Reply in Support of Petition for Permission to Appeal — 112 GENESEE STREET, LLC v. United States, No. 25-108 (Fed. Cir.)

Summary

A reply brief filed November 27, 2024 in the Federal Circuit, No. 25-108, Plaintiffs-Respondents, v. The United States, Defendant-Petitioner (Fed. Cl. No. 23-cv-1876C). The Department of Justice supports its petition for permission to appeal under 28 U.S.C. § 1292(d) an interlocutory order of the Court of Federal Claims dated July 24, 2024. The reply argues that the trial court's decision conflicts with Maine Community Health, Lummi and Eastport, that section 9009c is not money-mandating for Restaurant Revitalization Fund (RRF) grants, and that district courts have heard similar APA challenges to the SBA's processing of RRF applications. It adds that an immediate appeal would materially advance the case, and is signed by Rebecca S. Kruser and William J. Grimaldi.

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Case: 25-108 Document: 12 Page: 1 Filed: 11/27/2024

No. 25-108
[FED. CL. No. 23-cv-1876C]
IN THE UNITED STATES COURT OF APPEALS
FOR THE FEDERAL CIRCUIT
112 GENESEE STREET, LLC, et al,
Plaintiffs-Respondents,
v.
THE UNITED STATES,
Defendant-Petitioner.
REPLY IN SUPPORT OF PETITION FOR PERMISSION TO APPEAL AN
INTERLOCUTORY ORDER OF THE COURT OF FEDERAL CLAIMS
DATED JULY 24, 2024, IN CASE NO. 23-CV-1876
PURSUANT TO 28 U.S.C. § 1292(d)

BRIAN M. BOYNTON
Principal Deputy Assistant Attorney General

PATRICIA M. McCARTHY
Director

WILLIAM J. GRIMALDI
Assistant Director

REBECCA S. KRUSER
Senior Trial Counsel
Commercial Litigation Branch
Civil Division
Department of Justice
P.O. Box 480
Ben Franklin Station
Washington, D.C. 20044
Telephone: (202) 305-2035
Email: rebecca.s.kruser@usdoj.gov
November 27, 2024 Attorneys for Defendant-Petitioner
Case: 25-108 Document: 12 Page: 2 Filed: 11/27/2024

TABLE OF CONTENTS

PAGE

ARGUMENT ............................................................................................................................1

I. The Questions Presented are Controlling Questions of Law as to
Which There is Substantial Ground For Difference of Opinion ..........................1

II. Immediate Appeal Will Materially Advance The Ultimate Termination Of
This Case ...................................................................................................................... 10

CONCLUSION ..................................................................................................................... 11

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Case: 25-108 Document: 12 Page: 3 Filed: 11/27/2024

TABLE OF AUTHORITIES
CASES PAGE(S)
Eastport S. S. Corp. v. United States,
372 F.2d 1002 (Ct. Cl. 1967) .................................................................................................3

Lummi Tribe Of The Lummi Reservation, Washington v. United States,
870 F.3d 1313 (Fed. Cir. 2017) ............................................................................................. 2

Me. Cmty. Health Options v. United States,
590 U.S. 296 (2020) ...................................................................................................... passim

Orgain, Inc. v. N. Innovation Holding Corp.,
No. 8:18-cv-01253, 2021 WL 6103528 (C.D. Cal. Sept. 29, 2021) ................................. 5

Samish Indian Nation v. United States,
657 F.3d 1330(Fed. Cir. 2011) rehrg. & rehrg. en banc denied, vacated as moot,
568 U.S. 936 (2012) ......................................................................................................... 5, 10

W6 Rest. Grp., Ltd. v. Guzman,
No. 1:21-CV-2361, 2024 WL 1973132 (N.D. Ohio May 3, 2024) ................................. 6
STATUTES
28 U.S.C. § 1292(d)(2).................................................................................................. 1, 10, 11

ii
Case: 25-108 Document: 12 Page: 4 Filed: 11/27/2024

IN THE UNITED STATES COURT OF APPEALS
FOR THE FEDERAL CIRCUIT

112 GENESEE STREET, LLC, et al., )
)
Plaintiffs-Respondents, )
)
v. )
) No. 25-108
THE UNITED STATES, )
)
Defendant-Petitioner. )

REPLY IN SUPPORT OF PETITION FOR PERMISSION TO APPEAL

Pursuant to the Court’s Order of November 6, 2024 (ECF No. 3), the United

States respectfully submits this reply in support of its petition.

