A federal appeals court ruled in favor of a conservative legal group that sought to stop President Joe Biden's administration from giving priority status for COVID-19 relief to restaurants and bars owned by women and certain minorities.
The U.S. 6th Circuit Appeals Court issued a 2-1 opinion Thursday that said the government cannot allocate limited coronavirus relief funds based on race and sex. It issued an order for the government to stop using the criteria when processing an application from Antonio Vitolo, an East Tennessee restaurant owner.
The lawsuit was brought by the Wisconsin Institute for Law & Liberty on behalf of Vitolo, who owns Jake's Bar and Grill in Harriman, Tennessee. The suit targets the three-week period from May 3 until May 24 during which the $28.6 billion Restaurant Revitalization Fund has been processing and funding requests only from businesses owned by women, veterans, or socially and economically disadvantaged individuals.
Eligibility was slated to open broadly afterward. However, the Small Business Administration reported on May 18 that it had already received more than 303,000 applications representing over $69 billion, with nearly 38,000 applicants already approved for more than $6 billion. Of the applications, 57% came from women, veterans, and socially and economically disadvantaged business owners, who had already applied for $29 billion in the $28.6 billion program by May 12, the SBA has said.
Vitolo applied immediately for aid on May 3 but didn't qualify to receive it yet because he is a white male, according to the lawsuit.
"Vitolo challenges the Small Business Administration's use of race and sex preferences when distributing Restaurant Revitalization Funds. The government concedes that it uses race and sex to prioritize applications, but it contends that its policy is still constitutional. We disagree," the majority opinion said.
"The government is trying to allocate limited COVID relief funds on the basis of race and sex. The Court of Appeals held it cannot and that we are likely to succeed on our claim that this program is unconstitutional," Wisconsin Institute for Law & Liberty President and General Counsel Rick Esenberg said.
The ruling says the SBA shall fund Vitolo's grant applications, if approved, "before all later-filed applications, without regard to processing time or the applicants' race or sex."
In a dissenting opinion, Judge Bernice Bouie Donald said she found that the Restaurant Revitalization Fund was a "carefully targeted measure necessitated by an unparalleled pandemic" that would not have caused the plaintiffs irreparable harm.
"It took nearly 200 years for the Supreme Court to firmly establish that our Constitution permits the government to use race-based classifications to remediate past discrimination," Donald wrote. "It took only seven days for the majority to undermine that longstanding and enduring principle."
The ruling allows the Small Business Administration to continue to give veteran-owned restaurants priority in accordance with the law.
A Small Business Administration spokesperson has said the agency does not comment on pending litigation. The agency didn't immediately respond Friday to a request for comment.