UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

GORDON COLLEGE,

Plaintiff, Civil Action No. 23-614 (BAH) v. Judge Beryl A. Howell UNITED STATES SMALL BUSINESS ADMINISTRATION, et al.,

Defendants.

MEMORANDUM OPINION

In response to the COVID-19 “public health emergency,” Shawnee Tribe v. Mnuchin,

(D.C. Cir. 2021), Congress enacted the Coronavirus Aid, Relief, and Economic

Security (“CARES”) Act,

Stat. 281 (2020). The CARES Act

established, in Section 1102, the Paycheck Protection Program (“PPP”), see CARES Act § 1102

(codified at

(a)(36)), which authorized the United States Small Business

Administration (“SBA”) “to guarantee favorable and potentially forgivable loans to businesses

negatively impacted by the pandemic,” Springfield Hosp., Inc. v. Guzman,

(2d Cir. 2022).

As previously described, see generally Gordon College v. SBA (“Gordon I”), No. 23-cv-

614 (BAH),

(D.D.C. July 18, 2024), plaintiff Gordon College is “a religious

nonprofit higher educational institution” that received a PPP loan for $7,046,037 but was denied

loan forgiveness when SBA concluded that plaintiff “exceeded the maximum allowable number

of employees and therefore [did] not qualify under the SBA small business size standard

qualifications for a [PPP] loan.” Second Am. Compl. (“SAC”) ¶¶ 1, 142-52, 172, ECF No. 31.

Plaintiff administratively appealed the denial to SBA’s Office of Hearings and Appeals 1 (“OHA”), which denied plaintiff’s appeal.

. Plaintiff subsequently petitioned for

reconsideration, and the OHA upheld SBA’s decision to deny plaintiff’s loan forgiveness

application because plaintiff was ineligible for the loan in the first place.

After exhausting its administrative appeals, plaintiff instituted the instant action against

the SBA, Kelly Loeffler, in her official capacity as Administrator of SBA, and the United States

(collectively “defendants”). See generally Compl., ECF No. 1.1 Following grant of defendants’

partial motion to dismiss plaintiff’s first amended complaint, see Gordon I,

,

at *15, plaintiff filed the now operative second amended complaint, alleging that SBA’s denial of

loan forgiveness violated the Administrative Procedure Act (“APA”),

et seq., the

Fifth Amendment’s Equal Protection and Due Process Clauses, U.S. CONST. amend. V., and the

Declaratory Judgment Act,

. SAC ¶¶ 293-367. Defendants have now

moved for summary judgment as to plaintiff’s APA claim, to dismiss plaintiff’s Equal Protection

claim for either lack of subject matter jurisdiction or failure to state a claim, and to dismiss

plaintiff’s Due Process and Declaratory Judgment claims for failure to state a claim. Defs.’ Mot.

for Summ. J. & Dismiss (“Defs.’ Mot.”) at 1, ECF No. 32; Defs.’ Mem. Supp. Mot. (“Defs.’

Mem.”) at 1-3, ECF No. 32-1. For the reasons stated below, defendants’ motion for summary

judgment and to dismiss is granted.

I. BACKGROUND

Reviewed below is the relevant statutory background, factual background, and procedural

history.

1 Although plaintiff originally named as a defendant the former Administrator of the Small Business Administration, the current holder of the position is “automatically substituted as a party” in her place, pursuant to Federal Rule of Civil Procedure 25(d).

2 A. Statutory Background

The Small Business Act,

et seq., created the SBA to “aid, counsel, assist,

and protect, insofar as is possible, the interests of small-business concerns,”

§ 631(a); see also

id. § 633(a) (establishing SBA). Its “primary mechanism” for doing so is “by financing private

‘Section 7(a) loans,’” which are “typically issued by private lenders” with SBA’s “guarantee[].”

Springfield Hosp.,

; see also

(a) (establishing Section 7(a) of

the Small Business Act); SBA v. McClellan,

(1960) (explaining that SBA has

“extraordinarily broad powers to accomplish [its] important objectives, including that of lending

money to small businesses whenever they could not get necessary loans on reasonable terms

from private lenders”); United States v. Kimbell Foods, Inc.,

, 719 n.3 (1979)

(explaining that SBA “prefers to guarantee private loans rather than to disburse funds directly”).

To qualify for a Section 7(a) loan, an applicant must be a “small business concern,”

(a), which SBA has defined to be an entity that is an “operating business,” “organized for

profit,” “located in the United States,” under certain “size requirements” that vary by industry,

and “demonstrate[s] a need for the desired credit,”

; see also

(a)(2)(A) (allowing SBA to define “small business concern”).

To blunt the economic fallout during the COVID-19 pandemic, Congress tasked SBA

with implementing provisions of the CARES Act. In particular, the CARES Act, inter alia,

established the PPP as “a temporary program targeted at providing small businesses with the

funds necessary to meet their payroll and operating expenses and therefore keep workers

employed.” Springfield Hosp.,

; see also Business Loan Program Temporary

Changes; Paycheck Protection Program (“April 2020 IFR”),

, 20,811 (Apr.

15, 2020) (explaining that the PPP is “intended to provide economic relief to small businesses

nationwide adversely impacted [by COVID-19]”). “Rather than establishing the PPP as a 3 standalone program, the CARES Act place[d] the PPP under Section 7(a) of the Small Business

Act,” Springfield Hosp.,

, and temporarily expanded SBA’s pre-existing business

loan authority by authorizing SBA, “[e]xcept as otherwise provided” in Section 1102, to

guarantee PPP loans “under the same terms, conditions, and processes” as an ordinary Section

7(a) loan,

(a)(36)(B).

At the same time, the CARES Act “relaxed many of the Section 7(a) eligibility criteria

for PPP applicants and waived some of the standard Section 7(a) requirements altogether.”

Springfield Hosp.,

(citing

(a)(36)(D), (H)–(J), (R)). For

example, the CARES Act “[i]ncreased [the] eligibility” for PPP loans, such that PPP loans could

be guaranteed not only to “small business concerns” but also to “any . . . nonprofit organization”

that “employ[ed] not more than . . . 500 employees” (the “500-employee cap”).

(a)(36)(D). The CARES Act defined “employee,” “[f]or purposes of determining whether

. . . a nonprofit organization . . . employs not more than 500 employees,” to “include[]

individuals employed on a full-time, part-time, or other basis.”

§ 636(a)(36)(D)(v). The PPP

was launched on April 3, 2020, with Congress authorizing SBA to guarantee up to $349 billion

of PPP loans to small businesses. See April 2020 IFR, 85 Fed. Reg. at 20,812.2

The CARES Act also provides a process for loan forgiveness, see CARES Act § 1106

(codified at 15 U.S.C. § 636m), authorizing that “[a]n eligible recipient shall be eligible for

forgiveness of indebtedness” on the portions of the PPP loan used for certain enumerated

purposes, such as payroll costs and payments for rent, utilities, and mortgage interest, 15 U.S.C.

§ 636m(b); see also id. § 636(a)(36)(A)(iv) (defining “eligible recipient”); see also Springfield

2 Initially, the CARES Act allocated $349 billion to guarantee PPP loans.

(b)(1). On April 16, 2020, the SBA announced that the PPP was closed to new applications. Eight days later, on April 24, 2020, Congress appropriated an additional $310 billion for loan guarantees under the PPP. See The Paycheck Protection and Health Care Enhancement Act,

Stat. 620 (2020).

4 Hosp.,

(“The PPP provides potentially forgivable loans to eligible small

businesses, allowing the recipient to seek loan forgiveness if at least 60% of the loaned funds are

used for specified expenses, such as payroll.”). “The amount of loan forgiveness can be up to the

full principal amount of the loan and any accrued interest,” so long as “the borrower uses all of

the loan proceeds for forgivable purposes” and certain “employee and compensation levels are

maintained.” April 2020 IFR, 85 Fed. Reg. at 20,813; see also 15 U.S.C. § 636m(d)(1) (“The

amount of loan forgiveness . . . shall not exceed the principal amount of the financing made

available under the applicable covered loan.”). Loans that are not forgiven are to be repaid at a

fixed one-percent interest rate. April 2020 IFR, 85 Fed. Reg. at 20,813.

To obtain forgiveness, a borrower must submit a PPP loan forgiveness application with

supporting documentation to its lender. See 15 U.S.C. §§ 636m(e)–(f). Within 60 days of

receiving the application, the lender must “issue a decision on the . . . application.” Id. §

636m(g). If the borrower is determined to be entitled to loan forgiveness, the lender submits a

request for payment to SBA, and SBA, within 90 days, must “remit to the lender an amount

equal to the amount of forgiveness, plus any interest accrued through the date of payment.” Id. §

636m(c)(3).

“In light of the structure of the PPP . . ., in which loans and loan forgiveness are provided

based on the borrower’s certifications and documentation provided by the borrower,” SBA

established a series of “procedures and criteria through which SBA will review” a borrower’s

eligibility for a PPP loan, calculation of the loan amount, use of loan proceeds, and entitlement to

loan forgiveness “to ensure that PPP loans are directed to the entities Congress intended, and that

PPP loan proceeds are used for the purposes Congress required.” Business Loan Program

Temporary Changes; Paycheck Protection Program-SBA Loan Review Procedures and Related

5 Borrower and Lender Responsibilities (“June 2020 IFR”),

, 33,012 (June 1,

2020). “SBA may undertake a review at any time in SBA’s discretion.”

“If SBA determines

that a borrower is ineligible for the PPP loan, SBA will direct the lender to deny the loan

forgiveness application,” and, “[f]urther, if SBA determines that the borrower is ineligible for the

loan amount or loan forgiveness amount claimed by the borrower, SBA will direct the lender to

deny the loan forgiveness application in whole or in part, as appropriate.”

In sum, if an applicant was originally ineligible for a loan but received a PPP loan

nonetheless, the SBA will deny loan forgiveness.

If a loan has already been forgiven, “SBA

may . . . seek repayment of the outstanding PPP loan balance or pursue other available

remedies.”

