Little v. United States, 79-4013.

• Citation: 489 F. Supp. 1012
• Decision Date: 29 May 1980
• Docket Number: No. 79-4013.,79-4013.
• Parties: Dr. Harold L. LITTLE, Plaintiff, v. UNITED STATES of America et al., Defendants.
• Court: U.S. District Court — Central District of Illinois

489 F. Supp. 1012

Dr. Harold L. LITTLE, Plaintiff, v. UNITED STATES of America et al., Defendants.

No. 79-4013.

United States District Court, C. D. Illinois.

May 29, 1980.

COPYRIGHT MATERIAL OMITTED

Walter D. Braud, Rock Island, Ill., for plaintiff.

R. John Seibert and Surell Brady, Attys., Dept. of Justice, Washington, D. C., Janet L. Jannusch, Asst. U. S. Atty., Peoria, Ill., for defendants.

DECISION AND ORDER

ROBERT D. MORGAN, Chief Judge.

This action involves the allegedly improper denial of plaintiff's applications for certification in the minority business program of the Small Business Administration (SBA). Before the court at this time is defendants' motion for summary judgment pursuant to Rule 56, F.R.Civ.P. Plaintiff has withdrawn his motion for summary judgment and now asserts that there are substantial and material questions of fact which preclude summary judgment for defendants. Plaintiff and defendants have thoroughly briefed the issues, and extensive materials in support of their respective positions are before the court.

In his complaint, as amended, plaintiff essentially asserts two separate, although related, claims for relief. The first claim seeks judicial review, pursuant to the Administrative Procedure Act (APA), 5 U.S.C. § 701 et seq., of the allegedly improper administrative decision of the SBA. The second claim, based upon the Civil Rights Act of 1870, 42 U.S.C. § 1981, alleges that defendants racially discriminated against plaintiff in denying his applications.

The issue directly before the court, as on any motion for summary judgment, is whether the materials before the court present a genuine issue as to any material fact and whether the moving party is entitled to a judgment as a matter of law. Rule 56, F.R.Civ.P. The moving party has the burden of clearly establishing both of these conditions. All inferences to be drawn from the facts contained in the affidavits, exhibits, and depositions must be drawn in favor of the party opposing the motion. Cedillo v. Int'l. Ass'n. of Bridge & Iron Workers, 603 F.2d 7 (7th Cir. 1979). Applying the foregoing principles, the court finds that there are no genuine issues of fact which require a trial and that as a matter of law defendants are entitled to judgment.

FACTS

Plaintiff is a black American and the sole owner of h. Lorenzo Industries, Inc., a small business concern located in Rock Island, Illinois. Defendants are the United States of America; the SBA; A. Vernon Weaver, National Director of the SBA; and Donna Harrigan, Chicago Regional Director of the SBA. Pursuant to § 8(a) of the Small Business Act, 15 U.S.C. § 637(a), the SBA has established a program (hereinafter cited as the 8(a) program) to aid disadvantaged small business concerns in contracting with the federal government. Eligible businesses are certified by the SBA and receive significant advantages in obtaining federal contracts. The criteria for eligibility are detailed in regulations developed by the SBA, which appear at 13 C.F.R. § 124.1-1(c).

On or about August 23, 1977, plaintiff formally applied to the SBA Chicago office for 8(a) certification. Plaintiff desired this certification in order to do contractual work for the Arsenal at Rock Island, Illinois. At this time in the Rock Island area there were two existing 8(a) certified businesses (Pace Development and Peco), both of which had contracts with the Arsenal for the type of work that plaintiff was interested in performing.

In a letter to plaintiff dated August 26, 1977,¹ plaintiff's application was denied, based on six stated considerations. In his deposition testimony, District Director Krueger stated that he did not personally review plaintiff's application, but accepted the recommended disposition appearing in the letter. The letter also advised plaintiff that his application could be reconsidered through a written request which demonstrated that the stated deficiencies had been overcome.

Over the following twenty months, plaintiff continued to express his desire to receive 8(a) certification, took steps to provide a more extensive application to the SBA, and took actions that would allegedly aid his eligibility for 8(a) certification. The latter included resigning from his position as a professor at a local college. Plaintiff states that he was told by David Wilson, an SBA Assistant Director for Procurement Assistance in Chicago, that this resignation was necessary for plaintiff to meet the economically disadvantaged requirement of 8(a) certification. Wilson supervised and was generally responsible for the processing of plaintiff's applications until November 1978, at which time Wilson ceased to work for the SBA. Leonard Harbin, an SBA Minority Small Business Specialist, supervised plaintiff's application subsequent to November 1978. Plaintiff states that during this twenty-month period he received indications from Wilson and John Smith, District Director of the Chicago SBA office, that his application would be approved.

