Complaint — TAIT USA, LLC v. SBA (D.D.C.)
Summary
A complaint for declaratory and injunctive relief in TAIT USA, LLC v. Small Business Administration and Administrator Isabella Casillas Guzman, Case 1:22-cv-01358-FYP, in the U.S. District Court for the District of Columbia, filed May 16, 2022 as Document 1. Brought under the Administrative Procedure Act, it challenges the SBA denial of the company application and appeal for a Shuttered Venue Operators Grant. The complaint states that the company applied on April 26, 2021 for an award of $10,000,000, learned of the denial on August 21, 2021, and was told on October 26, 2021 that its appeal was denied. Count I alleges arbitrary and capricious agency action, Count II agency action contrary to law, and Count III a decision unsupported by substantial evidence. It asks the court to set aside the denial and order an award of $10,000,000 in SVOG funds.
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“Complaint — TAIT USA, LLC v. SBA (D.D.C.).”
Original at archive.org. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/court-filing-no-1-22-cv-01358-dkt-1-d-d-c-1905ecc060/
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Case 1:22-cv-01358-FYP Document 1 Filed 05/16/22 Page 1 of 9
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
TAIT USA, LLC,
401 W. Lincoln Ave.
Lititz, PA 17543,
Plaintiff,
Civil Action No. _______________
v.
SMALL BUSINESS ADMINISTRATION,
409 3rd Street, SW
Washington, DC 20416,
ISABELLA CASILLAS GUZMAN,
Administrator, Small Business Administration,
409 3rd Street, SW
Washington, DC 20416,
Defendants.
COMPLAINT FOR DECLARATORY AND INJUNCTIVE RELIEF
Plaintiff TAIT USA, LLC (“TUSA” or the “Company”), by and through its attorneys,
alleges and states as follows:
INTRODUCTION
1. This is an action under the Administrative Procedure Act (“APA”), 5 U.S.C. § 706,
and the Declaratory Judgment Act, 28 U.S.C. §§ 2201 and 2202, seeking emergency federal
financial assistance unlawfully withheld by Defendants Small Business Administration (“SBA”)
and its Administrator, Isabella Casillas Guzman.
2. The Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act, as
amended, 15 U.S.C. § 9009a, established the Shuttered Venue Operators Grant (“SVOG”) Program
to provide emergency financial assistance to eligible live entertainment businesses impacted by
Case 1:22-cv-01358-FYP Document 1 Filed 05/16/22 Page 2 of 9
the global COVID-19 pandemic. The SVOG Program is administered by the SBA and
Administrator Casillas Guzman.
3. In early spring 2020, the COVID-19 pandemic, as well as associated restrictions
regarding live entertainment, halted TUSA’s business. As a live performing arts organization
operator, TUSA suffered a 91% loss in revenue in the last three quarters of 2020 as compared to
the same period in 2019. TUSA requires an SVOG award to sustain operations—exactly the
purpose of the SVOG Program.
4. TUSA demonstrated eligibility for a SVOG award in its application to the SBA and,
following an initial denial, its appeal to the SBA. The SBA denied both TUSA’s application and
appeal, giving no reason for the initial denial and providing only conclusory statements with the
appeal denial and an additional email in April 2022 that fail to explain the agency’s reasoning.
5. SVOG funds are limited, and once the SBA has depleted the appropriated amount
through awards, eligible businesses may not be able to receive the emergency assistance. Thus,
even though TUSA demonstrated that it is an eligible live performing arts organization operator, it
may receive no assistance if SVOG funds are depleted before the SBA corrects the erroneous
denial of TUSA’s application.
JURISDICTION AND VENUE
6. This Court has jurisdiction over this action pursuant to 28 U.S.C. § 1331 because it
presents federal questions under the APA.
7. Venue lies in this district under 28 U.S.C. § 1391(e)(1).
8. This Court has authority to issue declaratory and injunctive relief under 5 U.S.C.
§ 706 and 28 U.S.C. §§ 2201 and 2202.
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PARTIES
9. Plaintiff TAIT USA, LLC, specializes in the creation, organization, and production
of live music concerts with more than 70% of TUSA’s revenue coming from production fees. The
shows TUSA creates include Celine Dion, Lady Gaga, Metallica, and Reba + Brooks & Dunn,
among others.
10. Defendant Small Business Administration is an independent agency of the federal
government. The SBA’s mission is to help Americans start, build, and grow businesses.
11. Defendant Isabella Casillas Guzman is the Administrator of the SBA and oversees
its operations. Administrator Casillas Guzman is sued in her official capacity.
BACKGROUND
A. Shuttered Venue Operators Grant Program
12. The Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act (the
“Act”), signed into law December 27, 2020, included $15 billion for grants to operators of
shuttered venues. Pub. L. No. 116-260 § 324. The American Rescue Plan, enacted March 11,
2021, amended the Act by providing an additional $1,249,500,000 for SVOG awards. Pub. L. No.
