Order — John Keener v. United States of America; Small Business Administration (District of South Carolina)

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An order in John Keener v. United States of America, Small Business Administration and Isabella Casillas Guzman, No. 2:22-cv-1640-DCN, in the United States District Court for the District of South Carolina, filed March 13, 2023 as Entry Number 36. The order recounts the complaint's allegations that race- and gender-based priority for the Restaurant Revitalization Fund under Section 5003 of ARPA pushed Keener's May 3, 2021 application behind minority applicants and women. The second amended complaint pleads equal protection, due process and Title VI claims and seeks an order requiring the defendants to fund the applications. Finding that the plaintiffs seek money damages, which are not an appropriate remedy under the APA, the court grants the motions to dismiss (ECF Nos. 15, 27) without prejudice. It is issued by David C. Norton.

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“Order — John Keener v. United States of America; Small Business Administration (District of South Carolina).” Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/36-order-finding-as-moot-15-motion-to-dismiss-granting-27-motio-5511fcee4e/, SHA-256 ef1b02db9fa58bcd5642501ba99403ec91d21aab3a6f2711d18dfb8fe05dcfe4.

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2:22-cv-01640-DCN Date Filed 03/13/23 Entry Number 36 Page 1 of 23

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF SOUTH CAROLINA
CHARLESTON DIVISION

JOHN KEENER, individually and on behalf )
of Crab Pot LLC, Awshucks SC, LLC d/b/a )
Oyster House, CCH-Market, LLC d/b/a )
Charleston Crabhouse-Market Street, and )
Huntmasters, Inc., )
)
Plaintiffs, )
) No. 2:22-cv-1640-DCN
vs. )
) ORDER
UNITED STATES OF AMERICA; )
SMALL BUSINESS ADMINISTRATION; )
and ISABELLA CASILLAS GUZMAN, in )
her official capacity as Administrator of the )
Small Business Administration, )
)
Defendants. )
_______________________________________)

The following matter is before the court on defendants United States of America

(the “United States”), the Small Business Administration (the “SBA”) and Isabella

Casillas Guzman’s (“Guzman”) (collectively, “defendants”) motions to dismiss, ECF

Nos. 15, 27. For the reasons set forth below, the court grants the motions and dismisses

the case.

I. BACKGROUND

John Keener (“Keener”), individually and on behalf of Crab Pot LLC, Awshucks

SC, LLC d/b/a/ Oyster House, CCH-Market, LLC d/b/a Charleston Crabhouse-Market

Street, and Huntmasters, Inc., (collectively, “plaintiff restaurants,” and with Keener,

“plaintiffs”) brought this action against the SBA alleging that its gender- and race-based

considerations for the Restaurant Revitalization Fund (“RRF”) that is included in Section

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5003 of the American Rescue Plan Act, Pub. L. 117-2 (“ARPA”), violated plaintiffs’

constitutionally-protected rights. ECF No. 1, Compl. at 1–2.

Section 5003 of ARPA appropriated $28.6 billion to create the RRF. ARPA

§ 5003(b); 2d Amend. Compl. ¶ 19. The RRF was administered by the SBA and

provided grants to restaurants adversely impacted by the COVID-19 pandemic. 2d

Amend. Compl. ¶¶ 19–21. Grant recipients were not required to repay the funds so long

as they were used on specified eligible expenses. ARPA §§ 5003(c)(5)–(6). ARPA

further provided that, during the first twenty-one days of the RRF’s operation, the SBA

Administrator:

shall prioritize awarding grants to eligible entities that are small business
concerns owned and controlled by women (as defined in section 3(n) of the
Small Business Act (15 U.S.C. 632(n))), small business concerns owned
and controlled by veterans (as defined in section 3(q) of such Act (15 U.S.C.
632(q))), or socially and economically disadvantaged small business
concerns (as defined in section 8(a)(4)(A) of the Small Business Act (15
U.S.C. 637(a)(4)(A))).

ARPA § 5003(c)(3)(A); 2d Amend. Compl. ¶ 21. Because the priority period was open

to “socially and economically disadvantaged small business concerns,” applicants within

that category must meet both criteria to qualify. After the twenty-one-day priority period,

SBA “shall award grants to the eligible entities in the order in which applications [were]

received.” ARPA § 5003(c)(1).

ARPA incorporates another federal law called the Small Business Act, 15 U.S.C.

§ 637(a)(4)(A), which provides that “[s]ocially disadvantaged individuals are those who

have been subjected to racial or ethnic prejudice or cultural bias because of their identity

as a member of a group without regard to their individual qualities.” 2d Amend. Compl.

¶ 22. Those regulations further define “socially disadvantaged individuals” and

“economically disadvantaged individuals” with a presumption that certain minority
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groups meet the criteria—namely, Black Americans; Hispanic Americans; Native

Americans (including Alaska Natives and Native Hawaiians); Asian Pacific Americans;

or Subcontinent Asian Americans. Id. ¶ 23 (citing 13 C.F.R. §§ 124.103–104). This

presumption may be rebutted with “credible evidence to the contrary.” 13 C.F.R.

§ 124.103(b)(3). Further, those who are not presumptively socially disadvantaged may

establish individual social disadvantage by providing evidence of a distinguishing feature

that has limited their advancement or entry into the business world. Id.

