Plaintiffs’ Class-action Complaint — No. 4:21-cv-00677 (Dkt. 1, N.D. Tex.)
Summary
Blessed Cajuns LLC, co-owners Janice Smith and Jason Smith, PSBH LLC and Eric Nyman filed this class-action complaint on May 23, 2021 in the Northern District of Texas, Case No. 4:21-cv-00677, against SBA Administrator Isabella Casillas Guzman and the Small Business Administration. They challenge Section 5003 of the American Rescue Plan Act, which appropriated $28.6 billion for the Restaurant Revitalization Fund and told SBA to 'prioritize awarding grants' to businesses owned by women and racial minorities during the program's first 21 days from May 3, 2021. The Smiths applied May 5, 2021 for up to $187,753.17; Nyman applied May 3, 2021 for up to $640,424.65. Citing an SBA release counting 303,000 applications for over $69 billion, they allege the fund may be gone before they are considered. They seek a Rule 23(b)(2) class, a declaration of unconstitutionality and injunctions.
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UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF TEXAS
FORT WORTH DIVISION
Blessed Cajuns LLC, Janice Smith,
Jason Smith, PSBH LLC, and Eric
Nyman, on behalf of themselves and
others similarly situated,
Plaintiffs,
Case No. 4:21-cv-00677
v.
Isabella Casillas Guzman, in her official
capacity as administrator of the Small
Business Administration; United States
Small Business Administration,
Defendants.
PLAINTIFFS’ CLASS-ACTION COMPLAINT
The Supreme Court of the United States said 125 years ago that:
[T]he constitution of the United States, in its present form, forbids, so
far as civil and political rights are concerned, discrimination by the gen-
eral government, or by the states, against any citizen because of his race.
All citizens are equal before the law. The guaranties of life, liberty, and
property are for all persons, within the jurisdiction of the United States,
or of any state, without discrimination against any because of their race.
Those guaranties, when their violation is properly presented in the reg-
ular course of proceedings, must be enforced in the courts, both of the
nation and of the state, without reference to considerations based upon
race.
Gibson v. State of Mississippi, 162 U.S. 565, 591 (1896); see also Bolling v. Sharpe, 347
U.S. 497 (1954) (citing Gibson and holding that segregation in the District of Co-
lumbia public schools violated the Due Process Clause of the Fifth Amendment).
Equal rights under law is the cornerstone of American constitutional jurispru-
dence: the principle that all citizens, regardless of status, wealth, race, color, religion,
plaintiffs’ class-action complaint Page 1 of 7
or creed, have the same rights and are entitled to the same standard of justice. These
are the principles etched into our founding documents, fought for on our nation’s
battlefields, written into the Gettysburg Address, and delivered from the steps of the
Lincoln Memorial by Martin Luther King.
As a nation, we are devoted to the task of satisfying these sacred ideals and provid-
ing equal rights to citizens of all races, as the Constitution requires. Profound progress
has been made, and extraordinary milestones reached, throughout our history, serving
as an inspiration to humanity and the nations of the world. Yet, today, the Small Busi-
ness Administration lurches America dangerously backward, reversing the clock on
American progress, and violating our most sacred and revered principles by actively
and invidiously discriminating against American citizens solely based upon their race
and sex. This is illegal, it is unconstitutional, it is wrong, and it must stop.
Section 5003 of the American Rescue Plan Act appropriates $28.6 billion to cre-
ate the Restaurant Revitalization Fund, which is administered by the Small Business
Administration. This fund provides relief for restaurants harmed by the COVID-19
pandemic, but it requires the Small Business Administration to discriminate among
restaurants according to the race and sex of the owner. The statute provides that dur-
ing the first 21 days of this program, which started on May 3, 2021, the administrator
of the SBA must “prioritize awarding grants” to businesses owned by women and
racial minorities. See American Rescue Plan Act § 5003(c)(3)(A) (attached as Exhibit
1).
