USCA4 Appeal: 24-1187 Doc: 34 Filed: 01/03/2025 Pg: 1 of 25

PUBLISHED

UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT

No. 24-1187

MARTY HIERHOLZER; MJL ENTERPRISES, LLC, a Virginia corporation,

Plaintiffs - Appellants,

v.

ISABEL GUZMAN, in her official capacity as Administrator of the Small Business Administration; SMALL BUSINESS ADMINISTRATION,

Defendants - Appellees.

Appeal from the United States District Court for the Eastern District of Virginia, at Norfolk. Raymond A. Jackson, Senior District Judge. (2:23-cv-00024-RAJ-DEM)

Argued: October 29, 2024 Decided: January 3, 2025

Before DIAZ, Chief Judge, WYNN and THACKER, Circuit Judges.

Reversed in part, affirmed in part, and remanded by published opinion. Judge Thacker wrote the opinion, in which Chief Judge Diaz and Judge Wynn joined.

ARGUED: Glenn Evans Roper, PACIFIC LEGAL FOUNDATION, Highlands Ranch, Colorado, for Appellants. Ellen L. Noble, UNITED STATES DEPARTMENT OF JUSTICE, Washington, D.C., for Appellee. ON BRIEF: Joshua P. Thompson, PACIFIC LEGAL FOUNDATION, Sacramento, California, for Appellants. Kristen Clarke, Assistant Attorney General, Bonnie I. Robin-Vergeer, Teresa Kwong, Appellate Section, Civil Rights Division, UNITED STATES DEPARTMENT OF JUSTICE, Washington, USCA4 Appeal: 24-1187 Doc: 34 Filed: 01/03/2025 Pg: 2 of 25

D.C.; Eric S. Benderson, Associate General Counsel for Litigation, David A. Fishman, Deputy Associate General Counsel for Litigation, Office of the General Counsel, UNITED STATES SMALL BUSINESS ADMINISTRATION, Washington, D.C., for Appellee.

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THACKER, Circuit Judge:

Marty Hierholzer (“Hierholzer”) is the sole owner, president, and chief executive of

MJL Enterprises, LLC (“MJL”) (collectively “Appellants”). Appellants allege that the

Small Business Administration’s (“SBA”) Section 8(a) Business Development Program

(“8(a) Program”) discriminated against Hierholzer based on his race. The 8(a) Program

employs a race conscious, rebuttable presumption allowing members of certain racial and

ethnic groups to establish that they are “socially disadvantaged.”

(a).

Appellants appeal the district court’s dismissal of their case based on mootness and

lack of standing. As explained below, we reverse the district court’s dismissal of the case

as moot. However, we affirm the district court’s dismissal based on Appellants’ inability

to establish the elements of Article III standing.

I.

A.

In 1953, Congress enacted the Small Business Act (“the Act”) to “aid, counsel,

assist, and protect” small businesses, to ensure a “fair proportion” of government contracts

go to small businesses,

(a)–(b), and to “preserv[e] . . . the competitive free

enterprise system.”

§ 631a. The Act established the SBA to manage several programs

to assist the business development and competitive viability of small businesses by

providing contract, financial, technical, and management assistance, including programs

requiring federal agencies to reserve certain contracts exclusively for small businesses. See

id. §§ 633, 644(j)(1). The Act includes several programs that create contracting

preferences for small businesses in general and for those that satisfy certain criteria,

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including small businesses owned and controlled by women, see id. § 637(m); small

businesses owned and controlled by service-disabled veterans, id. § 657f-1; and the

program at issue here, small businesses owned and controlled by “socially and

economically disadvantaged” individuals. Id. § 637(a).

Through the 8(a) Program, the SBA provides assistance to small businesses owned

and controlled by “socially and economically disadvantaged” individuals.

(a). The 8(a) Program authorizes the SBA to enter into agreements for goods and

services with other federal agencies and to subcontract those agreements to socially and

economically disadvantaged small businesses.

§ 631(f)(2). The Act aims to award at

least five percent of the total value of federal contracts to small businesses owned by

socially and economically disadvantaged individuals each year, with an overall goal of

awarding at least 23 percent of the total value of all contracts in a fiscal year to small

businesses. Id. §§ 644(g)(1)(A)(i), (iv).

Eligibility for the 8(a) Program is limited to small businesses that are at least 51

percent unconditionally owned and controlled by one or more “socially and economically

disadvantaged” individuals who are of good character, are citizens of the United States,

and who demonstrate a potential for success in competing in the private sector. Id.