§§ 124.103(c)(1)–(2). Those who are not presumptively economically disadvantaged

must meet other criteria. Namely, the SBA “examines[s] factors relating to the personal

financial condition of [the] individual. . . , including income for the past three years. . . ,

personal net worth, and the fair market value of all asserts . . . .” Id. § 124.104(c).

In accordance with Section 5003(c)(3)(A) of ARPA, the SBA announced that

during the priority period, it would “accept applications from all eligible Applicants,” but

would “distribute funds only for approved applications where the Applicant has self-

certified that it meets the eligibility requirements for a small business concern at least 51

percent owned and controlled by women, veterans, or socially and economically

disadvantaged individuals.” SBA, Restaurant Revitalization Funding Program: Program

Guide as of April 28, 2021, at 16, https://www.sba.gov/sites/default/files/2021-

04/Restaurant%20Revitalization%20Fund%20Program%20Guide%20as%20of%204.28.

21-508_0.pdf (last accessed March 13, 2023).

On July 2, 2021, the SBA announced the closure of the RRF program. SBA, SBA

Administrator Announces Closure of Restaurant Revitalization Fund Program, (July 2,

2021), https://www.sba.gov/article/2021/jul/02/sba-administrator-announces-closure-

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restaurant-revitalization-fund-program (last accessed March 13, 2023). As of June 30,

2021, the RRF program received more than 278,000 submitted eligible applications

representing over $72.2 billion in requested funds. Id. Of the $28.6 billion appropriated

to the program, approximate $18 billion went to underserved populations as defined by

the statute. Id. Presumably, the remaining approximately $10.6 billion was awarded to

eligible applications not identified as part of an underserved group. See id.

On November 1, 2022, four members of Congress wrote to Guzman, the

Administrator of the SBA, requesting that the SBA announce its plan to release all

unobligated funds from the RRF authorized under ARPA to eligible applicants. See ECF

No. 26-2. Their letter was based on a report from the Government Accountability Office

that stated that as of June 2022, $180 million of RRF funds remained unobligated. Id.

The letter also requested that the SBA submit to Congress “detailed information

regarding the agency’s progress in retrieving misallocated funds.” Id.

Keener applied for a grant under the RRF on May 3, 2021. 2d Amend. Compl.

¶ 30. He claims that as a part of applying for a grant, he chose “white” as his race and

“male” as his gender, “which means his application was pushed to the back of the queue

behind certain minority applicants and women.” Id. ¶ 31. Plaintiffs did not receive any

grant money, and Keener alleges that he was “unfairly discriminated against on the basis

of race and gender.” Id. ¶¶ 36, 39. Around one year later, this lawsuit followed.

On May 24, 2022, plaintiffs filed the complaint against the defendants. Compl.

On August 2, 2022, plaintiffs amended the complaint for the first time. ECF No. 9,

Amend. Compl. On October 11, 2022, the defendants filed their first motion to dismiss.

ECF No. 15. On November 14, 2022, plaintiffs filed their second amended complaint,

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now the operative complaint, which mooted defendants’ first motion to dismiss. ECF

No. 26, 2d Amend. Compl. On December 12, 2022, the defendants filed their second

motion to dismiss. ECF No. 27. Plaintiffs responded in opposition on January 20, 2023,

ECF No. 30, to which the defendants replied on February 6, 2023, ECF No. 34. As such,

the motions have been fully briefed and the matter is now ripe for review.

II. STANDARD

A. Fed. R. Civ. P. 12(b)(1)

Dismissal under Federal Rule of Civil Procedure 12(b)(1) examines whether the

pleading fails to state facts upon which jurisdiction can be founded. It is the petitioner’s

burden to prove jurisdiction, and the court is to “regard the pleadings’ allegations as mere

evidence on the issue, and may consider evidence outside the pleadings without

converting the proceeding to one for summary judgment.” Richmond, Fredericksburg &

Potomac R.R. Co. v. United States, 945 F.2d 765, 768 (4th Cir. 1991).

To resolve a jurisdictional challenge under Rule 12(b)(1), the court may consider

undisputed facts and any jurisdictional facts that it determines. The court may dismiss a

case for lack of subject matter jurisdiction on any of the following bases: “(1) the [the

pleading] alone; (2) the [pleading] supplemented by undisputed facts evidenced in the

record; or (3) the [pleading] supplemented by undisputed facts plus the court’s resolution

of disputed facts.” Johnson v. United States, 534 F.3d 958, 962 (8th Cir. 2008) (quoting

Williamson v. Tucker, 645 F.2d 404, 413 (5th Cir. 1981)).

B. Fed. R. Civ. P. 12(b)(6)

A Rule 12(b)(6) motion for failure to state a claim upon which relief can be

granted “challenges the legal sufficiency of a complaint.” Francis v. Giacomelli, 588

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F.3d 186, 192 (4th Cir. 2009) (citations omitted); see also Republican Party of N.C. v.

Martin, 980 F.2d 943, 952 (4th Cir. 1992) (“A motion to dismiss under Rule 12(b)(6) ...

does not resolve contests surrounding the facts, the merits of a claim, or the applicability

of defenses.”). To be legally sufficient, a pleading must contain a “short and plain

statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P.