117-2 § 5005(a).
13. SVOG awards may be used for specified business expenses, including payroll, rent,
and utility payments incurred between March 1, 2020, and December 31, 2021. 15 U.S.C. §
9009a(d)(1)(A)(i).
14. An eligible entity may receive a SVOG award in an amount equal to 45% of its
gross earned revenue in 2019 up to a maximum award of $10 million. 15 U.S.C. § 9009a(c).
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15. Eligible entities under the Act include live performing arts organization operators,
as well as theatrical producers, live venue operators and promoters, museum operators, motion
picture theatre operators, and talent representatives. 15 U.S.C. § 9009a(a)(1)(A).
16. In addition to falling within an eligible business category, to qualify for a SVOG
award a business must meet general eligibility criteria including, inter alia, that the business was
fully operational on February 29, 2020, suffered at least a 25% reduction of gross earned revenue
during at least one quarter of 2020 as compared to 2019, and has reopened or intends to reopen.
15 U.S.C. § 9009a(a)(1)(A). The Act lists a number of characteristics that would render an entity
ineligible, including, inter alia, issuance of securities on a national securities exchange, or
presenting live performances of a prurient sexual nature. Id. § 9009a(a)(1)(A)(vi), 9009a(a)(1)(B).
17. The Act defines live performing arts organization operators to include an entity that
as a principal business activity organizes, promotes, produces or hosts “live concerts” for which
there is a ticketed cover charge, performers are paid, and not less than 70% of revenue of the entity
is generated through “production fees or production reimbursements”. 15 U.S.C.
§ 9009a(a)(3)(A)(i).
18. The Act specifies that for a live performing arts organization operator (as well as a
live venue operator, live venue promoter, or theatrical producer) to be eligible, it must have
additional characteristics. The entity must put on events (1) with a defined performance and
audience space; (2) that use sound mixing equipment, a public address system, and a lighting rig;
(3) for which one or more individuals carry out at least two of the following roles—sound engineer,
booker, promoter, stage manager, security personnel, or box office manager; (4) for which tickets
are sold or a cover charge imposed for most performances; (5) that fairly pay artists; and (6) are
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marketed through print or electronic publications, websites, mass email, or social media. 15 U.S.C.
§ 9009a(a)(1)(A)(iii).
B. TUSA’s SVOG Application and the SBA’s Denial
19. On April 26, 2021, TUSA applied for a SVOG award of $10,000,000.
20. In its application, TUSA demonstrated that the Company satisfied the eligibility
criteria for a SVOG award. TUSA demonstrated that its losses in 2020 exceeded the 25% statutory
threshold by submitting income statements for 2019 and 2020. TUSA demonstrated that
substantially more than 70% of revenue was attributable to production fees and submitted
documentation showing that TUSA met the other application criteria. TUSA also provided the
certifications of eligibility required by the SBA’s guidance on SVOG applications.
21. On August 21, 2021, TUSA learned from the SBA’s portal that its application was
denied. The portal’s denial notice gave no explanation for the SBA’s denial.
22. On September 3, 2021, TUSA submitted an administrative appeal of the denial to
the SBA in which TUSA changed its eligibility category to live performing arts organization
operator from theatrical producer, as permitted by the SBA’s procedures.
23. TUSA’s application and appeal explained in detail and with supporting
documentation how the company meets each of the general eligibility requirements for a SVOG
award and each of the specific eligibility requirements for a live preforming arts organization
operator. TUSA’s supporting documentation included (1) venue floorplans designating seating for
audience members and stages for performers, (2) evidence of ticketing for events and payments to
performers, and (3) media materials for performances, event dates, ticket releases, and prices.
Every venue where TUSA organized and produced shows was a professional music venue with a
public address system, lighting rigs, and sound mixing equipment. TUSA also submitted venue
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payroll, venue crew lists, and venue guides for Celine Dion, Lady Gaga, Elton John, Metallica,
Reba + Brooks & Dunn, Pink, and John Mayer.
24. On October 26, 2021, the SBA notified TUSA by email that its appeal was denied.
The email listed a standard set of the reasons an appeal could be denied based on the SVOG
Eligibility Matrix, and stated that TUSA’s appeal was declined “at least in part” based on reasons
10 and 11. Reason 10 is listed as “Did not meet the principal business activity standard for the
entity type under which applied.” Reason 11 is listed as “Did not meet one or more of the eligibility
criteria specific to the entity type under which applied.” The email then provided a boilerplate
statement:
Please note the list provided in this email may not be a comprehensive list of reasons for
your decline. To receive additional information as to why your SVOG application was
declined, please complete this form (direct link:
https://forms.office.com/g/B7DeKGgF1z). The SBA will aim to provide this more specific
detail on appeal declines once the SVOG initial application reviews are complete.