On March 30, 1979, plaintiff's second application was submitted to the Chicago District Review and Evaluation Committee, which unanimously recommended that the application be denied. This recommendation was then forwarded to defendant Harrigan, the SBA Regional Director, who reviewed the Committee's work and concurred in their recommendation. On April 6, 1979, Harrigan forwarded the Committee recommendation and her concurrence to William Clement, Associate Administer for Minority Small Business in Washington, D.C. In a letter of May 10, 1979,² Clement informed plaintiff that he was ineligible for participation in the 8(a) program. Three specific reasons for plaintiff's ineligibility are stated in this letter. These procedures for evaluation and review of plaintiff's 8(a) application appear to comply with SBA regulations and are not specifically challenged by plaintiff. Plaintiff filed this action on April 20, 1979, prior to his receipt of the letter denying his second application.

I.

A.

With respect to plaintiff's claim for judicial review of the administrative decision of the SBA, the original complaint sought injunctive and declaratory relief, as well as monetary damages. Plaintiff has withdrawn his claim for injunctive relief in light of the express prohibition of such relief in the Small Business Act.³ While this provision precludes injunctive relief, it does waive sovereign immunity with respect to other types of relief. Plaintiff may assert his claims for declaratory relief, 28 U.S.C. §§ 2201, 2202; Mar v. Kleppe, 520 F.2d 867 (10th Cir. 1975); S.C.L.C. v. Connolly, 331 F.Supp. 940 (E.D.Mich.1971); Pottharst v. SBA, 329 F.Supp. 1142 (E.D.La.1971); American Electric v. U. S., 270 F.Supp. 689 (D.Hawaii 1967); and monetary damages, Mar v. Kleppe, supra; Romeo v. U.S., 462 F.2d 1036 (5th Cir. 1972), cert. denied, 410 U.S. 928, 93 S.Ct. 1361, 35 L.Ed.2d 589 (1973); Pottharst v. SBA, supra; Simpkins v. Davidson, 302 F.Supp. 456 (S.D.N.Y. 1969).

Pursuant to 28 U.S.C. § 1331, the federal question necessary for jurisdiction here over this claim arises under the Small Business Act, 15 U.S.C. § 631 et seq. Contrary to arguments made by plaintiff in his memoranda, the APA does not provide an independent grant of jurisdiction for this court to review the SBA's actions. Califano v. Sanders, 430 U.S. 99, 97 S.Ct. 980, 51 L.Ed.2d 192 (1977). As a person adversely affected or suffering legal wrong because of agency action, the APA does provide plaintiff with standing to seek judicial review of the SBA's decision, 5 U.S.C. § 702.

The two express exceptions to judicial review under the APA, 5 U.S.C. § 701(a)(1) and (2),⁴ do not apply to the agency action in this case. There is no statutory prohibition precluding court review of the SBA's action, except as noted above with respect to injunctive relief; and while the SBA's decision did involve a certain amount of discretion, it was insufficient to bring the action within the narrow scope of the agency discretion exception to judicial review.⁵

Judicial review pursuant to the APA must also satisfy finality and exhaustion requirements, 5 U.S.C. § 704. Plaintiff's claim challenging the propriety of the administrative decision appears to be final by reason of the May 10, 1979 letter of denial. There is no evidence that plaintiff has available further remedies that he should be required to exhaust prior to the court's review pursuant to the APA.

The proper standard of review to be applied is determined by the nature of the agency action which is under review, 5 U.S.C. § 706. Plaintiff asserts that the court should conduct a de novo review of the facts because of the agency's allegedly inadequate factfinding procedures and the adjudicatory nature of the decision, 5 U.S.C. § 706(2)(F). Defendants assert that review by the court is limited to the much narrower test of whether the action was arbitrary or capricious, 5 U.S.C. § 706(2)(A). Both parties agree that the principles established in Citizens to Preserve Overton Park v. Volpe, 401 U.S. 402, 91 S.Ct. 814, 28 L.Ed.2d 136 (1971), determine the proper standard of review to be applied.

Overton Park, at page 415, 91 S.Ct. at page 823, states that "de novo review is authorized when the action is adjudicatory in nature and the agency factfinding procedures are inadequate." Specific factors, relied upon by plaintiff to demonstrate the inadequacy of the factfinding procedures in this case, are the short evaluation period for his first application and the allegedly inadequate investigation by Harbin with respect to the factors relied upon in the second denial.⁶

It does not appear to this court that the SBA's factfinding procedures were inadequate. Both denial letters sent to plaintiff state definite relevant factors as the bases for the denials. The full factual record supports the SBA's determinations with respect to these factors. Plaintiff has not demonstrated that there exist any factual errors...