B. Factual Background

As described above, plaintiff is a “religious nonprofit higher education institution” that

received a PPP loan but was ultimately denied PPP loan forgiveness. SAC ¶¶ 1, 3-4.

Specifically, in April 2020, plaintiff submitted a PPP loan application to its bank reporting that it

had 495.67 employees.

. Plaintiff calculated this number using a full-time

equivalent (“FTE”) counting method, which counts part-time employees as a fraction of an

employee depending on the number of hours the employee worked.

The bank quickly

approved plaintiff’s loan application under the PPP’s streamlined procedures, and plaintiff

received a loan for $7,046,037.

.

In July 2021, plaintiff applied for full forgiveness of its PPP loan. See Certified

Administrative Record (“AR”) at 137. SBA requested additional information about plaintiff’s

loan, on September 7, 2021, and informed plaintiff, on October 13, 2021, that a “Hold Code” had

been placed on its loan based on its “Employee Count,” which was “indicative of concern”

because plaintiff reported a fractional number and was reflective of a “[p]otential eligibility 6 issue.”

. To complete its “quality control process and review [of plaintiff’s]

loan file,” SBA requested additional documentation related to plaintiff’s number of employees,

such as plaintiff’s “most recent 3 years Federal Tax Returns”; a “list of locations to include

employee count per location”; and a variety of reports for the 2019 fiscal year, including reports

summarizing employer health contributions, employment retirement contributions, and payroll

per employee.

; see also SAC ¶¶ 165, 172. On November 15, 2021, and again on

December 8, 2021, SBA informed plaintiff that although “a thorough review of all

documentation provided” to support plaintiff’s application for loan forgiveness was ongoing,

“[b]ased on our preliminary findings of the review, we are considering recommending a Full

Denial” because plaintiff, in relevant part, self-reported “639 employees for the Massachusetts

location, which exceeds the maximum limit of 500 employees per location.” AR at 138-39. In

total, plaintiff employed 808 individuals, excluding students who participated in the federal

work-study program and are not counted as employees by SBA.

.

On April 12, 2022, SBA issued its Final Loan Review Decision, denying forgiveness of

plaintiff’s PPP loan and explaining that plaintiff “was ineligible for the PPP loan” based on

SBA’s conclusion that plaintiff “exceeded the maximum allowable number of employees and

therefore does not qualify under the SBA small business size standard qualifications for a [PPP]

loan.”

; SAC ¶¶ 3, 172. “The bottom line of SBA’s decision [denying plaintiff loan

forgiveness] was a finding that [plaintiff] exceeded the 500-employee limit for PPP loan

eligibility.” SAC ¶ 3.

C. Procedural History

Plaintiff administratively appealed the denial to OHA, and an ALJ affirmed the denial of

PPP loan forgiveness. See AR at 137. On plaintiff’s petition for reconsideration, see

at 146-

64; SAC ¶ 3, the ALJ noted that the initial decision erroneously categorized plaintiff as a “small 7 business concern” rather than a “tax-exempt nonprofit,” but explained that this categorization

“change[d] the analysis but not the result of the Initial Decision,” and again upheld SBA’s

decision to deny plaintiff’s loan forgiveness application, AR at 201-02.

Looking carefully at the CARES Act, the ALJ further explained that nonprofit

organizations “employ[ing] not more than 500 employees” are eligible for a PPP loan, and that

“employee” is defined to “include[] individuals employed on a full-time, part-time, or other

basis.” AR at 202 (emphasis omitted) (first quoting

(a)(36)(D)(i); and then

quoting

§ 636(a)(36)(D)(v)). In the ALJ’s view, “the CARES Act’s text resolves the

employee-counting dispute” and is “very clear”: “SBA’s proposed ‘headcount’ method—that is,

counting every employed individual regardless of full-time or part-time status as an

‘employee’—is the proper method with which to determine whether a nonprofit organization is

eligible for a PPP loan based on the 500-employee threshold,” not the FTE method for which

plaintiff advocated and used when submitting its original PPP loan application. Id. at 203.

Plaintiff’s employment of over 800 individuals made plaintiff ineligible for the PPP loan and,

thus, ineligible for loan forgiveness. Id. at 183, 201-07.

Plaintiff then instituted this action on March 6, 2023, alleging that SBA’s denial of its

loan forgiveness application because of the PPP’s 500-employee cap violated the Religious

Freedom Restoration Act (“RFRA”) and the religious protections granted by the First and Fifth

Amendments, and that the process by which the SBA denied its loan forgiveness application

violated the APA and Fifth Amendment. Compl. ¶¶ 179-300, ECF No. 1; First Am. Compl. ¶¶

293-460, ECF No. 15. Defendants’ partial motion to dismiss plaintiff’s claims alleging

violations of RFRA and the religious protections afforded under the First and Fifth Amendments

was granted because “plaintiff . . . alleged no facts connecting the 500-employee cap to any

8 religious practice,” Gordon I,

, at *9, “fail[ed] to identify any ‘exercise of

religion’ that ha[d] been burdened,”

, and “failed to bring a rational-basis challenge by

not plausibly alleging that no reasonable set of facts could provide a rational basis for the PPP’s

500-employee cap,”

After grant of defendants’ partial motion to dismiss, plaintiff filed the second amended

complaint at issue here, alleging in four counts that: the ALJ’s decision affirming SBA’s denial

of its loan forgiveness application was “erroneous as a matter of law” or “arbitrary and

capricious,” in violation of the APA (Count 1), SAC ¶¶ 293-302; the CARES Act’s 500-

employee cap “burdens [plaintiff’s] religious exercise,” in violation of the Fifth Amendment’s

Due Process and Equal Protection clauses (Count 3),

; defendants violated

plaintiff’s Fifth Amendment Due Process clause “by failing to provide [plaintiff] with even the

minimal protection that due process requires” (Count 4),

; and plaintiff is entitled to

a declaratory judgment (Count 2),

. Defendants now seek summary judgment as to

Count 1, dismissal of Count 3 either for failure to state a claim or for lack of subject matter

jurisdiction, and dismissal of Counts 2 and 4 for failure to state a claim. See Defs.’ Mem. at 1-3.

II. LEGAL STANDARD

A. Motion to Dismiss for Lack of Subject Matter Jurisdiction

A defendant may move to dismiss the complaint for lack of subject matter jurisdiction

under Federal Rule of Civil Procedure 12(b)(1). FED. R. CIV. P. 12(b)(1). Indeed, “[f]ederal

courts are courts of limited jurisdiction,’ possessing ‘only that power authorized by Constitution

and statute.’” Gunn v. Minton,

(2013) (quoting Kokkonen v. Guardian Life

Ins. Co. of Am.,

(1994)). “[F]orbidden . . . from acting beyond [their]

authority,” NetworkIP, LLC v. FCC,

(D.C. Cir. 2008), federal courts thus

“have an affirmative obligation ‘to consider whether the constitutional and statutory authority 9 exist for [it] to hear each dispute,’” James Madison Ltd. by Hecht v. Ludwig,

(D.C. Cir. 1996) (quoting Herbert v. Nat’l Acad. of Scis.,

(D.C. Cir. 1992)).

Absent subject matter jurisdiction, a case must be dismissed. See Arbaugh v. Y&H Corp.,

(2006); FED. R. CIV. P. 12(b)(1), 12(h)(3).

“[T]he defect of standing is a defect in subject matter jurisdiction.” Sattler v. U.S. Dep’t

of Justice,

, 1 (D.C. Cir. 2021) (quoting Haase v. Sessions,

(D.C. Cir. 1987)). When reviewing a motion to dismiss for lack of standing under Rule 12(b)(1),

the court must “assume that the complaint states a valid legal claim,” Huron v. Cobert,

(D.C. Cir. 2016), and “accept the well-pleaded factual allegations as true and draw

all reasonable inferences from those allegations in the plaintiff’s favor,” Kareem v. Haspel,

(D.C. Cir. 2021) (quoting Arpaio v. Obama,

(D.C. Cir. 2015)).

Furthermore, a court “may consider materials outside the pleadings to determine [its]

jurisdiction.”

at 866 n.7.

B. Motion to Dismiss for Failure to State a Claim

To survive a Rule 12(b)(6) motion to dismiss, the “complaint must contain sufficient

factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft

v. Iqbal,

(2009) (quoting Bell Atl. Corp. v. Twombly,

(2007)). A facially plausible claim pleads facts that are not “‘merely consistent with’ a

defendant’s liability” but “that allow[] the court to draw the reasonable inference that the

defendant is liable for the misconduct alleged.”

at 678 (quoting Twombly,

-

57). In deciding a motion under Rule 12(b)(6), a court must accept all factual allegations as true,

“even if doubtful in fact,” Twombly,

, and “construe the complaint ‘in favor of the

plaintiff,’” Langeman v. Garland,

(D.C. Cir. 2023) (quoting Hettinga v.

United States,

(D.C. Cir. 2012)). Courts, however, “need not accept 10 inferences . . . not supported by the facts set out in the complaint, nor must the court accept legal

conclusions.”

(quoting Hettinga,

). In determining whether a complaint fails

to state a claim, although a court must review the whole complaint, Twombly,

,

courts are limited to “consider[ing] only the facts alleged in the complaint, any documents either

attached to or incorporated in the complaint and matters of which [the court] may take judicial

notice.” Marshall’s Locksmith Serv. Inc. v. Google, LLC,

(D.C. Cir.

2019) (second alteration in original) (quoting Hurd v. District of Columbia,

(D.C. Cir. 2017)).

C. Summary Judgment

Under Federal Rule of Civil Procedure 56(a), summary judgment is appropriate when the

pleadings and evidence demonstrate 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). When assessing a

motion for summary judgment in an APA case, such as this one, “the district judge sits as an

appellate tribunal,” Rempfer v. Sharfstein,

(D.C. Cir. 2009) (quoting Am.

Bioscience, Inc. v. Thompson,

(D.C. Cir. 2001)), since the “‘entire case on

review is a question of law,’ and the ‘complaint, properly read, actually presents no factual

allegations, but rather only arguments about the legal conclusion to be drawn about the agency

action,’”

(quoting Marshall Cnty. Health Care Auth. v. Shalala,

(D.C.

