Petition of Whitman Operating Co., LLC D/B/A Camp Walt Whitman et al.

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for rebuttal, is that correct? I have, Your Honor. You can begin at any time. Thank you. Your Honor, may I please the court? My name is Ovid Lamont. I'm, I'm a lawyer with the law firm of Bernstein Shore Sawer Nelson. And I appear here on behalf of the petitioners in this matter. With me in the courtroom is Matt Sya, my colleague, who has appeared on the brief as well as represented the petitioners before the agencies, uh, from which we're whose, whose decision in which we're we're appealing constitutionally protected rights can never be suspended. Not in a pandemic, not during a state of emergency. And the guardrails and speed bumps and controls in the Constitution regarding the government's conduct of its business, vis-a-vis its people transcend pandemics and states of emergency. This case involves a government benefits program funded by the federal government under the CARES Act, but administered by the state through, that's the acronym for the Governor's Office of of for Emergency Relief and Recovery with a grant to the BFA, the Business Finance Authority to administer and manage this particular fund. This, this, uh, gap fund. So Are grants, constitutionally protected rights. They can be grants that are government grants operated and managed by the government, funded by the government for the benefit of her people. Of its people, I believe present a constitutionally protected interest, a property interest, none unlike other benefits programs here, the government had an offered the people who were interested in participating the businesses of the state who had not heard a four, received any kind of care relief, like through the Main Street Relief Fund to apply for this gap fund. They established eligibility criteria. They and our clients satisfied those eligibility criteria, except that they added one more criteria that was not published, that was not defined. And that was the, so-called Wealth of Owners of the applicants, the petitioners in this case. Why was that an unreasonable criteria to add? Given that this is, uh, a pandemic in this money is designed to help entities that might not survive. It's unreasonable for two reasons. One, a corporation is a natural person or is treated like a natural person under the law. And that is true, that's been true for well over a hundred years in the jurisprudence of this country. And oh, you only have to look at cases like, uh, first National Bank of Boston versus bti Citizens United. We've referred to, to give you a sense of the scope and breadth of the rights corporations are afforded under our laws for the government to pierce the corporate veil, essentially, to look past that corporation to see who the owners are and to determine that the owners are either too wealthy or have some other, uh, economic, uh, independent economic status that would preclude those corporations from receiving the grant is unreasonable and frankly unlawful. And in this case, what's interesting here, these petitioners, their, their owner is in another corporation. It's called the Camp Group, LLC. It only a hundred percent of the membership interests of the three petitioners who are New Hampshire LLCs in good standing, the state not only pierce the corporate veil of those LLCs, it pierce the corporate veil of the camp group, which is the parent company of the LLCs to get to 62 or so individual owners of Camp Group LLC, which is a national company. Did They require that you provide the, um, financial background of those LLC members, or, Or not? They did. And the state, if you look at the webinar that's referred to in the state's brief, it's, it was a July 24th webinar hosted by the BFA. There are reasons to have the financial information and, um, the executive director for the BFA explained in the webinar that, for example, verification of identity was one way. I don't know what exactly that meant, but I heard him say that. And, and there are other reasons to look at the financial status, uh, or the financial status, if you will, of the owners to make sure you, there were no conflict of interest or fraud or any kind of co-mingling of funds. But not to determine, and that Included liquid and illiquid assets. Everything. Apparently it did, yes. Yes. But those funds aren't available to the LLCs. Those are, those are the individual's funds. Those individuals are owners because they capitalize the LC at some level. They invested in it, they bought their interest in it. But it's, it would be like this, the analogy I would like to offer to you to consider is this. What if an applicant were a sole proprietor, a business in New Hampshire that met all the eligibility criteria of her business for this grant? What if the state said, we want to know what the family's financial condition is in order to, to, you know, to apply. She provides financial information. Her father isn't particularly wealthy, but her grandfather is. This is exactly analogous of this situation. The state would deny the grant grant application on the basis that the grandfather's wealthy. But there's no legal compulsion, no legal requirement that a grandfather or father capitalize a business anymore than shareholders. No Lawsuit should compulsion get into it. If there's an