Birri v. United States Small Business Administration

Background

Astor Birri represented himself in a civil-rights lawsuit against the United States Small Business Administration (SBA). He alleged that the SBA discriminated against him based on race and age by refusing to distribute $38,800 in approved COVID-19 Economic Injury Disaster Loans to him and his businesses. He asserted claims under Title VI of the Civil Rights Act of 1964, 42 U.S.C. § 1981, and the Age Discrimination in Employment Act. He sought the loan funds and $13,780,000 in damages.

Birri also filed a separate administrative claim under the Federal Tort Claims Act concerning the same alleged conduct and requesting $13,780,000 in damages. While the SBA’s motion to dismiss the lawsuit was pending, Birri expressed interest in settling for redistribution of the $38,800. The SBA proposed an agreement under which Birri would receive $38,800, dismiss the lawsuit with prejudice, and release the SBA from claims arising from the same subject matter, including the administrative tort claim. Birri signed the agreement on February 10, 2023, and the court dismissed the action with prejudice on February 13, 2023. Birri received the $38,800 on February 28, 2023.

Motion for Relief

Birri later moved to set aside the settlement agreement and dismissal. The court treated his motion as a request for relief from a final order under Rule 60(b) of the Federal Rules of Civil Procedure. He argued that the SBA lawyer misled him about the status of his administrative tort claim, that he signed the agreement under duress because he believed he had to act quickly before the court ruled on the motion to dismiss, and that he had obtained new evidence concerning his discrimination claim.

The SBA opposed the motion. It argued that the administrative tort claim was not being actively considered because it involved the same subject matter as the federal lawsuit, and that a later letter from the agency was an administrative formality rather than evidence of a separate viable claim. The SBA also argued that the court lacked jurisdiction to consider Birri’s motion. The court rejected that jurisdictional argument because Birri sought to cancel the settlement and reopen the case rather than enforce the settlement.

Fraud, Misrepresentation, or Misconduct

Rule 60(b)(3) permits relief when fraud, misrepresentation, or misconduct prevented a party from fully and fairly presenting the case. The moving party must prove the misconduct by clear and convincing evidence, and the alleged misconduct generally must not have been discoverable through reasonable diligence before or during the proceedings.

The court concluded that Birri had not identified evidence showing that the SBA lawyer made false or misleading statements about the status or viability of the administrative tort claim. The settlement expressly included that claim within the release. The court found that the later SBA letter and the lack of agency communications did not establish that Birri had been misled. It also found that Birri had not shown that reasonable diligence and appropriate inquiries could not have revealed the information he claimed to need. The court therefore denied relief based on fraud, misrepresentation, or misconduct.

Duress

Because duress is not one of Rule 60(b)’s specifically listed grounds, the court treated Birri’s argument as a request under Rule 60(b)(6), which allows relief for another reason that justifies it. The court explained that this provision is used sparingly and requires injury plus circumstances beyond the party’s control that prevented proper participation in the case.

The court found that Birri’s allegations did not show that circumstances beyond his control prevented him from reviewing the agreement or acting in his own interests. Although he said he signed quickly and did not have time to consult an attorney from the Federal Pro Se Program, he did not contend that the SBA lawyer prohibited him from considering the proposal over the weekend. The record also did not show that the SBA imposed a deadline. The court found that the statement that a ruling on the pending motion to dismiss could affect the SBA’s willingness to settle was true, and that the pending motion and uncertainty about the ruling’s timing did not constitute extraordinary circumstances or duress. The court therefore denied relief on this ground.

Newly Discovered Evidence

Rule 60(b)(2) permits relief based on newly discovered evidence that could not have been found earlier through reasonable diligence. The evidence must also be significant enough that having it earlier would likely have changed the case’s outcome or the party’s decision to settle.

Birri identified three categories of evidence: the SBA’s May 3, 2023 letter about the administrative tort claim, recordings of telephone conversations with SBA representatives, and documents obtained through a Freedom of Information Act request concerning the SBA’s alleged statement that he was overfunded for a Black person. The court found that none qualified for relief. It concluded that the May 3 letter did not support the existence of a separately viable administrative tort claim, and that it was unclear how the recordings and documents differed from or added to allegations already in the complaint. Birri also did not explain when he obtained those materials or what diligence he used to obtain them before settling. Finally, he did not show that the evidence was significant enough that earlier access would likely have changed the case’s disposition or his willingness to settle.

Disposition

Judge Virginia K. Demarchi denied Birri’s motion for relief from the order of dismissal or the settlement agreement resolving the litigation. The opinion’s ruling addressed only whether the dismissal and settlement should be undone; it did not decide the underlying discrimination claims on their merits.