 1, 2021, Plaintiffs filed an Amended Complaint in this action that added several
Additional Plaintiffs, each of whom identifies as a white male and each of whom contends that “he
was denied a priority preference based on his race and gender.” See Am. Compl. ¶¶ 6-9. On June 2,
2021, the Additional Plaintiffs filed an emergency motion asking this Court to enjoin Defendant “to
pay Additional Plaintiffs’ grant applications, if approved, before all other later-filed applications,
without regard to processing time or the applicants’ race or sex.” See Pls.’ Second Emergency Mot.
for a Temporary Restraining Order & Preliminary Injunction 1, ECF No. 39 (“Add’l Pls.’ TRO Mot.”).
On June 10, 2021, this Court denied that motion on the basis that the Additional Plaintiffs’ claims
were moot. See Mem. Op. 8, ECF No. 44 (“Second TRO Op.”). After the priority period ended,
SBA initiated processing and consideration of each of the Additional Plaintiffs’ applications; however,
the RRF was exhausted before the Additional Plaintiffs’ applications were funded. Decl. of John A.
Miller ¶¶ 12-13 (“Third Miller Decl.”).
LEGAL STANDARD
Under Federal Rule of Civil Procedure 12(b)(1), a party may seek dismissal of a claim for lack
of jurisdiction. When a party moves to dismiss on 12(b)(1) grounds, “[t]he plaintiff has the burden of
proving jurisdiction in order to survive the motion.” Allen v. Whitmer, No. 21-1019, 2021 WL 3140318,
at *2 (6th Cir. July 26, 2021) (quoting Rogers v. Stratton Indus., Inc., 798 F.2d 913, 915 (6th Cir. 1986)).
Questions of mootness are jurisdictional, and thus properly governed by Rule 12(b)(1). See Demis v.
Sniezek, 558 F.3d 508, 512 (6th Cir. 2009) (“Because the exercise of judicial power under Article III of
the Constitution depends on the existence of a live case or controversy, mootness is a jurisdictional
question.”).
“Rule 12(b)(1) motions to dismiss for lack of subject-matter jurisdiction generally come in two
varieties: a facial attack or a factual attack.” Gentek Bldg. Products, Inc. v. Sherwin-Williams Co., 491 F.3d
320, 330 (6th Cir. 2007) (citing Ohio Nat’l Life Ins. Co. v. United States, 922 F.2d 320, 325 (6th Cir. 1990)).
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A facial attack challenges the sufficiency of the pleading, while a factual attack challenges the
jurisdictional facts set forth in the complaint. Id. When a court considers a facial attack, it takes the
allegations in the complaint as true. Id. “Where, on the other hand, there is a factual attack” on
subject-matter jurisdiction, “no presumptive truthfulness applies to the allegations” and the district
court may consider evidence outside the pleadings in assessing whether subject-matter jurisdiction
exists. Id.
ARGUMENT
“Article III, § 2 of the United States Constitution vests federal courts with jurisdiction to
address ‘actual cases and controversies,’” and “[f]ederal courts are prohibited from rendering decisions
that ‘do not affect the rights of the litigants.’” Thomas v. City of Memphis, 996 F.3d 318, 323 (6th Cir.
2021) (quoting Coal. for Gov’t Procurement v. Fed. Prison Indus., Inc., 365 F.3d 435, 458 (6th Cir. 2004)).
Accordingly, “dismissal on mootness grounds is mandatory ‘[i]f after filing a complaint the claimant
loses a personal stake in the action, making it ‘impossible for the court to grant any effectual relief.”
Thomas, 996 F.3d at 330 (6th Cir. 2021) (quoting Hrivnak v. NCO Portfolio Mgmt, Inc., 719 F.3d 563, 567
(6th Cir. 2013)).
The Amended Complaint should be dismissed under Rule 12(b)(1) because Plaintiffs have
either received all of their requested relief or seek relief that is no longer available for the Court to
grant. First, SBA has disbursed funds to the Original Plaintiffs for the full amount of their requested
award. The relief requested in the Amended Complaint thus would have no impact on their legal
rights, and their claims are therefore moot. Second, the Additional Plaintiffs’ claims are moot because
the priority period expired by its own terms on May 24, 2021, and SBA made a number of operational
changes that provided the Additional Plaintiffs with essentially the same relief that they were seeking
in Court. Finally, the RRF is now exhausted and closed, and no further awards can be paid out unless
Congress elects to allocate more money to the RRF. Accordingly, Plaintiffs’ claims are moot, and
there is thus no further action for the Court to take with respect to Plaintiffs’ claims save to dismiss
them for lack of jurisdiction.
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I. Plaintiffs Vitolo and Jake’s Bar and Grill LLC’s Claims Are Moot Because They Have
Already Received Their Requested Injunctive Relief.