Cir. 1993)).

As such, the APA “instructs a reviewing court to set aside agency action found to be

‘arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law,’” Cigar

Ass’n of Am. v. FDA,

(D.C. Cir. 2020) (quoting

(2)(A)). This

standard “‘requires agencies to engage in reasoned decisionmaking,’ and . . . to reasonably

explain to reviewing courts the bases for the actions they take and the conclusions they reach.” 11 Bhd. of Locomotive Eng’rs & Trainmen v. Fed. R.R. Admin.,

(D.C. Cir. 2020)

(internal citations omitted) (quoting Dep’t of Homeland Sec. v. Regents of the Univ. of Cal.

(“Regents”),

, 16 (2020)). While “judicial review of agency action is limited to ‘the

grounds that the agency invoked when it took the action,’” Regents, 591 U.S. at 20 (quoting

Michigan v. EPA,

(2015)), the agency, too, “must defend its actions based on

the reasons it gave when it acted,” id. at 24.

III. DISCUSSION

Defendants’ challenges to Counts 1, 3 and 4 in plaintiff’s third complaint filed in this

action are addressed seriatim.3 For the reasons explained below, defendants are correct that no

claim withstands scrutiny.

A. COUNT 1: Denial of Plaintiff’s Loan Forgiveness Was Neither Contrary to Law nor Arbitrary and Capricious Under the APA.

Count 1 alleges that defendants’ conclusion that plaintiff did not qualify for the PPP loan,

and is thus ineligible for loan forgiveness, was “arbitrary and capricious” and “erroneous as a

matter of law,” in violation of the APA. SAC ¶ 297. Defendants move for summary judgment

on this claim on grounds that the SBA properly construed governing law as requiring a

“headcount” method to calculate plaintiff’s number of employees, as opposed to plaintiff’s FTE

method, and therefore the decision to apply the 500-employee cap to deny plaintiff’s loan

forgiveness application was not arbitrary and capricious. Defs.’ Mem. at 10-14; id. at 2 (arguing

that plaintiff’s claim “fails as a matter of law because SBA’s application of the 500-employee

3 Defendants also seek dismissal of Count 2, claiming entitlement to a declaratory judgment, SAC ¶¶ 303-12, because the “Declaratory Judgment Act does not alone ‘provide a cause of action’” and “is more properly included in the [] prayer for relief.” Defs.’ Mem. at 38 (alteration in original) (first quoting Ali v. Rumsfeld,

(D.C. Cir. 2011); then quoting Am. First Legal Found. v. Cardona,

(D.D.C. 2010)). Plaintiff concedes this point, Pl.’s Opp’n Defs.’ Mot. (“Pl.’s Opp’n”) at 44, ECF No. 36, and, accordingly, Count 2 will be dismissed.

12 cap . . . was not arbitrary and capricious but was instead mandated by the plain text of the

[CARES Act].”). Review of the relevant APA rules and the statutory text at issue demonstrates

that defendants are entitled to summary judgment as to Count 1.

“In determining whether an agency’s interpretation of its governing statute is contrary to

law, [courts] must exercise [their] ‘independent judgment’ and ‘apply[] all relevant interpretive

tools’ to reach ‘the best reading of the statute.’” Env’t Def. Fund v. EPA,

(D.C.

Cir. 2024) (third alteration in original) (quoting Loper Bright Enters. v. Raimondo,

,

400, 412 (2024)). In contrast, “review under the ‘arbitrary and capricious’ standard is narrow.”

Motor Vehicle Mfrs. Ass’n of U.S., Inc. v. State Farm Mut. Auto. Ins. Co.,

(1983). Under this standard, the reviewing court must avoid substituting its “judgment for that

of the agency,” but must nonetheless ensure that the agency has “examine[d] the relevant data

and [has] articulate[d] a satisfactory explanation for its action including a ‘rational connection

between the facts found and the choice made.’”

(quoting Burlington Truck Lines v. United

States,

(1962)).

1. Contrary to Law

Defendants properly construed the relevant statutory language governing loan

forgiveness eligibility for nonprofit organizations like plaintiff as requiring, inter alia, 500 or

fewer total employees and not 500 or fewer FTE employees based on the number of hours

worked. Statutory interpretation “begins, as always, with the text of the statute.” Chao v. Day,

(D.C. Cir. 2006) (citing Barnhart v. Sigmon Coal Co.,

(2002)). If the text of the statute is “plain and ambiguous,” the “analysis ends with the text as

well.”

(citing Robinson v. Shell Oil Co.,

(1997)); see also Nat’l Ass’n of

Mfrs. v. Dep’t of Def.,

(2018) (“Because the plain language [the statute] is

13 ‘unambiguous,’ ‘our inquiry begins with the statutory text, and ends there as well.’” (quoting

BedRoc Ltd., LLC v. United States,

(2004) (plurality opinion)); United States

v. Villanueva-Sotelo,

(D.C. Cir. 2008) (“We must first ‘determine whether

the language at issue has a plain and unambiguous meaning with regard to the particular dispute

in the case.’ If it does, our inquiry ends and we apply the statute’s plain language.” (internal

citation omitted) (quoting Robinson,

and citing Barnhart,

)).

As relevant here, the CARES Act permits PPP loans to be guaranteed to “any . . .

nonprofit organization,”

(a)(36)(D)(i), that “employs not more than . . . 500

employees,”

§ 636(a)(36)(D)(i)(I), and provides that “[f]or purposes of determining whether a

. . . nonprofit organization . . . employs not more than 500 employees . . . the term ‘employee’

includes individuals employed on a full-time, part-time, or other basis,” id. § 636(a)(36)(D)(v).

The word “or” “is ‘almost always disjunctive,’” meaning in this statutory context that an

employee is counted for purposes of the 500-employee cap regardless of the “basis” for their

employment. Encino Motorcars, LLC v. Navarro,

(2018). The plain meaning

here is clear: to be eligible for a forgivable PPP loan, a nonprofit organization must employ 500

or fewer individuals regardless of the employee’s employment status or the number of hours they

work.

Accordingly, the statute forecloses plaintiff’s alternative FTE method of counting the

number of employees for purposes of qualifying for a PPP loan, and thus subsequent loan

forgiveness, which proposed method counts the number of staff based on the number of hours

they worked as a fraction of the hours of a full-time employee. SAC ¶ 40. Instead, as defendants

succinctly argue, the statute prescribes a simple and straight-forward method to calculate the

14 number of individuals a nonprofit employs to determine its eligibility for a PPP loan: “one

employee plus one employee equals two employees.” Defs.’ Mem. at 13.

Further support for this conclusion is found elsewhere in the statute. Specifically,

Congress drafted other provisions of the statute to require FTE calculation for certain purposes.

For example, Congress specified the use of the FTE method to determine reductions in loan

forgiveness proportional to a borrower’s reduction in its number of FTE employees. 15 U.S.C. §

636m(d)(2)(A). “[H]ad Congress intended” to authorize prospective loan applicants to calculate

its number of employees using the FTE method in

(a)(36)(D), “it would have

done so,” as it did in Section 636m(d)(2)(A). State Farm Fire & Cas. Co. v. U.S. ex rel. Rigsby,

(2016); see also Barnhart,

(“[I]t is a general principle of

statutory construction that when ‘Congress includes particular language in one section of a

statute but omits it in another section of the same Act, it is generally presumed that Congress acts

intentionally and purposely in the disparate inclusion or exclusion.’” (quoting Russello v. United

States,

(1983))).

Faced with the statute’s plain language, plaintiff offers a smattering of rhetorical

questions and misplaced arguments—none of which confronts the statute’s text. See Pl.’s Opp’n

Defs.’ Mot. (“Pl.’s Opp’n”) at 2-11, 14-22, ECF No. 36. First, plaintiff argues that the statute’s

definition of “employee” was meant “to distinguish workers who are employed by [eligible

organizations] from workers who ‘operate under a sole proprietorship or as an independent

contractor and eligible self-employed individuals.’” Pl.’s Opp’n at 21 (emphasis omitted)

(quoting

(a)(36)(D)(ii)). Plaintiff’s argument, pointing to a separate provision

that does not provide a method to count employees for purposes of loan eligibility, however, is of

no persuasive help in reading the statutory provision which does exactly that. See

636(a)(36)(D)(v). Moreover, as defendants correctly point out “it would not make sense for the

statute to define ‘employee’ as a means of distinguishing ‘self-employed’ when the statute

expressly and separately defines the term ‘eligible self-employed individual.’” Defs.’ Reply

Supp. Mot. (“Defs.’ Reply”) at 4-5, ECF No. 39 (citing

(a)(36)(A)(v), which

adopts the definition of “eligible self-employed individual” from § 7002(b) of the Families First

Coronavirus Response Act).

Second, plaintiff asserts that “there is little reason to think that, in its rush to pass the

CARES Act, Congress implicitly established Defendants’ formula for counting employees” and

that doing so would “oppose the essence of the PPP.” Pl.’s Opp’n at 19, 21. Clear statutory text

is no “little reason,” however. “[C]ourts must presume that a legislature says in a statute what it

means and means in a statute what it says there.” Conn. Nat’l Bank v. Germain,

(1992). Here, Congress did not “implicitly” establish defendants’ formula for counting

employees, the text did so explicitly in defining “employee” “[f]or purpose of determining

whether a . . . nonprofit organization . . . employs not more than 500 employees” as including

“individuals employed on a full-time, part-time, or other basis.”

(a)(36)(D)(v).

Further, “no legislation pursues its purpose at all costs” and deciding which nonprofits were

eligible for, and could receive, PPP loans “is the very essence of legislative choice.” Rodriguez

v. United States,

(1987). Congress made a choice to decide how “small” a

nonprofit had to be to be eligible for a PPP loan, and thus receive PPP loan forgiveness. See

(a)(36)(D)(v);

§ 636m(b) (limiting forgiveness to only “eligible recipient[s]”).

