Opposition to Cross Motion for Summary Judgment — Harlem Globetrotters v. Small Business Administration

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Plaintiff's Opposition to Defendant's Cross Motion for Summary Judgment and Reply in Support of Plaintiff's Motion for Summary Judgment in Harlem Globetrotters International, Inc. versus Small Business Administration and Isabella Casillas Guzman, Civil Action No. 24-1164 (RBW), filed December 2, 2024, as Document 20, in the United States District Court for the District of Columbia. It states that SBA awarded HGI Shuttered Venue Operators Grant Program funds through a Notice of Award on December 7, 2022, and that the Consolidated Appropriations Act of 2023 rescinded only unobligated funds. It argues under 5 U.S.C. § 706(1) and § 706(2) that the refusal to pay is arbitrary and capricious and that HGI is entitled to promissory estoppel. It asks the Court to award HGI the $10,000,000. It is signed by Gunjan Talati of Kilpatrick Townsend & Stockton LLP.

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“Opposition to Cross Motion for Summary Judgment — Harlem Globetrotters v. Small Business Administration.” Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/20-reply-to-opposition-to-motion-re-15-motion-for-summary-judgm-b94987064a/, SHA-256 f2d6896d020b9d408698f4c09ae51887d1066ae6da12f5ce6d7e7ea7874e349b.

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Case 1:24-cv-01164-RBW Document 20 Filed 12/02/24 Page 1 of 34

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLUMBIA

HARLEM GLOBETROTTERS
INTERNATIONAL, INC.,

Plaintiff,
v.

SMALL BUSINESS ADMINISTRATION, and
Civil Action No: 24-1164 (RBW)
ISABELLA CASILLAS GUZMAN,

Defendants.

PLAINTIFF’S OPPOSITION TO DEFENDANT’S CROSS MOTION FOR SUMMARY JUDGMENT AND
REPLY IN SUPPORT OF PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT

Pursuant to Federal Rule of Civil Procedure 56 and Local Civil Rule 7(h), Plaintiff Harlem

Globetrotters International, Inc. hereby provides this Opposition to Defendant’s Cross Motion for

Summary Judgment and Reply in Support of Plaintiff’s Motion for Summary Judgment (“Reply”).

In support of this Reply, Plaintiff relies on the accompanying Memorandum of Points and

Authorities and the administrative record.

Respectfully submitted this 2nd day of December, 2024.

/s/ Gunjan Talati
Gunjan Talati (DC Bar No. 976169)
KILPATRICK TOWNSEND & STOCKTON LLP
701 Pennsylvania Ave, Suite 200
Washington, DC 20004
gtalati@ktslaw.com
Telephone: (202) 481-9941
Attorney for Plaintiff
Case 1:24-cv-01164-RBW Document 20 Filed 12/02/24 Page 2 of 34

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLUMBIA

HARLEM GLOBETROTTERS
INTERNATIONAL, INC.,

Plaintiff,
v.

SMALL BUSINESS ADMINISTRATION, and
Civil Action No: 24-1164 (RBW)
ISABELLA CASILLAS GUZMAN,

Defendants.

PLAINTIFF’S MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF ITS OPPOSITION TO
DEFENDANT’S CROSS MOTION FOR SUMMARY JUDGMENT AND REPLY IN SUPPORT OF
PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT

Gunjan Talati (DC Bar No. 976169)
KILPATRICK TOWNSEND & STOCKTON LLP
701 Pennsylvania Ave, Suite 200
Washington, DC 20004
gtalati@ktslaw.com
Telephone: (202) 481-9941
Attorney for Plaintiff

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TABLE OF CONTENTS

INTRODUCTION ................................................................................................................................ 1
ARGUMENT ...................................................................................................................................... 3
I. Under 5 U.S.C. § 706(2), the SBA’s Refusal to Disperse Funds Pursuant to a Notice
of Award is Arbitrary and Capricious. .................................................................... 3

A. 5 U.S.C. § 706(2) is Appropriate when Agency Inaction Has the Same
Impact as an Express Denial. ...................................................................... 3

B. The “Substantial Evidence” and “Arbitrary and Capricious” Standards Are
Used Interchangeably for Fact-based Determinations Under 5 U.S.C. §
706(2). ......................................................................................................... 4

C. The Administrative Record Does Not Contain an Explanation for SBA’s
(In)Actions. ................................................................................................. 6

II. Under 5 U.S.C. § 706(2), SBA’s Interpretation of the CAA is “Arbitrary and
Capricious” ............................................................................................................. 9

A. The SBA’s Interpretation and Decision to Apply the CAA is an “Agency
Action.” ....................................................................................................... 9

B. Issue Preclusion Does Not Apply to Matters Dismissed for Lack of Subject
Matter Jurisdiction. ..................................................................................... 9

C. The SBA Has Provided No Explanation or Authority to Support Its
Interpretation of the CAA. ........................................................................ 10

III. Under 5 U.S.C. § 706(1), the SBA Should Be Ordered to Disperse Funds Pursuant
To A Notice of Award. ......................................................................................... 12

IV. HGI is Entitled to Promissory Estoppel. ............................................................... 21

CONCLUSION.................................................................................................................................. 25

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TABLE OF AUTHORITIES

Page(s)

Cases

AARP v. United States Equal Emp. Opportunity Comm'n, 267 F. Supp. 3d 14 (D.D.C.),
on reconsideration, 292 F. Supp. 3d 238 (D.D.C. 2017)...........................................................6

Air Canada v. Dep’t of Transp.,
148 F.3d 1142 (D.C. Cir. 1998) .................................................................................................7

Alaska Bulk Carriers, Inc. v. Baldrige,
541 F. Supp. 770 (D.D.C. 1982) ................................................................................................7

All. to Save Mattaponi v. U.S. Army Corps of Eng’rs,
515 F. Supp. 2d 1 (D.D.C. 2007) ...............................................................................................3

Anglers Conservation Network v. Pritzker,
809 F.3d 664 (D.C. Cir. 2016) .................................................................................................13

Appropriations, Obligation, Civil Defense Contributions to States
B-109173, 1952 WL 588 (Comp. Gen. May 21, 1952) ...........................................................16

Arabzada v. Donis,
No. CV 23-655 (RC), 2024 WL 1175802 (D.D.C. Mar. 19, 2024) ...................................13, 14

Beckman v. USPS,
79 F.Supp.2d 394 (S.D.N.Y.2000)...........................................................................................22

Bowsher v. Synar,
478 U.S. 714 (1986) .................................................................................................................11

Burkhart v. WMATA,
112 F.3d 1207 (D.C. Cir. 1997) ...............................................................................................22

Choate v. TRW, Inc.,
14 F.3d 74 (D.C. Cir. 1994) .....................................................................................................23

Concert Inv., LLC v. Small Bus. Admin.,
100 F.4th 215 (D.C. Cir. 2024) ............................................................................................8, 20

In re Core Commc'ns, Inc.,
531 F.3d 849 (D.C. Cir. 2008) .................................................................................................20

Dep't of Com. v. New York,
139 S. Ct. 2551 (2019) .............................................................................................................11
Case 1:24-cv-01164-RBW Document 20 Filed 12/02/24 Page 5 of 34

Dickinson v. Zurko,
527 U.S. 150 (1999) ...................................................................................................................5

Donovan v. USPS,
530 F.Supp. 872 (D.D.C. 1981) ...............................................................................................22

Encino Motorcars, LLC v. Navarro,
579 U.S. 211 (2016) .................................................................................................................11

Filebark v. U.S. Dep't of Transp.,
468 F.Supp.2d 3 (D.D.C. 2006) ...............................................................................................10

Golden Ent. PA, Inc. v. SBA,
Civ. A. No. 22-1731 (JDB), 2024 WL 1344421 (D.D.C. Mar. 29, 2024) ...............................14

Harlem Globetrotters Int’l, Inc. v. United States,
168 Fed. Cl. 31 (2023) .................................................................................................10, 23, 24

Harlem Globetrotters Int’l, Inc. v. United States,
No. 1:23-cv-00386-RAH (Fed. Cl. October 4, 2023) ..........................................................1, 12

Heckler v. Chaney,
470 U.S. 821 (1985) ...................................................................................................................3

Hi-Tech Pharmacal Co. v. U.S. Food & Drug Admin.,
587 F. Supp. 2d 1 (D.D.C. 2008) ...............................................................................................4