opportunity for that person, if there's a limited amount of resources available to help entities in distress, why isn't it proper for the government to decide that they should go? That money should go to entities that have no other alternative. The government is not in a position to pick winners or losers. It looks at the applicants that come before the government. And it makes a decision based on those applicants, not people behind the applicants. And, and How is this any different than a, a public college providing scholarship for students in need and students that qualify for them? If you are fortunate enough to have parents that are worth millions of dollars, you're probably not gonna get that scholarship, right? Right. Yes. But if you you don't have that background, you might get it. Yeah, but we we're, we're not here to make those decisions. Are we? Not, for, not in that context, but that's not this case. But How's it different? This case is a government benefit program. It isn't, it is not a scholarship program that has certain criteria that the government in the context of the school will follow. This. This is a government's pre government benefits program that has separate criteria, eligibility criteria, which are not appealable. And this will go to the second point here. And it's undisputed that your client meets all of those eligibility requirements. It's undisputed, other than the subjective valuation or determination of the wealth of the individuals who have an ownership interest in, in, in my clients, which is improper. Alright, So are those owners, owners relevant? For example, if the camp your client, were to look for a loan, right? Apply for a loan at a bank, conventional loan. So how far would the bank go, um, looking, if you will, into the wealth of the owners? I'm not a commercial, uh, lending attorney, but I do know enough about commercial lending that if a bank thought that the, the debtor that or the applicant for a loan were, was not able to finance the loan, it may ask for a guarantee from the owners and may ask for some formal commitment. But the bank itself is not in a position to compel the contribution by an owner to further capitalize the operation. And that's what the state is effectively saying. And, and without, by the way, we don't know what the standards were that were applied here. This is the second area of error. If you're going to have a standard of criteria, you have to do more than simply say, we're gonna, we're gonna see it. We're gonna play it as we see it. And unfortunately, that's what the executive director says in the webinar. He says, well, we're gonna look at financial condition for a number of reasons, but we're not no hard and fast rule. We're not really sure. And nobody knows. And in this case, we've had two other camps in New Hampshire who are granted $350,000 each of GA funds and their privately owned by wealthy people. But we don't know, as our petitioners don't know the difference between their situation other than the fact they're part of larger, perhaps, operation than these other individual camps. So If we were to find that your clients have standing here, uh, does that mean that everybody who got turned down for a grant in the state with, uh, the GAP fund and under the CARES Act would have a cause of action and would be appealing here If they were denied? For the same reasons? My clients were, Desi denied a non-disclosed criterion undefined, they could certainly file that appeal. They would have to proceed. We proceed under, under RSA 5 41. Uh, the state argues that it's not applicable. From my perspective, it doesn't really matter. 'cause the rid of has the same standards essentially to determine whether or not government action is arbitrary and capricious or contrary to law. And that's what happened here. Any other, as similarly situated applicant like our clients would be in a position to file an appeal. But I think the appeal period probably passed by you Are go for funds available. I don't know. So if those funds are no longer available, what, what's your committee? Well, the state was managing the funds and, uh, should have reserved some funds for situations like this. We filed this appeal, at least asked for rehearing very shortly after the, the grants were denied. And we made the arguments as we have in our briefs about the unlawfulness of the denial and the basis for the denial being the wealth relative wealth of owners. And that is inappropriate in this, in this program. What, what law does that violate say? It's unlawful. It's unlawful because corporations should be given their standing and their recognition as citizens of these United States as independent people. Not again, as, as, as, as a proxy for their owners. That's why You have, so, so you're saying it's irrelevant if Jeff Bezos comes in here and has a camp and, uh, has $150 billion and he says, well, my camp, uh, is short on cash. I need, uh, $2 million from Gopher that you can't look to Jeff Bezos, This set of facts. He would not, he would be eligible, or his company would be eligible for the grant. If the state wanted to consider things like the cash reserves of a corporation, which they probably have or wanted to consider the relative wealth of the owners, even if that's permissible, then they could have come up with a standard. For example, if the wealth