That decision, and “not individual policy preferences,” governs resolution of the parties’

interpretive dispute. Loper Bright, 603 U.S. at 403.

16 Third, plaintiff cites to “sources of official guidance” that refer to the FTE method,

including the PPP loan application, the April 2020 IFR, and the PPP promissory note. Pl.’s

Opp’n at 17. Nowhere do these documents suggest, however, that a PPP loan applicant could, or

should, count employees using the FTE method to determine eligibility for such a loan. AR at

167-70 (PPP loan Application); AR at 35-41 (April 2020 IFR); AR at 273-92 (promissory note).

To the contrary, the sources’ “use [of] the phrase ‘full-time equivalent employees,’” Pl.’s Opp’n

at 17, is unremarkable given the fact that the number of FTE employees was necessary to

determine potential reductions in loan forgiveness proportional to a borrower’s reduction in its

number of full-time equivalent employees during the relevant period, 15 U.S.C. §

636m(d)(2)(A). For loan eligibility purposes, Congress directed applicants to count each

individual employee regardless of the basis of their employment—full-time, part-time, or other.

(a)(36)(D)(v). On April 26, 2020, after PPP loan disbursements began, SBA

issued a statement reiterating this distinction and reminding applicants that “[f]or purposes of

loan eligibility, . . . [a] borrower must . . . calculate the total number of employees, including

part-time employees, when determining their employee headcount for purposes of the eligibility

threshold,” as mandated by the plain text of the statute. AR at 143. Plaintiff attempts to frame

this statement as a “revision of the counting method,” Pl.’s Opp’n at 15 (emphasis in original),

but the guidance did not impose any new requirements for loan eligibility. Instead, this guidance

merely “remind[ed] parties of existing statutory or regulatory duties,” “track[ed] preexisting

requirements[,] and explain[ed] something the statute . . . already required.” Mendoza v. Perez,

(D.C. Cir. 2014) (cleaned up).4

4 Plaintiff argues that defendants’ interpretation of the definition of “employee” to exclude students participating in the federal work-study program undermines the plain language of the statute. Pl.’s Opp’n at 3. This is simply not persuasive since the purpose of the federal work-study program, “a federally subsidized financial aid program,” is to provide a form of financial aid to help students afford their educational program and continue in the

17 In sum, “[j]udges are not free to overlook plain statutory commands.” Bostock v. Clayton

County,

(2020). “[W]hen the meaning of the statute’s terms is plain, [the

court’s] job is at an end.”

. Here, defendants did not act contrary to law when they

appropriately construed the statute’s definition of “employee” for purposes of loan eligibility,

and thus loan forgiveness, as requiring 500 or fewer total employees regardless of the basis of

their employment and not plaintiff’s proposed FTE method.

2. Arbitrary and Capricious

Plaintiff also alleges that defendants acted arbitrarily and capriciously in denying its loan

forgiveness application. SAC ¶ 297. Defendants are correct this portion of plaintiff’s claim is

untenable based on the administrative record. Defs.’ Mem. at 11-14.

Under the arbitrary and capricious standard, courts are “highly deferential to the agency’s

decision and presume[] that the agency action is valid.” Am. Pub. Gas Ass’n v. U.S. Dep’t of

Energy,

(D.C. Cir. 2023) (quoting Oceana, Inc. v. Ross,

(D.C. Cir. 2019)). An agency’s action will be upheld as long as the agency “examined the

relevant considerations and articulated a satisfactory explanation for its action, including a

rational connection between the facts found and the choice made.” Columbia Gulf Transmission,

LLC v. FERC,

(D.C. Cir. 2024) (brackets omitted) (quoting FERC v. Elec.

Power Supply Ass’n,

(2016)). “Agency action is arbitrary and capricious if it

‘has relied on factors which Congress has not intended it to consider, entirely failed to consider

status as a student, and thus, its “primary purpose” is to “advance education” and not to meet employment needs. Business Loan Program Temporary Changes; Paycheck Protection Program

, 27,289 (May 8, 2020);

(“[Work-study programs] . . . provide part-time jobs to students with financial need, and their services are incident to and for the purposes of pursuing a course of study.”). In any event, defendants’ decision to exclude students who participate in federal work-study programs from a nonprofit educational institution’s total employee count has no bearing on the outcome of this case as plaintiff exceeds the 500-employee cap regardless of whether work-study students are counted, or not, in plaintiff’s employee count. Without counting work-study students, plaintiff employed 808 individuals. AR 183; Gordon I,

, at *12 (making this point).

18 an important aspect of the problem, offered an explanation for its decision that runs counter to

the evidence before the agency, or is so implausible that it could not be ascribed to a difference

in view or the product of agency expertise.’” Sinclair Wyo. Refin. Co. v. EPA,

(D.C. Cir. 2024) (quoting State Farm,

).

The administrative record reflects that SBA properly examined the relevant

considerations and articulated satisfactory reasons for denying plaintiff’s loan forgiveness

application. Concluding that plaintiff “had more than 500 employees,” AR at 205, SBA properly

conducted “[a] thorough analysis of the IRS 941 reports and additional supporting

documentation,” plaintiff submitted, which “confirm[ed] that [plaintiff] exceeded the maximum

allowable number of employees and therefore d[id] not qualify under the SBA small business

size standard qualifications for a [PPP] loan,”

. A review of the administrative record

reinforces that “there is no shortage of . . . evidence . . . that [plaintiff] exceeded the 500-

employee threshold and was consequently ineligible for the PPP loan.” Id. at 205-06. In fact,

plaintiff does not dispute employing more than 500 employees at the time of submission of its

PPP loan application, id. at 183, 205-06, but only the interpretation of how it was meant to count

them, see Pl.’s Opp’n at 14-25. Accordingly, “the process by which [the agency] reache[d] [its]

result [was] logical and rational” and easily satisfies arbitrary and capricious review. Michigan,

(quoting Allentown Mack Sales & Serv., Inc. v. NLRB,

(1998)).

In light of this reasoned decision-making and plaintiff’s concession about employing

more than 500 employees at the time of applying for the PPP loan, none of plaintiff’s arguments

intended to show the denial of its loan forgiveness was arbitrary and capricious hold water.

19 First, plaintiff suggests that because the administrative record “contains no intra- or inter-

agency communications that might suggest motive” for denying plaintiff’s loan forgiveness

application, that record “might as well be 1,744 blank pages.” Pl.’s Opp’n at 44. Basic black-

letter law provides, however, that “in reviewing agency action, a court is ordinarily limited to

evaluating the agency’s contemporaneous explanation in light of the existing administrative

record.” Dep’t of Commerce v. New York,

(2019). This fundamental

principle “reflects the recognition that further judicial inquiry into ‘executive motivation’

represents ‘a substantial intrusion’ into the workings of another branch of Government and

should normally be avoided.”

(quoting Arlington Heights v. Metro. Housing Dev. Corp.,

, 268 n.18 (1977)). While a “narrow exception to the general rule against inquiring into

‘the mental process of administrative decisionmakers’” may be available on a “strong showing of

bad faith or improper behavior,”

(quoting Citizens to Preserve Overton Park, Inc. v. Volpe,

(1971)), plaintiff provided no factual support, let alone made “a significant

showing,” Air Transp. Ass’n of Am., Inc. v. Nat’l Mediation Bd.,

(D.C. Cir.

2011), that satisfies that standard here—nor could plaintiff make such a showing given the

clarity in the statutory text.5

Second, plaintiff contends it was treated differently from similarly situated colleges.

SAC ¶¶ 7, 218-35;

Ex. 8 (“List of Colleges”) at 2-4, ECF No. 31-8; Pl.’s Opp’n at 2-3, 30.

To be sure, “an agency may not treat like cases differently.” Eagle Broadcasting Grp., Ltd. v.

5 Plaintiff’s mere suspicion of animus simply does not satisfy that standard. See SAC ¶ 325 (alleging that defendants’ actions “may be motivated by animus” (emphasis added)). Despite plaintiff’s protestations that it is “impossible to obtain, and fundamentally unfair to require, proof of animus or other motive without some discovery,” Pl.’s Opp’n at 43, the “APA is not a discovery mechanism,” Alsaidi v. U.S. Dep’t of State,

(D.D.C. 2018). In other words, plaintiff “cannot use the APA to justify a fishing expedition for evidence that defendants were motivated, not by their stated reason[s] . . . , but by a discriminatory policy that plaintiff believes exists.”

F.3d 543, 551 (D.C. Cir. 2009) (quoting Freeman Eng’g Assocs., Inc. v. FCC,

, 178 (D.C. Cir. 1997)). A similarly situated comparator is one that is “prima facie

identical in all relevant respects, or directly comparable . . . in all material respects.” Muwekma

Ohlone Tribe v. Salazar,

(D.D.C. 2011) (alteration in original) (quoting

Racine Charter One, Inc. v. Racine Unified Sch. Dist.,

(7th Cir. 2005), aff’d,

(D.C. Cir. 2013). In this case, a similarly situated comparator would, at a

minimum, be one that: (1) is a nonprofit college; (2) had more than 500 employees at a single

location, while excluding federal work-study students from the total headcount; (3) used the FTE

method to calculate the number of employees in applying for a PPP loan; (4) received a PPP

loan; (5) applied for PPP loan forgiveness; (6) had the PPP loan forgiveness application trigger a

“hold code” indicating potential eligibility issues and prompting SBA’s close scrutiny; and (7)

received loan forgiveness despite triggering a hold code and employing more than 500

employees at a single location while excluding federal work-study students from the total

headcount.