25. TUSA sent an email to the SBA requesting additional information on why TUSA’s
application and appeal were denied.
26. On April 13, 2022, the SBA forwarded an email with a matrix stating that the reason
for denial was that TUSA did not “have a principal business activity . . . creating producing
performing, and/or presenting live events by performing artists with not less than 70% of earned
revenue coming from ticket sales/cover charges, sales of merchandise/food/beverage (incl.
alcohol), production fees/reimbursements, and/or nonprofit educational initiatives.”
27. The SBA’s denial of TUSA’s appeal is the agency’s final decision.
28. The SBA approved SVOG awards for TUSA’s direct competitors, including
Clearwing Productions, Inc. (https://www.clearwing.com/), Clair Global Corporation
(https://clairglobal.com), and All Access Staging & Production, Inc. (https://allaccessinc.com).
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CLAIMS FOR RELIEF
29. The courts recognize a strong presumption favoring judicial review of
administrative action.
30. The APA provides that “[a] person suffering legal wrong because of agency action,
or adversely affected or aggrieved by agency action within the meaning of a relevant statute, is
entitled to judicial review thereof.” 5 U.S.C. § 702.
31. The APA provides that “final agency action for which there is no other adequate
remedy in a court” is “subject to judicial review.” 5 U.S.C. § 704.
32. The APA provides that courts will “hold unlawful and set aside” agency action that
is “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law” or
“unsupported by substantial evidence.” 5 U.S.C. § 706(2)(A) and (E), respectively.
33. The SBA is an “agency” whose final actions are reviewable under the APA.
COUNT I—ARBITRARY AND CAPRICIOUS AGENCY ACTION
34. TUSA realleges and incorporates by reference each of the preceding paragraphs
and allegations.
35. A basic requirement of administrative law is that an agency provide the reasons for
its decisions. However, the SBA gave no reason for denying TUSA’s application, and provided
only conclusory decisions that do not explain the agency’s reasoning for denying TUSA’s appeal.
36. Indeed, the SBA’s decision on TUSA’s application conflicts with the evidence of
TUSA’s eligibility presented to the SBA in the Company’s application and appeal.
37. The SBA further erred by treating TUSA disparately from direct competitors that
were granted SVOG awards. The SBA approved awards of $10,000,000 and $8,200,015 to Clair
Global and All Access Staging & Production, Inc., respectively. Such disparate treatment only
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further hinders TUSA’s ability to compete in the marketplace and adds additional injury to a
company aiming to recover from a 91% pandemic-imposed drop in revenue.
38. For each of these reasons, the SBA’s denial of TUSA’s SVOG award request is
arbitrary and capricious.
COUNT II—AGENCY ACTION CONTRARY TO LAW
39. TUSA realleges and incorporates by reference each of the preceding paragraphs
and allegations.
40. TUSA satisfies the Act’s general eligibility criteria for a SVOG award and specific
eligibility criteria for an award as a live preforming arts organization operator.
41. The SBA’s denial of TUSA’s SVOG award request therefore violated the Act and
is contrary to law.
COUNT III—AGENCY DECISION UNSUPPORTED BY SUBSTANTIAL EVIDENCE
42. TUSA realleges and incorporates by reference each of the preceding paragraphs
and allegations.
43. The SBA’s denial of TUSA’s SVOG award request is supported by no evidence in
the record, let alone substantial evidence. TUSA’s application and appeal presented evidence
which demonstrates TUSA’s eligibility for a SVOG award.
44. The SBA’s denial of TUSA’s SVOG award request is thus unsupported by
substantial evidence.
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PRAYER FOR RELIEF
For the foregoing reasons, TUSA respectfully requests that this Court:
1. Declare unlawful and set aside Defendants’ denial of TUSA’s SVOG award
request.
2. Preliminarily and permanently order Defendants to consider TUSA’s application
for a SVOG award consistent with applicable law and the evidence before the SBA.
3. Preliminarily and permanently order Defendants to award TUSA $10,000,000 in
SVOG funds.
4. Preliminarily and permanently order Defendants to retain appropriations from the
Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act (Pub. L. No. 116-260
§ 324) and/or the American Rescue Plan (Pub. L. No. 117-2 § 5005(b)) in an amount sufficient to
fund Plaintiff’s SVOG initial grant award.
5. Award Plaintiff its costs and reasonable attorney fees; and
6. Grant such other and further relief as the Court deems just and proper.
Dated: May 16, 2022 Respectfully submitted,
/s/ Caroline L. Wolverton
Angela B. Styles
D.C. Bar No. 448397
Caroline L. Wolverton
D.C. Bar No. 496433
AKIN GUMP STRAUSS HAUER & FELD LLP
2001 K Street, N.W.
Washington, D.C. 20006
(202) 887-4000
Counsel for Plaintiff TAIT USA, LLC
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