of the individuals collectively net assets was a hundred times the net operating or gross operating revenues of the company pre covid for a year, pre prior fiscal year, that would be at least a standard, a definable standard. There was no standard applied Here, applies board to for-profit hospitals or regardless. Right? I'm sorry, the question again. It, that standard would apply across the board to nonprofits for-profits, hospitals, you name it. Well, where there's an ownership position and, and or a relationship. For example, if it's a holding company or something, the state could, could have done that, but the state did not do that. And, and, and further, the state denied due process to these petitioners by saying, you can't even appeal this decision on this point, on the relative wealth assessment of the petition of the owners. Instead, they said, you can appeal as to the criteria we listed, but you can't appeal as to this. And that, frankly, again, defies what we would consider to be due process rights of an applicant for a government benefit, government benefit program can Appeal here or can appeal superior court. No, why are we here on this and not a superior Court? Because this is a petition for TI or I, which we filed because there was no other opportunity for us to, no other recourse for us. We've exhausted our administrative remedy with Gopher and BBFA and we've gotten a letter that says we're closed. So the next, the only option for us, sort of like the, the petitioner in in Ray, uh, Hamill, I believe is the case. We've cited that, uh, if there's no recourse, then petition for SOAR with this court is what is, was what the remedy is that's available. And that's why we're here. The, the, the state through Gopher and the BFA should have established some sort of a review process for this sort of issue to be at least heard there. We, we were not able to provide supplemental information, explain why their calculation, whatever it was, which we still don't know was an error. So if we remand to the state to do what you just said, is that adequate from your perspective? No, but it's better than where we are now, which is denied. I think this court, the Court is red light. But let me ask you this question. Um, does the fact that this all happened under one of the governor's emergency orders impact our analysis? It may. The reason I say that is because the enabling legislation, so-called for this particular grant program is on, on the basis of the governor's executive powers were exercised in light of the pandemic. There's no legislative enactment. The, the legislature had no role here. So it's an entirely executive branch activity. And that's important for a number of reasons. But I think for purposes of your analysis, that is how you should look at this. And, and the bottom line is that government has to function within the contours and restrictions of the constitution no matter where the authority comes from. Thank You. You've got your two minutes reserved. Thank you Ms.

Lombardi. Good afternoon. May it please the court. I'm Laura Lombardi representing the state. I'd be happy to take questions at any time. This appeal should be dismissed for lack of jurisdiction. I think it's important to note that the petitioners filed this as a Rule 10 appeal from an administrative agency and not as a Rule 11 petition for original jurisdiction. Under Rule 10, there are only two types of appeal available. An appeal under 5 41 RSA 5 41 or a petition for a writ of tertiary. Neither of those avenues are available, um, in this case. First, there's no statute that authorizes an appeal under RSA 5 41. In these circumstances, um, in this court has made it clear that if there's no statute, um, citing to 5 41, that that avenue of appeal is not available. Second, GoFund did not act in a quasi-judicial capacity. So a petition for writ of tertiary, tertiary is not the appropriate avenue for the petitioner's. I'm Curious, I'm curious about that argument because you make it by engrafting on some other language when 4 94 doesn't include the judicial capacity language, and it does include Ritz of error made you WR to corporations and individuals. So I'm wondering how we square that with this restriction that it always has to be acting in a quai judicial Capacity. That goes back to the distinction between the Rule 10 petition and the Rule 11 petition. So the statute that you cite RSA 4 94 includes all the jurisdiction of the court. Um, so that inco encompasses this court's original jurisdiction for writ of Manus or Ritz of, um, So had this been brought as Rule 11 petition, that would be okay as far as you're concerned? Not necessarily. Okay. There might be other arguments, um, that could raise separation of powers, arguments in terms of if they're seeking over the pandemics against the governor under the emergency power statute. Um, and to the extent that they cited that language from the statute in their reply brief, um, we haven't fully flushed out those arguments. Um, but in this case, they brought it under Rule 10 and there is no, um, for, for a writ of tertiary, they don't cite a single case. Um, where this court has looked has considered under a petition of tertiary an action by, um, an administrative agency that was not a, um, an adjudicatory proceeding or a proceeding in a quasi-judicial