8(a)(2). A Rule 12(b)(6) motion should not be granted unless it appears certain that the

plaintiff can prove no set of facts that would support his claim and would entitle him to

relief. Mylan Labs., Inc. v. Matkari, 7 F.3d 1130, 1134 (4th Cir. 1993). When

considering a Rule 12(b)(6) motion, the court should accept all well-pleaded allegations

as true and should view the complaint in a light most favorable to the plaintiff.

Ostrzenski v. Seigel, 177 F.3d 245, 251 (4th Cir. 1999); Mylan Labs., 7 F.3d at 1134.

“To survive a motion to dismiss, a complaint must contain sufficient factual matter,

accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v.

Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544,

570 (2007)). “A claim has facial plausibility when the plaintiff pleads factual content

that allows the court to draw the reasonable inference that the defendant is liable for the

misconduct alleged.” Id.

III. DISCUSSION

Plaintiffs allege three causes of action. 2d Amend. Compl. ¶¶ 42–79. First,

plaintiffs allege a violation of the Fourteenth Amendment’s due process and equal

protection rights. Id. ¶¶ 42–62. Second, plaintiffs allege a violation of Title VI—

specifically, plaintiffs claim the federal government violated 42 U.S.C. § 2000d et seq.,

which prohibits the exclusion of individuals from participation in or from denial of

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benefits from a federally funded program on the grounds of race, color, or national origin.

Id. ¶¶ 63–72. Third, plaintiffs seek injunctive relief asking the court to require the

defendants to fund plaintiffs’ applications. Id. ¶¶ 73–79. Preliminarily, the first and third

causes of action require the court to engage in a generous amount of interpretation of the

arguments. First, plaintiffs incorrectly bring a Fourteenth Amendment claim for equal

protection and due process when they should bring a Fifth Amendment claim since the

claim is against the federal government, not a state or local entity. 1 Second, plaintiffs

seek injunctive relief pursuant to 28 U.S.C. §§ 2201–2202 (declaratory judgments) and 5

U.S.C. §§ 702, 706 (judicial review pursuant to the Administrative Procedure Act

(“APA”)), which have different standards of review and therefore should be considered

independently of each other. 2d Amend. Compl. ¶ 76.

1
Under the Due Process Clause of the Fifth Amendment, no person may “be
deprived of life, liberty or property, without due process of law.” U.S. Const. amend. V.
This guarantee has a procedural as well as a substantive component. See Cnty. of
Sacramento v. Lewis, 523 U.S. 833, 856 (1998); Martin v. St. Mary’s Dep’t of Soc.
Servs., 346 F.3d 502, 511 (4th Cir. 2003). Procedural due process ensures that the
government employs fair procedures when it seeks to deprive an individual of liberty or
property. See Mathews v. Eldridge, 424 U.S. 319, 332 (1976); D.B. v. Cardall, 826 F.3d
721, 741 (4th Cir. 2016). But, the Fifth Amendment assures “more than fair process.”
Washington v. Glucksberg, 521 U.S. 702, 719 (1997). Substantive due process “forbids
the government to infringe certain ‘fundamental’ liberty interests at all, no matter what
process is provided, unless the infringement is narrowly tailored to serve a compelling
state interest.” Reno v. Flores, 507 U.S. 292, 301-02 (1993) (emphasis in original). In
addition to procedural and substantive due process, the Supreme Court has held that the
Fifth Amendment implicitly guarantees the right to equal treatment enshrined in the
Fourteenth Amendment. See Bolling v. Sharpe, 347 U.S. 497 (1954); see also United
States v. Windsor, 570 U.S. 744, 774 (“The liberty protected by the Fifth Amendment’s
Due Process Clause contains within it the prohibition against denying to any person the
equal protection of the laws.”). Thus, courts apply Fourteenth Amendment jurisprudence
to equal protection claims brought against the federal government. See Buckley v. Valeo,
424 U.S. 1, 93 (1976) (“Equal protection analysis in the Fifth Amendment area is the
same as that under the Fourteenth Amendment.”); accord Sessions v. Morales-Santana,
582 U.S. 47, 52 n.1 (2017).
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Defendants’ arguments for dismissal can most easily be distilled into two

umbrella arguments: (1) dismissal for lack of subject matter jurisdiction, and (2)

dismissal for failure to state a claim. First, defendants argue there is no subject matter

jurisdiction because: (a) plaintiffs cannot show actual or imminent injury and therefore

lack standing; (b) the contested priority period has ended meaning the claim regarding

that period is moot; and (c) there is no final agency action that would allow an APA

claim to proceed, meaning that the claim is not ripe. ECF No. 27. Second, defendants

argue that plaintiffs have failed to state a claim because: (a) the elements for declaratory

relief are not met; (b) the APA’s waiver of sovereign immunity is not applicable; and (c)

Title VI claims do not apply to federal agency administrative programs. Id. Plaintiffs

filed a short response in opposition alleging that the imminent agency action is the

depletion of the unobligated funds in the RRF, arguing that the ending of the priority

period counts as final agency action, and claiming that since Congress did not expressly

prohibit waiver of sovereign immunity, the suit is not prohibited. ECF No. 30. In reply,

defendants reiterate that there is no plausible claim for injunctive relief and directly

contest plaintiffs’ sovereign immunity arguments, saying that Congress has not explicitly

waived the SBA’s sovereign immunity for claims relating to the RRF. The court

examines the arguments in turn.

