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Case Name Vitolo v. Guzman PB-TN-0009
Docket / Court 3:21-cv-00176 ( E.D. Tenn )
State/Territory Tennessee
Case Type(s) Public Benefits / Government Services
Special Collection Challenges to minority benefits in Biden Administration American Rescue Plan
Case Summary
This case is one of several brought challenging the American Rescue Plan Act (ARPA) and the Small Business Administration’s (SBA) prioritization of certain applications for emergency government assistance. Section 5003 appropriated $28.6 billion for the Restaurant Revitalization Fund to be ... read more >
This case is one of several brought challenging the American Rescue Plan Act (ARPA) and the Small Business Administration’s (SBA) prioritization of certain applications for emergency government assistance. Section 5003 appropriated $28.6 billion for the Restaurant Revitalization Fund to be administered by the Small Business Administration (SBA). The SBA initially accepted all applications for emergency grants, but was directed in the ARPA to give priority to certain grant applicants during an initial 21-day period, beginning on May 3, 2021. Those given priority included small businesses “owned and controlled by women, veterans, or socially and economically disadvantaged small business concerns.” The ARPA incorporated the definition of socially disadvantaged individuals found in the Small Business Act (15 U.S.C. §637): “those 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.” SBA regulations further defined “socially disadvantaged individuals” and “economically disadvantaged individuals” as those people belonging to certain racial groups.

The plaintiff was a white man who owned Jake’s Bar and Grill, LLC, in Harriman, Tennessee. He was represented by the Wisconsin Institute for Law and Liberty, a non-profit, conservative activist law firm. The plaintiff applied for an emergency grant under the Restaurant Revitalization Fund on May 3, 2021, and his application was put on hold. The plaintiff filed suit on May 12, 2021, in the U.S. District Court for the Eastern District of Tennessee, with Judge Travis R. McDonough presiding. The plaintiff alleged that Section 5003 violated the Fifth and Fourteenth Amendment constitutional guarantees of equal protection and due process. The plaintiffs sought the following: a temporary restraining order (TRO) enjoining Section 5003’s racial classifications; a temporary injunction requiring SBA to process applications in the order in which they were made, again without regards to race or sex of the applicant; a declaratory judgment that the policy was unconstitutional; and an order permanently enjoining SBA from making such eligibility classifications in dispersing ARPA funding. The plaintiff moved for a preliminary injunction to enjoin SBA’s use of the classifications on the same day.

The government filed a motion in opposition to the TRO on May 17, 2021, arguing that the race-conscious classification was a necessary means to achieve a compelling government interest in remedying the effects of past or present racial discrimination. On May 19, 2021, the court denied the plaintiff’s motion for a TRO. The court determined that when Congress passed the ARPA, it had a compelling interest in remedying past racial discrimination against minority owned businesses, especially given racial disparities which appeared in previous COVID-19-relief programs such as the 2020 CARES Act. Plaintiffs moved to stay this order on May 19, 2021. This was denied the next day. The district court also denied the plaintiff’s motion for a preliminary injunction on May 25, 2021, citing reasoning similar to their denial of the TRO.

Plaintiff appealed the denial of the TRO to the U.S. Court of Appeals for the Sixth Circuit on May 20, 2021. The Sixth Circuit reversed the district court, enjoining the government to pay plaintiff’s grant application, if approved, before all later-filed applications, without regard to processing time or the applicant’s race or sex. 999 F.3d 353. The Sixth Circuit determined that the government lacked a compelling interest because it relied only on "broad statistical disparities." The Sixth Circuit also held that the prioritization of women-owned businesses failed to pass strict scrutiny.

The plaintiff filed an amended complaint on June 1, 2021. This added four additional plaintiffs, all of whom were white male business owners who had applied for ARPA funding during the initial 21-day period. The next day, the new plaintiffs filed a second emergency motion for a TRO and a preliminary injunction. They sought relief similar to what the Sixth Circuit had given the initial plaintiff. The district court denied the preliminary injunction as moot on June 10, 2021, citing testimony of the Deputy Associate Administrator of Capital Access at SBA that the agency had already begun processing non-priority applications, including those of the additional plaintiffs, and that no new priority applications would be reviewed until preceding non-priority applications had been reviewed first.

The plaintiffs voluntarily withdrew all appeals on July 15, 2021, likely due to the mootness issue mentioned above. The trial court case is ongoing.