§§ 637(a)(4)(A), (7)(A);

.

“Socially disadvantaged individuals are those who have been subjected to racial or

ethnic prejudice or cultural bias because of their identity as a member of a group without

regard to their individual qualities.”

(a)(5). SBA regulations require that

the social disadvantage must have resulted from “circumstances beyond [the individual’s]

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control.”

(a). The SBA regulations further provide that members of

certain designated groups, including “Black Americans, Hispanic Americans, Native

Americans . . . , Asian Pacific Americans . . . , Subcontinent Asian Americans . . . , and

members of other groups designated from time to time by [the] SBA,” are entitled to a

rebuttable presumption of social disadvantage.

§ 124.103(b)(1). This presumption may

be rebutted with “credible evidence to the contrary.” Id. § 124.103(b)(3). 8(a) Program

applicants owned and controlled by individuals who are not members of one of these

groups may show social disadvantage by submitting evidence that demonstrates, by a

preponderance of the evidence:

(i) At least one objective distinguishing feature that has contributed to social disadvantage, such as race, ethnic origin, gender, identifiable disability, long-term residence in an environment isolated from the mainstream of American society, or other similar causes not common to individuals who are not socially disadvantaged;

(ii) The individual’s social disadvantage must be rooted in treatment which he or she has experienced in American society, not in other countries;

(iii) The individual’s social disadvantage must be chronic and substantial, not fleeting or insignificant; and

(iv) The individual’s social disadvantage must have negatively impacted on his or her entry into or advancement in the business world. SBA will consider any relevant evidence in assessing this element, including experiences relating to education, employment and business history . . . .

(A) Education. SBA considers such factors as denial of equal access to institutions of higher education, exclusion from social and professional association with students or teachers, denial of educational honors rightfully earned, and social

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patterns or pressures which discouraged the individual from pursuing a professional or business education.

(B) Employment. SBA considers such factors as unequal treatment in hiring, promotions and other aspects of professional advancement, pay and fringe benefits, and other terms and conditions of employment; retaliatory or discriminatory behavior by an employer; and social patterns or pressures which have channeled the individual into nonprofessional or non-business fields.

(C) Business history. SBA considers such factors as unequal access to credit or capital, acquisition of credit or capital under commercially unfavorable circumstances, unequal treatment in opportunities for government contracts or other work, unequal treatment by potential customers and business associates, and exclusion from business or professional organizations.

Id. §§ 124.103(c)(1)–(2). Additionally, the applicant must provide evidence establishing

that the purported social disadvantage has “negatively impacted his or her entry into or

advancement in the business world.” Id. § 124.103(c)(3).

Regardless of how social disadvantage is established, all applicants for the 8(a)

Program must be a small business owned by an individual who is both “socially and

economically disadvantaged.”

(a)(4)(A)(i)(I) (emphasis supplied). An

economically disadvantaged individual is one whose “ability to compete in the free

enterprise system has been impaired due to diminished capital and credit opportunities as

compared to others in the same business area who are not socially disadvantaged.”

§ 637(a)(6)(A);

(a). In evaluating economic disadvantage, the SBA

“shall consider, but not be limited to [considering], the [individual’s] assets and net worth.”

(a)(6)(A). SBA regulations provide that the SBA will consider “the

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personal financial condition of any individual claiming disadvantaged status, including

income for the past three years . . . , personal net worth, and the fair market value of all

assets . . . .”

(c). Importantly, the rebuttable presumption that applies

regarding social disadvantage does not apply regarding economic disadvantage.

B.

Hierholzer is a service-disabled veteran who served twenty two years in the Navy

as a diver before retiring in 2002. As a result of his military career, Hierholzer lives with

knee, lower back, and shoulder pain; hearing loss and tinnitus; decreased mobility; and

clinically recognized depression and anxiety disorders.

MJL is a small business owned by Hierholzer. MJL provides equipment and office

supplies to military bases and Veterans Affairs hospitals, provides high-tech safety and

security equipment to first responders, and provides logistical labor and personnel services

for Veterans Affairs hospitals.