fashion. Um, and I would, I would say they, they argue that, um, there must be judicial review of all, um, state action that affects a person. Um, and I disagree as an example. Um, arts grants provided by, uh, the Department of Cultural Resources, uh, those don't have an avenue of appeal. If you're denied a discretionary grant, um, you don't necessarily have a right unless it's affecting a constitutionally protected party. And yet The arguments made that these grants are actually benefits. So they would be different than an arts grant or a scholarship. Uh, in terms of them being a, a government benefit program, um, you only have a protected interest, a protected constitutional protected interest in a government benefits program if the statute includes explicitly mandatory language. So a government benefits program that's discretionary, you do not have a constitutionally protected, um, right in receiving, uh, such a grant. Um, and, and that's what we have here. In this case, they didn't have a protected property Right. Receiving, um, an award from the Gap fund, Are there funds still available, Ms. Lombardi, do You know the gap fund balance? No. Um, whether there are other covid relief funds available, uh, I'm not sure there may be, but they would not be in this, um, fund. And the relief that they're seeking is a reversal of gofers, uh, decision. So first I would say there's no avenue to appeal this decision, um, by Gopher, but even if it could, uh, the relief they're seeking, um, would not be effective if there's no funds remaining. Um, the Gap fund had a specific amount of money in it, um, and it was dispersed based on the governor's determination of which businesses were most in need. Of the, You footnote in your brief that to the extent they have a constitutional claim, it should have been brought to Superior Court. What was their avenue to get to Superior Court? Their, I mean, there they say they have no effective judicial review. Um, and I would say that they do have avenues to seek, uh, judicial relief if they believe, uh, that their rights have been violated. Um, I do not believe that they would be successful. Um, but the avenue that they chose to pursue, um, is, is not, um, there's no jurisdiction for this court under the avenue that they, So then how do we, um, reconcile the seemingly arbitrary, some camps get the money and some camps don't. Um, how, how do we reconcile that? It's not arbitrary. Um, there were criteria that were set forth, there was eligibility criteria, and those were the criteria that someone could appeal if there was an error in terms of those listed criteria, whether or not they had an employee who was not an owner, that if, if there was a mistake made, um, there was, it was known the, the financial, um, information of business owners would be considered. They had to supply that information. Um, they had to, in the instructional webinar, um, the B-F-I-B-F-A explained that personal finances would be considered and that it could affect your ability, um, to get a, a, an award. Um, because specifically they were, these funds were targeted. They had to be targeted because there was a limited amount of funds, um, to those businesses that were most in need of the assistance to, uh, survive the pandemic. So assuming, and then I'll leave you alone, but assuming there's a meeting of all camp owners a year, 2, 3, 5 from now, and they get talking and they find out that a camp that had similar, um, wealthy ownership interests got funding and this camp didn't, what's the remedy then? I think it needs to be presumed that, um, the government apply the standards correctly, and it's for the petitioners to build a record. And that's another reason why we have a problem coming straight to the court, is they have not built a record for this court's review. Um, and in terms of there, there was no, uh, proceeding before Gopher, gopher is not an administrative agency. It's essentially an advisory committee to the governor. This was an act by the governor awarding these funds. Um, and they, because they don't have a property, the petitioners didn't have a property interest in receiving a grant. Um, there is no requirement to hold an adjudicatory hearing. Uh, and that goes back to the CARES Act, um, the treasury guidance, um, the gopher's application process, it's all discretionary. There's no explicitly mandatory language in any of those, um, documents that would entitle a person to, uh, receive a grant. What, What is legal status of Gopher? Is it, what is it? It's an office created, uh, under executive order, um, following from, flowing from the governor's executive emergency powers. So is it in essence, but the governor ultimately decides how to disper these funds? Gofer is just advisory, right? Correct. So, so the, in essence, is this a suit against the governor? Um, it's a and it's, I would say no, because it's a suit against Gopher and gopher's, uh, decisions, their recommendations to the governor. Um, but a recommendation could A recommendation, the decision was made by the governor. Yeah. So they haven't named the governor, but they're essentially seeking to overturn his discretionary decisions, um, for which there was no, I mean, the CARES Act makes it clear, um, that the governor has, um, considerable discretion in deciding how to spend the covid relief funds. And What