A. Standing

To have standing, a plaintiff must “[1] present an injury that is concrete,

particularized, and actual or imminent; [2] fairly traceable to the defendant’s challenged

behavior; and [3] likely to be redressed by a favorable ruling.” Davis v. Fed. Elec.

Comm’n, 554 U.S. 724, 733 (2008). “For a legal dispute to qualify as a genuine case or

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controversy, at least one plaintiff must have standing to sue.” Dep’t of Commerce v.

New York, 139 S. Ct. 2551, 2565 (2019). Plaintiffs, as the party invoking federal

jurisdiction, bear the burden of establishing these elements. Lujan v. Defs. of Wildlife,

504 U.S. 555, 561 (1992).

1. Injury in Fact

Defendants’ only argument regarding standing is that plaintiffs have failed to

allege injury in fact—defendants do not challenge that the injury is fairly traceable to the

defendants’ challenged behavior or that it is likely to be redressed by a favorable ruling.

Specifically, defendants argue that plaintiffs lack standing to seek injunctive or

declaratory relief relating to the long-expired priority period. ECF No. 27 at 8. In

support of this argument, defendants point to the fact that SBA has twice stated under

penalty of perjury that “because the statutory priority period is over, SBA will not take

priority status into account when issuing new RRF awards.” Id. (citation omitted).

Plaintiffs have failed to explicitly establish standing, but have stated facts that allows the

court to perform the standing analysis. See 2d Amend. Compl.; ECF No. 30.

“To establish injury in fact, a plaintiff must show that he or she suffered ‘an

invasion of a legally protected interest’ that is ‘concrete and particularized’ and ‘actual or

imminent, not conjectural or hypothetical.’” Spokeo, Inc. v. Robins, 578 U.S. 330, 339

(2016) (quoting Lujan, 504 U.S. at 560). While “imminence is concededly a somewhat

elastic concept,” a “threatened injury must be certainly impending to constitute injury in

fact,” and “[a]llegations of possible future injury are not sufficient.” Clapper v. Amnesty

Int’l USA, 568 U.S. 398, 409 (2013) (cleaned up). Rather, “[a]n allegation of future

injury may suffice if the threatened injury is ‘certainly impending,’ or there is a

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‘substantial risk’ that the harm will occur.” Susan B. Anthony List v. Driehaus, 573 U.S.

149, 158 (2014) (quoting Clapper, 568 U.S. at 414 n.5) (cleaned up).

The closest that plaintiffs come to directly alleging injury in fact is their response

in opposition to the motion to dismiss where they allege “the Defendants’

unconstitutional discrimination against Plaintiffs have caused exorbitant damages,”

though the nature and extent of those damages are not identified or explained. ECF No.

30 at 1. Otherwise, the second amended complaint and the response in opposition are

silent as to the required elements of constitutional standing. See generally id.; 2d Amend.

Compl. However, the court may construe the factual allegations in the second amended

complaint to arrive at a plausible allegation of injury in fact. Specifically, because

plaintiffs’ applications were designated as non-priority, they were ineligible for the race-

based and gender-based priority period, resulting in their otherwise eligible application

failing to be funded despite Keener’s prompt application on the first day of the

application period. See 2d Amend. Compl. ¶¶ 30–36. Plaintiffs plausibly allege that

Keener’s status as a white male means that he did not qualify for the priority period under

a presumption, and the application to prove both social and economic disadvantage was

significantly more burdensome for him on the basis of Keener’s race and gender.

Consequently, that allegation could conceivably rise to the level of a constitutional

violation and invasion of a legally protected interest that is particularized to plaintiffs.

However, it is debatable whether the injury is ongoing or imminent since the SBA

announced the closure of the RRF program on July 2, 2021—therefore, the program’s

gender- and race-based priority period is no longer in effect.

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To have standing to seek an injunction, plaintiffs must show they are in

immediate danger of sustaining some direct injury. City of L.A. v. Lyons, 461 U.S. 95,

101–02 (1983). Mere “[p]ast exposure to illegal conduct does not in itself show a present

case.” Id. at 103. That said, “continuing, present adverse effects” from past illegal

conduct can suffice, and past wrongs are evidence bearing on whether there is a real and

immediate threat of repeat injury. O’Shea v. Littleton, 414 U.S. 488, 495–96 (1974).