Hierholzer is of Scottish and German descent and is not a member of a group with

a presumption of social disadvantage pursuant to

(b)(1). Therefore,

when MJL applied to the 8(a) Program in 2009 and 2016, it was required to present

evidence to support that Hierholzer was socially disadvantaged pursuant to Section

124.103(c). He was not. Therefore, in both 2009 and 2016, the SBA notified Appellants

of MJL’s ineligibility, “despite [the SBA’s] recognition of [Hierholzer’s] disabilities and

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veteran status.” J.A. 16. 1 See generally In re: MJL Enters., LLC, SBA No. BDPE-566,

, at *1, *7 (Dec. 18, 2017) (detailing MJL’s applications and affirming

MJL’s 2016 denial).

The SBA denied both applications, which included incidents of Hierholzer’s

claimed social disadvantage, along with supporting evidence. Hierholzer believes that he

“would have been accepted into the 8(a) Program without having to prove his social

disadvantage if he belonged to one of the favored races listed” in the Act and regulations

(i.e., if Hierholzer received a presumption of social disadvantage). J.A. 17. Thus,

Appellants allege injury based on an inability to “stand[] on equal footing for 8(a)

[P]rogram eligibility”; to “compet[e] for exclusive 8(a) contracting opportunities based on

race”; or to “access other benefits provided to 8(a) Program companies,” including “access

to business development assistance, free training opportunities through the SBA, and

federal surplus property access.”

. As a result, Appellants allege that MJL “is at

a competitive disadvantage when competing for . . . contracts” and “in accessing the 8(a)

Program itself” as compared to “members of minority groups.”

at 18–19.

C.

Appellants sued Isabel Guzman, in her official capacity as Administrator of the

SBA, and the SBA (collectively, “the Government”) in the Eastern District of Virginia

alleging violations of: (i) the Equal Protection Clause of the Fifth Amendment based on

1 Citations to the “J.A.” refer to the Joint Appendix filed by the parties in this appeal.

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SBA’s regulations and the Act; and (ii) the Administrative Procedure Act based on the

SBA exceeding its statutory authority, acting in an arbitrary and capricious manner, and

exercising an unconstitutional delegation of authority by promulgating the regulations

setting forth the race conscious presumption of social disadvantage. Appellants seek a

declaration that “Section 8(a)’s racial classifications found in

(a)(5), (8),

and 631(f)(1)(b) and

(a), (b)(1) are facially unconstitutional”;

permanent injunctions against the enforcement of the Section 8(a) Program’s rebuttable

presumption of social disadvantage; and costs, attorneys’ fees, and expenses. J.A. 26.

The Government moved to dismiss, arguing that the district court lacked subject

matter jurisdiction because Appellants lacked standing. Specifically, the Government

argued that Appellants could not establish an injury in fact because they were not “able and

ready to bid” on 8(a) Program contracts. J.A. 98 (quoting Ne. Fla. Chapter of the

Associated Gen. Contractors of Am. v. City of Jacksonville,

(1993)).

Additionally, the Government argued that Appellants had not established an injury in fact

because they did not adequately allege social or economic disadvantage. The Government

argued that Appellants failed to plausibly allege social disadvantage in the absence of the

race conscious presumption, highlighting that Appellants were already twice denied entry

to the 8(a) Program based on their failure to establish social disadvantage and that the

complaint failed to include any allegations that would yield a different result. The

Government also argued that, even if Appellants had alleged economic disadvantage,

Appellants would still fail to demonstrate Hierholzer’s economic disadvantage as required

by the 8(a) Program because Appellants “participated in thousands of contract actions with

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federal government agencies totaling close to $130 million dollars.” J.A. 47. The

Government further argued that Appellants did not plausibly allege causation, particularly

considering the lack of pleading regarding economic disadvantage -- meaning that

Appellants had not plausibly alleged that they could participate in the 8(a) Program without

satisfying the race conscious presumption. Finally, the Government argued that Appellants

did not plausibly allege redressability because a favorable decision enjoining the use of the

race conscious presumption would not alter Appellants’ position, given their inability to

establish either social or economic disadvantage as illustrated by their two previous denials.

Appellants opposed the motion to dismiss. Appellants argued that they plausibly

pled the elements of standing. To rebut the Government’s arguments regarding lack of

standing, Appellants attached a declaration by Hierholzer in which he averred that he

believed himself to be economically disadvantaged. The declaration noted that Hierholzer

had a net worth of $850,000 and that his adjusted gross income averaged over the prior

three years did not exceed $400,000. Therefore, Appellants asserted they had alleged

standing.