As explained above, Plaintiffs Vitolo and Jake’s Bar and Grill LLC brought the initial
Complaint in this action, arguing that the RRF’s priority period unconstitutionally discriminates on
the basis of race and sex. The Original Plaintiffs further sought a temporary restraining order and a
preliminary injunction prohibiting the SBA from paying out any awards from the RRF “unless
Defendant begins processing applications and paying grants in the order that the applications were
received, without regard to the race or gender of the applicants.” See Pls.’ Mot. for Temporary
Restraining Order 21, ECF No. 12 (“Original Pls.’ TRO Mot.”). This court denied the Original
Plaintiffs’ motions, but on May 27, 2021, the Sixth Circuit granted the Original Plaintiffs’ motion for
an injunction pending appeal. Vitolo, 999 F.3d at 366. That injunction required SBA to “fund the
[Original Plaintiffs’] grant application, if approved, before all later-filed applications, without regard
to processing time or the applicants’ race or sex.” Id.
On June 1, 2021, SBA disbursed an RRF award of $104,590.20 to Jake’s Bar and Grill LLC
and Mr. Vitolo. First Miller Decl. ¶ 20. This amount represented the full amount requested by the
Original Plaintiffs in their RRF application. Decl. of Antonio Vitolo ¶ 13, ECF No. 12-3. Because
the Original Plaintiffs have had their application processed and funded, any further injunctive or
declaratory relief by this Court would not affect their legal rights. As such, the Original Plaintiffs’
claims are moot and must be dismissed. See Second TRO Op. 4 (“Federal courts are prohibited from
rendering decisions that ‘do not affect the rights of the litigants’”) (citation omitted); see also Already,
LLC v. Nike, Inc., 568 U.S. 85, 91 (2013) (quoting Alvarez v. Smith, 558 U.S. 87, 93 (2009)) (“No matter
how vehemently the parties continue to dispute the lawfulness of the conduct that precipitated the
lawsuit, the case is moot if the dispute ‘is no longer embedded in any actual controversy about the
plaintiffs’ particular legal rights.’”); see also L.A. Cty. v. Davis, 440 U.S. 625, 631 (1979) (“[A] case is
moot when the issues presented are no longer ‘live’ or the parties lack a legally cognizable interest in
the outcome.’”).
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II. The Additional Plaintiffs’ Claims Are Moot Because Their Requested Relief Would
Not Affect Their Legal Rights.
The Amended Complaint, which added the Additional Plaintiffs, was filed on June 1, 2021,
one week after the statutory priority period expired. See generally Am. Compl.; see also Second TRO
Op. 5. By the time the Additional Plaintiffs joined the case, the SBA had already (1) begun processing
non-priority applications, including the Additional Plaintiffs’ applications, based on its ordinary review
practices; and (2) paused processing of priority applications until it completed processing for all
previously filed non-priority applications.2 First Miller Decl. ¶¶ 14-15; see also Second TRO Op. 5. As
a result of these operational changes, SBA initiated processing and consideration of each of the
Additional Plaintiffs’ applications. First Miller Decl. ¶¶ 22-26.
Accordingly, when the Additional Plaintiffs moved for a temporary restraining order and
preliminary injunction ordering Defendant “to pay Additional Plaintiffs’ grant applications, if
approved, before all later-filed applications, without regard to processing time or the applicant’s race
or sex,” see Add’l Pls.’ TRO Mot. 1, this Court held that there was “no need” for such an order because
the SBA was “already processing the Additional Plaintiffs’ applications without regard to race or sex,
so an injunction would not ‘affect the rights of the litigants’ because ‘the issues presented are no longer
live.’” Second TRO Op. 6. The Court held that SBA’s operational changes “irrevocably eradicated
the effects of the alleged Constitutional violation against the Additional Plaintiffs,” and thus the
Additional Plaintiffs’ claims were moot.3 Id.
2 The SBA stated that it would resume processing priority applications once it completed
processing all previously filed non-priority applications “if the RRF is not first exhausted.” First Miller
Decl. ¶ 15. Because the RRF was exhausted before SBA finished processing all previously filed non-
priority applications, SBA did not resume processing priority applications.
3 The one aspect of the Additional Plaintiffs’ requested relief that they did not receive was
their request to have their RRF applications paid “before all other later-filed applications, without regard
to processing time.” Add’l Pls.’ TRO Mot. 1 (emphasis added). However, as this Court correctly noted
in its earlier order “the case at bar does not challenge the ordinary internal review practices of SBA in
processing RRF applications,” and after the expiration of the priority period and SBA’s corresponding
operational changes, “processing time [was] no longer affected by the race- or gender-based priority
period challenged in this suit.” Second TRO Op. 6-7; see also Def.’s Response to Pls,’ Second
Emergency Motion 8-9, ECF No. 41 (“Second TRO Opp”) (providing examples of differences in
processing times not based on an applicant’s race or gender). Accordingly, that aspect of the
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The same reasoning applies to the Plaintiffs’ remaining requests for relief: (1) “a declaratory
judgment that the race- and gender-based classifications under Section 5003 of ARPA are
unconstitutional,” and (2) “an order permanently enjoining Defendant from applying race- and
gender-based classifications when determining eligibility or priority consideration for grants under
Section 5003 of ARPA.” See Am. Compl. at 9-10 (Relief Requested). Because the priority period
expired before Plaintiffs filed their Amended Compliant and because SBA initiated processing of the
Additional Plaintiffs’ applications and paused priority applications to mitigate any “head start”
received by those applications, a declaratory judgment that the priority period was unconstitutional
would have no effect on the Additional Plaintiffs’ legal rights. Indeed, such a declaratory judgment
would be a classic example of an advisory opinion. See Thomas, 996 F.3d at 330 (holding that after the
defendant changed its policy, an injunction or declaration declaring that policy unconstitutional
“would amount to exactly the type of advisory opinion that Article III prohibits”). A permanent
injunction barring Defendant from applying race- and gender-based classifications when determining
eligibility or priority consideration for RRF award is similarly unnecessary. Id. (affirming district
court’s dismissal on mootness grounds where the requested injunction would lack “any practical
effect”).4
Additional Plaintiffs’ requested relief had no relationship to the legal claims at issue in the case, and
this Court therefore correctly declined to issue an injunction to that effect.