“The prospect of future injury becomes significantly less speculative where . . . plaintiffs

have identified concrete and consistently-implemented policies claimed to produce such

injury.” Outdoor Amusement Bus. Ass’n, Inc. v. Dep’t of Homeland Sec., 982 F.3d 671,

680 (4th Cir. 2020) (internal quotation marks omitted) (quoting In re Navy Chaplaincy,

697 F.3d 1176–77 (D.C. Cir. 2012)).

The few courts that have considered the issue of standing as it relates to the RRF

grant program in ARPA have found that non-priority applicants have standing to

challenge the gender- and race-based priority scheme. See, e.g., Vitolo v. Guzman, 2021

WL 2132106, at *2–3 (E.D. Tenn. May 25, 2021) (finding the plaintiffs had standing

because the race-conscious language of both the SBA presumption and the definition of

“socially disadvantaged” as applied in ARPA § 5003(c)(3)(A) denied them equal

protection under the law since the processing of plaintiffs’ RRF application was being

delayed on the basis of race, which was an allegedly ongoing constitutional violation and

an invasion of a legally protected interest that was particularized to the plaintiffs);

Greer’s Ranch Cafe v. Guzman, 540 F. Supp. 3d 638, 645–48 (N.D. Tex. 2021) (holding

the plaintiffs had established standing because the “threatened unconstitutional use of

racial and gender classifications explicit in Defendants’ RRF grant prioritization scheme”

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prevented plaintiffs from being considered for an RRF grant notwithstanding the fact that

plaintiffs had not applied to the RRF program prior to filing a complaint with the court);

Blessed Cajuns LLC v. Guzman, No. 4:21-cv-00677, slip op. at 9, ECF No. 18 (N.D.

Tex. May 28, 2021) (applying the same reasoning as Greer and finding the plaintiffs had

standing). Each of those cases occurred while the fund still had money and the priority

window for the grants was ongoing or had only recently closed such that priority grant

applications remained ahead of non-priority applications. To find a complete lack of

injury-in-fact, the court likely needs more information about how the SBA is processing

grants under the remaining funds of the RRF—namely, whether the priority groups no

longer receive priority over non-priority applications that were filed earlier.

Though defendants do not challenge the second two requirements of standing, the

court considers the additional standing requirements of traceability and redressability and

finds them to be met.

2. Fairly Traceable

“A plaintiff’s injury satisfies the traceability element of standing when there is a

causal connection between the injury and the defendant’s conduct complained of by the

plaintiff.” Lujan, 504 U.S. at 560; Disability Rights of S.C. v. McMaster, 24 F.4th 893,

901 (4th Cir. 2022) (internal quotation marks and citations omitted). “[T]he causation

element of standing does not require the challenged action to be the sole or even the

immediate cause of the injury.” Sierra Club v. U.S. Dep’t of the Interior, 899 F.3d 260,

284 (4th Cir. 2018). Nonetheless, “[w]hile the defendant’s conduct need not be the last

link in the causal chain, the plaintiff must be able to demonstrate that the alleged harm

was caused by the defendant, as opposed to the independent action of some third party

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not before the court.” Disability Rights of S.C., 24 F.4th at 901 (internal quotation marks

and citations omitted).

The court finds the causation prong met because it is the SBA’s alleged process of

prioritizing applications from persons of qualifying races or genders that caused the

alleged injury. This case concerns the SBA’s actions, and not those of a third party,

which is sufficient for plaintiffs to plausibly allege causation.

3. Redressability

Moreover, “[a]n injury is redressable if it is likely, as opposed to merely

speculative, that the injury will be redressed by a favorable decision.” Friends of the

Earth, Inc. v. Laidlaw Envt’l Servs. (TOC), Inc., 528 U.S. 167, 181 (2000). “A plaintiff’s

burden to establish redressability ‘is not onerous’: he must only ‘show that [he]

personally would benefit in a tangible way from the court’s intervention.’” Disability

Rights of S.C., 24 F.4th at 903 (quoting Deal v. Mercer Cnty. Bd. of Educ., 911 F.3d 183,

189 (4th Cir. 2018)). Accordingly, the “removal of even one obstacle to the exercise of

one’s rights, even if other barriers remain, is sufficient to show redressability.” Deal, 911

F.3d at 190 (quoting Sierra Club, 899 F.3d at 284) (emphasis added).

Plaintiffs possibly show that redressability is met depending on what it is they are

asking the court to do. Certain actions are beyond the scope of the courts and therefore

are not redressable by court action. See, e.g., Juliana v. United States, 947 F.3d 1159,

1175 (9th Cir. 2020) (finding that the relief requesting specific actions by the legislative

and executive branches is not within the power of an Article III court to compel). If the

court construes the complaint to assume the plaintiffs are asking the court to compel the

SBA to process their application, regardless of funding outcome, that would meet the

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redressability prong. See Vitolo, 999 F.3d at 366. However, if the plaintiffs are seeking

money damages under the APA, or to compel the agency to fund their applications, 2 a

court cannot compel such actions. See Reboot Macon, LLC v. United States, 2022 WL

4872480, at *2–3 (M.D. Ga. Oct. 3, 2022); Reynolds Assocs. v. Kemp, 974 F.2d 1331, at

*3 (4th Cir. 1992) (“It is plain, however that § 702 [of the APA] does not waive the

sovereign immunity of the United States in actions seeking money damages.”); Shahi v.

U.S. Dep’t of State, 572 F. Supp. 3d 470, 481 (N.D. Ill. 2021) (explaining that plaintiffs

have not met the redressability prong of the standing analysis when they sought

impermissible money damages under the APA). The court assumes, for the standing

analysis, it is plausible that plaintiffs are pleading the former and not the latter, which

means that the claims could be redressable by a favorable decision.