Inc. v. DEA,
259 F.3d 731 (D.C. Cir. 2001) ...................................................................................................7

Jost v. Surface Transp. Bd.,
194 F.3d 79 (D.C. Cir. 1999) ...................................................................................................11

Kreis v. Sec’y of Air Force,
406 F.3d 684 (D.C. Cir. 2005) ...................................................................................................8

Loper Bright Enterprises v. Raimondo,
144 S. Ct. 2244, 219 L. Ed. 2d 832 (2024) ..............................................................2, 10, 11, 15

Maine Cmty. Health Options v. United States,
590 U.S. 296, 140 S. Ct. 1308 (2020) ......................................................................................18

Maine Lobstermen's Ass'n v. Nat'l Marine Fisheries Serv.,
70 F.4th 582 (D.C. Cir. 2023) ....................................................................................................9

Monument Realty LLC v. Washington Metro. Area Transit Auth.,
535 F. Supp. 2d 60 (D.D.C. 2008) ...........................................................................................22

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Motor Vehicle Mfrs. Ass'n of U.S. v. State Farm Mut. Auto. Ins.,
463 U.S. 29 (1983) ...................................................................................................................12

Nat'l Automatic Laundry & Cleaning Council v. Shultz,
443 F.2d 689 (D.C. Cir. 1971) ...................................................................................................9

Nat'l Classification Comm. v. United States,
765 F.2d 164 (D.C. Cir. 1985) .................................................................................................21

Norton Constr. Co. v. U.S. Army Corps of Engineers,
2006 WL 3526789 (N.D.Ohio Dec. 6, 2006) ............................................................................3

Obligational Practices of the Corporation for National and Community,
B-300480, 2003 WL 1857402 (Comp. Gen. April 9, 2003) ........................................16, 17, 18

Olympic Fed. Sav. & Loan Ass’n v. Off. of Thrift Supervision,
Civ. A. No. 90-0482 (RCL), 1990 WL 134841(D.D.C. Sept. 6, 1990) ...................................21

Op. Comp. Gen.,
B–193573 (Dec. 19, 1979) .......................................................................................................18

Pailes v. U.S. Peace Corps,
783 F. Supp. 2d 1 (D.D.C. 2009) .............................................................................................10

Parnigoni v. St. Columba's Nursery Sch.,
681 F. Supp. 2d 1 (D.D.C. 2010) .............................................................................................24

PDK Lab'ys Inc. v. U.S. D.E.A.,
362 F.3d 786 (D.C. Cir. 2004) ...................................................................................................7

Pol'y & Rsch., LLC v. United States Dep't of Health & Hum. Servs.,
313 F. Supp. 3d 62 (D.D.C. 2018) .............................................................................................6

Potomac Elec. Power Co. v. ICC (“PEPCO”),
702 F.2d 1026 (D.C. Cir. 1983) ...............................................................................................20

RadNet Mgmt v. Nat’l Lab. Rels. Bd.,
992 F.3d 1114 (D.C. Cir. 2021) .................................................................................................7

Rochester Pure Waters Dist. v. EPA,
960 F.2d 180 (D.C. Cir. 1992) .................................................................................................14

Roelofs v. Sec'y of Air Force,
628 F.2d 594 (D.C. Cir. 1980) ...................................................................................................7

S. Carolina Pub. Serv. Auth. v. FERC,
762 F.3d 41 (D.C. Cir. 2014) .....................................................................................................4

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Scheidler v. Nat'l Org. for Women, Inc.,
537 U.S. 393 (2003) .................................................................................................................17

SEC v. Chenery Corp.,
318 U.S. 80, 63 S.Ct. 454, 87 L.Ed. 626 (1943) ........................................................................9

Select Specialty Hosp.–Bloomington, Inc. v. Burwell,
757 F.3d 308 (D.C. Cir. 2014) ...................................................................................................5

Sierra Club v. Thomas,
828 F.2d 783 (D.C. Cir. 1987) ...................................................................................................3

Sokol World Ent., Inc. v. Small Bus. Admin.,
No. 21-CV-2385 (TSC), 2022 WL 4547540 (D.D.C. 2022) .....................................................8

Stebbins v. Keystone Ins. Co.,
481 F.2d 501 (D.C. Cir. 1973) .................................................................................................10

Stewart v. Geostar Corp.,
617 F.Supp.2d 532 (E.D. Mich. 2007) .....................................................................................10

U.S. Department of Education's Use of Fiscal Year Appropriations to Award
Multiple Year Grants,
B-28980, 2002 WL 31950147(Comp. Gen. Dec. 30, 2002) ....................................................16

In re U.S. Office Products Co. Sec. Litig.,
251 F. Supp. 2d 77 (D.D.C. 2003) ...........................................................................................22

United States Olympic & Paralympic Museum v. Small Bus. Admin.,
No. 22-CV-3785 (TSC), 2024 WL 3694462 (D.D.C. Aug. 7, 2024) .............................. passim

Vallejo Ent. LLC v. Small Bus. Admin.,
No. 1:22-CV-01548-RCL, 2023 WL 3275634 (D.D.C. May 5, 2023)..............................20, 21

W. Sur. Co. v. U.S. Eng'g Co.,
375 F. Supp. 3d 1 (D.D.C. 2019) .............................................................................................15

Washington Props., Inc. v. Chin, Inc.,
760 A.2d 546 (D.C. 2000) .......................................................................................................15

Wilbur v. U.S. ex rel. Kadrie,
281 U.S. 206, 50 S. Ct. 320, 74 L. Ed. 809 (1930) ..................................................................19

Window Covering Manufacturers Ass'n v. Consumer Prod. Safety Comm'n,
82 F.4th 1273 (D.C. Cir. 2023) ..................................................................................................4

Wis. Gas Co. v. FERC,
770 F.2d 1144 (D.C. Cir. 1985) .................................................................................................5

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Statutes

5 U.S.C. § 551(13) .......................................................................................................................3, 4

5 U.S.C. § 555(e) .........................................................................................................................6, 7

5 U.S.C. § 706(1) ...........................................................................................................3, 12, 13, 21

5 U.S.C. § 706(2) ................................................................................................................... passim

15 U.S.C. § 633 ........................................................................................................................14, 19

15 U.S.C. § 9009a(b)(1)(A) ...........................................................................................................23

31 U.S.C. § 1501 .................................................................................................................... passim

31 U.S.C. § 1501(a) ...........................................................................................................14, 15, 16

31 U.S.C. § 1501(a)(5)...................................................................................................9, 14, 16, 17

31 U.S.C. § 1501(a)(6).....................................................................................................................9

31 U.S.C. § 1501(a)(9).....................................................................................................................9

41 U.S.C. § 5 ..................................................................................................................................16

Affordable Care Act .......................................................................................................................18

Antideficiency Act .........................................................................................................................18

Consolidated Appropriations Act of 2023 ............................................................................. passim

Economic Aid Act....................................................................................................................16, 19

Federal Appropriations Law ........................................................................................11, 14, 18, 19

U.S. Code § 1501 (a)(5)(A) .........................................................................................13, 15, 16, 17

U.S. Code § 9009a ...................................................................................................................17, 23

U.S. Code § 9009a(b)(2) ................................................................................................................13

U.S. Code § 9009a(c) .....................................................................................................................16

Rules & Regulations

48 C.F.R. § 49.502 .........................................................................................................................16

48 C.F.R. § 52.243-1......................................................................................................................16

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48 C.F.R. § 243-2...........................................................................................................................16

48 C.F.R. § 243-3...........................................................................................................................16

86 Fed. Reg. 16,270 .......................................................................................................................23

86 Fed. Reg. at 16,274 ...................................................................................................................23

Federal Rule of Civil Procedure 56 .................................................................................................1

Local Civil Rule 7(h) .......................................................................................................................1

Other Authorities

“Tallahassee Couple Sentenced to Federal Prison for Wire Fraud, Conspiracy,
Money Laundering Conspiracy, and Making False Statements Relating to
Covid-19 Relief Programs”........................................................................................................8

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INTRODUCTION

After more than two years of litigation in this Court and the Court of Federal Claims, this

may be the last word the Harlem Globetrotters International Inc. (“HGI”) gets for a while. Even

though the Small Business Administration (“SBA”) will have one more filing, the records (both

the Administrative Record and the litigation record) establishes these unassailable truths:

 After “screwing up” multiple times,1 SBA awarded HGI funds from the Shuttered Venue

Operators Grant Program (“SVOG”) through a Notice of Award on December 7, 2022.