ARGUMENT

I. The Questions Presented are Controlling Questions of Law as to
Which There is Substantial Ground For Difference of Opinion

The first factor for determining whether an interlocutory order is ripe for

appeal is whether it involves a controlling question of law. See 28 U.S.C. § 1292(d)(2).

In their response, plaintiffs do not discuss this issue. Plaintiffs thus have conceded

this element of the statutory standard.

Regarding the next element, plaintiffs fail to refute our showing that there are

several reasons why the trial court’s decision is erroneous or, at a minimum, there is a

substantial ground for difference of opinion. First, the trial court’s decision conflicts

with binding precedent regarding grant programs. The Supreme Court decision in

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Maine Community Health and this Court’s decisions in Lummi and National Center for

Manufacturing Sciences explain that claims asserting that an agency erroneously

interpreted a statute or regulation governing the disbursement or calculation of grant

amounts, causing the plaintiff not to receive funding to which it believes it is entitled,

are not properly heard under the Tucker Act. Plaintiffs’ response does not engage

with this authority. Plaintiffs merely argue that these cases are distinguishable, based

on their own characterization of their complaint as a basic, backwards-looking request

for money damages. See Pls. Resp. at 1-2, 9-10.

Plaintiffs’ attempt to distinguish these cases, however, is directly refuted by this

Court’s decision on interlocutory appeal in Lummi. In Lummi, this Court reversed the

trial court’s determination that the Native American Housing Assistance and Self-

Determination Act of 1996 (NAHASDA) was money-mandating. 870 F.3d 1313,

1315 (Fed. Cir. 2017). The relevant sections of NAHASDA required the agency to

make grants for affordable housing to Indian tribes based on a specific regulatory

formula. Id. The agency determined that it had made overpayments and deducted

these amounts from subsequent grant allocations. Id. The plaintiff tribe claimed that

the agency misapplied the NAHASDA formula when it calculated the overpayment

and thus improperly deprived them of grant funds. Id. at 1316. This Court reversed

the trial court and held that under NAHASDA, plaintiffs “are not entitled to an actual

payment of money damages, in the strictest terms; their only alleged harm is having

been allocated too little in grant funding.” See id.
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Plaintiffs pursue the same kind of theory here. Plaintiffs themselves explain

that they seek money damages for “harm” caused by the Small Business

Administration’s (SBA) failure to follow the “statutory command to award grants in

the order applications were received.” Pls. Resp. at 3-4. Plaintiffs pursue a tort-like

theory that they should receive “compensation” for the “monetary value” of

“injuries” caused by SBA’s statutory violations. See id. at 17, 19. At base, plaintiffs

cannot point to any direct statutory obligation to pay them Restaurant Revitalization

Fund (RRF) grants. Instead, plaintiffs make an indirect claim that they were harmed

by SBA’s incorrect statutory interpretation that in turn caused SBA to misallocate the

money to other applicants who may have applied later in time.

Indeed, plaintiffs attribute the fact that they did not receive RRF grants to

SBA’s alleged unlawful, arbitrary, capricious, and negligent acts or omissions. The

trial court brushed aside this problem as merely inartful pleading. Appx15. However,

this Court long ago rejected the idea that the United States is “liable under the Tucker

Act for such a commercial injury resulting from a failure or wrong done in the course

of the regulatory process.” Eastport S. S. Corp. v. United States, 372 F.2d 1002, 1009

(Ct. Cl. 1967). The trial court’s decision is in conflict with this binding precedent.

Plaintiffs also incorrectly contend that there can be no substantial ground for

difference of opinion because section 9009c is unquestionably money-mandating. Pls.