B. Mootness

Defendants argue that the priority period’s self-expiration renders plaintiffs’

claims for injunctive and declaratory relief moot because courts “can neither declare

unconstitutional nor enjoin the enforcement of a provision that is no longer in effect.”

ECF No. 27 at 9 (internal citation omitted). They assert that the court should deem

2
However, the court notes that upon analyzing the merits of an injunction, infra
III.F., the court finds it likely that plaintiffs are actually seeking impermissible money
damages. See 2d Amend. Compl. at 12 ¶ 2 (asking the court to “issue an injunction
requiring Defendants to immediately fund all applications”); id. at 12 ¶ 4 (requesting the
court to “compel Defendants to fund Plaintiff’s [sic] applications); id. at 12 ¶ 3 (asking
the court to “enter a temporary restraining order requiring Defendants to not disburse any
of the unobligated and undisbursed RRF money until Defendants fully fund Plaintiffs’
RRF applications.”). As such, plaintiffs would fail to meet the redressability prong of the
standing analysis. For the sake of this motion, and given that the outcome dismissing the
case in whole is the same regardless, the court continues its analysis of the claims
notwithstanding the plaintiffs’ apparent failure to meet the redressability prong of the
standing analysis.
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plaintiffs’ challenge to the priority period moot because the priority period expired on

May 24, 2021, and it no longer dictates how SBA processes RRF applications. Id. at 10.

“[A] case is moot when the issues presented are no longer ‘live’ or the parties lack

a legally cognizable interest in the outcome.” Porter v. Clarke, 852 F.3d 358, 363 (4th

Cir. 2017) (citation omitted). “As long as the parties have a concrete interest, however

small, in the outcome, the case is not moot.” Ellis v. Brotherhood of Ry., Airline & S.S.

Clerks, 466 U.S. 435, 442 (1984).

One court considered this exact issue of mootness in a case filed by white male

restaurant owners who challenged the RRF priority period as unconstitutional on June 4,

2021. Kingsley Rests., Inc. v. U.S. Small Bus. Admin., 2021 WL 8441778, at *1 (N.D.

Ga. Aug. 24, 2021). That court found that the plaintiffs’ requested relief was moot

because plaintiffs had “already either received all of their requested relief or seek relief

that is no longer available for the Court to grant.” Id. at *2. In pertinent part, the priority

period expired before plaintiffs filed suit, both of their applications were processed before

the fund closed, and in the time since the suit was filed, the RRF program ran out of

money and ceased operations. Id.

Plaintiffs allege that the SBA still has $180 million dollars available in it despite

the closure of that fund on July 2, 2021. See 2d Amend. Compl. ¶ 38; ECF No. 26-2.

The court cannot say based on the pleadings that plaintiffs’ claims for injunctive relief are

moot because, taken as true, that amount would be a sufficient sum to fund the plaintiffs’

awards—thus, the controversy as alleged is not moot. See Reboot Macon, LLC v. United

States, 2022 WL 1411186, at *7 (M.D. Ga. May 4, 2022) (concluding plaintiffs’

constitutional claims for injunctive relief were not moot based on the allegations in the

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complaint that the RRF still retained some funds for grant allocation). However, if

defendants were to show evidence that the RRF program lacks funds, at that point

plaintiffs’ claims would be moot. 3

C. Fourteenth Amendment

Having determined that the issues of standing and mootness do not necessarily

warrant dismissal at this stage, the court turns to the merits of plaintiffs’ constitutional

claims. The Equal Protection Clause, which prohibits States from denying persons “the

equal protection of the laws,” U.S. Const. amend. XIV, § 1, “keeps governmental

decisionmakers from treating differently persons who are in all relevant respects alike,”

Nordlinger v. Hahn, 505 U.S. 1, 10 (1992). The Fourteenth Amendment applies to state

actors, while “actions of the federal government are reviewed under the Fifth

Amendment.” United States v. Al-Hamdi, 356 F.3d 564, 573 n.11 (4th Cir. 2004).

Plaintiffs have failed to state a cognizable constitutional claim because they

brought their constitutional claims against the federal government under the Fourteenth

Amendment. See Asilonu v. Asilonu, 550 F. Supp. 3d 282, 298 (M.D.N.C. 2021)

3
Despite the plaintiffs’ complaint alleging that there remain significant funds in
the RRF, ECF No. 26-2, another court examined that allegation and found that those
funds had been disbursed. See Chef Time 1520 v. Small Bus. Admin., 2022 WL
17820293, at *2 (D.D.C. Dec. 20, 2022). Specifically, sometime after the RRF’s
depletion, about $83 million of previously obligated funds were returned to the SBA. Id.
In distributing that $83 million, the SBA considered neither the priority status nor the
date on which the application was “fully approved.” Id. Rather, the agency allocated the
funds to the pool of fully approved applications in the order in which the applications
were submitted—allocating $83 million to 169 eligible applicants, the last of which
submitted its application at 1:19 PM on May 3, 2021. Id. This is outside of the record,
and therefore the court cannot rely on the assertions or declarations in that case in making
its determination. For this reason, the court finds that the instant case is not moot because
the record indicates that plaintiffs have alleged that the SBA still has funding available in
the RRF and the government has not disputed that allegation.
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(holding a party has failed to state a claim because “the Fourteenth Amendment is

inapplicable to the federal government.”). Plaintiffs are represented by counsel and

therefore not accorded the lenient pleading standards available to pro se litigants,

meaning the court is not required to construe their incorrect Fourteenth Amendment

claims as claims brought pursuant to the Fifth Amendment. Cf. Crosby v. S.C. Dep’t of

Pub. Safety, 2017 WL 398352, at *2 (D.S.C. Jan. 30, 2017) (“Certainly, pro se

complaints are construed liberally and identification of the wrong constitutional

amendment . . . would be too technical a fault to warrant dismissal of a pro se claim.”).