HGI completed all necessary steps to receive funding on or before December 8, 2022. The

Administrative Record establishes HGI was eligible and that it completed all required tasks

to be paid.

 There is no explanation in the records for why SBA has not paid HGI. Instead, SBA hides

behind the Consolidated Appropriations Act of 2023 (“CAA”). However, as HGI has

explained, the CAA rescinded “unobligated” funds from the SVOG program effective

December 29, 2022, and the funds committed to HGI were “obligated” under any

reasonable interpretation of the word.

Perhaps realizing that it cannot argue the merits of the matter, the SBA resorts to the only option

available to it – it attempts to find numerous technical “foot faults” in HGI’s arguments. However,

this shotgun approach should not obscure from the Court one immutable fact: the Administrative

Record (even incorporating all public laws) cannot provide an explanation for SBA’s effective

denial of the Notice of Award and refusal to pay funds to HGI.

1
“We’re here today because the SBA screwed up.” - Judge Hartling, Transcript of Motion to
Dismiss Hearing, 11:3-4, ECF No. 14, Harlem Globetrotters Int’l, Inc. v. United States, No. 1:23-
cv-00386-RAH (Fed. Cl. October 4, 2023).

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All of the SBA’s arguments can be easily addressed: 1) the SBA’s inaction in paying HGI

constitutes an “agency action” under 5 U.S.C. § 706(2) because it has the same impact as an

express denial; 2) the “substantial evidence” and “arbitrary and capricious” standards are used

interchangeably for fact-based determinations; 3) while public acts are a part of the Administrative

Record, an agency’s interpretation of these acts are not; 4) the SBA granted similarly situated

entities with Notices of Award and informed these entities they were in line for SVOG funding –

any confusion by HGI is only further evidence that the Administrative Record (and public record)

provides no information explaining SBA’s refusal to pay HGI pursuant to the Notice of Award; 5)

the SBA’s interpretation of the CAA is an agency action; and 6) issue preclusion does not apply

when the initial matter was dismissed for a lack of subject matter jurisdiction.

SBA’s argument can be summed up in one sentence: “SBA [does] not need to explain its

conclusion that Congress had rescinded the funds at issue because its reasoning was ‘self-

explanatory.’” Opposition at 25. Unfortunately for the SBA, it can no longer simply expect court

deference for its self-serving interpretations of law. Post Loper Bright, the SBA must convince

this Court of its interpretation of “obligated” funds under the CAA and it must provide a non-

arbitrary and capricious reason for its effective denial of a Notice of Award. HGI has provided

numerous, well litigated examples for the correct interpretation of “obligated”. SBA, in contrast,

has yet to provide a single authority for its interpretation of “obligated.” The SBA’s interpretation

of the CAA, which lies in direct contrast with all other case law surrounding Appropriations Acts,

is not “self-explanatory.”

For the foregoing reasons, this Court should grant HGI’s Motion for Summary Judgment,

deny the SBA’s Cross Motion for Summary Judgment, and award HGI with the $10,000,000

originally promised to it by SBA.

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ARGUMENT

I. Under 5 U.S.C. § 706(2), the SBA’s Refusal to Disperse Funds Pursuant to a Notice of
Award is Arbitrary and Capricious.

A. 5 U.S.C. § 706(2) is Appropriate when Agency Inaction Has the Same Impact as an
Express Denial.

The SBA argues that 5 U.S.C. § 706(1) is HGI’s only avenue for relief, because 5 U.S.C.

§ 706(2) only applies to “agency actions” not agency “inactions”. See Dkt. 18 (“Opposition”), at

11. This is simply incorrect.

Section 5 U.S.C. § 706(2) allows a court to “hold unlawful and set aside agency action

found to be arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.”

The APA defines “agency action” as “the whole or a part of an agency rule, order, license, sanction,

relief, or the equivalent or denial thereof, or failure to act.” 5 U.S.C. § 551(13) (emphasis added).

A plaintiff can bring an action under both 5 U.S.C. § 706(1) and § 706(2) when agency

inaction – or a failure to act – has the same effect as an express denial. All. to Save Mattaponi v.

U.S. Army Corps of Eng’rs, 515 F. Supp. 2d 1, 10 (D.D.C. 2007) (“According to the plain terms

of APA, ‘failures to act’ fall under the scope of both § 706(1) and § 706(2) . . . The court, therefore,

has subject matter jurisdiction over these claims pursuant to § 706(2).”) (internal citations

omitted); see also Norton Constr. Co. v. U.S. Army Corps of Engineers, 2006 WL 3526789

(N.D.Ohio Dec. 6, 2006) (rejecting Government’s argument that agency inactions under § 706(1)

and § 706(2) are mutually exclusive).

In support of its position, the SBA relies on Heckler v. Chaney, 470 U.S. 821 (1985) and

its immediate progeny. See Opposition, at 11. However, since Chaney, this Court has repeatedly

held agency inaction is actionable under that 5 U.S.C. § 706(2). All. to Save Mattaponi, 515 F.

Supp. 2d 1, 9 (D.D.C. 2007) (“The D.C. Circuit repeatedly has read Chaney narrowly in cases

involving agency inaction”); Sierra Club v. Thomas, 828 F.2d 783 (D.C. Cir. 1987) (holding that

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“agency inaction is final action having the same impact as agency action”) (partially abrogated on

other grounds).

Instead, this Court has held that an agency’s inaction – such as refusing to distribute funds

pursuant to a valid notice of award – is effectively a denial of funds:

The D.C. Circuit has stated that APA review of an agency's failure to act is
appropriate when the challenged inaction may represent effectively final agency
action that the agency has not frankly acknowledged. Judicial review of an agency's
failure to act under Section 706(2) is authorized, then, when administrative inaction
has the same impact on the rights of the parties as an express denial of relief.

Hi-Tech Pharmacal Co. v. U.S. Food & Drug Admin., 587 F. Supp. 2d 1, 10 (D.D.C. 2008). The

SBA’s unexplained decision not to fulfill the terms of the Notice of Award has the same effect as

a denial of the Notice of Award. This effective denial of funds is a “failure to act” and therefore

categorized as “agency action” under 5 U.S.C. § 551(13). Id. Thus, this Court can review the

SBA’s “inaction” under 5 U.S.C. § 706(2).

B. The “Substantial Evidence” and “Arbitrary and Capricious” Standards Are Used
Interchangeably for Fact-based Determinations Under 5 U.S.C. § 706(2).

Instead of providing any kind of evidence (substantial or otherwise) or explanation for

refusing to distribute funds to HGI, the SBA attempts to attack the standard itself. SBA argues

that HGI’s reference to “substantial evidence” “stumbles out the gate” because the “substantial

evidence” standard applies only to formal rulemakings and formal adjudications not “arbitrary and

capricious” actions. See Opposition, at 12. The SBA’s argument creates a distinction without a

difference.

This Court has repeatedly emphasized “that the distinction between the substantial

evidence and the arbitrary or capricious test is largely semantic” and that the two tests “are one

and the same.” Window Covering Manufacturers Ass'n v. Consumer Prod. Safety Comm'n, 82

F.4th 1273, 1286 n.2 (D.C. Cir. 2023) (internal citations omitted); S. Carolina Pub. Serv. Auth. v.

4
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FERC, 762 F.3d 41 (D.C. Cir. 2014) (finding that the substantial evidence test is identical to the

arbitrary and capricious standard.); Wis. Gas Co. v. FERC, 770 F.2d 1144, 1156 (D.C. Cir. 1985)

(same).

Regardless, HGI has always maintained that SBA’s actions are “arbitrary and capricious.”

Dkt. 1 Complaint (“Cmpl.”) ¶¶15, 68-82; HGI’s Motion For Summary Judgment, Dkt 15.

