MomoCon, LLC v. Small Bus. Admin.

MOMOCON, LLC, Plaintiff, v. SMALL BUSINESS ADMINISTRATION, et al., Defendants.

Civil Action No. 21-2386 (RC)

Re Document Nos. 19, 21

United States District Court, District of Columbia

February 10, 2022

REDACTED

GRANTING PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT AND DENYING DEFENDANTS' MOTION TO DISMISS AND, IN THE ALTERNATIVE FOR SUMMARY JUDGMENT

MEMORANDUM OPINION

RUDOLPH CONTRERAS UNITED STATES DISTRICT JUDGE

I. INTRODUCTION

Plaintiff MomoCon, LLC, filed this suit against Defendants the U.S. Small Business Administration and its Administrator, Isabella Casillas Guzman (collectively, “SBA”), to review SBA's denial of MomoCon's application for Shuttered Venue Operators Grant (“SVOG”) funds. MomoCon moves for summary judgment that SBA's denial was arbitrary and capricious in violation of the Administrative Procedure Act (“APA”) at least because SBA granted SVOG applications made by entities similar to MomoCon and did not appropriately consider the relevant evidence. SBA moves for summary judgment that this Court lacks jurisdiction over this suit due to sovereign immunity and that its decision was not arbitrary or capricious. For the reasons given below, the Court grants MomoCon's motion and denies SBA's motion.

II. BACKGROUND

The SVOG program was established by Congress to-as the name suggests-provide grants to shuttered venue operators. Shuttered Venue Operators Grant, U.S. Small Bus. Admin., https://www.sba.gov/funding-programs/loans/covid-19-relief-options/shuttered-venue-operators-grant. One category of potential grant recipients is “a live venue operator or promoter, theatrical producer, or live performing arts organization operator.” 15 U.S.C. § 9009a(a)(1)(A). To fall into that category, an applicant must be “an individual or entity that, as a principal business activity, organizes, promotes, produces, manages, or hosts live concerts, comedy shows, theatrical productions, or other events by performing artists, ” among other requirements. Id. § 9009a(a)(3)(A)(i)(I).

“MomoCon is a festival organization that creates an annual 4-day event” to “bring[] together fans of Japanese Anime, American Animation, Comics, Video Games, and Tabletop Games to celebrate their passion by costuming/cosplay, browsing the huge exhibitors hall, meeting celebrity voice talent, designers, and writers behind their favorite shows, games, and comics and much . . . more, ” including live performances. Administrative Record (“AR”) at 56, 1675, ECF No. 27-1;^[1] Mot. Dismiss & in the Alternative for Summ. J. & Opp'n Pl.'s Mot. Summ. J. (“Defs.' Opp'n & Mem.”) at 6-7, ECF Nos. 21 & 22. Due to the COVID-19 pandemic, MomoCon canceled its 2020 and 2021 events. Pl.'s Mem. P. & A. Supp. Mot. Summ. J. (“Pl.'s Mem.”) at 5, ECF No. 19.

In April 2021, MomoCon applied for a SVOG award. Id. at 3. After some back and forth-including a denial, an administrative appeal (in which MomoCon changed its category from “live performing arts organization to live venue promoter”), a denial of the appeal, filing of this case, and voluntary remand to SBA on SBA's request-the parties arrived at what they both treat as the final and operative denial. Id. at 3-7. Namely, on October 15, 2021, SBA stated that it had conducted “a thorough and comprehensive review of [MomoCon's] appeal” and decided that its “application remains declined.” AR at 1696. The denial states that the application was denied “at least in part” for failure to “meet the principal business activity standard for the entity type under which applied, ” citing 15 U.S.C. § 9009a(a)(3)(A). Id. According to SBA, MomoCon

principally focuses on presenting exhibits, participatory events, and interactions with professionals who work in their favored areas of fandom. While MomoCon does include a few bona fide performing arts events such as musical concerts, it is clear from the record that such events are minimal in number compared to other events at the convention, and they do not factor significantly in the way the convention is presented. These events represent a secondary or sideline activity rather than the principal business of the convention.

Id. at 1696-97. MomoCon's appeal referenced other companies that both received SVOG grants and, according to MomoCon, put on “fan conventions” similar to MomoCon's. Pl.'s Mem. at 6; see also AR at 86-87 (citing companies' websites and describing similarities to MomoCon).

