This Court Just Temporarily Blocked the SBA from Discriminating Against Restaurant Owners on the Basis of Race and Sex

The American Rescue Plan Act of 2021 created a $28.6 billion fund called the Restaurant Revitalization Fund, administered by the U.S. Small Business Administration (SBA), to help restaurants impacted by the COVID-19 pandemic.

But the fund prioritizes grants to businesses owned by women, minorities, and veterans before dispensing money to owners outside these classifications.

America First Legal filed a lawsuit on behalf of Greer’s Ranch Café, et al., alleging racial and sex discrimination against white men who own restaurants. The plaintiffs were eligible for relief under the fund but didn’t apply, claiming they were barred from relief under the program’s first 21 days (which began on May 3). The SBA stated that it would “accept applications from all eligible applicants, but only process and fund priority group applications.” The plaintiffs, concerned that the fund will run out of money before they could receive help, filed a lawsuit.

A district court just granted (PDF – 18 pages) the plaintiffs’ request for a temporary restraining order. The court contended that the government failed to prove a compelling interest in “remedying past discrimination in the restaurant industry” during COVID-19 or show an “important government objective” or “exceedingly persuasive justification” to discriminate against certain owners. “Plaintiffs are likely to succeed on the merits of their claim that Defendants’ use of race-based and sex-based preferences in the administration of the RRF violates the Equal Protection Clause of the Constitution.”

The court also held that the plaintiffs “will suffer irreparable harm absent a TRO because Plaintiffs are experiencing race and sex discrimination at the hand of government officials and the evidence submitted by Plaintiffs indicates that the entire $28.6 billion in the Restaurant Revitalization Fund may be depleted before Plaintiffs’ application can be considered for relief under the program.”

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