(“Motion”), at 7-17. HGI’s Motion referenced “substantial evidence” simply for the proposition

that “factual conclusions” (such as the ineligibility for SVOG assistance or that something cannot

be paid) need to be supported by “substantial evidence”. Motion, at 14; Dickinson v. Zurko, 527

U.S. 150, 164 (1999) (discussing the history and usage of the “substantial evidence” standard and

determining that “a reviewing court reviews an agency's reasoning to determine whether it is

‘arbitrary’ or ‘capricious,’ or, if bound up with a record-based factual conclusion, to determine

whether it is supported by ‘substantial evidence.’) (internal citations omitted). The SBA’s

arguments and cited cases do not challenge or overrule Dickinson.

By drawing attention to hollow distinctions, the SBA attempts to obfuscate one material

underlying fact: the Administrative Record is devoid of any evidence that HGI should not receive

the SVOG funds to which it is entitled. The Opposition produces no additional document or

explanation supporting SBA’s position. This alone is fatal to the SBA’s position as where an

agency fails to adequately “state its reasoning”, the agency’s action is by definition arbitrary and

capricious. Select Specialty Hosp.–Bloomington, Inc. v. Burwell, 757 F.3d 308, 312 (D.C. Cir.

2014) (“There are cases where an agency's failure to state its reasoning or to adopt an intelligible

decisional standard is so glaring that we can declare with confidence that the agency action was

arbitrary and capricious. This is one of them.”) (internal citations omitted).

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C. The Administrative Record Does Not Contain an Explanation for SBA’s
(In)Actions.

HGI agrees that the Public Acts can be read into the Administrative Record. But a mere

incorporation of publicly available documents does not replace “reasoned decision making” in the

Administrative Record. AARP v. United States Equal Emp. Opportunity Comm'n, 267 F. Supp. 3d

14, 29 (D.D.C.), on reconsideration, 292 F. Supp. 3d 238 (D.D.C. 2017) (“[T]he agency's chosen

interpretation must be reasonable and must be supported by the administrative record.”)

In Pol'y & Rsch., LLC, this Court held that the Government must sufficiently explain in the

Administrative Record any deviation to a validly awarded Notice of Award:

The most striking thing about the agency action that Plaintiffs challenge in this case
is the fact that HHS provided no explanation whatsoever for its decision to
“shorten[ ]” the project periods pertaining to Plaintiffs' grants. (See Notice of
Award 2017–2018 at 82.) The agency merely announced the change as a foregone
conclusion, an ipse dixit if you will, and presumably expected Plaintiffs not to
notice that their grants were being terminated two years early without any statement
of cause or a finding that any of the other circumstances set forth in HHS's
termination rules existed. In its summary judgment brief, the agency breezily
contends that its “policy concerns with the current TPPP Program are a matter of
public record.” (Def.'s Mem. at 37.) But as far as the administrative record is
concerned, HHS said nothing to Plaintiffs at the time that it cut short their project
periods, and it certainly did not undertake the kind of reasoned analysis of potential
causes that the APA and its own regulations require.

Pol'y & Rsch., LLC v. United States Dep't of Health & Hum. Servs., 313 F. Supp. 3d 62, 83 (D.D.C.

2018) (emphasis in original). Here, the SBA has refused to provide an explanation in the

Administrative Record for its effective denial of HGI’s Notice of Award and refusal to pay HGI.

Instead of providing an explanation, SBA claims that its reasoning is “self-explanatory.”

Opposition at 14. This is not the first time the SBA has asserted this argument in an SVOG case.

Recently, in United States Olympic & Paralympic Museum, the SBA asserted that a denial of

SVOG funds were “self-explanatory” under 5 U.S.C. § 555(e). United States Olympic &

Paralympic Museum v. Small Bus. Admin., No. 22-CV-3785 (TSC), 2024 WL 3694462, at *3

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(D.D.C. Aug. 7, 2024). The Court in United States Olympic & Paralympic Museum specifically

rejected this argument:

Defendants do not even argue that their explanation was a reasoned one. Rather,
they contend that the SBA did not need to give a reasoned explanation because it
was “self-explanatory” that Plaintiff's “application affirmatively show[ed] on its
face that the applicant is ineligible for the relief that they sought.” Def.’s Am.
Cross-Mot. for Summ. J. & Opp'n to Pl.’s Mots. for Summ. J. & to Consider Extra-
Record Evidence, ECF No. 32 at 3–7 (“Def.’s Mot.”) (citing 5 U.S.C. § 555(e)). . .
But this case is far less “self-explanatory” than any of the D.C. Circuit cases
Defendants cite.

Id. The SBA, likely aware that the “self-explanatory” argument is doomed, cites to zero analogous

cases for its proposition. The cases that it does cite to (RadNet Mgmt v. Nat’l Lab. Rels. Bd., 992

F.3d 1114, 1124 (D.C. Cir. 2021); Air Canada v. Dep’t of Transp., 148 F.3d 1142, 1157 (D.C. Cir.

1998); Alaska Bulk Carriers, Inc. v. Baldrige, 541 F. Supp. 770, 773 (D.D.C. 1982)) address a

completely different test – the “harmless error” rule. These cases can be easily distinguished

because clearly, SBA’s erroneous refusal to distribute funds pursuant to a valid Notice of Award

resulted in harm to HGI – HGI has not received $10,000,000 promised to it. See PDK Lab'ys Inc.

v. U.S. D.E.A., 362 F.3d 786, 799 (D.C. Cir. 2004) (finding prejudicial error when an agency's

mistake may affect the outcome of suspension orders).

Through SBA’s handwaving, the fact remains that SBA must provide a detailed reasoning

for effective denials of Notices of Awards. See Tourus Rec.s, Inc. v. DEA, 259 F.3d 731, 737

(D.C. Cir. 2001) (Agencies are subject to the “fundamental requirement” that they “set forth [ ]

reasons for [a] decision”) (cleaned up). In other words, the agency's statement must be one of

reasoning, not merely conclusion. Roelofs v. Sec'y of Air Force, 628 F.2d 594, 601 (D.C. Cir.

1980) (“It is not enough if Government counsel offer to explain the reasons for the denial . . .”)

The SBA further claims that HGI is mistaken as to which SVOG entities have been

approved and given SVOG funding – however, this is only further evidence that the public record

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and Administrative Record is devoid of any information substantiating SBA’s position. According

to court opinions, Sokol World Entertainment and Concert Investors have successfully litigated

APA claims in this Court. Sokol World Ent., Inc. v. Small Bus. Admin., No. 21-CV-2385 (TSC),

2022 WL 4547540, at *1 (D.D.C. 2022) (granting Sokol’s Motion for Summary Judgment to

receive SVOG funding); Concert Inv., LLC v. Small Bus. Admin., 100 F.4th 215 (D.C. Cir. 2024)

(vacating and remanding holding that Concert Investor was ineligible for SVOG funding).

By even Ms. Richardson’s accounts (the SBA’s Deputy Director for the Shuttered Venue

Operators Grant), some entities are at least “in line” to receive SVOG funding if, and when,

funding becomes available. See Opposition, Exhibit A, Dkt 18-1, Richards Decl. ¶ 13 (listing out

Companies A, B, and C that are “deemed eligible prior to the recission” that have yet to receive

SVOG funding). Is HGI mystery “Company A” in line for $10,000,000 or is that some other

company? If not, why is it not HGI? There is simply nothing in her affidavit or Administrative

Record to provide any further explanation.2 The last chronological document in the Administrative

Record is the acceptance and execution of HGI’s Notice of Award. Disparate treatment of

similarly situated entities without justification is arbitrary and capricious. Kreis v. Sec’y of Air

Force, 406 F.3d 684, 687 (D.C. Cir. 2005) (“It is axiomatic that an agency must treat similar cases

in a similar manner unless it can provide a legitimate reason for failing to do so.”) The SBA has

2
This also raises a litany of practical questions that SBA has failed to address such as: Is HGI
similarly “in line” to receive funding? Are funds that were earmarked for pending litigation still
remaining? Why did the SBA choose to apply the not yet in effect CAA to the HGI’s Notice of
Award? Is there any SVOG funding remaining after DOJ prosecutions that have clawed back
SVOG grants? See e.g. U.S. DOJ Press Release “Tallahassee Couple Sentenced to Federal Prison
for Wire Fraud, Conspiracy, Money Laundering Conspiracy, and Making False Statements
Relating to Covid-19 Relief Programs”, available at https://www.justice.gov/usao-ndfl/press-
release/file/1582411/dl (Individuals agreed to pay back restitution to the SBA for ill-gotten SVOG
funds in the amount of $2,802,690.76). None of this information is available in the “self-
explanatory” Administrative Record.