As such, plaintiffs’ Fourteenth Amendment due process and equal protection claims are

dismissed for failure to state a claim.

D. Title VI Claims

The United States may not be sued without its consent. United States v. Mitchell,

463 U.S. 206, 212 (1983). Thus, the court only has jurisdiction over claims against the

United States to the extent that it has waived its sovereign immunity. Id. A waiver of

immunity must be clearly evidenced in the language of a statue. F.A.A. v. Cooper, 566

U.S. 284, 290 (2012). The provisions of Title VI of the Civil Rights Act of 1964 do not

waive sovereign immunity or provide grounds for liability against the United States. See,

e.g., Hervey v. United States, 2019 WL 11690495, at *3 (D. Kan. Oct. 30, 2019). Thus,

the court lacks subject matter jurisdiction over plaintiffs’ Title VI claims against the

federal government and they must be dismissed under Fed. R. Civ. P. 12(b)(1).

Even if the court were to consider the merits of plaintiffs’ Title VI claim, it would

find that plaintiffs have failed to state a claim for relief because Title VI claims cannot be

brought against the federal government. Title VI of the Civil Rights Act of 1964

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provides that “[n]o person in the United States shall, on the ground of race, color, or

national origin, be excluded from participation in, be denied the benefits of, or be

subjected to discrimination under any program or activity receiving Federal financial

assistance.” 42 U.S.C. § 2000d. The statute defines “program or activity” and

“program” to mean “all of the operations of” departments or instrumentalities of state or

local governments, colleges and certain public systems of higher education, certain

corporations and other private organizations, and other entities established by a

combination of two or more of the foregoing entities. See id. § 2000–d–4a. The

statutory definitions of “program or activity” and “program” do not include federal

agencies. Rather, courts have consistently held that Title VI does not apply to programs

directed by federal agencies. Jersey Heights Neighborhood Ass’n v. Glendening, 174

F.3d 180, 191 (4th Cir. 1999) (“[Title VI] includes no express cause of action, and we

decline to imply one against the federal government.”); see also, e.g., Halim v. Donovan,

951 F. Supp. 2d 201, 207 (D.D.C. 2013) (“Title VI does not apply to programs conducted

directly by federal agencies.”); Colen v. United States, 2008 WL 2051697, at *15 (C.D.

Cal. May 12, 2008), aff’d, 368 F. App’x 837 (9th Cir. 2010) (collecting cases finding no

private right of action under Title VI against a federal entity); Cannon v. Univ. of Chi.,

441 U.S. 677, 706 n.51 (1979) (suggesting that no right of action exists under Title VI

against the federal agency funding the state or local recipient agency accused of

discrimination). Because Title VI does not apply to the United States or the SBA—a

federal administrative agency—it is also inapplicable to the agency’s employees sued in

their official capacities, which includes Guzman. Thus, the court also dismisses

plaintiffs’ claims brought under Title VI for failure to state a claim.

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E. Declaratory Judgments

Plaintiffs seek injunctive relief pursuant to The Declaratory Judgment Act. 28

U.S.C. § 2201. Namely, plaintiffs ask the court to “issue a declaratory judgment that

Defendants’ implementation and application of Section 5003 of [ARPA] violated

[Keener’s] constitutional rights.” 2d Amend. Compl. at 12 ¶ 1. Defendants argue that

since the priority period challenged by plaintiffs ended well almost two years ago, there

are no circumstances warranting a declaratory judgement. ECF No. 27 at 12–13.

Specifically, defendants explain that since the priority period has ended, “any new RRF

awards will be distributed without considering an applicant’s race or gender,” meaning

that “Plaintiffs face no ongoing or imminent injury, and their requested relief is

unsupported in all events.” Id.

The Declaratory Judgment Act provides that where an “actual controversy within

its jurisdiction” exists, “any court of the United States . . . may declare the rights and

other legal relations of any interested party seeking such declaration.” 28 U.S.C.

§ 2201(a). A court may exercise jurisdiction over a declaratory judgment action when:

(1) the complaint alleges an actual controversy between the parties of sufficient
immediacy and reality to warrant issuance of a declaratory judgment;

(2) the court possesses an independent basis for jurisdiction over the parties (e.g.,
federal question or diversity jurisdiction); and

(3) the court does not abuse its discretion in its exercise of jurisdiction.

Volvo Constr. Equip. N. Am., Inc., v. CLM Equip. Co., Inc., 386 F.3d 581, 592 (4th Cir.

2004). The act, however, “is not an independent source of federal jurisdiction.”