III. LEGAL STANDARD

“Federal courts are courts of limited jurisdiction, ” and “[i]t is to be presumed that a cause lies outside this limited jurisdiction.” Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994). Thus, to survive a Rule 12(b)(1) motion to dismiss, a plaintiff bears the burden of establishing that a court has jurisdiction over his claim. See Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 103-04 (1998) (standing and Article III jurisdiction); Moms Against Mercury v. FDA, 483 F.3d 824, 828 (D.C. Cir. 2007) (subject-matter jurisdiction). To determine whether jurisdiction exists, a court may “consider the complaint supplemented by undisputed facts evidenced in the record, or the complaint supplemented by undisputed facts plus the court's resolution of disputed facts.” Coal. for Underground Expansion v. Mineta, 333 F.3d 193, 198 (D.C. Cir. 2003). “If sovereign immunity has not been waived, a claim is subject to dismissal under Rule 12(b)(1) for lack of subject matter jurisdiction.” Clayton v. District of Columbia, 931 F.Supp.2d 192, 200 (D.D.C. 2013).

Although Rule 56 requires a court to grant summary judgment “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law, ” Fed.R.Civ.P. 56(a), “in APA cases, the summary judgment standard functions slightly differently, because the reviewing court generally . . . reviews the agency's decision as an appellate court addressing issues of law, ” Pol'y & Rsch., LLC v. U.S. Dep't of Health & Hum. Servs., 313 F.Supp.3d 62, 74 (D.D.C. 2018) (cleaned up). Stated another way, “[t]he entire case on review is a question of law, and only a question of law.” Marshall Cnty. Health Care Auth. v. Shalala, 988 F.2d 1221, 1226 (D.C. Cir. 1993). Accordingly, “whether the issue is one of reviewability or otherwise, the court must limit its review to the administrative record and the facts and reasons contained therein to determine whether the agency's action was consistent with the relevant APA standard of review.” Pol'y & Rsch., LLC, 313 F.Supp.3d at 74 (cleaned up). However, judicial review under the APA may go beyond the administrative record “when there has been a strong showing of bad faith or improper behavior or when the record is so bare that it prevents effective judicial review.” Theodore Roosevelt Conservation P'ship v. Salazar, 616 F.3d 497, 514 (D.C. Cir. 2010) (internal quotation marks omitted) (quoting Com. Drapery Contractors, Inc. v. United States, 133 F.3d 1, 7 (D.C. Cir. 1998)).

IV. ANALYSIS

MomoCon moves for summary judgment that SBA's denial of MomoCon's SVOG application violated the APA because it was arbitrary and capricious. Pl.'s Mem. at 8-16. SBA moves for summary judgment that the Court lacks jurisdiction over this case due to sovereign immunity and that SBA's decision was not arbitrary and capricious. Defs.' Opp'n & Mem. at 10-20. For the reasons given below, the Court holds that (1) SBA has not demonstrated that the Court lacks jurisdiction, and (2) SBA's decision was arbitrary and capricious. MomoCon's motion is therefore granted, and this matter is remanded to SBA for supplementation of the administrative record and further proceedings in line with this opinion.

A. Jurisdiction

SBA moves to dismiss this case for lack of jurisdiction. See Defs.' Opp'n & Mem. at 10- 12. Specifically, SBA argues that the Court lacks jurisdiction to hear this case because MomoCon sues for money damages and the only relevant waiver of the United States' sovereign immunity does not cover actions for “money damages.” 5 U.S.C. § 702. For the reasons below, the Court holds that it has jurisdiction to hear this case.

“It is axiomatic that the United States may not be sued without its consent and that the existence of consent is a prerequisite for jurisdiction.” United States v. Mitchell, 463 U.S. 206, 212 (1983). The APA waives sovereign immunity for certain claims:

An action in a court of the United States 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 shall not be dismissed nor relief therein be denied on the ground that it is against the United States or that the United States is an indispensable party.

5 U.S.C. § 702 (emphasis added). “[M]oney damages represent compensatory relief, an award given to a plaintiff as a substitute for that which has been lost; specific relief in contrast represents an attempt to restore to the plaintiff that to which it was entitled from the beginning.” Am.'s Cmty. Bankers v. FDIC, 200 F.3d 822, 829 (D.C. Cir. 2000). Declaratory and injunctive relief do not generally constitute money damages. Robles v. Kerry, 74 F.Supp.3d 254, 260 (D.D.C. 2014). Specific relief, including “monetary relief sought as a statutory entitlement, ” also does not constitute money damages. Id.

The Supreme Court has provided guidance for determining whether monetary relief constitutes money damages. In Bowen v Massachusetts, 487 U.S. 879 (1988), the Court addressed whether federal district courts had “jurisdiction to review a final order of the Secretary of Health and Human Services refusing to reimburse a State for a category of expenditures under its Medicaid program.” Id. at 882. The Court...