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failed to provide any reasoning for its actions, thus under 5 U.S.C. § 706(2), the SBA’s refusal to

disperse funds to HGI is arbitrary and capricious.

II. Under 5 U.S.C. § 706(2), SBA’s Interpretation of the CAA is “Arbitrary and Capricious”

A. The SBA’s Interpretation and Decision to Apply the CAA is an “Agency Action.”

The Opposition claims that the SBA’s interpretation and application of the CAA is not an

“agency action.” This position is without merit. Case law is clear that an agency’s interpretation

of law is an “agency action.” See Nat'l Automatic Laundry & Cleaning Council v. Shultz, 443 F.2d

689, 698 (D.C. Cir. 1971) (“The term ‘agency action’ thus embraces and agency's interpretation

of its law, and it is the finality of that action that we must consider.”); Maine Lobstermen's Ass'n

v. Nat'l Marine Fisheries Serv., 70 F.4th 582, 597 (D.C. Cir. 2023) (“For 80 years it has been a

clear precept of administrative law that an agency action may not stand if the agency has

misconceived the law.”) (citing SEC v. Chenery Corp., 318 U.S. 80, 94, 63 S.Ct. 454, 87 L.Ed.

626 (1943)).

Under existing authority, including 31 U.S.C. § 1501(a)(5) and the Government

Accountability Office’s precedent, HGI’s Notice of Award is an “obligation” and should have

been marked as such. Under 31 U.S.C. § 1501(a)(6), 31 U.S.C. § 1501(a)(9), and the SBA’s own

procedures, funds in active litigation are “obligated” funds. HGI and the SBA were in active

litigation when the CAA was enacted. The SBA’s refusal to disperse funds to HGI pursuant to its

incorrect interpretation of “obligated” funds in the CAA should be set aside.

B. Issue Preclusion Does Not Apply to Matters Dismissed for Lack of Subject Matter
Jurisdiction.

The SBA claims that issue preclusion prohibits HGI from arguing that the funds at issue

were unobligated at the time that the rescission, because this was an issue decided at the Court of

Federal Claims. Opposition, at 18. This claim is also entirely without merit. Issue preclusion,

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also known as collateral estoppel, “applies only to matters that have been actually litigated[.]”

Stebbins v. Keystone Ins. Co., 481 F.2d 501, 508 (D.C. Cir. 1973). HGI’s Court of Federal Claims

complaint was dismissed for lack of subject matter jurisdiction under the Tucker Act. Harlem

Globetrotters Int’l, Inc. v. United States, 168 Fed. Cl. 31, 43 (2023). It is axiomatic that a dismissal

for lack of subject matter jurisdiction contains no preclusive effect. See Pailes v. U.S. Peace

Corps, 783 F. Supp. 2d 1, 6 (D.D.C. 2009) (“[T]he Peace Corps' motion based on collateral

estoppel fails because dismissal for lack of subject matter jurisdiction has no preclusive effect.”);

Filebark v. U.S. Dep't of Transp., 468 F.Supp.2d 3, 7–8 (D.D.C. 2006) (denying a motion to

dismiss where plaintiff “previously brought a claim against the United States in the Court of

Federal Claims ... [which] was not decided on the merits and was dismissed

for lack of subject matter jurisdiction under the Tucker Act.”); Stewart v. Geostar Corp., 617

F.Supp.2d 532, 537 (E.D. Mich. 2007) (denying defendant's motion to dismiss “to the extent that

it relies on collateral estoppel” where the prior state court decision determined that, “as a matter

of law, it lacked subject matter jurisdiction”)

Instead, this Court should see SBA’s argument for what it truly is: an attempt to distract

this Court from the unavoidable conclusion that the SBA unreasonably applied the terms of the

CAA to HGI’s Notice of Award, without sufficient reason or explanation in the Administrative

Record.

C. The SBA Has Provided No Explanation or Authority to Support Its Interpretation of
the CAA.

Instead of explaining its interpretation of “unobligated” funds under the CAA, the SBA

attempts to dismiss HGI’s citations to Court of Federal Claim transcripts, well litigated and fully

developed administrative case law authorities, and references to Government handbooks as merely

“persuasive” authority. Opposition, at 20-25. SBA misses the point. Post Loper Bright, the SBA

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must affirmatively convince this Court of its interpretation of “obligated” funds under the CAA

and it must convince the Court that it had a non-arbitrary and capricious reason for not paying HGI

and effectively denying HGI a Notice of Award. See Loper Bright Enterprises v. Raimondo, 144

S. Ct. 2244, at 2273, 219 L. Ed. 2d 832 (2024). (“Courts must exercise their independent judgment

in deciding whether an agency has acted within its statutory authority, as the APA requires.”) HGI

has provided numerous, well litigated examples of persuasive authority for the correct

interpretation of “obligated”. The SBA has provided none.

The SBA’s discussion of Bowsher v. Synar, 478 U.S. 714 (1986) which the SBA deems as

“especially instructive”, is puzzling. Opposition, at 23-24. Bowsher stands for the proposition

that Congressional duties directly delegated to the Comptroller General violate the doctrine of

separation of powers. HGI fails to understand the relevancy of this proposition. The authority of

the Comptroller General is not at issue here. HGI cites to GAO administrative decisions and the

Principles of Federal Appropriations Law simply to provide this Court with a reasoned

explanation of "obligated” and “unobligated” funds.

Instead of providing any reasonable explanation for its denial, or discussion of

“obligation”, SBA sits in silence. This is fatal to SBA’s position. “The requirement that agency

action not be arbitrary and capricious includes a requirement that the agency adequately explain

its result.” Jost v. Surface Transp. Bd., 194 F.3d 79, 85 (D.C. Cir. 1999) (citation omitted).

“Procedurally, a reasoned explanation enables the court to ‘discern’ the ‘path’ the agency

took. United States Olympic & Paralympic Museum v. Small Bus. Admin., No. 22-CV-3785

(TSC), 2024 WL 3694462, at *3 (D.D.C. Aug. 7, 2024) (citing Encino Motorcars, LLC v. Navarro,

579 U.S. 211, 221 (2016)). This explanation “is meant to ensure that agencies offer genuine

justifications for important decisions.” Dep't of Com. v. New York, 139 S. Ct. 2551, 2575–76

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(2019). To meet this requirement, an agency must “examine the relevant data and articulate a

satisfactory explanation for its action including a ‘rational connection between the facts found and

the choice made.’” Motor Vehicle Mfrs. Ass'n of U.S. v. State Farm Mut. Auto. Ins., 463 U.S. 29,

43 (1983) (citation omitted).

The reason why the SBA has failed to provide a justification for its interpretation of

“obligation” is a simple one: it has already admitted on public record it has none. See Transcript

of Motion to Dismiss Hearing, 35:9-20, ECF No. 14, Harlem Globetrotters v. United States, No.

1:23-cv-00386-RAH (Fed. Cl. October 4, 2023) (“[The Court]: And is that [decision to consider

funds obligated] -- is that by virtue or some regulation or some statutory requirement in Title 31

or --[The SBA representative]: No Your Honor. . . ”). The SBA cannot provide any justification

for any of its actions – therefore, the SBA’s decision to apply the CAA to effectively deny HGI’ s

Notice of Award is necessarily arbitrary and capricious.

III. Under 5 U.S.C. § 706(1), the SBA Should Be Ordered to Disperse Funds Pursuant To A
Notice of Award.

HGI relies on 5 U.S.C. § 706(1) for one reason – it remains unclear whether the SBA will

ever pay HGI without a direct order. For the past three years, HGI has been trying to overcome

one-sided mistakes made by the SBA. Compl. ¶67. HGI promptly applied for SVOG funding,

but was incorrectly denied by the SBA. Id., at ¶3. After filing suit in this Court, the SBA remitted,

and issued a Notice of Award to HGI. Id., at ¶4. This Notice of Award was accepted and executed

by the SBA. Id., at ¶5. Still, HGI has not been paid. The APA allows this Court to compel agency

action when it is “unlawfully withheld or unreasonably delayed.” 5 U.S.C. § 706(1).

A. The SBA has a Ministerial Duty to Accurately Record Obligations.

The SBA asserts that, as a threshold matter, the SBA must have a “ministerial duty to act”

as “Section 706(1) permits judicial review of agency inaction, but only within strict limits.”