In the midst of the litigation of this lawsuit, the District Court for the Eastern District

of Tennessee enjoined the SBA from using the rebuttable presumption of social

disadvantage in

(b) in administering the 8(a) Program. See Ultima

Servs. Corp. v. U.S. Dep’t of Agric.,

, 752 (E.D. Tenn. 2023). The

district court in the Ultima case held that the rebuttable presumption violated Ultima’s Fifth

Amendment right to equal protection of the law. Thereafter, the Government moved to

stay proceedings in the present case pending a final order in Ultima. In the motion to stay,

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the Government included two declarations of John W. Klein, the deputy general counsel

and associate general counsel for procurement law at the SBA. Klein’s declarations

explained changes to the 8(a) Program subsequent to the Ultima injunction:

• “Since the Court’s July 19, 2023 Order, SBA is making all social disadvantage determinations pursuant to the standard for nonpresumptive applicants as directed in

(c). This includes social disadvantage determinations for new and pending applications from individual business owners and for 8(a) participants that previously relied on the rebuttable presumption.”

• “The social disadvantage determination involves reviewing a business owner’s narrative of social disadvantage and ensuring that the information provided satisfies each of the elements in

(c) by a preponderance of the evidence.”

• SBA reevaluated both previously admitted applicants who had been admitted using the rebuttable presumption and applicants with pending awards based on the nonpresumptive social disadvantage standard in

(c). SBA required previously admitted and pending participants to submit evidence of social disadvantage for reevaluation.

• SBA created a portal for previously admitted applicants to submit evidence of social disadvantage and set a submission deadline of September 30, 2023.

• SBA began making social disadvantage determinations “for any contract action [requiring] an SBA eligibility determination.”

• SBA had suspended pending applications after the Ultima July 19, 2023, order, but it reopened its online portal for new submissions on September 29, 2023.

• All 8(a) Program applicants are required to submit evidence of social disadvantage.

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J.A. 129–35.

The district court held a hearing regarding the Government’s motion to dismiss and

motion to stay. At the hearing, the Government argued that “the claims for relief that

[Appellants] sought in their complaint simply don’t exist anymore” because “the

presumption at issue in th[e] case has been purged from the process” following the Ultima

injunction. J.A. 138, 140. Additionally, the Government argued that the changes it made

to the program following the injunction to remove the race conscious presumption

emphasize the Government’s point that Appellants are unable to establish injury, causation,

or redressability, and, therefore, do not have standing.

For their part, Appellants argued that that no final judgment had been issued in the

Ultima case, so the question remained “whether SBA [was] continuing to provide a

discriminatory approach to those who would have fallen under the presumption.” J.A. 145.

Appellants also noted that the Government had not indicated whether it would appeal the

Ultima decision and highlighted that the SBA’s changes to the 8(a) Program should not be

considered because standing is determined at the time that a complaint is filed.

The district court granted the Government’s motion to dismiss, holding that

Appellants “no longer have a personal stake in the outcome of th[e] litigation. Therefore,

[Appellants’] claim is moot . . . .” J.A. 175. The district court also held that Appellants

failed to establish the elements of standing because they did not allege eligibility and did

not sufficiently plead economic disadvantage in the first instance or social disadvantage in

the absence of the presumption. And the district court explained that Appellants’ position

would not change if their requested relief were granted because Appellants would still have

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to establish social and economic disadvantage. The district court denied as moot the

motion to stay.

Appellants timely appealed.

II.

We review de novo the district court’s determination that a case is moot. See S.C.

Coastal Conservation League v. U.S. Army Corps of Eng’rs,

(4th Cir.

2015) (citing Simmons v. United Mortg. & Loan Inv., LLC,

(4th Cir.

2011)). We also review de novo the legal question of whether a plaintiff has standing to

bring a claim. Buscemi v. Bell,

(4th Cir. 2020) (citing South Carolina

v. United States,

(4th Cir. 2019)).

III.

A.

Appellants first argue that the district court erred in holding that the case is moot.

Pursuant to Article III of the Constitution, the jurisdiction of the federal courts is

limited to “Cases” and “Controversies.” See U.S. Const. art. III, § 2. “When a case or

controversy ceases to exist, the litigation is moot, and the court’s subject matter jurisdiction

ceases to exist also.” S.C. Coastal Conservation League v. U.S. Army Corps of Engineers,

(4th Cir. 2015) (citation omitted). “A case can become moot due either

to a change in the facts or a change in the law.”