Plaintiff’s complaint ultimately does not allege sufficient facts about any proposed

comparators and suffers from significant substantive defects. While plaintiff makes the broad

allegation that other colleges used the FTE method to calculate the number of employees on their

PPP loan applications and received loan forgiveness, SAC ¶ 44, this allegation, standing alone,

falls far short of showing the colleges were similarly situated in all relevant characteristics. Put

simply, plaintiff offers insufficient “facts to support its conclusory allegation that [they] are

similarly situated.” Gordon I,

, at*11; see also Monkey Jungle, Inc. v. SBA,

No. 22-cv-2537 (JDB),

, at *11 (D.D.C. Aug. 29, 2024) (rejecting a dissimilar

treatment APA claim where plaintiff “fail[ed] to make any ‘significant showing’ that the[]

21 entities are genuinely ‘analogous’” (quoting Republic Airline Inc. v. U.S. Dep’t of Transp.,

(D.C. Cir. 2012))). 6 For example, with respect to the first similar characteristic,

i.e., being a nonprofit college, plaintiff’s List of Colleges attached to its second amended

complaint identifying the supposedly similarly situated colleges contains “Asa College,” which

is classified as a “corporation” and not a nonprofit organization, see List of Colleges at 2,

undermining plaintiff’s position that the exhibit in fact “shows that the government has treated it

differently from a similarly situated party,” Muwekma Ohlone Tribe v. Salazar,

(D.C. Cir. 2013).

In addition, while alleging that other colleges used the FTE method to calculate fewer

than 500 employees but employed over 500 employees and still received forgiveness, SAC ¶¶

218-35, plaintiff does not account for the fact that “other colleges . . . were [potentially] eligible

for forgiveness on grounds unavailable to [plaintiff].” Defs.’ Mem. at 18. As previously

discussed in Gordon I, higher education institutions could exclude work-study students from

their total employee count, and this could, in some instances, reduce a college’s total number of

employees to under 500—as was the case in Husson University, one of plaintiff’s alleged

similarly situated comparators.

, at *12; Business Loan Program Temporary

6 In opposition, plaintiff raises for the first time allegations that an additional 145 colleges not identified in its second amended complaint, were similarly situated, for a total of 170 such colleges. SAC, Decl. of Philip D. Eskeland, Attach. 1 (“2d List of Colleges”), ECF No. 38-1. These allegedly similarly situated comparators were not presented to the SBA during the administrative process. In any event, like the initial 25 colleges, plaintiff does not allege that these comparators satisfy all the relevant characteristics discussed in the text nor provide analysis that these additional colleges are similarly situated in “all of the relevant aspects.” Burley v. Nat’l Passenger Rail Corp.,

(D.C. Cir. 2015). Indeed, two purported comparators on the new list of colleges are reported as “professional associations” and not nonprofit colleges, calling into question whether the list accurately reflects appropriate comparators. 2d List of Colleges at 1, 5 (listing “Crown College” and “Albion College” as “professional associations”). Given the insufficiency of the factual pleading and analysis, the declaration of Jacon C. Frulla submitted by defendants in reply to rebut plaintiff’s belated new list by describing the process by which SBA implemented the PPP loan forgiveness application process, including how hold codes were placed on accounts that triggered closer agency review of documentation, Defs.’ Reply, Decl. of Jason C. Frulla (“Frulla Declaration”), Program Analyst, SBA, ECF No. 39-1, and plaintiff’s surreply responding to the Frulla Declaration, see Pl.’s Surreply at 1-5, ECF No. 41, are not necessary to consider.

22 Changes; Paycheck Protection Program

, 27,289 (May 8, 2020); SAC ¶¶

237-50. In contrast to the example of Husson University, plaintiff “does not dispute that the

question whether work-study students constitute ‘employees’ was not at issue in its PPP loan

forgiveness application or appeal, nor that, excluding work-study students, plaintiff still has more

than 500 employees.” Gordon I,

, at *12; see generally SAC (not alleging

new facts that change the conclusion in Gordon I); Pl.’s Opp’n (not making any arguments that

change the conclusion in Gordon I). Notably, plaintiff does not allege that any of the other

colleges it identifies as similarly situated would exceed the 500-employee cap when work-study

students are excluded. See SAC.

Likewise, a nonprofit organization can also receive forgiveness if its physical locations

each maintain fewer than 500 employees, even if the total number of employees across all

physical locations is over 500. See

(a)(36)(D)(iii)(III)(aa). Plaintiff fails to

allege that the purportedly similarly situated colleges meet this second characteristic of having

500 or more employees at the same location, see SAC, as plaintiff does at its Massachusetts

location alone, AR at 201, and this silence undercuts a claim that the other colleges are similarly

situated.

Moreover, the proposed comparators flunk the sixth characteristic of having a PPP loan

forgiveness application trigger a hold code prompting the agency’s close scrutiny. A hold code

was placed on plaintiff’s loan forgiveness application because it reported a fractional number of

employees, 495.67, on its PPPP loan application. AR at 232, 254, 258, 325-29. The code

flagged that its application for forgiveness was “indicative of concern” because of a “[p]otential

eligibility issue” for its PPP Loan, which resulted in SBA’s manual review of plaintiff’s loan

forgiveness application and associated documentation. AR at 232, 254, 258, 325-29. Plaintiff

23 does not allege that the supposedly similar colleges’ loan forgiveness applications triggered a

hold code. See SAC. In the same vein, no factual allegations are provided that any of the

purportedly similarly situated comparators meet the seventh characteristic of having received

loan forgiveness despite both triggering a hold code and employing more than 500 employees at

a single location (excluding federal work-study students from the total headcount), which is

plaintiff’s precise situation.

In sum, plaintiff has not “plausibly allege[d] that it has received inconsistent treatment”

compared to any “similarly situated parties,” and defendants have “offered a reasonable and

coherent explanation for” any perceived “inconsistent results.” Balt. Gas & Elec. Co. v. FERC,

(D.C. Cir. 2020).7

In a last gasp effort to show that defendants acted arbitrarily and capriciously, plaintiff

insists that defendants adopted an employee counting method contrary to its own regulations in

violation of the Accardi doctrine. SAC ¶¶ 299, 235; Pl.’s Opp’n at 22-23. The referenced

doctrine requires that agencies follow their “existing valid regulations.” U.S. ex rel. Accardi v.

Shaughnessy,

(1954); Battle v. FAA,

(D.C. Cir. 2005)

(“[T]he essence of an Accardi claim is that an agency did not follow its rules.”). An agency’s

7 In any event, plaintiff’s reliance on extra-record comparator evidence would not result in the relief principally sought in this lawsuit, namely: an order reversing the ALJ and directing SBA to issue plaintiff loan forgiveness. SAC (prayer for relief ¶ b); Pl.’s Opp’n at 44 (“[Plaintiff] asks the Court to . . . reverse the decisions below . . ., entitling [it] to” loan forgiveness.). “Rather, the remedy would be to . . . remand to the agency for further analysis.” Monkey Jungle,

, at *11 n.7. “Insofar as SBA concluded that it improperly awarded grants to other [colleges], the further step [would] be for SBA to recoup those . . . funds, not to improperly issue [loan forgiveness] to [plaintiff].”

In other words, “the law does not require the Government to perpetuate the mistake” by ordering defendants to grant loan forgiveness to plaintiff if other colleges incorrectly received loan forgiveness. Tex. Int’l Airlines, Inc. v. Civ. Aeronautics Bd.,

(D.C. Cir. 1971). To the extent that any colleges were not entitled to loan forgiveness but nevertheless mistakenly received loan forgiveness, defendants have expressly reserved the right to claw back such funds. June 2020 IFR, 85 Fed. Reg. at 33,012. Cf. MomoCon, LLC, v. SBA, No. 21-cv-2386 (RC),

, at *10-12 (D.D.C. Dec. 22, 2023) (affirming denial of a PPP loan because “[u]nlike the initial denial, the SBA” on remand “applied its methods to those competitors and acknowledged a mistake” and instituted procedures to recoup incorrect awards). Such claw back measures, as opposed to perpetuating administrative mistakes, is logical because colleges, including plaintiff, are not “entitle[d] . . . to benefit from the . . . mistake [of receiving PPP loan forgiveness] at the taxpayer’s expense.” Defs.’ Reply at 19.

24 failure to do so, “can be challenged under the APA.” Webster v. Doe,

, 602 n.7

(1988).

Plaintiff’s second amended complaint did not identify which supposed regulations SBA

violated, SAC ¶¶ 293-302, but in opposing defendants’ motion, plaintiff argues that

permitted SBA to create a “custom-fit” definition of employee based on the “totality

of the circumstances” to “fulfill the relevant statutory goals.” Pl.’s Opp’n at 24. Nowhere does

plaintiff argue that SBA violated

, only that the regulation permits SBA to

adopt the FTE method in certain circumstances.

As support, plaintiff cites two cases

involving another statute entirely, the HUBZone Act. See Pl.’s Opp’n at 24-25 (citing Metro

Mach. Corp. v. SBA,

(E.D. Va. 2004) and Aeolus Systs., LLC v. United

States,

(Fed. Cl. 2007)). Yet, as those cited cases make clear, “because the

[HUBZone Act] is silent on the issue of how to determine who [are] the ‘employees,’” SBA

could make a “discretionary decision” to define employee as “a matter of regulatory, not

statutory, interpretation.” Metro Mach. Corp.,

(E.D. Va. 2004) (emphasis

in original); see also Aeolus Systs., LLC,

n.9 (noting that the “HUBZone statute

does not define the term ‘employee’”). Here, plaintiff’s position fails because the CARES Act

mandates the headcount method in its definition of employee.

(a)(36)(D)(v).

Accordingly, plaintiff’s arguments fail to overcome the conclusion that “the agency . . .

acted within a zone of reasonableness and, in particular, . . . reasonably considered the relevant

issues and reasonably explained the decision” to deny plaintiff’s loan forgiveness application

because it employed over 500 employees at the time it applied for, and received, its PPP loan.