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Opposition at 4-5. HGI recognizes that the SVOG statute affords certain discretionary

responsibilities to the SBA. 15 U.S. Code § 9009a(b)(2) (“The Administrator may make initial

grants to eligible persons or entities.”). However, the matter before the Court is a different one:

once a grant is awarded, does the CAA give the SBA the right to incorrectly mark the funds as

“unobligated”? The answer is no. Accurately marking “obligated” funds is an agency’s

“ministerial duty.” See 31 U.S. Code § 1501 (a)(5)(A).

The CAA rescinds “unobligated” funds from the SVOG program, effective December 29,

2022. Pub. L. 117–328. Specifically, the CAA provides that “[o]f the unobligated balances of

amounts made available under the heading ‘Small Business Administration - Shuttered Venue

Operators’ . . . $459,000,000 are hereby rescinded.” Id., at §101(d)(2) (emphasis added).

Next, 31 U.S.C. § 1501 defines how an agency must mark “obligated” funds: “[a]n amount

shall be recorded as an obligation of the United States Government . . . [as] a grant or subsidy

payable . . . from appropriations made for payment of, or contributions to, amounts required to be

paid in specific amounts fixed by law or under formulas prescribed by law.” See 31 U.S.C. § 1501

(a)(5)(A) (emphasis added). The SBA agrees that for purposes Section 706(1) the term “shall”

indicates a mandatory duty to Act. Opposition at 7; Arabzada v. Donis, No. CV 23-655 (RC), 2024

WL 1175802, at *4 (D.D.C. Mar. 19, 2024) (“D.C. Circuit has explained, the term ‘shall’ is

mandatory.”) (internal citations omitted); Anglers Conservation Network v. Pritzker, 809 F.3d

664, 671 (D.C. Cir. 2016) (finding that legislation using the word “shall” imposes a mandatory

obligation and therefore ministerial duty upon the agency.) 3

3
Moreover, the addition of the language “to be paid” presents a forward-looking statement. Thus,
SBA’s interpretation that an obligation only occurs at the time of actual payment is contrary to the
plain reading of the statute.

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Government Accounting Principles agree with the mandatory duty interpretation of 31 U.S.

Code § 1501. The “obligational event” for a grant occurs at the time of grant award. See GAO,

Principles of Federal Appropriations Law, at 10-107 (“The [grant award] is when the grantor

agency must record an obligation under 31 U.S.C. § 1501(a)(5), not when the grantee draws down

the funds or when the grantee incurs its own obligations.”) (emphasis added). “The statutory

requirement for recording obligations extends to all actions necessary to constitute a valid

obligation, and includes, of course, grant obligations”. Id., at 10-14 (citing 31 U.S.C. § 1501)

(emphasis added).

The SBA cites to two cases for its position that 31 U.S.C. § 1501 does not “obligate” the

government to action: Rochester Pure Waters Dist. v. EPA, 960 F.2d 180, 186 (D.C. Cir. 1992)

and Golden Ent. PA, Inc. v. SBA, Civ. A. No. 22-1731 (JDB), 2024 WL 1344421, at *6 (D.D.C.

Mar. 29, 2024). First, Rochester only cites to 31 U.S.C. § 1501 to state that the statute can create

an affirmative obligation. Rochester Pure Waters Dist. v. EPA, 960 F.2d 180, 186 (D.C. Cir. 1992)

(finding that pending litigation did not fall under the obligation requirements of 31 U.S.C. §

1501(a)). Second, HGI recognizes Golden Entertainment holds that “31 U.S.C. § 1501(a)(5) does

not create any requirement that SBA ‘obligate’ funds after issuing a Notice of Award.” Golden

Ent. PA, Inc. v. Small Bus. Admin., No. CV 22-1731 (JDB), 2024 WL 1344421, at *6 (D.D.C. Mar.

29, 2024). However, the SBA has already admitted that Golden Entertainment is inapposite:

Last, Harlem Globetrotters tries to distinguish Golden Entertainment on various
grounds, but that case is inapposite for an even simpler reason. The Golden
Entertainment plaintiffs did not argue that either 15 U.S.C. § 633 or the Economic
Aid Act imposed a ministerial duty on SBA to disburse funds to them. They instead
argued only that (1) a different statute, (2) the Notice of Award itself, and (3)
various agency guidance documents imposed such a duty—arguments that the court
easily rejected. The Golden Entertainment court thus had no occasion to address
whether either 15 U.S.C. § 633 or the Economic Aid Act impose a ministerial duty
on SBA to disburse funds to an applicant.

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See Opposition at 9-10 (internal citations omitted). Moreover, plaintiffs in Golden Entertainment

never raised the issue of statutory interpretation of 31 U.S.C. § 1501. See Plaintiff's Memorandum

of Points and Authorities in Support of Its Motion for Preliminary Injunction, Dkt 12, 2024 WL

1988177 (JDB) (citing only to GAO decisions in support of its definition of “obligation”). This is

likely because Golden Entertainment was decided before Loper Bright, in a time when agency

interpretation of statutes under both 706(1) and 706(2) were given significant deference. See Loper

Bright Enterprises v. Raimondo, 144 S. Ct. 2244, at 2273, 219 L. Ed. 2d 832 (2024). (“Chevron is

overruled. . . . courts need not and under the APA may not defer to an agency interpretation of the

law simply because a statute is ambiguous.”) No such deference exists anymore. Thus, this Court

has never been presented with arguments analyzing the statutory interpretation of 31 U.S.C. §

1501(a).

The complete text of 31 U.S.C. § 1501(a)(5)(A) states: “[a]n amount shall be recorded

as an obligation of the United States Government only when supported by documentary evidence

of a grant or subsidy payable from appropriations made for payment of, or contributions to,

amounts required to be paid in specific amounts fixed by law or under formulas prescribed

by law.” 31 U.S.C. § 1501(a)(5)(A) (emphasis added).

HGI acknowledges that the “only when” language establishes a condition precedent.

However, a condition precedent, does not negate the agency’s affirmative duty to act. Washington

Props., Inc. v. Chin, Inc., 760 A.2d 546, 549 (D.C. 2000) (A condition precedent is “an event, not

certain to occur, which must occur, unless its non-occurrence is excused, before performance under

a contract becomes due.”) Instead, a condition precedent only adds an additional hurdle that must

be met before the agency must carry out its duty. See W. Sur. Co. v. U.S. Eng'g Co., 375 F. Supp.

3d 1, 5 (D.D.C. 2019) (“In other words, a condition precedent is a fact which must either occur or

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exist before a duty to perform can arise.”) The Economic Aid Act satisfies this condition precedent

– it undisputedly prescribes a “formula” for distribution of funds. See 15 U.S. Code § 9009a(c)

(“Amount. . . Subject to subparagraphs (B) and (C), a grant under subsection (b)(2) shall be in the

amount equal to the lesser of . . .”) Therefore it follows, that an agency must “record as an

obligation” the granted amount. 31 U.S.C. § 1501(a)(5)(A).

There are numerous GAO cases confirming this interpretation of 31 U.S.C. § 1501(a).

They are summarized in Corporation for National and Community:

[T]he nature or scope of the obligation [is] incurred at time of [grant] award. Were
it otherwise, every government contract that permits the government to terminate
the contract for the convenience of the government (48 C.F.R. § 49.502), or to
modify the terms of the contract at will (48 C.F.R. §§ 52.243-1, 243-2, 243-3),
would not be an obligation of the government at time of award. Long-standing
practice and logic both of the Congress (31 U.S.C. § 1501, 41 U.S.C. § 5) and the
accounting officers of the government (B-234957, July 10, 1989, B-112131, Feb.
1, 1956) have rejected such a view. As we explained earlier, at the time of grant
award, the Corporation's approval of a specified number of new participants
establishes a legal duty that can mature into a legal liability for education benefits
by virtue of actions of the grantee that are beyond the control of the Corporation
unless the Corporation takes affirmative action to modify the grant.

Obligational Practices of the Corporation for National and Community, B-300480, 2003 WL

1857402, (Comp. Gen. April 9, 2003). This Court need not reinvent the wheel. Numerous, well-

litigated GAO cases have held that 31 U.S.C. § 1501 requires agencies to mark as obligated funds

after issuance of a Notice of Award. See, e.g., U.S. Department of Education's Use of Fiscal Year

Appropriations to Award Multiple Year Grants, B-28980, 2002 WL 31950147(Comp. Gen. Dec.