Schilling v. Rogers, 363 U.S. 666, 678 (1960) (citation omitted). To consider a claim

under the Declaratory Judgment Act, a federal court must have jurisdiction under another

federal statute. Id.

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In examining plaintiffs’ request for a declaratory judgment, the court first notes

that plaintiffs have not pled the elements of a declaratory judgment action with

specificity. See 2d Amend. Compl. As such, the court takes the facts as alleged in the

second amended complaint and determines from them whether a declaratory judgment is

warranted. The court finds that since it has dismissed plaintiffs’ claims brought pursuant

to the Fourteenth Amendment and Title VI—the only substantive claims pleaded in the

second amended complaint—the court lacks jurisdiction for consideration of a

declaratory judgment. As such, plaintiffs’ claims for relief pursuant to 28 U.S.C. § 2201

are dismissed for want of jurisdiction.

F. Administrative Procedure Act, 5 U.S.C. §§ 702, 706

Similarly, the APA is not a jurisdictional statute, so it does not provide a court

with the initial authority to hear the case. See Califano v. Sanders, 430 U.S. 99, 105

(1977) (“[T]he APA is not to be interpreted as an implied grant of subject-matter

jurisdiction to review agency actions.”). 28 U.S.C. § 1331 provides a jurisdictional

basis—federal question jurisdiction—to hear APA claims and provides a general grant of

subject matter jurisdiction to federal district courts in “all civil actions arising under the

Constitution, laws, or treaties of the United States.” See Genesis Healthcare, Inc. v.

Becerra, 39 F.4th 253, 262 (4th Cir. 2022) (“[Subject-matter jurisdiction] must be

demonstrated independently [of the APA] by statutory authority, such as by 28 U.S.C.

§ 1331.”). The court finds that upon its dismissal of plaintiffs’ Title VI claims and

Fourteenth Amendment claims for relief for failure to state a claim, it now lacks subject

matter jurisdiction over plaintiffs’ remaining APA claims seeking injunctive relief

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because no federal question claims remain. As such, the court dismisses plaintiffs’ APA

claims for lack of jurisdiction.

However, even if the court were to reach the merits of plaintiffs’ APA claims, the

court would dismiss them under Rule 12(b)(6) for failure to state a claim because

plaintiffs seek impermissible money damages. Plaintiffs may not sue the United States or

the SBA under the APA for money damages. See Randall v. United States, 95 F.3d 339,

346 (4th Cir. 1996) (“The waiver of sovereign immunity in the APA is limited to suits

seeking relief ‘other than money damages.’”); Dep’t of Army v. Blue Fox, Inc., 525 U.S.

255, 263 (1999) (holding that money damages fall outside the APA’s waiver of sovereign

immunity). Conversely, the APA does allow the United States to be sued in the district

courts for remedies other than money damages arising from an agency’s unlawful action.

5 U.S.C. § 702; Match-E-Be-Nash-She-Wish Band of Pottawatomi Indians v. Patchak,

567 U.S. 209, 215 (2012) (“The APA generally waives the Federal Government’s

immunity from a suit seeking relief other than money damages and stating a claim that an

agency or an officer or employee thereof acted or failed to act in an official capacity or

under color of legal authority.”).

Other courts that have considered this matter have, in some instances, decided that

the plaintiffs successfully challenged the SBA’s RRF fund distribution scheme, and

forcing the agency to consider, and if approved, fund their grant application ahead of

later-filed applications by priority applicants. See, e.g., Vitolo, 999 F.3d at 366; Blessed

Cajuns LLC v. Guzman, No. 4:21-00677, slip op., ECF No. 18 at 11 (N.D. Tex. May 28,

2021). Similarly, in Reboot Macon, LLC v. United States, the court required plaintiffs to

amend their complaint to plead and clarify their APA claims—noting specifically that the

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court cannot require the SBA to disburse funds to the plaintiffs or seek any form of

damages. 2022 WL 4872480, at *2–3 (M.D. Ga. Oct. 3, 2022). Rather, the plaintiffs

could only seek injunctive relief by requiring the SBA to process the plaintiffs’

applications and, if approved, disburse funds. Id. at *3.

However, based upon plaintiffs’ second amended complaint, plaintiffs clearly

seek impermissible money damages. See 2d Amend. Compl. at 12 ¶ 2 (asking the court

to “issue an injunction requiring Defendants to immediately fund all applications”); id. at

12 ¶ 4 (requesting the court to “compel Defendants to fund Plaintiff’s [sic] applications);

id. at 12 ¶ 3 (asking the court to “enter a temporary restraining order requiring

Defendants to not disburse any of the unobligated and undisbursed RRF money until

Defendants fully fund Plaintiffs’ RRF applications.”). Since the plaintiffs are seeking

impermissible money damages, the court dismisses plaintiffs’ claims upon reaching

defendants’ motion to dismiss for failure to state a claim because money damages are not

an appropriate remedy under the APA.

IV. CONCLUSION

For the reasons set forth above, the court GRANTS the motions to dismiss

without prejudice.

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AND IT IS SO ORDERED.

DAVID C. NORTON
UNITED STATES DISTRICT JUDGE

March 13, 2023
Charleston, South Carolina

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