(citing Ross v. Reed,

,

693–94 (4th Cir. 1983)); see also Deal v. Mercer Cnty. Bd. of Educ.,

(4th Cir. 2018) (“A case becomes moot when the issues presented are no longer live or the

parties lack a legally cognizable interest in the outcome.” (internal quotation marks

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omitted) (quoting Simmons v. United Mortg. & Loan Inv., LLC,

(4th

Cir. 2011))).

“If an intervening circumstance deprives the plaintiff of a personal stake in the

outcome . . . at any point during litigation, the action . . . must be dismissed as moot.”

Campbell-Ewald Co. v. Gomez,

, 160–61 (2016) (internal quotation marks

omitted) (citation omitted). “A case becomes moot, however, only when it is impossible

for a court to grant any effectual relief whatever to the prevailing party.”

(internal

quotation marks omitted) (citation omitted).

The district court held that because the “SBA changed the 8(a) Program application

and removed the race conscious presumption from all stages of the process[,] [Appellants]

no longer have a personal stake in the outcome of this litigation. Therefore, [Appellants’]

claim is moot . . . .” J.A. 175.

On appeal, Appellants argue that the SBA has not conceded that the race conscious

“presumption is unconstitutional or made any permanent changes in response to the Ultima

case; it has only paused use of the presumption so as to not violate the . . . injunction.”

Appellants’ Opening Br. at 35 (citing Ultima Servs. Corp. v. U.S. Dep’t of Agric.,

, 774 (E.D. Tenn. 2023)). Appellants further argue in their reply brief that the

district court’s order in Ultima is not final because it may still be appealed. To its credit,

the Government concedes that the case is not moot: “in the absence of a final judgment in

Ultima, [Appellants’] claim is technically not moot.” Gov’t’s Resp. Br. at 39 n.9.

Here, the subsequent events, namely the injunction in Ultima and the changes to the

8(a) Program as a result of the injunction, have not rendered Appellants’ claims moot.

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Despite the changes made to the 8(a) Program by the SBA pursuant to the injunction, the

controversy has not ceased to exist. See S.C. Coastal Conservation League,

. The controversy is still live because the Ultima decision has not resulted in a final

judgment. See Deal,

.

Therefore, the district court erred in holding that Appellants’ case is moot. We

reverse.

B.

Appellants next argue that the district court erred in holding that Appellants lacked

standing to challenge the 8(a) Program. The Government responds that Appellants have

experienced no injury traceable to the 8(a) Program because they are simply ineligible, so

a favorable decision in Appellants’ favor would not redress their claimed injury. This is

so, according to the Government, because, even without the race conscious presumption,

Appellants cannot compete for 8(a) Program contracts given that Hierholzer is not socially

or economically disadvantaged.

The Supreme Court has long understood the cases and controversies limitation

imposed by Article III of the Constitution “to require that a case embody a genuine, live

dispute between adverse parties, thereby preventing the federal courts from issuing

advisory opinions.” Laufer v. Naranda Hotels, LLC,

(4th Cir. 2023)

(internal quotation marks omitted) (quoting Carney v. Adams,

(2020)).

The Court “has identified the doctrine of standing as a means to implement that

requirement.”

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In order to possess Article III standing to sue, plaintiffs must plausibly allege: “(1)

[they] suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the

defendant, and (3) that is likely to be redressed by a favorable judicial decision.” Spokeo,

Inc. v. Robins,

(2016) (citation omitted). These requirements for

standing ensure that the plaintiff has “a personal stake in the outcome.” Gill v. Whitford,

(2018) (quoting Baker v. Carr,

(1962)). Appellants, as

“the parties invoking federal jurisdiction, bear the burden of establishing these elements.”

Disability Rts. S.C. v. McMaster,

(4th Cir. 2022) (cleaned up) (quoting

Spokeo, Inc.,

).

1.

Injury in Fact

An injury in fact is “an invasion of a legally protected interest which is (a) concrete

and particularized, and (b) actual or imminent, not conjectural or hypothetical.” Laufer,

(internal quotation marks omitted) (quoting Lujan v. Defs. of Wildlife,

(1992)). “The ‘threatened injury must be certainly impending,’ and

‘[a]llegations of possible future injury’ are insufficient.” Buscemi v. Bell,

(4th Cir. 2020) (quoting Whitmore v. Arkansas,

(1990)). “An injury

reliant on a highly attenuated chain of possibilities does not qualify as being certainly

impending.”