30, 2002) (“In the grant context, the obligation occurs at the time of award.”) (citing 31 U.S.C. §

1501(a)(5)).; Appropriations, Obligation, Civil Defense Contributions to States B-109173, 1952

WL 588 (Comp. Gen. May 21, 1952) (finding that a grant constitutes “a binding obligation upon

the United States” for purposes of Appropriation Acts.)

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The SBA responds in two ways. First, it implies that 31 U.S.C. § 1501(a)(5)(A) does not

apply to discretionary funding. Obviously, that cannot be the case: the CAA explictily rescinded

“unobligated funds” from SVOG funding. Pub. L. 117–328., at §101(d)(2). Clearly, SVOG

fundings become “obligated” at some point. After all, the CAA’s rescission of all “unobligated”

funds from the SVOG program necessarily implies the existence and non-recission of “obligated

funds.” These two terms can only exist in a binary. See Scheidler v. Nat'l Org. for Women, Inc.,

537 U.S. 393 (2003) (finding that if a word is not statutorily defined, then the courts are bound to

start with the common law meaning of the term.)

Second, the SBA argues that an executed Notice of Award is not an obligation under 31

U.S.C. § 1501(a)(5)(A). Under the SBA’s reading of 31 U.S.C. § 1501(a)(5), the term

“obligation” is affixed to some amorphous point, likely at the actual disbursement of funds. But

that is not what 31 U.S.C. § 1501(a)(5) calls for. Instead, an executed Notice of Award presents

specific amounts to be paid, attached with specific conditions, under a formula prescribed by 15

U.S. Code § 9009a. See Corporation for National and Community, B-300480 (“When the

[agency] enters into grant agreements with state service commissions, it specifies the budget and

project period of the award, the total number of positions approved, the total amount awarded for

related program costs for the approved positions, and the terms of acceptance.”) HGI has provided

numerous authorities to support this reading of 31 U.S.C. § 1501(a)(5). See Motion at 17-20

(detailing the numerous GAO decisions concluding that the date of the Notice of an Award is the

date of an obligation for purposes of 31 U.S.C. § 1501). The SBA has provided no authority –

precedential or persuasive – analyzing the text of 31 U.S.C. § 1501.

Perhaps the most damning piece of evidence against the SBA’s position is its own affidavit.

Surprisingly, Ms. Richardson’s testimony admits that because of SBA’s own record keeping

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practices, “there is now a $4,671,078 gap that SBA owes to the U.S. Treasury.” See Opposition,

Exhibit A Richards Decl. ¶ 10. This deficit occurred because SBA reported to Congress it had

$459 million of unobligated funds, when it only had $454,328,922 in remaining funds. Id., at ¶¶9-

10. These poor record keeping practices resulted in the exact outcome GAO cases warn against.

Obligational Practices of the Corporation for National and Community, B-300480, 2003 WL

1857402, (Comp. Gen. April 9, 2003) (“Understanding the concept of an obligation and properly

recording obligations are important because an obligation serves as the basis for the scheme of

funds control that Congress envisioned when it enacted such fiscal laws as the Antideficiency

Act.”) By not accurately marking the funds as “obligated” at the time of the Notice of Award, the

SBA acknowledges that it does not “understand[] the concept of an obligation and properly

recording obligations.” Id.

And contrary to the SBA’s assertions, just because the SBA does not have the money to

pay HGI, does not mean it is “off the hook” for payment. Maine Cmty. Health Options v. United

States, 590 U.S. 296, 308, 140 S. Ct. 1308, 1319 (2020) (“Incurring an obligation, of course, is

different from paying one.”) Maine Cmty, describes the four-steps required to create and satisfy

a Government obligation:

Creating and satisfying a Government obligation, therefore, typically involves four
steps: (1) Congress passes an organic statute (like the Affordable Care Act) that
creates a program, agency, or function; (2) Congress passes an Act authorizing
appropriations; (3) Congress enacts the appropriation, granting “budget authority”
to incur obligations and make payments, and designating the funds to be drawn;
and (4) the relevant Government entity begins incurring the obligation.

Maine Cmty. Health Options v. United States, 590 U.S. 296, 308, 140 S. Ct. 1308, 1319 (2020)

(citing GAO, Principles of Federal App. Law, and Op. Comp. Gen., B–193573 (Dec. 19, 1979)).4

4
Maine Cmty - finding that Congress can “deviate from the [four-step] pattern” - ultimately
analyzed the text of the Affordable Care Act. Id. Here, there is no need to apply a different test

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Preliminarily, it should be noted that in support of its position, the Supreme Court cites

almost exclusively to Comptroller General Decisions and the GAO’s Principles of Federal

Appropriations Law – thus even the Supreme Court recognizes the GAO’s expertise in analyzing

appropriations statutes. Moreover, there can be no question that the Government has satisfied all

four requirements to create and satisfy an “obligation” for purposes of 31 U.S. Code § 1501: 1)

Congress passed 15 U.S.C. § 633 creating the SBA to administer small business grants, 2)

Congress passed the Economic Aid Act authorizing appropriations; 3) Congress enacted the

SVOG statue granting “budget authority” to the SBA: and 4) the SBA began incurring obligations

under 31 U.S.C. § 1501 by issuing Notices of Award. Id. Under any rational interpretation of 31

U.S.C. § 1501, the SBA has a ministerial duty to accurately record HGI’s Notice of Award as an

“obligation”. See Wilbur v. U.S. ex rel. Kadrie, 281 U.S. 206, 218–19, 50 S. Ct. 320, 324, 74 L.

Ed. 809 (1930) (“Where the duty in a particular situation is so plainly prescribed as to be free from

doubt and equivalent to a positive command, it is regarded as being so far ministerial that its

performance may be compelled by mandamus, unless there be provision or implication to the

contrary.”) Therefore, this Court has the authority to order the SBA to fulfill that ministerial duty

and pay HGI $10,000,000.

B. 706(1) is Appropriate to Prevent the Frustration of Judicial Orders.

Finally, the SBA argues that Congress intended for the APA to not always provide an

actionable relief. Opposition at 9. This misses the point of HGI’s argument. HGI asserts that

under the SBA’s interpretation, remedies available under Section 706(2) for discretionary grants

are meaningless. If a statute is deemed discretionary (and almost all grant statutes are), anytime a

because under the four-step analysis, an obligation has been created against the Government which
must be satisfied.

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court orders a Notice of Award to be set aside pursuant to Section 706(2), the agency can simply

refuse to take further action. The practical effect of any claim for grant relief under 5 U.S.C. §

706(2) to revisit a denial of a Notice of Award will be lost. In fact, this Court will be setting the

precedent that for most grants, it will be futile to bring a 5 U.S.C. § 706(2) to challenge a denial

of Notice of Award, because issuance of the Notice of Award will not necessarily lead to payment

of funds.

This Court is clear that it has the authority to issue a writ of mandamus to “prevent the

frustration of orders previously issued.” Potomac Elec. Power Co. v. ICC (“PEPCO”), 702 F.2d

1026, 1032 (D.C. Cir. 1983); see also In re Core Commc'ns, Inc., 531 F.3d 849, 856 (D.C. Cir.

2008) (“[U]ntil the FCC states its explanation for its interim rules in a final order, Core cannot

mount a challenge to those rules. In this way, the FCC insulates its nullification of our decision

from further review. But a federal court has authority to issue a writ of mandamus to prevent the

frustration of orders previously issued.”) (internal citations omitted).

HGI points to any number of SVOG cases decided either partially or fully in favor of the

plaintiff after the passage of the CAA. See, e.g., Concert Inv., LLC v. Small Bus. Admin., 100 F.4th

215 (D.C. Cir. 2024); United States Olympic & Paralympic Museum v. Small Bus. Admin., No.

22-CV-3785 (TSC), 2024 WL 3694462(D.D.C. Aug. 7, 2024). If relief cannot be granted because

of the CAA, these cases would be moot. In response, SBA claims that HGI has a “strained attempt

to find meaning” behind the text of Concert Inv., LLC v. Small Bus. Admin., 100 F.4th 215 (D.C.

