Samuels v. Small Business Administration

Background

Justin Samuels brought this action against the Small Business Administration, or SBA, challenging the SBA’s Women-Owned Small Business Federal Contract program. Samuels alleged that he was excluded from that program because he is a man and argued that the program’s requirement that participating businesses be at least 51% owned by women violated the Fifth Amendment, the Civil Rights Act of 1866, the Equal Protection Clause, and Title VII of the Civil Rights Act of 1964. He sought a declaration that the requirement was unlawful and an injunction allowing him to proceed with an application without regard to gender-based ownership requirements.

Samuels also alleged that he had registered with the SBA intending to seek assistance or federal contracts through the SBA’s Section 8(a) program. The court noted, however, that he did not allege that he actually applied for assistance, funding, or a federal contract. He also did not identify the business he allegedly owned or provide facts showing that he operated a business or met the basic eligibility requirements for either program.

Standing

The SBA moved to dismiss under Federal Rule of Civil Procedure 12(b)(1), which permits dismissal when the court lacks subject-matter jurisdiction. The court addressed standing first. Standing requires a plaintiff to show a concrete and particularized injury, a connection between that injury and the defendant’s conduct, and a likelihood that a favorable ruling would remedy the injury.

The court concluded that Samuels failed to allege an injury in fact. He had not applied to the SBA programs and had not alleged that the SBA denied him assistance or a contract because of his gender or race. His claim that he might be denied if he applied was therefore hypothetical. The court also rejected any implied argument that applying would have been futile. Although the court assumed, for purposes of its analysis, that applying to the women-owned program might have been futile for a male applicant, it found no supported basis for concluding that Samuels could not obtain assistance through the 8(a) program.

The court further found that Samuels had not adequately alleged that he owned an operating U.S. business or met the programs’ eligibility requirements. Because he did not establish that he could qualify for the programs, he also could not show that a favorable ruling would likely provide him with relief. The court therefore concluded that he lacked Article III standing and that the court lacked subject-matter jurisdiction.

Venue

The court separately addressed the SBA’s argument that venue was improper in the Southern District of New York. Under the federal venue statute governing suits against federal agencies, venue could be proper where the agency resides, where a substantial part of the relevant events occurred, or where the plaintiff resided when the case was filed, assuming no real property was involved.

The court found that none of those bases was alleged. It stated that the SBA was headquartered in Washington, D.C., and that the agency’s office in the Southern District of New York did not establish that the agency resided there for venue purposes. Samuels also did not allege that any substantial events occurred in the district. Finally, he lived in Portugal when he filed the case; his later move to the Bronx did not change the venue analysis.

Other Grounds and Leave to Amend

Because the court found no subject-matter jurisdiction, it did not decide the SBA’s arguments concerning mootness or failure to state a claim. It declined to transfer the case because the standing defect would prevent any federal court from exercising jurisdiction over the claims.

The court also concluded that Samuels should not receive another opportunity to amend. It reasoned that he had already amended his pleading, had been told what deficiencies to correct, and still had not alleged facts establishing standing or proper venue. Samuels had not requested another amendment or indicated that he possessed facts that would cure those defects.

Recommendation

Judge Gary Stein recommended that the SBA’s motion to dismiss be granted and that the second amended complaint be dismissed with prejudice. The opinion is a report and recommendation rather than a final decision by the assigned district judge; it states that the parties could file objections with Judge John P. Cronan within the stated period.