(cleaned up). “The ‘injury in fact’ in an equal protection case . . . is the

denial of equal treatment resulting from the imposition of the barrier, not the ultimate

inability to obtain the benefit.” Ne. Fla. Chapter of the Associated Gen. Contractors of

Am. v. City of Jacksonville,

(1993) (citation omitted). “And in the

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context of a challenge to a set-aside program, the injury in fact is the inability to compete

on an equal footing in the bidding process, not the loss of a contract.”

(citation omitted).

Therefore, “a party challenging a set-aside program . . . need only demonstrate that it is

able and ready to bid on contracts and that a discriminatory policy prevents it from doing

so on an equal basis.”

The district court held that Appellants’ injury was not “‘concrete’ or ‘actual or

imminent’” because they failed to allege that they lost contract bids as a result of the race

conscious presumption. J.A. 168. Moreover, the district court held that Appellants failed

to allege that Hierholzer was economically disadvantaged pursuant to

,

so Appellants could not demonstrate that they were “able and ready” to bid on 8(a) Program

contracts due to “[Appellants’] own failure to meet the 8(a) Program eligibility

requirements -- social and economic disadvantage.” J.A. 169.

On appeal, Appellants argue that it is unnecessary to show economic disadvantage,

that the race conscious presumption caused their injury because it is a “barrier that denies

them equal treatment,” and that “admission is more difficult for [Appellants] than for an

applicant who qualifies” for the presumption. Appellants’ Opening Br. at 22–23, 26–28.

The Government counters that Appellants’ complaint fails to allege necessary facts

to support finding that Appellants suffered an injury in fact because it fails to allege (1)

that Appellants are able and ready to bid on contracts, or (2) that they could meet the race

neutral requirements of the 8(a) Program. In support of its argument, the Government

highlights Appellants’ receipt of $130 million in government contracts since 2006, their

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previous two denials of admission based on Hierholzer’s lack of social disadvantage, and

the fact that Appellants pled no facts indicating a change in circumstances since the denials.

Appellants contest the district court’s holding that they failed to make a showing of

“lost contracts.” Appellants’ Opening Br. at 23–25. However, the Government responds

that “without any allegations that plaintiffs have lost business in the past or that they are

ready and able to bid on future business set aside in the 8(a) Program, their alleged injury

is not at all concrete, particularized, imminent, or certainly impending.” Gov’t’s Resp. Br.

at 30–31 (emphasis supplied) (citing Food & Drug Admin. v. All. for Hippocratic Med.,

, 368 (2024) (“[R]equiring the plaintiff to show an injury in fact . . . screens

out plaintiffs who might have only a general legal, moral, ideological, or policy objection

to a particular government action.”)).

We hold that, although Appellants were not required to allege the loss of contract

bids in order to establish an injury in fact as a result of the race conscious presumption,

they were still required to demonstrate that they were “able and ready” to bid on contracts.

City of Jacksonville,

. And, as the district court held, Appellants failed to

demonstrate that they were “able and ready” to bid on 8(a) Program contracts.

Here, the 8(a) Program’s basic requirements are that each applicant must be: (1) a

small business; (2) unconditionally owned and controlled by; (3) a socially disadvantaged

individual; (4) who is also economically disadvantaged.

(a)(4)(A);

.

Appellants’ complaint acknowledges that the 8(a) Program benefits socially and

economically disadvantaged businesses and explains that Appellants unsuccessfully

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applied for the 8(a) Program in 2009 and 2016. Despite Appellants’ belief that MJL “would

qualify for 8(a) participation” based on “‘cultural bias’ [experienced by Hierholzer] due to

his status as a service-disabled veteran,” the SBA rejected Hierholzer as not socially

disadvantaged twice. J.A. 11–12, 17. Appellants’ complaint includes three pages

dedicated to explaining their claimed bases for social disadvantage (physical and

psychological disabilities) but does not contain any pleading with regard to Hierholzer’s

economic disadvantage, as required by the Act and implementing regulations.

(a)(6)(A) (defining individuals as economically disadvantaged when their “ability to

compete in the free enterprise system has been impaired due to diminished capital and

credit opportunities as compared to others in the same business area who are not socially

disadvantaged”);

(c) (requiring submission of information relevant to

the applicant’s personal financial condition, including income for the prior three years,

personal net worth, and the fair market value of all assets).

As a result, Appellants failed to allege in their complaint economic disadvantage

sufficient to “demonstrate” that they are “able and ready” to bid or that the alleged

discriminatory policy is their only barrier to participation in the 8(a) Program on an equal

basis. City of Jacksonville,

. Nor can Appellants’ later filed declaration, in

which Hierholzer attempts to allege economic disadvantage, cure Appellants’ pleading

deficiency. We have held that parties may not “amend their complaints through briefing.”