John Duffield - 07/26/2021


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Issues and Causes of Action
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Issues
Affected Gender
Male
Benefit Source
American Rescue Plan (ARP)
Constitutional Clause
Due Process
Due Process: Substantive Due Process
Equal Protection
Defendant-type
Jurisdiction-wide
Discrimination-basis
Race discrimination
Sex discrimination
General
Classification / placement
Disparate Treatment
Funding
Public assistance grants
National Origin/Ethnicity
Other
Plaintiff Type
Non-profit NON-religious organization
Private Plaintiff
Race
White
Causes of Action Declaratory Judgment Act, 28 U.S.C. § 2201
Ex parte Young (federal or state officials)
Defendant(s) Small Business Administration
Plaintiff Description Plaintiffs are white male restaurant or small business owners who applied for emergency COVID-19-relief funding under the ARPA and whose applications were classified as non-priority due to the fact they were neither women nor racial minorities.
Class action status sought No
Class action status outcome Not sought
Filed Pro Se No
Prevailing Party Plaintiff
Public Int. Lawyer Yes
Nature of Relief Injunction / Injunctive-like Settlement
Source of Relief Litigation
Filed 05/12/2021
Case Ongoing Yes
Court Docket(s)
E.D. Tenn
07/26/2021
3:21-cv-00176-TRM-DCP
PB-TN-0009-9000.pdf | Detail
Source: PACER [Public Access to Court Electronic Records]
General Documents
E.D. Tenn
05/12/2021
Complaint [ECF# 1]
PB-TN-0009-0002.pdf | Detail
Source: PACER [Public Access to Court Electronic Records]
E.D. Tenn
05/17/2021
Defendants' Opposition to Plaintiffs' Motion for Temporary Restraining Order [ECF# 18]
PB-TN-0009-0003.pdf | Detail
Source: PACER [Public Access to Court Electronic Records]
E.D. Tenn
05/19/2021
Memorandum Opinion [ECF# 24] (2021 WL 2003552)
PB-TN-0009-0004.pdf | WESTLAW | Detail
Source: PACER [Public Access to Court Electronic Records]
E.D. Tenn
05/21/2021
Defendant's Opposition to Plaintiffs' Motion for Preliminary Injunction [ECF# 30]
PB-TN-0009-0005.pdf | Detail
Source: PACER [Public Access to Court Electronic Records]
U.S. Court of Appeals
05/27/2021
Opinion [Ct. of App. ECF# 22-1 & 22-2] (2021 WL 2172181)
PB-TN-0009-0001.pdf | WESTLAW | Detail
Source: PACER [Public Access to Court Electronic Records]
E.D. Tenn
06/01/2021
Amended Complaint [ECF# 34]
PB-TN-0009-0006.pdf | Detail
Source: PACER [Public Access to Court Electronic Records]
E.D. Tenn
06/03/2021
Defendant's Response to Plaintiffs' Second Emergency Motion for a Temporary Restraining Order and Preliminary Injunction [ECF# 41]
PB-TN-0009-0007.pdf | Detail
Source: PACER [Public Access to Court Electronic Records]
E.D. Tenn
06/10/2021
Memorandum Opinion [ECF# 44]
PB-TN-0009-0008.pdf | Detail
Source: PACER [Public Access to Court Electronic Records]
show all people docs
Judges Donald, Bernice Bouie (W.D. Tenn., Sixth Circuit) show/hide docs
PB-TN-0009-0001
McDonough, Travis Randall (E.D. Tenn) show/hide docs
PB-TN-0009-0004 | PB-TN-0009-0008 | PB-TN-0009-9000
Norris, William Albert (Ninth Circuit) show/hide docs
PB-TN-0009-0001
Poplin, Debra Court not on record [Magistrate] show/hide docs
PB-TN-0009-9000
Thapar, Amul Roger (E.D. Ky., Sixth Circuit) show/hide docs
PB-TN-0009-0001
Plaintiff's Lawyers Berg, Luke N. (Wisconsin) show/hide docs
PB-TN-0009-0002 | PB-TN-0009-0006 | PB-TN-0009-9000
Esenberg, Richard M. (Wisconsin) show/hide docs
PB-TN-0009-0002 | PB-TN-0009-0006 | PB-TN-0009-9000
Lennington, Daniel P (Wisconsin) show/hide docs
PB-TN-0009-0002 | PB-TN-0009-0006 | PB-TN-0009-9000
McClanahan, Matthew Janson (Tennessee) show/hide docs
PB-TN-0009-0002 | PB-TN-0009-0006 | PB-TN-0009-9000
Defendant's Lawyers Boynton, Brian M (District of Columbia) show/hide docs
PB-TN-0009-0003 | PB-TN-0009-0005 | PB-TN-0009-0007
Farby, Lesley (District of Columbia) show/hide docs
PB-TN-0009-0003 | PB-TN-0009-0005 | PB-TN-0009-0007
Saslaw, Alexandra Rachel (District of Columbia) show/hide docs
PB-TN-0009-0003 | PB-TN-0009-0005 | PB-TN-0009-0007 | PB-TN-0009-9000

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