4 Because Plaintiffs filed their operative complaint on June 1, 2021, after the expiration of the
challenged priority period, the Plaintiffs also lack standing to pursue their requested relief because they
have not shown that they have suffered an actual or imminent injury that is likely to be redressed by
an order of this Court. Although this Court previously held on May 12, 2021, that the Original
Plaintiffs properly alleged standing (see PI Op. 4-5 (citing Aiken v. Hackett, 281 F.3d 516, 519) (6th Cir.
2002)), that ruling does not confer standing on all plaintiffs in perpetuity. Standing is evaluated at the
time the operative complaint is filed, which in this case is June 1, 2021. See Rockwell Int’l Corp. v. United
States, 549 U.S. 457, 473-74 (2007); see also Holt v. Lauderdale-Hamilton, Inc., No. 2:16-cv-00092-MCLC,
2017 WL 887380, at *3 (E.D. Tenn. Mar. 1, 2017). By the time the Amended Complaint was filed,
the priority period had expired by its own terms, and SBA had made corresponding operational
changes to its processing and consideration of RRF applications, including changes that mitigated any
“processing head start” for priority applicants. Thus, even if Plaintiffs were injured during the priority
period, that injury was no longer ongoing at the time the Amended Complaint was filed. See City of
Los Angeles v. Lyons, 461 U.S. 95, 102 (1983); see also Hange v. City of Mansfield, Ohio, 257 F. App’x 887,
891-92 (6th Cir. 2007). Moreover, for all the reasons discussed above, Plaintiffs’ claims were not likely
to be redressed by a favorable decision of this Court because SBA’s actions had already “irrevocably
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Further, because the RRF is now exhausted, SBA is no longer processing or funding any
applications—priority or otherwise—there is accordingly no further action for the Court to take with
respect to the Additional Plaintiffs’ requested relief. See Brandywine, Inc. v. City of Richmond, 359 F.3d
830, 836 (6th Cir. 2004) (“We can neither declare unconstitutional nor enjoin the enforcement of a
provision that is no longer in effect.”); see also Fieger v. Gromek, 373 F. App’x 567, 572 (6th Cir. 2010).5
Thus, even if a live case or controversy did exist when the Plaintiffs filed their Amended Complaint
and moved for a temporary restraining order or preliminary injunction (and it did not), any such
controversy has ceased to exist in view of the RRF’s exhaustion. The Amended Complaint must
therefore be dismissed for lack of jurisdiction.
CONCLUSION
For the foregoing reasons, the Amended Complaint should be dismissed.
Dated: August 6, 2021
Respectfully submitted,
BRIAN M. BOYNTON
Acting Assistant Attorney General
Civil Division
LESLEY FARBY
Assistant Branch Director
s/Alexandra R. Saslaw
ALEXANDRA R. SASLAW
Trial Attorney
eradicated the effects of the alleged Constitutional violation.” Second TRO Op. 7. After all, “Article
III standing ultimately turns on whether a plaintiff gets something (other than moral satisfaction) if the
plaintiff wins.” Hange, 257 F. App’x at 892 (quoting Drutis v. Rand McNally & Co., 499 F.3d 608, 612
(6th Cir. 2007)); see also Friends of Tims Ford v. Tenn. Valley Auth., 585 F.3d 955, 970-71 (6th Cir. 2009).
But even if the Additional Plaintiffs had standing to bring their claims on June 1, 2021, those claims
are now moot.
5 Although these cases involve situations where the policy was changed, rather than expired
by its own terms, the same logic should apply here: the Court cannot enjoin enforcement of a
provision that is no longer in effect because such an action would no longer affect the legal rights of
the parties involved. See Trump v. Hawaii, 138 S. Ct. 377, 377 (2017) (per curiam) (holding that because
the challenged provisions of the Executive Order “have ‘expired by [their] own terms,’ the appeal no
longer presents a ‘live case or controversy’”).
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United States Department of Justice
Civil Division, Federal Programs Branch
P.O. Box 883
Washington, DC 20044
Phone: (202) 514-4520
alexandra.r.saslaw@usdoj.gov
Attorneys for Defendant
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