Schultz v. The Harry S. Truman Scholarship Foundation

Background

The Harry S. Truman Scholarship Foundation is a federal agency that administers the Truman Scholarship program. Brendan Schultz, then a third-year undergraduate student, received a nomination from his college and applied for the scholarship. In his application, he described his Jewish identity and leadership and public-service activities connected to it.

Schultz alleged that, during his finalist interview, panelists asked him demeaning questions about whether Jews are oppressed and whether Jews are oppressed as racial minorities in the United States. He also alleged that a panelist laughed when Schultz said he wanted to run for elected office. According to Schultz, he and the only other Jewish finalist were the only finalists questioned about their ethnic or religious identities. Schultz was not selected for a scholarship.

Afterward, Schultz contacted the Foundation about its civil-rights grievance process. The Foundation conducted investigations, including an investigation by outside legal counsel. Schultz alleged that the process was negligent, lacked due process and impartiality, and did not follow the required procedures.

Schultz’s Fourth Amended Complaint asserted two claims: discrimination under the Fifth Amendment’s equal-protection component and a claim under the Administrative Procedure Act, a federal law allowing judicial review of certain agency actions. He sought monetary damages and a jury trial. The Foundation moved under Federal Rule of Civil Procedure 12(b)(6), which asks whether a complaint states a legally sufficient claim, to dismiss both claims. It also asked the Court to dismiss the damages requests and strike the jury demand.

Fifth Amendment Claim

The Court held that Schultz alleged enough facts to state a Fifth Amendment discrimination claim at the pleading stage. Such a claim requires allegations that the defendant intentionally discriminated against the plaintiff because of membership in a protected class, or facts that support a reasonable inference of discriminatory intent.

The Court relied on Schultz’s allegations that the interview differed from the experiences of other finalists, except for another Jewish candidate; that panelists used his racial, ethnic, or religious identity to attack or provoke him; and that other finalists were treated respectfully and were not questioned about protected identities or traumatic experiences. The Court found these allegations sufficient to make purposeful discrimination plausible.

Accordingly, to the extent the Foundation moved to dismiss the Fifth Amendment claim, the motion was denied.

Administrative Procedure Act Claims

Schultz asserted that the Foundation violated Executive Order 13160 and its own procedures. The Court addressed three theories.

Alleged discrimination in the selection process. To the extent Schultz’s Administrative Procedure Act claim was based on a constitutional violation, the Court found that his allegations were sufficient for the same reasons supporting the Fifth Amendment claim. The motion to dismiss that portion of the claim was denied.

Allegedly superior qualifications. Schultz also argued that the Foundation violated the law by failing to award him a scholarship based on his merit and qualifications. The Court granted the motion to dismiss this portion of the claim. It concluded that the governing statute authorizes, but does not require, the Foundation to award scholarships to candidates who meet the stated eligibility requirements. The statute does not define “outstanding potential,” and the selection process involves subjective factors and comparisons among many applicants. The Court found no meaningful legal standard for reviewing the Foundation’s judgment about which qualified candidate should receive one of a limited number of scholarships.

Grievance procedure. Schultz alleged that the Foundation failed to establish a procedure for receiving and addressing complaints, as required by Executive Order 13160. The Court granted the motion to dismiss this portion of the claim. An exhibit to the complaint indicated that the Foundation had a complaint and investigation process. The Court also held that, even assuming the Foundation had failed to establish a procedure, any failure was harmless because Schultz’s complaint was investigated at three levels within the agency.

Damages and Jury Demand

The Court granted the Foundation’s motion to dismiss Schultz’s requests for compensatory and punitive damages, relying on reasons stated in earlier orders that had dismissed damages requests for his Fifth Amendment and Administrative Procedure Act claims.

The Court also found the Foundation’s argument that sovereign immunity barred a jury trial persuasive. Because Schultz offered no contrary argument, the Court granted the motion to strike his jury demand.

Disposition

The Court granted in part and denied in part the Foundation’s motion to dismiss as follows:

- The motion to dismiss the Fifth Amendment claim was denied. - The motion to dismiss the Administrative Procedure Act claim based on alleged constitutional discrimination was denied. - The motion was granted as to the Administrative Procedure Act claim based on Schultz’s qualifications. - The motion was granted as to the Administrative Procedure Act claim based on the alleged failure to establish a grievance procedure. - The motion was granted as to Schultz’s requests for monetary damages. - The motion was granted as to Schultz’s jury-trial demand, which was stricken.

The opinion does not state that any dismissed claim or request was dismissed with or without prejudice.