These race and sex preferences are patently unconstitutional, and the Court
should promptly enjoin their enforcement. Doing so will promote equal rights under
the law for all American citizens and promote efforts to stop racial discrimination,
because “[t]he way to stop discrimination on the basis of race is to stop discriminating
on the basis of race.” Parents Involved in Cmty. Sch. v. Seattle Sch. Dist. No. 1, 551 U.S.
701, 748 (2007) (Roberts, C.J., concurring).
plaintiffs’ class-action complaint Page 2 of 7
JURISDICTION AND VENUE
1. The Court has subject-matter jurisdiction under 28 U.S.C. § 1331 and 28
U.S.C. § 1343.
2. Venue is proper because a substantial part of the events giving rise to the
claims occurred in this judicial district. See 28 U.S.C. § 1391(b)(2).
PARTIES
3. Plaintiff Blessed Cajuns LLC is a limited liability company incorporated un-
der the laws of Texas, operating under the name “The Lost Cajun Keller.” It operates
in Keller, Texas.
4. Plaintiff Jason Smith is co-owner of Blessed Cajuns LLC. He resides in Fort
Worth, Texas.
5. Plaintiff Janice Smith is co-owner of Blessed Cajuns LLC. She resides in Fort
Worth, Texas.
6. Plaintiff PSBH LLC is a limited liability company incorporated under the
laws of Pennsylvania, operating under the name “Penn Hotel Sports & Raw Bar.” It
operates in Camp Hill, Pennsylvania.
7. Plaintiff Eric Nyman owns PSBH LLC.
8. Defendant Isabella Casillas Guzman is administrator of the Small Business
Administration. Administrator Guzman is sued in her official capacity.
9. Defendant United States Small Business Administration is an agency of the
United States government.
STATEMENT OF FACTS
10. Section 5003 of the American Rescue Plan Act of 2021, H.R. 1319, 117th
Cong. (2021), provides aid to restaurants that have been harmed by the COVID-19
pandemic. It appropriates $28.6 billion to create the Restaurant Revitalization Fund,
which will be administered by the Small Business Administration.
plaintiffs’ class-action complaint Page 3 of 7
11. Section 5003 provides that during the first 21 days of this program, which
started on May 3, 2021, the administrator of the SBA must “prioritize awarding
grants” to businesses owned by women and racial minorities. See American Rescue
Plan Act § 5003(c)(3)(A) (attached as Exhibit 1).
12. Plaintiffs Jason and Janice Smith own the Lost Cajun Keller. They submitted
an application for relief under the Restaurant Revitalization Fund on May 5, 2021.
Their application indicated that they were eligible for up to $187,753.17 worth of
relief.
13. Plaintiff Eric Nyman owns the Penn Hotel Sports & Raw Bar. He submitted
an application for relief under the Restaurant Revitalization Fund on May 3, 2021.
His application indicated that he was eligible for up to $640,424.65 worth of relief.
14. None of the plaintiffs qualify as a “socially disadvantaged individual” or
“economically disadvantaged individual” under the SBA’s regulations. See 13 C.F.R.
§§ 124.103, .104. They are therefore being subjected to unconstitutional race and
sex discrimination by the “priorities” that the statute commands for minority- and
women-owned businesses.
15. On May 18, 2021, the Small Business Administration issued a press release
announcing that it has already received 303,000 applications for relief, representing
over $69 billion in requested funds. See Exhibit 2. And so far, “nearly 38,000 appli-
cants have been approved for more than $6 billion.” Id. “Of the overall submitted
applications, 57 percent came from women, veterans, and socially and economically
disadvantaged business owners.” Id.
16. This raises the possibility that the entire $28.6 billion that Congress allo-
cated to the Restaurant Revitalization Fund will be depleted before the plaintiffs can
even be considered for relief under the program.
plaintiffs’ class-action complaint Page 4 of 7
17. The plaintiffs sue on behalf of all restaurant owners and restaurants in the
United States who are encountering or who will encounter race or sex discrimination
from the Small Business Administration on account of section 5003.