FCC v. Prometheus Radio Proj.,

(2021).8

8 After roughly two years of litigation in this Court, three complaints, and one round of dispositive briefing, plaintiff for the first time in opposition argues that “SBA never legally employed” the ALJ who adjudicated

25 B. COUNT 3: Plaintiff’s Equal Protection Claim Fails.

After dismissal of the RFRA and First Amendment Free Exercise Clause claims in

Gordon I, plaintiff’s second amended complaint “re-framed its case in terms of equal protection”

by alleging, in Count 3, “classic denial of equal treatment” under the Fifth Amendment’s Due

Process and Equal Protection Clauses. Pl.’s Opp’n at 27. In plaintiff’s view, SBA denied its

loan forgiveness even though other colleges used the FTE method to qualify for PPP loan while

allegedly employing more than 500 total employees, and those other colleges received

the underlying dispute before the agency, “and thus all his decisions, are invalid and must be set aside.” Pl.’s Opp’n at 8. This wholly new attack on the ALJ is waived. See Williams v. Spencer,

, 181 n.8 (D.D.C. 2012) (“Where the . . . complaint does not make a claim, plaintiff cannot add a new claim through an opposition brief.”). Even considered on the merits, this attack on the ALJ still fails. First, while plaintiff argues that the “entire process of appointing ALJs to OHA for . . . appeals . . . violated statutory and constitutional law,” nowhere in its pages of confusing discussion does it describe what aspects of the ALJ appointment process is unconstitutional. Indeed, plaintiff cites only one case one time for the proposition that the ALJ presiding over the administrative process at issue here “had no more power to act here than the SEC ALJs did in Lucia v. SEC,

(2018).” Pl.’s Opp’n at 8. In Lucia, the Supreme Court held that Securities and Exchange Commission (SEC) ALJs tasked with overseeing enforcement actions are “Officer[s] of the United States” and subject to the Appointments Clause. Lucia,

. Key to that decision was that the SEC ALJs “exercise[d] the same ‘significant discretion’ when carrying out . . . ‘important functions’ . . . [with] the authority to ensure fair and orderly adversarial hearings.”

(internal citation omitted) (quoting Freytag v. Comm’r,

(1991)). Plaintiff fails to provide any analysis describing how the ALJ who adjudicated its case resembles the ALJs the Supreme Court held as unconstitutionally appointed in Lucia. On the present record, there is no showing that the ALJ had any “discretion” to deny plaintiff its loan forgiveness application nor that the underlying proceedings were adversarial— SBA was not a party to the case advocating for or against loan forgiveness. See

(describing that “adversary adjudications are administrative proceedings before OHA which involve SBA as a party” and do not include OHA proceedings “such as” “appeals” of “loan review decisions,” like in this case, found in

); see Sims v. Apfel,

(2000) (reasoning, in a case involving Social Security Administration, that the proceedings were not adversarial because the regulations ensured a nonadversarial process and “[the ALJ] has no representative before [it] to oppose the claim for benefits”). Second, plaintiff argues that the ALJ was labeled an “administrative judge” as opposed to a “hearing officer,” the term used in the statute creating the OHA framework, see

(i). Pl.’s Opp’n at 7. The regulation describing this label change, however, clearly states that an “Administrative Judge means a Hearing Officer, as described at

(i).” Rules of Procedure Governing Cases Before the Office of Hearings and Appeals,

, 25,506 (June 2, 2017). The label used or title for the ALJ, made pursuant to a final rule that plaintiff does not challenge, does not ipso facto render the ALJ’s employment illegal. Third, plaintiff’s remaining argument is that the ALJ served contrary to the statute because plaintiff asserts the ALJ was “not classified” at the proper employment, or “General Schedule,” level to hold his position. Pl.’s Opp’n at 8 (citing

(i)(3)(B)). The only “fact” cited to support this assertion is a non-government affiliated website that does not “guarantee that information” provided is “100% accurate or complete,” but purportedly shows that the ALJ got paid at a lower employment level. Pl.’s Opp’n at 8 n.8 (citing to the ALJ’s profile on www.govsalaries.com). Plaintiff’s leap from this information to a conclusion that SBA did not legally employ the ALJ is unadorned with any citation to case law and is rejected.

26 forgiveness. Id.; SAC ¶¶ 313-45.9 Defendants seek dismissal of Count 3, on grounds, first, that

plaintiff has failed to allege facts sufficient to establish standing, and, second, even if standing is

present, plaintiff “has not sufficiently alleged intentional discrimination, and this Court has

already held that the PPP’s 500-employee cap survives rational basis.” Defs.’ Reply at 16;

(arguing that plaintiff “has not alleged non-conclusory facts that SBA discriminated against it”

nor “alleged sufficient facts to support a finding that it was treated differently than materially

similar entities in violation of [plaintiff’s] equal protection rights”).

While plaintiff does have standing to bring the equal protection claim in Count 3, this

claim fails to state a claim for relief and must be dismissed.

1. Standing

“Article III confines the federal judicial power to the resolution of ‘Cases’ and

Controversies.’” TransUnion LLC v. Ramirez,

(2021). A case presents a

9 Tucked in a footnote in its 367-paragraph-long second amended complaint, plaintiff argues that “to the extent these equal-protection claims are better analyzed ‘under the Free Exercise Clause,’ Plaintiff pleads this cause of action under that Clause as well,” SAC ¶ 315 n.26 (quoting Gordon I,

, at *9), with another passing reference, in opposition briefing, to “Free Exercise principles[] as may be appropriate,” Pl.’s Opp’n at 27, but absolutely no further development of any such claim or argument. “It is not enough merely to mention a possible argument in the most skeletal way, leaving the court to do counsel’s work, create the ossature for the argument, and put flesh on its bones.” Schneider v. Kissinger,

, 200 n.1 (D.C. Cir. 2005) (quoting United States v. Zannino,

(1st Cir. 1990)). “[P]erfunctory and undeveloped arguments, and arguments that are unsupported by pertinent authority,” like plaintiff’s arguments here, are typically “deemed waived.” Sherrod v. McHugh,

(D.D.C. 2018) (quoting Johnson v. Panetta,

(D.D.C. 2013)). These oblique references to “the Free Exercise Clause” are, accordingly, deemed waived. In any event, no new factual allegations in the second amended complaint cure the fundamental flaws previously found to have doomed plaintiff’s prior claim for relief under the Free Exercise Clause of the First Amendment. Namely, plaintiff has failed to allege facts that “identify any ‘exercise of religion’ that has been burdened” by the 500-employee cap or “sincere religious belief” in employing over 500 people. Gordon I,

at *6, 10; see SAC ¶¶ 313-45. To the extent the new allegation that “having more than 500 employees is essential to [plaintiff’s] central mission of Christian education” and that “application of the 500-employee cap . . . burdens [its] religious exercise by pressuring it to consider reductions of its part-time staff to meet such a cap,” SAC ¶ 317, was added to support a Free Exercise clause claim, this allegation fails to provide facts regarding how and why the 500-employee cap “prevent[s] conduct required by [plaintiff’s] religion or placed substantial pressure on [it] to violate [its] beliefs.” Ferguson v. Owen, No. 23-5102,

, at *1 (D.C. Cir. Jan. 11, 2024). No newly alleged facts, see SAC ¶¶ 313-45, undermine this Court’s prior finding that “the application of the PPP’s 500-employee cap to plaintiff is neutral and generally applicable,” surviving “rational basis review.” Gordon I,

, at *10; see Pl.’s Opp’n at 31 (claiming, unadorned with case law or reasoning, that “the claim has a real shot under rational basis”).

27 “case or controversy under Article III,” when the plaintiff has “a ‘personal stake’ in the case—in

other words, standing.”

(quoting Raines v. Byrd,

(1997)). To establish

standing, “a plaintiff must show (i) that he suffered an injury in fact that is concrete,

particularized, and actual or imminent; (ii) that the injury was likely caused by the defendant;

and (iii) that the injury would likely be redressed by judicial relief.”

Defendants principally argue that plaintiff has not sufficiently alleged an injury in fact to

establish standing. Defs.’ Reply at 14-16. Specifically, defendants claim that plaintiff’s alleged

injury of facing “stigma and personal injury from discrimination itself” fails to “support a finding

of standing” because plaintiff “has failed to allege sufficient facts to support a finding that SBA

discriminated against it.” Defs.’ Reply at 14-15. This argument conflates what plaintiff must

show to establish standing with what plaintiff must show to succeed on the merits. As the D.C.

Circuit has observed, “[w]hether a plaintiff has a legally protected interest that supports standing

does not require that he show he will succeed on the merits; if it did, every merits loss would

amount to a lack of standing.” Estate of Boyland v. U.S. Dep’t of Agric.,

(D.C. Cir. 2019). To avoid that outcome, “[f]or purposes of analyzing plaintiff’s standing, [the

court] make[s] the requisite assumption that [plaintiff] would prevail on the merits of [its]

claim.”

“[A]ssum[ing][] arguendo, the merits of [plaintiff’s] legal claim,”

(quoting

Parker v. District of Columbia,

(D.C. Cir. 2007)), plaintiff’s alleged injury of

stigma and personal injury from discrimination, SAC ¶¶ 313-43, easily satisfies the standing

standard, see Heckler v. Mathews,

(1984) (recognizing that “discrimination

itself” causes “serious non-economic injuries” by “stigmatizing members of the disfavored

group”).10

10 Puzzlingly, neither side argues that, assuming plaintiff would prevail on the merits of its claims, defendants’ denial of a $7,046,0367 loan in violation of plaintiff’s equal protection rights would also satisfy the

28 While neither side seriously disputes that plaintiff meets the second and third

prerequisites for standing, these prongs are addressed because courts “have an affirmative

obligation” to assure itself of its jurisdiction. Ludwig,

. Plaintiff has alleged that

its injury, stigma or discrimination resulting in unfair treatment, is “fairly traceable to the

challenged action of the defendant,” In re Navy Chaplaincy,

(D.C. Cir. 2008)

(quoting Lujan v. Defs. of Wildlife,

(1992))—namely, the denial of its loan

forgiveness application in violation of its equal protection rights, see SAC ¶¶ 29, 343. This is

sufficient to satisfy the second prong. Finally, “a favorable decision by the court would redress

. . . plaintiff’s injury.”

“If this court were to give [plaintiff] what [it] wants,” i.e., an order

directing the SBA to grant its loan forgiveness application, see SAC (prayer for relief), “the

differential treatment because of” its religious affiliation “would disappear.” Cutler v. U.S.