S. Walk at Broadlands Homeowner’s Ass’n, Inc. v. OpenBand at Broadlands, LLC,

(4th Cir. 2013); see also U.S. ex rel. Nathan v. Takeda Pharms. N. Am., Inc.,

, 459 n.8 (4th Cir. 2013) (“[A plaintiff] cannot cure pleading deficiencies in

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the complaint with later-filed supporting documentation [on a motion to dismiss].”). Even

if Hierholzer’s declaration was sufficient to allege economic disadvantage, Appellants still

failed to plead that they could satisfy the 8(a) Program’s race neutral social disadvantage

requirements.

Appellants contest that they were required to plead facts to illustrate their basic

eligibility to the 8(a) Program. Oral Argument at 04:59–5:25, Hierholzer v. Guzman, No.

24-1187 (4th Cir. Oct. 29, 2024), https://www.ca4.uscourts.gov/OAarchive/mp3/24-1187-

20241029.mp3 (“Oral Argument”) (“It simply makes no sense to say that you have to prove

social disadvantage in order to challenge the presumption of social disadvantage . . . . [I]f

a plaintiff can already prove social disadvantage to SBA’s satisfaction, that’s when they

arguably would have a standing problem.”). But, it is elemental that “the party invoking

federal jurisdiction, bears the burden of establishing” standing. McMaster,

.

Therefore, contrary to Appellants’ assertion, they were required to plead facts to support

that they would be eligible for the program -- i.e., that Hierholzer is socially and

economically disadvantaged. Because Appellants failed to do so, Appellants have not

demonstrated that they suffered an injury in fact.

As the Government aptly stated, “without any allegations that . . . [Appellants] are

ready and able to bid on future business” through the 8(a) Program, Appellants’ “alleged

injury is not at all concrete, particularized, imminent, or certainly impending.” Gov’t’s

Resp. Br. at 30. Appellants’ alleged injury is, therefore, entirely conjectural or hypothetical

rather than actual or imminent. See Laufer,

. And Appellants do not have

a “personal stake in the outcome” of the controversy because, as the district court noted,

20 USCA4 Appeal: 24-1187 Doc: 34 Filed: 01/03/2025 Pg: 21 of 25

Appellants’ failure to allege an injury is based on “their own failure to [demonstrate] the

8(a) Program eligibility requirements [of] social and economic disadvantage.” J.A. 169.

Appellants’ alleged injury is a “generally available grievance about government”

insufficient to confer standing. Gill,

.

Therefore, we affirm the determination of the district court that Appellants failed to

allege an injury in fact.

2.

Traceability

“To be ‘fairly traceable,’ there must be ‘a causal connection between the injury and

the conduct complained of.’” Laufer,

(quoting Lujan,

).

The district court held that Appellants could not establish that the race conscious

presumption caused their harm because Appellants failed to meet the required criteria --

social and economic disadvantage -- for the 8(a) Program even without the presumption.

Again, the district court held that the pleading deficiency could not be cured with

Appellants’ later filed declaration in which Hierholzer attempted to establish his economic

disadvantage because the declaration was “inadequate to cure [the] deficiencies in the

complaint.” J.A. 171. The district court also focused on Appellants’ history of being

denied by the 8(a) Program for failure to establish social disadvantage.

On appeal, Appellants argue that they need not illustrate social disadvantage

because the presumption makes it harder to get into the 8(a) Program and that their injury

can be traced to the SBA’s enforcement of the 8(a) Program. The Government counters

21 USCA4 Appeal: 24-1187 Doc: 34 Filed: 01/03/2025 Pg: 22 of 25

that Appellants are unable to meet the program requirements, and, therefore, Appellants

fail to adequately allege causation.

Here, again, the Government is correct. There is no causal connection between

Appellants’ claimed injury (i.e., that it is more difficult to get into the 8(a) Program) and

the conduct complained of (i.e., the existence of the presumption). Appellants cannot meet

the requirements of the 8(a) Program regardless of the presumption. In arguing otherwise,

Appellants wish to convert the 8(a) Program into a double dipping opportunity. See J.A.