CLAIM FOR RELIEF
18. The Constitution prohibits the federal government from discriminating on
account of race or ethnicity. See Bolling v. Sharpe, 347 U.S. 497 (1954). The Consti-
tution likewise prohibits the federal government from engaging in sex discrimination
absent an “exceedingly persuasive justification.” See United States v. Virginia, 518 U.S.
515, 531 (1996).
19. Title VI of the Civil Rights Act of 1964 prohibits discrimination on the
grounds of race, color, or national origin in any program that receives federal funds.
See 42 U.S.C. § 2000d.
20. The Small Business Administration is violating the Constitution and Title
VI by discriminating on account of race and sex in administering the Restaurant Re-
vitalization Fund.
21. The Court should declare these race and sex preferences unconstitutional
and permanently enjoin the administrator of the SBA from implementing any such
race or sex exclusions in any of the SBA’s programs.
22. The Court should also issue a preliminary injunction to prevent the dis-
bursement of funds that were prioritized on race or sex-based grounds during the 21-
day window described in section 5003.
CLASS-ACTION ALLEGATIONS
23. The plaintiffs bring this class action under Rule 23(b)(2) of the Federal
Rules of Civil Procedure.
plaintiffs’ class-action complaint Page 5 of 7
24. The plaintiffs seek to represent a class of all restaurant owners and restau-
rants in the United States who are encountering or who will encounter race or sex
discrimination from the Small Business Administration on account of section 5003.
25. The number of individuals in this class makes joinder of the individual class
members impractical.
26. There are questions of law common to the class, including whether the Con-
stitution or Title VI allows the SBA to discriminate on account of race and sex when
administering the Restaurant Revitalization Fund.
27. The plaintiffs’ claims are typical of other members of the class. Each of them
seeks to stop the SBA from discriminating on account of race and sex when adminis-
tering the Restaurant Revitalization Fund.
28. The plaintiffs adequately represent the interests of the class, and they have
no interests antagonistic to the class.
29. A class action is appropriate under Rule 23(b)(2) because the defendants
are acting on grounds that apply generally to the class, so that final injunctive relief or
corresponding declaratory relief is appropriate respecting the classes as a whole.
DEMAND FOR RELIEF
30. The plaintiffs respectfully requests that the court:
a. certify a class of all restaurant owners and restaurants in the United
States that are encountering or that will encounter race or sex dis-
crimination from the Small Business Administration on account of
section 5003;
b. award the declaratory relief described in paragraph 21;
plaintiffs’ class-action complaint Page 6 of 7
c. enter a temporary restraining order, preliminary injunction, and per-
manent injunction that prevent Administrator Guzman and her suc-
cessors from implementing any race or sex preferences in SBA pro-
grams;
d. award costs and attorneys’ fees under 42 U.S.C. § 1988;
e. award all other relief that the Court may deem just, proper, or equi-
table.
Respectfully submitted.
/s/ Jonathan F. Mitchell
Gene P. Hamilton Jonathan F. Mitchell
Virginia Bar No. 80434 Texas Bar No. 24075463
Vice-President and General Counsel Mitchell Law PLLC
America First Legal Foundation 111 Congress Avenue, Suite 400
300 Independence Avenue SE Austin, Texas 78701
Washington, DC 20003 (512) 686-3940 (phone)
(202) 964-3721 (512) 686-3941 (fax)
gene.hamilton@aflegal.org jonathan@mitchell.law
Charles W. Fillmore Robert Henneke
H. Dustin Fillmore Texas Bar No. 24046058
The Fillmore Law Firm, L.L.P. Texas Public Policy Foundation
201 Main Street, Suite 801 901 Congress Avenue
Fort Worth, Texas 76102 Austin, Texas 78735
(817) 332-2351 (phone) (512) 472-2700 (phone)
(817) 870-1859 (fax) rhenneke@texaspolicy.com
chad@fillmorefirm.com
dusty@fillmorefirm.com
Counsel for Plaintiffs and
Dated: May 23, 2021 the Proposed Class
plaintiffs’ class-action complaint Page 7 of 7
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