Huang v. Small Business Administration

Background

Jingli Huang sued the Small Business Administration, Isabel Guzman in her official capacity as SBA Administrator, Janet Yellen in her official capacity as Secretary of the Treasury, and the United States of America. Huang alleged that he founded and owned DLS US, a full-service restaurant incorporated under Delaware law and registered in California. On April 1, 2020, he applied on DLS US’s behalf for an Economic Injury Disaster Loan under the Coronavirus Aid, Relief, and Economic Security Act. The application and a later request for reconsideration were denied.

Huang filed the action as an individual rather than naming DLS US as a plaintiff. Earlier screening orders identified that problem and allowed limited opportunities to amend. Huang ultimately filed a second amended complaint, and the defendants moved to dismiss under Federal Rule of Civil Procedure 12(b)(1), for lack of subject-matter jurisdiction, and Rule 12(b)(6), for failure to state a claim.

Standing and jurisdiction

The defendants argued that Huang lacked standing, meaning he had not shown the personal injury required to invoke federal-court jurisdiction. They argued that the denial injured only DLS US, not Huang personally. Huang responded that he was injured as the business owner and pointed to SBA website language stating that small-business owners could apply for COVID-19 Economic Injury Disaster Loans.

The court held that the CARES Act identified a small business as an eligible entity, while also separately identifying an individual operating as a sole proprietor or independent contractor. Huang stated that DLS US was incorporated and did not allege that he was a sole proprietor or independent contractor. The court explained that an owner generally cannot sue to remedy an injury belonging only to the corporation. It found that Huang had not named DLS US as a plaintiff and had not alleged an injury separate from the denial of DLS US’s loan application.

The defendants also argued that the alleged injury was not redressable, meaning a favorable court decision could not provide the requested relief. The defendants submitted a declaration stating that the COVID-19 EIDL program had ended after appropriated funds were exhausted on May 15, 2022, and that the online loan portal closed on May 16, 2022. Huang argued that funding remained available when the portal closed and pointed to a later letter from several senators requesting that SBA resume processing certain applications.

The court concluded that the program had lapsed and that Huang had provided no evidence showing that it was open or had reopened. Because the program had ended, the court stated that it could not order SBA to provide DLS US with a COVID-19 EIDL. The court therefore found that the alleged injury was not redressable.

Disposition

The court held that Huang had neither suffered a qualifying personal injury nor shown that the alleged business injury could be remedied. It concluded that he lacked standing and that the court lacked subject-matter jurisdiction. The court granted the defendants’ motion to dismiss for lack of subject-matter jurisdiction and granted the motion without leave to amend. Because of that ruling, the court did not address the defendants’ Rule 12(b)(6) arguments.