15–17 (discussing the “social disadvantages stemming from his service-disabled veteran

status”). 15 U.S.C. § 657f-1 exists to assist small, service-disabled veteran owned

businesses. And Appellants have benefitted from that program immensely. See J.A. 58–

61 (discussing the fact that Appellants have been awarded 3,630 contracts totaling nearly

$130 million since 2006 -- $76,059,043 of which was awarded through the

Service-Disabled Veteran Owned Small Business Program).

In contrast, the 8(a) Program was not created to assist small, service-disabled

veteran owned businesses. It was created to assist eligible, socially and economically

disadvantaged small business owners. Yet, as the district court held, Appellants are simply

ineligible for the program because of their failure to allege economic disadvantage and

their inability to prove social disadvantage -- the core requirements that must be met for

admission into the program.

Therefore, we affirm the determination of the district court that Appellants failed to

allege causation.

22 USCA4 Appeal: 24-1187 Doc: 34 Filed: 01/03/2025 Pg: 23 of 25

3.

Redressability

For Appellants to establish redressability, “‘it must be likely, as opposed to merely

speculative, that the injury will be redressed by a favorable decision.’” Laufer,

(quoting Lujan,

). “Additionally, where injunctive relief is sought, the

plaintiff must show a ‘real or immediate threat that [they] will be wronged again.’”

(quoting City of L.A. v. Lyons,

(1983)).

The district court held that Appellants failed to plausibly allege that striking down

the race conscious presumption would redress Appellants’ alleged injury. Nor did the

district court accept Appellants’ argument that the presumption made it less likely that

Appellants would be granted 8(a) Program eligibility, which the district court called “pure

speculation.” J.A. 173.

Appellants argue that the elimination of the presumption of social disadvantage

would redress the difficulty that they experienced in getting into the 8(a) Program. The

Government counters that even if Appellants are granted the relief sought -- an injunction

against the presumption – Appellants’ position would not change because, as the district

court pointed out, the presumption is severable from the rest of the regulation, which would

simply continue to operate without the presumption and would continue to bar Appellants

from the program based on Hierholzer’s previous and continued lack of social and

economic disadvantage. See Oral Argument at 14:56–15:36 (“[The] relief [Appellants]

seek . . . happened over a year ago . . . . [And Appellants] have already twice failed to

make [a showing of social disadvantage]. They are in no different a position today than

23 USCA4 Appeal: 24-1187 Doc: 34 Filed: 01/03/2025 Pg: 24 of 25

they were when they previously applied to the program . . . . Tellingly, in the year since

the presumption has been eliminated, [Appellants] have not reapplied to the program.

Because they failed to allege that they can satisfy those race neutral eligibility requirements

for the 8(a) Program, their injury cannot be redressed.”).

Appellants counter that their prior “rejections for failure to satisfy the social

disadvantage criterion underscore the inherent inequality of SBA’s process.” Appellants’

Reply Br. at 13.

But it is clear that a favorable decision would not redress Appellants’ claimed injury.

Despite Appellants’ attempts to argue otherwise, their prior rejections underscore their

ineligibility for the 8(a) Program. Even if Appellants were granted an injunction, the race

neutral criteria that Appellants would face upon application to the 8(a) Program would

remain the same. See

(a)(4)(A)(i)(I) (requiring all applicants for the 8(a)

Program to be both “socially and economically disadvantaged” (emphasis supplied)).

Therefore, Appellants would still be required to demonstrate social and economic

disadvantage, among other requirements, to be admitted to the program -- which they

cannot do.

On multiple occasions, Appellants have been unable to meet the program

requirements -- hurdles that would continue to bar Appellants from the 8(a) Program even

if their requested relief were granted. For that reason, Appellants have not and cannot show

a “real or immediate threat that [they] will be wronged again” because they were not

wronged in the first place -- they were simply ineligible. Laufer,

(internal

quotation marks omitted) (citation omitted). Because Appellants’ claimed injury cannot

24 USCA4 Appeal: 24-1187 Doc: 34 Filed: 01/03/2025 Pg: 25 of 25

be redressed by a favorable decision, Appellants have failed to establish the redressability

requirement of standing.

Therefore, there is no “genuine, live dispute between adverse parties.” Laufer,

. Consequently, we affirm the district court’s determination that Appellants

have failed to establish injury in fact, causation, or redressability, and they lacked Article

III standing to sue. We affirm the district court’s dismissal based on a lack of subject

matter jurisdiction.

IV.

For these reasons, the district court’s order is reversed in part and affirmed in part.

We remand for further proceedings consistent with this opinion.

REVERSED IN PART, AFFIRMED IN PART, AND REMANDED

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