Dep’t of Health & Hum. Servs.,

(D.C. Cir. 2015). See also

(noting that

“in analyzing the redressability prong of standing, it must be remembered that ‘a court

sustaining’ an equal protection claim” can order at least “two remedial alternatives: [it] may

either declare [the statute] a nullity and order that its benefits not extend to the class that the

legislature intended to benefit, or it may extend the coverage of the statute to include those who

are aggrieved by the exclusion” (brackets in original) (quoting Heckler,

)).

Thus, plaintiff has standing to raise the equal protection claim in Count 3.

2. Equal Protection

Although the Fifth Amendment does not contain an Equal Protection Clause, the

Supreme Court has construed the Fifth Amendment’s Due Process Clause, which applies to the

injury prong. See TransUnion, LLC v. Ramirez,

(2021) (“[C]ertain harms readily qualify as concrete injuries under Article III. The most obvious are traditional tangible harms, such as physical harms and monetary harms. If a defendant has caused physical or monetary injury to the plaintiff, the plaintiff has suffered a concrete injury in fact under Article III.”).

29 federal government, as containing an equal protection guarantee. Edmonson v. Leesville

Concrete Co.,

(1991) (applying “the equal protection component of the Fifth

Amendment’s Due Process Clause” to resolve a dispute). That guarantee is concomitant with the

protection afforded by the Fourteenth Amendment’s Equal Protection Clause. Adarand

Constructors, Inc. v. Pena,

(1995) (noting that courts “treat the equal

protection obligations imposed by the Fifth and the Fourteenth Amendments as

indistinguishable”); see also Am. Fed’n of Gov’t Emps., AFL-CIO v. United States,

, 65 n.3 (D.D.C. 2000) (noting that the “guarantee of equal protection” in the Fifth

Amendment “is coterminous with the Fourteenth Amendment Equal Protection Clause”). As

such, “[t]he liberty protected by the Fifth Amendment’s Due Process Clause contains within it

the prohibition against denying to any person the equal protection of the laws.” United States v.

Windsor,

(2013).

Lawsuits asserting violations of equal protection rights may be framed in various ways,

including, for example, allegations that (1) “the government has expressly classified individuals

based on their [protected characteristic]”; (2) “the government has applied facially neutral laws

or policies in an intentionally discriminatory manner”; or (3) “facially neutral laws or policies

result in . . . disproportionate impact and are motivated by a . . . discriminatory purpose.” Rothe

Dev., Inc. v. U.S. Dep’t of Def.,

(D.C. Cir. 2016) (internal citations and quotation

marks omitted); see also Branch Ministries v. Rossotti,

(D.C. Cir. 2000)

(noting that the government would have engaged in “selective prosecution” or enforcement of a

law if it singled out the plaintiff from among others similarly situated due to improper

motivation, i.e., “based on race, religion or another arbitrary classification” (quoting United

States v. Washington,

(D.C. Cir. 1983))); Vill. of Willowbrook v. Olech, 528

(2000) (“Our cases have recognized successful equal protection claims brought by

a ‘class of one,’ where the plaintiff alleges that she has been intentionally treated differently from

others similarly situated and that there is no rational basis for the difference in treatment.”).

Plaintiff’s claim flops under any of these theories because the factual allegations underlying

Count 3 fail sufficiently to allege similarly situated comparators, dissimilar treatment because of

a protected characteristic, intentional differential treatment, and that the 500-employee cap, or

the denial of its loan forgiveness application because of application of the 500-employee cap,

lacks a rational basis.

At bottom, equal protection directs “that all persons similarly situated should be treated

alike.” City of Cleburne v. Cleburne Living Ctr.,

(1985). “The

Constitution, however, does not require things which are different in fact or opinion to be treated

in law as though they were the same.” Women Prisoners of D.C. Dep’t of Corrections v. District

of Columbia,

(D.C. Cir. 1996) (citation and internal quotation marks omitted).

Accordingly, “[t]he threshold inquiry in evaluating an equal protection claim is, therefore, to

determine whether a person is similarly situated to those persons who allegedly received

favorable treatment.”

(citation and internal quotation marks omitted). Plaintiff has failed to

make this threshold showing.

Plaintiff’s equal protection claim relies on the same assumption already rejected, see

supra Part III.A.2, that the agency’s alleged grant of loan forgiveness to certain colleges with a

headcount of more than 500 employees, when they used the FTE method to report fewer than

500 employees for purposes of PPP loan eligibility, violated its rights. For the same reasons, id.,

plaintiff has failed to allege sufficient facts about how it is similarly situated to the identified

colleges in all relevant respects or characteristics. Indeed, as described above, plaintiff fails to

31 allege facts that these comparators are all nonprofit colleges (characteristic 1), that these

comparators had more than 500 employees at a single location, while excluding federal work-

study students from the total headcount (characteristic 2), that the comparators’ PPP loan

forgiveness applications triggered a hold code indicating potential loan eligibility issues

(characteristic 6), and that the comparators received loan forgiveness despite triggering a hold

code and employing more than 500 employees at a single location while excluding federal work-

study students from the total headcount (characteristic 7). Additionally, relevant for purposes of

plaintiff’s equal protection claim, plaintiff almost entirely omits allegations that those who

received favorable treatment were non-religious colleges. Out of all the purportedly similar

colleges, plaintiff alleges that only sone was secular: Husson University. SAC ¶ 237. While

Husson University may be secular, it is not comparable because it does not share characteristic 2

as it had fewer than 500 employees excluding federal work-study students, nor, for the same

reason, characteristic 7. See supra Part III.A.2.

Plaintiff, thus, does not allege sufficient facts to conclude that it is “similarly situated” to

the colleges it has identified who received PPP loan forgiveness, failing to clear “a required

‘threshold showing’” to state an equal protection violation claim. Richards v. Gelsomino,

, 610 (D.C. Cir. 2020); see also Henderson v. Kennedy,

, 17-18 (D.C. Cir.

2001) (dismissing plaintiffs’ religious equal protection claim for, inter alia, failing to show they

were similarly situated to other t-shirt vendors on the National Mall); Muwekma Ohlone Tribe,

(rejecting the plaintiff’s equal protection claim for failing to show that it was

similarly situated to other tribes who were allegedly treated more favorably).

Even if plaintiff made the necessary threshold showing of dissimilar treatment, its equal

protection claim would still fail as plaintiff has not plead “sufficient factual matter” permitting

32 the plausible inference “that the defendant[s] acted with discriminatory purpose” “on account of

. . . religion,” Iqbal,

, in denying its PPP loan forgiveness application. On this

point, plaintiff does not even allege defendants were aware of plaintiff’s religious affiliation, a

flaw observed in the prior round of briefing. Compare Gordon I,

*11

(“Plaintiff does not even allege that SBA knew of its religious affiliation.”), with SAC. Indeed, a

review of the complaint and its attachments reveals that nothing in plaintiff’s PPP loan

application suggests that plaintiff was a religious college. See SAC;

Ex. 4 (PPP Loan

Application), ECF No. 31-4.11 In addition to that pleading deficiency, plaintiff effectively

concedes that the second amended complaint fails to allege non-conclusory allegations of

religious discrimination, arguing that “discovery” is needed to understand defendants’ intent in

denying its application. See Pl.’s Opp’n at 39 (“Whether that intent was benign or invidious is a

question that only discovery can resolve.”). “[T]he doors of discovery,” however, are not

“unlock[ed],” absent “factual” allegations, “accepted as true,” that “state a claim to relief that is

plausible on its face.” Iqbal,

-79.

Here, putting aside merely conclusory allegations, which do not suffice, and accepting all

factual allegations as true, and construing the complaint in favor of plaintiff, the allegations fail

to support a claim that defendants denied plaintiff’s loan forgiveness application “because of” its

religion or intentionally treated plaintiff differently than other similarly situated colleges. See,

e.g., Frederick Douglass Found., Inc. v. District of Columbia,

(D.C. Cir.

2023) (affirming dismissal of plaintiff’s equal protection claim for failing to allege sufficient

11 Many of the exhibits attached to plaintiff’s complaint are also in the administrative record. Joint Appendix, ECF No. 42. In ruling on a motion to dismiss, “the Court may consider . . . documents attached to or incorporated by reference in the complaint,” Slovinec v. Georgetown Univ.,

(D.D.C. 2017), which is why the exhibits are relied upon, as opposed to citations to the administrative record, in discussing the claims that defendants seek to dismiss under Rule 12(b)(6).

33 facts that defendants took action “because of, not merely in spite of” plaintiffs’ viewpoint

(quoting Iqbal,

)); Alive Church of the Nazarene, Inc. v. Prince William County,

(4th Cir. 2023) (affirming dismissal of plaintiff’s religious equal protection

claim because it failed to allege facts suggesting a zoning ordinance was passed “with religious

animus”); Satanic Temple v. City of Belle Plaine,

(8th Cir. 2023) (affirming

dismissal of plaintiff’s religious equal protection claim because plaintiff “ha[d] not plausibly

alleged” “similarly situated” comparators, “that it was treated differently,” “[n]or ha[d] it

plausibly alleged that the” law “was discriminatory on its face or had a discriminatory purpose or

impact”).

Given that the 500-employee cap is “facially neutral . . . and no showing of intent to

discriminate” has been made, plaintiff’s “equal protection attack” can “succeed only with an

argument that the polic[y] lack[s] a rational basis.” In re Navy Chaplaincy,

(D.C. Cir. 2013). This “highly deferential” standard “entitle[s]” the 550-employee cap “to a

presumption of rationality.” Dixon v. District of Columbia,

(D.C. Cir.

2011). A “social or economic policy” “must be upheld ‘if there is any reasonably conceivable

state of facts that could provide a rational basis’ for the legislative choice.” Sanchez v. Off. of St.

Superintendent of Educ.,

(D.C. Cir. 2022) (quoting FCC v. Beach Commnc’s,

Inc.,

(1993)). “A plaintiff bringing a constitutional challenge to a regulation

on rationality grounds thus faces the unenviable task of refuting ‘every conceivable basis which

might support it.’”