Cir. 2024) and similar cases. Opposition, at 9. Unfortunately for the SBA, this Court has already

disagreed with the SBA’s position. See Vallejo Ent. LLC v. Small Bus. Admin., No. 1:22-CV-

01548-RCL, 2023 WL 3275634, at *2 (D.D.C. May 5, 2023) (“Concert Investor will almost

assuredly answer a key question potentially dispositive in this case: whether congressional

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rescission of unobligated funds from the Shuttered Venue Operators Grant (SVOG) Program

prevents courts from providing relief.”). By finding for the plaintiff, Concert Investor implicitly

answered the question posed in Vallejo. If the SVOG prevented this Court from providing relief

Concert Investor, it would not have partially found in favor of the plaintiff – there would be no

reason to. This Court’s holdings in those cases point in one direction: Congressional rescission of

unobligated funds from the SVOG Program does not prevent this Court from providing relief.

It remains unclear whether the SBA will ever pay HGI without a direct order, even if it has

remaining SVOG funds. Under the SBA’s interpretation of the SVOG statute, the SBA can sit on

SVOG funds granted to it without ever administering any funds. This cannot be how a government

functions. The APA allows this Court to compel agency action when it is “unlawfully withheld or

unreasonably delayed.” 5 U.S.C. § 706(1). The SBA should be ordered to pay $10,000,000 and

fulfill its obligations under a valid Notice of Award.

IV. HGI is Entitled to Promissory Estoppel.

A. Promissory Estoppel Claims Can Be Levied Against the Government.

The SBA claims that sovereign immunity bars all promissory estoppel cases against the

government. In support of this claim, the SBA primarily relies on Olympic Fed. Sav. & Loan Ass’n

v. Off. of Thrift Supervision, Civ. A. No. 90-0482 (RCL), 1990 WL 134841(D.D.C. Sept. 6, 1990).

See Opposition at 27-28.

The SBA’s reliance on Olympic is misplaced for two reasons. First, Olympic is an

unpublished opinion that should not be given precedential effect. See Nat'l Classification Comm.

v. United States, 765 F.2d 164, 170 (D.C. Cir. 1985) (“[U]npublished opinion ... has no

precedential effect with respect to other parties.”). Moreover, Olympic clearly discusses

promissory estoppel brough under the authority of the Tucker Act. Id. (“[T]he Tucker Act did not

waive immunity as to promissory estoppel claims.”) While the Tucker Act was at issue in HGI’s

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case at the Court of Federal Claims, it is not at issue in this case. Instead, this Court has indicated

that promissory estoppel can be levied against the government. See e.g. Donovan v. USPS, 530

F.Supp. 872, 892–94 (D.D.C. 1981) (resolving promissory estoppel claim against USPS on its

merits); Beckman v. USPS, 79 F.Supp.2d 394, 406 n. 15 (S.D.N.Y.2000) (“[T]here is nothing to

prevent this Court from hearing a claim of promissory estoppel against the USPS, provided there

is some basis for jurisdiction and the claim is properly pleaded.”)

In this Court, “immunity questions often turn on whether the activity is discretionary, or

ministerial.” Burkhart v. WMATA, 112 F.3d 1207, 1216 (D.C. Cir. 1997) (internal citations

omitted). Monument Realty explains the relevant test:

Under certain conditions, liability for discretionary actions is shielded by sovereign
immunity, whereas sovereign immunity never shields ministerial actions. The
distinction between “discretionary” and “ministerial” is as follows: “Generally
speaking, a duty is discretionary if it involves judgment, planning, or policy
decisions. It is not discretionary [i.e., ministerial] if it involves enforcement or
administration of a mandatory duty at the operational level, even if professional
expert evaluation is required.

Monument Realty LLC v. Washington Metro. Area Transit Auth., 535 F. Supp. 2d 60, 76 (D.D.C.

2008) (emphasis added). As discussed in Section IIIA, the SBA has a ministerial duty to obligate

funds pursuant to an awarded grant. Thus, sovereign immunity does not bar HGI from alleging

promissory estoppel claims.

B. HGI Adequately Established the Elements of Promissory Estoppel.

To demonstrate promissory estoppel, a plaintiff must establish three elements: (1) the

existence of a promise; (2) that the promise reasonably induced reliance on it; and (3) that the

promisee relied on the promise to his detriment. In re U.S. Office Products Co. Sec. Litig., 251 F.

Supp. 2d 77, 97 (D.D.C. 2003).

SBA primarily contends that the Notice of Award and surrounding documentation is not a

“promise.” However, a “promise is an expression of intention that the promisor will conduct

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himself in a specified way or bring about a specified result in the future, communicated in such a

manner to a promise that he may justly expect performance and may reasonably rely thereon.”

Choate v. TRW, Inc., 14 F.3d 74, 77–78 (D.C. Cir. 1994). The execution of the Notice of Award

and surrounding communications (including a voicemail from SBA’s representative) satisfies this

element.

Throughout the SVOG process, the SBA solicited offers through grant applications, set up

a website and SVOG Portal to receive and approve such applications, and published SVOG

Guidelines and other policy documents concerning the administration of SVOG grants, including

unambiguous instructions regarding the SBA’s acceptance of applicant offers. 15 U.S.C. §

9009a(b)(1)(A); SVOG Notice, 86 Fed. Reg. 16,270; SVOG Guidance (Ver. 1); SVOG Guidance

(Ver. 4). And pursuant to the governing procedure established by Section 9009a, its accompanying

regulations, and the SBA’s official communications with HGI, grant agreements were accepted by

issuing award notices—specifically Form 1222 Notice of Award—to approved applicants. See

SVOG Notice, 86 Fed. Reg. at 16,274 (providing that the SBA will notify successful applicants

“via electronic correspondence containing a link to access an electronic version of a grant award

notification”); SVOG Guidance (Ver. 1) at 1, 3–4 (providing that “after approval” the SBA would

send a “Notice of Award (Form 1222)” and that the applicant’s “application has been approved”

and the “award amount is finalized”). Clearly, SBA communicated that it intended to provide

money to SVOG recipients.

In support of its position, the SBA cites to HGI’s Court of Federal Claims case to suggest

that the Notice of Award was not a “promise.” Opposition at 30. However, that was not at issue

in the Court of Federal Claims. Harlem Globetrotters Int’l, Inc. v. United States, 168 Fed. Cl. 31,

43 (2023). Instead, the Court of Federal Claims held that the Notice of Award by itself did not

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satisfy the requirements to be a binding contract for purposes of the Tucker Act. Id. Again, the

Tucker Act is not at issue in the instant matter.

Jurisprudence in this Circuit is clear that oral communications supported by documentation

can serve as the basis for a promissory estoppel claim. See Parnigoni v. St. Columba's Nursery

Sch., 681 F. Supp. 2d 1, 26 (D.D.C. 2010) (holding an oral promise of employment for a term can

constitute as a definite promise for a promissory estoppel claim). By all accounts, HGI was told it

would receive the funding both through the SBA website, the Notice of Award, and verbal

confirmation. However, no funding ever came.

SBA also claims that HGI did “not even argue it satisfies the second element of a

promissory estoppel claim—that SBA ‘expected [it] to rely on the promise by taking definite and

substantial action or forbearing from such action.’” Opposition at 32. Again, this is simply untrue.

The Motion for Summary Judgment states that “[o]n reliance of SBA’s Notice of Award and verbal

confirmation, HGI began its tour for the upcoming season. Singleton Declaration, ¶7. At this time,

no reasonable person would think that the SBA would claim that the not yet enacted CAA would

rescind promised funds.” Motion at 32. HGI’s application and supplemental information informed

SBA of HGI’s potential upcoming tour. Administrative Record (“AR”) 0001-0654. Moreover,

one of the conditions to receive the Notice of Award was continued confirmation with the SVOG

statute. AR 1915-1917.

The SBA promised HGI money and HGI anticipated using the awarded $10 million for

payroll costs, rent payments, utility payments, and debt payments. HGI suffered injuries due to its

reliance on the Defendants’ promise and therefore should be awarded at least $10 million in

promissory estoppel.

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CONCLUSION

For the foregoing reasons, HGI respectfully requests that the Court grant HGI’s Motion for

Summary Judgment and Deny SBA’s Cross Motion for Summary Judgment.

Respectfully submitted this 2nd day of December, 2024.

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