The plaintiffs, Sean Wayne Null and Erkios Systems, Inc., sued Arch Grants and Gabe Angieri, alleging race-based discrimination prohibited by federal law among other state-law claims.
Factual Overview
Sean Wayne Null, a Missouri resident and the president, CEO, and majority owner of Erkios Systems, a cybersecurity products company, entered into a Grant Agreement with Entrepreneur Startup Business Development Corp., operating as Arch Grants. This organization, aimed at supporting start-up businesses, had received a substantial COVID-19-related loan from the federal Small Business Administration. Under the agreement, Erkios was promised certain accommodations, privileges, financing, and grants in exchange for relocating its headquarters to St. Louis, Missouri. Arch Grants displayed a willingness to work with Erkios on flexible terms. But after Erkios relocated and complied with the agreement’s material commitments, Arch Grants, under the new executive direction of Gabe Angieri, allegedly imposed onerous requirements on Erkios that were not imposed on similarly situated businesses, discriminating against them based on Null’s race, color, or national origin. This led to the termination of the agreement and caused Null and Erkios to suffer damages and irreparable harm according to the complaint.
Legal Analysis
Violation of Title VI: The court addressed the plaintiffs’ allegation that both Angieri and Arch Grants violated Title VI of the Civil Rights Act of 1964, which prohibits race discrimination in programs receiving federal funds. Yet the court determined that Title VI’s provisions apply only to programs or activities, not individuals, thus Angieri, as an individual, could not be held personally liable under Title VI. Regarding Arch Grants, the court found the plaintiffs’ allegations insufficient to meet the pleading standards for a Title VI claim. The plaintiffs failed to provide direct evidence of discrimination or sufficient circumstantial evidence under the McDonnell Douglas burden-shifting framework. The complaint lacked factual details to support claims of discrimination or how the plaintiffs were treated differently from similarly situated entities. Thus, the court dismissed the Title VI claim against both defendants for failure to state a claim upon which relief can be granted.
Remaining State-Law Claims: With the dismissal of the federal claims, the court declined to exercise supplemental jurisdiction over the remaining state-law claims, dismissing them without prejudice. The plaintiffs’ request for an opportunity to amend their complaint was not considered a proper motion under the court’s rules and was therefore not addressed.
In conclusion, the court dismissed the federal discrimination claim against both defendants for lack of sufficient factual allegations to support the claim. It also dismissed the state-law claims for lack of jurisdiction, following the dismissal of the federal claims, without prejudice to refiling.
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