document are we supposed to construe in order to determine whether one, you get judicial review and what are we affirming or what are we reversing? Right? There's, there's no letter or order or anything that sets forth the reason or rationale for the denial. And That's exactly why we're not in the appropriate forum here. There was no adjudicatory proceedings, so there's no order, um, for them to appeal from. Um, they're appealing from the denial of a grant. They did not have, um, a property interest in receiving. Um, in fact, the application that they submitted expressly states there is no legal obligation for the state to make an award to the applicant based on this application. Um, it was clear that these were discretionary grants. They were not gonna be awarded to every business. Um, in the webinar, it was explained that there's limited amount of funds and that they were gonna use it to target the businesses most in need of, of assistance. Are you aware of any, um, similar FEMA or emergency grant funding from other disasters, if you will, that have been addressed by courts? I believe I cited a couple, um, outta state cases in my brief, and I, I can't recall specifically what they were dealing with, but they were, again, I think it stands for the proposition that unless there's that explicit, explicit mandatory language, such as some of the health and human services statutes, who you're entitled to certain benefits if you meet certain standards. Um, and that's why they would have adjudicatory proceedings, um, in the Health and Human Services Department, um, for people applying for those benefits. Um, in this case, there, there is not that, um, that language entitling, um, every business owner in the state, um, to An award. What would the recourse be for, uh, an organization or a group of organizations that believe they were denied on the grounds of race? Where would they go? Would they have any rights? They would, I assume, if any, anyone, regardless of what their claim is, if they're claiming some kind of legal violation by the state, they could bring whatever appropriate legal action they think is appropriate, but it wouldn't necessarily be an appeal. Um, but If it was a protected class, there would be an equal viol equal violation, um, equal protection violation. But in the case of a protected class, we don't have that here, do we? Correct. So, but I still think that person could not appeal directly to this court. They could file a lawsuit in Superior Court raising those claims, and they would've a much greater chance of, of success than what we have in this case. And, uh, if there are no further questions, I'll submit my brief. Thank You. Thank you, Mr. Lamont. You have two minutes. Thank your honors. A few points to be made. First of all, the law of New Hampshire is not that you have a mandatory right expressed in a statute. It the law of New Hampshire's consistent with the law across the country, where you have to have some independent basis to rely on the expectation of a benefit in New Hampshire. We found this court has found property protected property interests in a Trinity High school student who wanted to play basketball. And that's in the DUFFLEY versus N-H-I-A-A case. The plan, your case also, uh, involved a a, a doctor's right to a li to a license, but the court did an analysis and it did not require that there to be a mandatory right to a benefit in order for protected property interest, uh, to arise and the, and trigger equal protection analysis and so forth. Uh, secondly, the petitioners couldn't build a record here because they were denied administrative review and administrative hearing. It would've been very simple if in designing this program gopher and, and, and the BFA would've incorporated 5 41, that would've given everyone an opportunity to do that, but they didn't. And in fact, if you look at the correspondence from Gopher attorney Nancy Smith, she basically shut us down completely. Our clients, there's no, no recourse because this undisclosed not eligibility criteria was not an eligibility criteria, and therefore there was no recourse for it. And your question to your question of Attorney Lombardi, what if the wealthy people are Muslims or of another faith? The, the, there is no standard by which you could even determine whether or not there's some sort of protected class discrimination occurring Equal protection, by the way, does not pertain solely to protected class. There are equal protection cases in this, in this state where you look at what standard, uh, a protected class is strict scrutiny for similarly situated individuals or persons who are seeking benefits. It's a rational basis test. Mr. Montane, lemme ask you, uh, one question, which is, um, gopher is, uh, advisory. So really what this comes down to is a challenge to the governor's decision to, as to whom should get money, right? It's a challenge to the BFAs administration of the fund as the grantee of Gopher. And if you look at the, the, the documentation leading to the grant and so forth, it's very clear that the BFA is in charge, subject to approval by Gopher and the Governor's office. But the, the fault here lies with the BFA Administering this grant. Thank you. Thank you, your Honor. Uh, thank you very much. Counsel. Case submitted the case. The court is now adjourned. All rise, please.