Resp. at 1. Plaintiffs suggest that Maine Community Health has resolved all of the

pertinent legal questions here against the Government. Id. at 6-9. However, plaintiffs
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ignore that the statutory language here is dissimilar to that at issue in Maine Community

Health. Maine Community Health does not support the idea that the word “shall”

somewhere near the word “award,” “grant,” and/or “pay,” is all that matters and that

the rest of the statutory provision or context should be ignored. See id. at 8-9.

Notably, in Maine Community Health, the statute stated that the Secretary of

Health and Human Services “shall pay” insurers for losses exceeding the statutory

threshold and the subject of this language was payment to an identifiable group, i.e.,

insurers with unprofitable plans. See Me. Cmty. Health Options v. United States, 590 U.S.

296, 302 (2020). By contrast, in section 9009c, Congress did not state that SBA shall

award a grant to any or all eligible entities or to eligible entities who applied at a

certain date or time or met certain criteria. Section 9009c does not define any group

of applicants entitled to recover under the statute. See Pls. Resp. at 11. Plaintiffs’

argument, like the trial court’s opinion, instead tries to create a damages remedy based

on an agency’s asserted non-compliance with a non-monetary, administrative

instruction.

To the extent that plaintiffs are asserting that the statute requires payment to all

eligible entities in general, this argument not only misconstrues the statute but is

contrary to the trial court’s decision. See id. The trial court specifically stated that,

“[i]mportantly, section 9009c is not an unlimited money-mandate requiring the

payment of grants to all eligible entities” and it “does not provide a general

entitlement and is not a money-mandating grant to all eligible entities[.]” Appx19.
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The trial court also acknowledged that section 9009c does not “literally” command

payment to all eligible entities. Appx22. The trial court thus notably did not find this

case to be directly resolved by Maine Community Health.

The second substantial ground for difference of opinion discussed in our

petition is that this case presents an issue of first impression regarding the import of

this Court’s holding addressing discretionary payment schemes. In its opinion, the

trial court considered the statutory language to be sufficiently non-discretionary as to

mandate payment. However, the court also discussed the Federal Circuit’s decisions

in Samish Indian Nation, Perri, and Doe, which set forth when an apparently

discretionary statute can be money-mandating. Appx17-23. However, the

Government is unaware of any decision of this Court that has applied these cases to

find an “individual right” to receive money from the Government based on a claimed

failure of an agency in administering a program. See Appx19, Appx22.

Plaintiffs’ response to this argument is that an “alternative holding” cannot

support a request for interlocutory appeal. Pls. Resp. at 13. Plaintiffs can only muster

a non-binding, unreported case from a district court as support. See id. (citing Orgain,

Inc. v. N. Innovation Holding Corp., No. 8:18-cv-01253, 2021 WL 6103528 (C.D. Cal.

Sept. 29, 2021)). Regardless of the persuasive strength of Orgain, it is inapposite.

Here, the trial court’s reasoning on discretionary payment schemes was not a separate,

alternate holding, but instead an alternate basis for its conclusion that section 9009c is

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money-mandating. The trial court’s application of Samish Indian Nation, Perri, and Doe

relates to this same controlling question of law for which we seek certification.

The third substantial ground for difference of opinion discussed in our petition

is that the trial court’s opinion is in tension with the fact that other cases challenging

the administration of the RRF have been filed in the United States district courts.

Notably, in the W6 Restaurant Group case, the plaintiffs asserted an APA claim based

on the same theory that SBA “did not process applications for RRF grants in the

order in which they were received[.]” W6 Rest. Grp., Ltd. v. Guzman, No. 1:21-CV-

2361, 2024 WL 1973132, at *2 (N.D. Ohio May 3, 2024), appeal docketed, No. 24-3483

(6th Cir. June 5, 2024). Contrary to plaintiffs’ assertion, our argument does not ignore

that the district court plaintiffs have brought APA claims requesting equitable relief,

whereas here plaintiffs have carefully styled their complaint as one for money

damages. Pls. Resp. at 18-19. Rather, this just highlights the core problem with

plaintiffs’ claim here – the trial court should not have exercised jurisdiction over a

disguised APA claim just because plaintiffs’ preferred outcome is to receive money.