(quoting Beach,

).

Like the first review of the asserted claims in this case, plaintiff “makes little attempt to

satisfy its burden here.” Gordon I,

, at *13. With respect to the 500-

employee cap generally, plaintiff does not dispute that it survives rational basis. Pl.’s Opp’n at

34 41 (arguing only that its difference in treatment is not rational as opposed to the law itself);

Gordon I,

, at *13 (finding the 500-employee cap easily survives rational

basis). Without any citation to case law, plaintiff simply argues that defendants’ denial of loan

forgiveness was “irrational” when other colleges were granted loan forgiveness, seemingly

drawing upon “class of one” jurisprudence. Pl.’s Opp’n at 38; see Engquist v. Or. Dep’t of

Agric.,

(2008) (“[T]he class-of-one theory of equal protection . . . presupposes

that like individuals should be treated alike, and that to treat them differently is to classify them

in a way that must survive at least rationality review.”). As already discussed, however, plaintiff

has failed to allege these other colleges are similarly situated to it in all relevant respects, or that

it was intentionally treated differently. Even if the government had to rely on a rational basis to

“treat” plaintiff “differently,” Enquist,

, the fact that plaintiff’s application for

loan forgiveness triggered a hold code because of the reported fractional number of employees

on its PPP loan application, leading to a manual review and close examination of plaintiff’s

employee-count documentation and, ultimately, denial of its loan forgiveness application—a

sequence of events, with each step leading inexorably to the next—easily satisfies rationality.

See SAC, Ex. 2 (“SBA Initial Decision”) at 2, ECF No. 31-2; see Engquist,

(denying a “class of one” equal protection claim because government action often involves

“discretionary decisionmaking based on a vast array of subjective, individualized assessments”);

Lillemoe v. U.S. Dep’t of Agric., Foreign Agric. Serv.,

(D.D.C. 2018)

(“Given the discretion afforded [to the government] in administering the program and acting on

thousands of individual guarantee applications . . . the Court will not second-guess [its] decision

to prevent [plaintiffs] from using rented trade flow transactions in the program, even while

allowing others to do so at the same time.”).

35 ***

Despite the amount of ink spilled over fifteen briefing pages by plaintiff in trying to

bolster Count 3, Pl.’s Opp’n at 26-41, the takeaway is simple: plaintiff has failed to allege facts

sufficient to state a claim that defendants’ actions violated its equal protection rights.12

Accordingly, defendants’ motion to dismiss Count 3 for failure to state a claim is granted.

C. COUNT 4: Plaintiff Fails to State a Due Process Violation.

Plaintiff alleges, in Count 4, that defendants violated its procedural due process rights

during the administrative process by failing to provide a “fundamentally fair, judicial-like

process.” SAC ¶¶ 259, 346-47. Defendants argue that plaintiff’s challenges to the procedural

integrity of the administrative process fail to support a due process claim because none of the

“alleged procedural deficiencies prejudiced [plaintiff].” Defs.’ Reply at 2; id. at 34, 36

(contending that plaintiff “received sufficient . . . process” has failed to allege that any

“procedural defects affected the outcome of its OHA appeal”). Defendants are correct.

The Due Process Clause of the Fifth Amendment provides that no person shall “be

deprived of life, liberty, or property, without due process of law.” U.S. CONST. amend. V. To

prevail on a procedural due process claim, plaintiffs must show (1) that they “were deprived of a

12 To the extent plaintiff argues that its equal protection rights were violated because the application of the 500-employee cap burdens its fundamental religious rights, see Pl.’s Opp’n at 28; SAC ¶¶ 314-318, its arguments are wholly duplicative of its free exercise claims rejected in Gordon I and supra Part III.B. n.9. To be sure, courts apply “strict scrutiny” when a law “jeopardizes exercise of a fundamental right.” Banner v. United States,

(D.C. Cir. 2005) (quoting Nordlinger v. Hahn,

(1992)). Here, though, “[w]here a plaintiff’s First Amendment Free Exercise claim has failed, the Supreme Court has applied only rational basis scrutiny in its subsequent review of an equal protection fundamental right to religious free exercise claim based on the same facts.” Wirzburger v. Galvin,

(1st Cir. 2005) (citing Locke v. Davey,

, 721 n.3 (2004)); St. John’s United Church of Christ v. City of Chicago,

(7th Cir. 2007) (same); see also We the Patriots USA, Inc. v. Conn. Off. of Early Childhood Dev.,

(2d Cir. 2023) (“While plaintiffs are correct that the free exercise of religion is a fundamental constitutional right, we have already concluded that the Act does not impermissibly burden plaintiffs’ free exercise rights. Plaintiffs’ attempt to argue that they need only ‘demonstrate a burden on a fundamental constitutional right,’ rather than plead a Free Exercise Clause claim under the applicable tests, is without support in the Supreme Court’s cases.” (internal citations omitted)). As such, for the same reasons stated above, plaintiff has failed to state a claim that the 500-employee cap burdens its fundamental rights, and the law survives rational basis review. See supra Part III.B. n.9; Part III.B.2.

36 protected interest, and” (2) that they did not receive “the process they were due.” Statewide

Bonding, Inc. v. U.S. Dep’t of Homeland Sec.,

(D.C. Cir. 2020) (quoting UDC

Chairs Chapter, Am. Ass’n of Univ. Professors v. Bd. of Trs. of Univ. of D.C.,

(D.C. Cir. 1995)). The parties here assume that plaintiff has a protected interest and only

dispute whether the process provided during the administrative proceedings were sufficient.

Defs.’ Mem. at 34 n.9; Pl.’s Opp’n at 41-44.

“The essential requirements of due process . . . are notice and an opportunity to respond.”

Cleveland Bd. of Educ. v. Loudermill,

(1985). Here, plaintiff does not dispute

that proper notice was provided but challenges aspects of the administrative appeal process for

lacking “procedural integrity,” critiquing the ALJ for the following: (1) “fail[ing] to close the

Administrative Record at any point in the OHA appeal”; (2) “fail[ing] to rule on [plaintiff’s]

Objections to Administrative Record prior to [the] ALJ . . . issuing his Initial Decision”; and (3)

admitting SBA’s supplement as a reply, which “did not exist at the time of the original SBA loan

examiner decision.” SAC ¶ 357. As an initial matter, “[t]he fundamental requirement of due

process is the opportunity to be heard at a meaningful time and in a meaningful manner.”

Statewide Bonding,

(quoting Mathews, 424 U.S. at 333). Despite the critiques of

certain actions taken by the ALJ, plaintiff had an opportunity to be heard with respect to the

applicable evidence in both its initial appeal to SBA’s decision, SAC, Ex. 7 (“Pl.’s Initial Appeal

Decision”), ECF No. 31-7, and its reconsideration petition, SAC, Ex. 3 (“Pl.’s Recon. Pet.”),

ECF No. 31-3. Plaintiff also had the opportunity to raise and explain its objections to SBA’s

supplement before the ALJ issued a final decision, SAC, Ex. 15 (“Pl.’s Obj. to SBA Supple.”),

ECF No. 31-15. Plaintiff “may have desired a greater opportunity to present [its] case than the

limited nature of the . . . hearing provided,” La. Ass’n of Indep. Producers & Royalty Owners v.

37 FERC,

, 1115 (D.C. Cir. 1992), but “the procedures” were “tailored . . . to [e]nsure

that [it] [was] given a meaningful opportunity to present [its] case,” Mathews, 424 U.S. at 349.

Moreover, plaintiff’s due process claim fails for at least two additional, independent

reasons. First, plaintiff neither alleges nor argues that any of the procedural defects affected the

outcome of its administrative appeal. See SAC ¶¶ 346-66; see Pl.’s Opp’n at 41-44.

Consequently, even assuming the alleged ALJ actions occurred as alleged, any error, whether

constituting a due process violation or not, would essentially be harmless “because . . . the

agency’s mistake did not affect the outcome,” and “if it did not prejudice the petitioner, it would

be senseless to vacate and remand for reconsideration.” Jicarilla Apache Nation v. U.S. Dep’t of

Interior,

(D.C. Cir. 2010) (quoting PDK Lab’ys, Inc. v. DEA,

(D.C. Cir. 2004)). Indeed, none of the critiqued ALJ actions changes the reality that plaintiff

employed more than 500 employees in one location, and plaintiff does not allege otherwise. See

SAC;

Ex. 1 (“SBA Final Decision”) at 5-6, ECF No. 30-1. Thus, plaintiff has not alleged,

and likely could not allege, any prejudice. See Horning v. SEC,

(D.C. Cir.

2009) (holding, in an agency action, “[i]n the absence of any suggestion of prejudice, we cannot

conclude that [plaintiff] was deprived . . . of procedural due process”).

Second, plaintiff does not allege or identify “what plausible alternative safeguards would

be constitutionally adequate,” which is a necessary element to support a due process violation.

Statewide Bonding,

; see SAC ¶¶ 346-66.13

13 The remainder of plaintiff’s opposition addressing its due process claim repackages its already rejected APA and equal protection arguments or merely restates conclusory allegations—see, e.g., Pl.’s Opp’n at 42 (“[Plaintiff] challenged the whole process as a violation of the Accardi Doctrine.”);

(“[Plaintiff] also challenged the entire process as likely infected with religious animus, but proof of this would require discovery.”); id. at 43 (arguing that lack of access to information not in the administrative record is “a Due Process problem”)—and are, consequently, not persuasive.

38 In sum, defendants’ motion to dismiss Count 4 for failure to state a claim for relief is

granted.

IV. CONCLUSION

Consequently, for the reasons stated above, defendants’ motion for summary judgment

on plaintiff’s APA claim in Count 1 and its motion to dismiss plaintiff’s equal protection, due

process, and declaratory judgment claims in Counts 2-4 of plaintiff’s complaint for failure to

state a claim is granted. An order consistent with this memorandum opinion will enter

contemporaneously.

Date: May 28, 2025

__________________________ BERYL A. HOWELL United States District Judge

39