See Appx12-13, Appx24-26. It is highly relevant that district courts have accepted

APA challenges to SBA’s method of paying out the RRF grants, despite the ultimate

redressability problems.

Plaintiffs do not address our point that this Court should have the opportunity

to address whether this statute indeed presents an area of concurrent jurisdiction with

the district courts. See Appx14. The cases cited by the trial court are inapposite.
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Furthermore, plaintiffs repeat the trial court’s erroneous inference that because the

district courts uniformly dismissed these APA suits due to lack of standing or

mootness, the trial court possesses Tucker Act jurisdiction. Pls. Resp. at 20; Appx11.

This holding would improperly make the trial court a backup forum for litigants to

repackage and reassert non-redressable or defective APA claims.

The fourth instance of a substantial ground for difference of opinion discussed

in our petition is that the trial court’s ruling is in tension with this Court’s decision in

Katz v. Cisneros, which is based on the Supreme Court’s decision in Bowen. We

explained that the trial court failed to properly apply these cases, based on its

erroneous view that the scope of Bowen was somehow limited in Maine Community

Health and this Court’s decisions in Suburban Mortgage Associates and Consolidated Edison.

Appx12. In their response, plaintiffs do not address our argument.

Instead, plaintiffs argue that Bowen and Katz are inapplicable and once again rely

heavily on their characterization of their claims as only seeking backwards-looking

money damages rather than any kind of prospective relief. As evidence of

retrospectiveness, plaintiffs point to how the statute calculated the amount of an RRF

grant as an applicant’s decline in gross revenue between 2020 and 2019, the time

period that predated the statute, and that the RRF program has concluded. Pls. Resp.

at 3, 9-10.

By focusing on the RRF program itself, plaintiffs do not perform the correct

inquiry. Regardless of how the actual grants were calculated when the RRF program
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Case: 25-108 Document: 12 Page: 11 Filed: 11/27/2024

was operating, plaintiffs do not claim in this suit that the statute directly required the

Government to pay them a sum of money that is currently unpaid and is due and

owing, as in Maine Community Health. Plaintiffs seek to create a new relationship with

SBA prospectively, and outside of the RRF program’s limitations, particularly the

requirement to use funds during the covered period, by obtaining a decision that they

should have received grants. There is thus a substantial ground for difference of

opinion because the trial court was required to address the parties’ competing

interpretations of Maine Community Health and Bowen.

The fifth instance of a substantial ground for difference of opinion discussed in

our petition goes to whether plaintiffs state a claim upon which relief can be granted.

Contrary to plaintiffs’ argument, if this appeal is accepted, we intend to challenge the

trial court’s holding. See Pls. Resp. at 21. In particular, we intend to argue that the

trial court erroneously interpreted the phrase “in addition to amounts otherwise

available” to be open ended even though Congress has never made any additional

amounts available. See Appx29-32.

That there is substantial ground for difference of opinion, at a minimum, on

this issue is demonstrated by the trial court’s lengthy analysis and examination of

Maine Community Health, Star-Glo, Greenlee County, and Prairie County and determination

that no existing precedent involved a statute with wording like section 9009c.

Appx29-32. The Court applied “the factors deemed important by the Federal Circuit

in its precedents to the apparently unprecedented language of the RRF statute” and
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concluded that section 9009c did not impose a cap on the Government’s liability.

Appx31.

Plaintiffs argue that the distinctive statutory language is irrelevant because the

trial court held that their claims would survive even if the Government’s liability were

capped. Pls. Resp. at 21. But the trial court likewise recognized that its analysis of the

existence of a cap and the effect of any cap was not resolved by current precedent.

The trial court specifically explained that existing caselaw does not extend to the

scenario of plaintiffs seeking damages because they would have received grants “had

SBA not misinterpreted the statute and made award to the wrong applicants . . . .”

Appx32. The trial court determined that in the “absence of caselaw holding that a

plaintiff cannot state a claim under these circumstances,” it would effectuate

Congress’s intent that plaintiffs receive money for their pandemic-related losses.

Appx33. Therefore, as the trial court itself confirmed, its holding even as to the

significance of the cap was not dictated by settled law.

Plaintiffs’ argument that the trial court’s decision is “compelled” by Maine

Community Health is erroneous. Pls. Resp. at 22-23. Unlike in Maine Community Health,

section 9009c contains the express limiting language of including a specific

appropriated amount -- $28.6 billion. In Maine Community Health, the Supreme Court

noted that “Congress could have expressly limited an obligation to available

appropriations or specific dollar amounts.” 590 U.S. at 313 (emphasis added). In a

footnote, the Supreme Court then cited numerous examples of statutory provisions
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that contained the “limiting language” of the phrase “subject to the availability of

appropriations” or listed an appropriated amount, such as “[t]here is authorized to be

appropriated to carry out this section, $10,000,000[.]” Id. at 313 n.7. Thus, directly

contrary to plaintiffs’ argument, Congress’ inclusion of a specific dollar amount is

equivalent to using the phrase “subject to the availability of appropriations.”

Finally, Samish Indian Nation v. United States, (Samish V) does not demonstrate

the lack of a substantial ground for difference of opinion. See Pls. Resp. at 24. In

Samish V, this Court found that the statute did not have limiting language that capped

the Government’s liability for damages and distinguished Star-Glo and Greenlee County.

657 F.3d 1330, 1339-41 (Fed. Cir. 2011), rehrg. & rehrg. en banc denied, vacated as moot,

568 U.S. 936 (2012). However, the language of the statute in Samish V is not at all

analogous to the language in section 9009c and the trial court did not rely upon it in

reaching its decision. See Appx29-33.

II. Immediate Appeal Will Materially Advance the Ultimate Termination of
This Case

In our petition, we explained that if the Court accepts the appeal and reverses

on either controlling legal question, the trial court and the parties will avoid

unnecessary delay, expense, and piecemeal litigation. Notably, plaintiffs do not

address our argument. Therefore, plaintiffs have also conceded this factor.

Instead, plaintiffs suggest, using a recent example, that this Court takes too

long to advance cases on its docket and therefore they should not be made to undergo

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an interlocutory appeal. Pls. Resp. at 25. However, section 1292(d)(2) does not

include as a factor the time required for an interlocutory appeal or the asserted

prejudice caused by such an appeal. See 28 U.S.C. § 1292(d)(2). An interlocutory

appeal has significant potential to materially advance the ultimate resolution of this

matter. Moreover, the trial court has already addressed plaintiffs’ concerns by only

staying the case through the completion of briefing at this Court. See Appx41.

CONCLUSION

For these reasons and those in the petition, we respectfully request that the

Court grant our petition for permission to appeal an interlocutory order under 28

U.S.C. § 1292(d)(2).

Respectfully submitted,

BRIAN M. BOYNTON
Principal Deputy Assistant Attorney General

PATRICIA M. McCARTHY
Director

/s/ William J. Grimaldi
WILLIAM J. GRIMALDI
Assistant Director

/s/ Rebecca S. Kruser
Rebecca S. Kruser
Senior Trial Counsel
Commercial Litigation Branch
Civil Division
Department of Justice
P.O. Box 480
Ben Franklin Station
Washington, D.C. 20044
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Telephone: (202) 305-2035
Email: rebecca.s.kruser@usdoj.gov
November 27, 2024 Attorneys for Defendant-Petitioner

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CERTIFICATE OF COMPLIANCE

I hereby certify that this reply contains 2,588 words, excluding the parts of the

motion exempted by Federal Rule of Appellate Procedure 32(f). I further certify

that this reply complies with the typeface and type-style requirements of Federal

Rules of Appellate Procedure 27(d)(1)(E), 32(a)(5), and 32(a)(6) because it has

been prepared using Microsoft Word 2013 in a proportionally spaced typeface, 14-

point Garamond font.

/s/ Rebecca S. Kruser
Rebecca S. Kruser

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