Order Granting in Part and Denying in Part Defendants’ Emergency Motion for a Stay — DV Diamond Club of Flint, LLC v. United States Small Business Administration (Dkt. 47, E.D. Mich.)

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An order by United States District Judge Matthew F. Leitman granting in part and denying in part the defendants' emergency motion for a stay (ECF No. 45) in DV Diamond Club of Flint, LLC, et al. v. United States Small Business Administration, et al., Case No. 20-cv-10899, in the U.S. District Court for the Eastern District of Michigan, filed May 13, 2020 as ECF No. 47. The defendants sought a stay of the preliminary injunction or, in the alternative, 36 more hours to tell the plaintiffs' and intervenors' lenders that their PPP applications shall not be denied under the prurient sexual nature provisions. The court denies a stay but grants the additional 36 hours, to comply by 11:59 p.m. on May 15, 2020.

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Case 4:20-cv-10899-MFL-DRG ECF No. 47, PageID.<pageID> Filed 05/13/20 Page 1 of 3




                       UNITED STATES DISTRICT COURT
                       EASTERN DISTRICT OF MICHIGAN
                            SOUTHERN DIVISION

  DV DIAMOND CLUB
  OF FLINT, LLC, et al.,

         Plaintiffs,                                  Case No. 20-cv-10899
                                                      Hon. Matthew F. Leitman
  v.

  UNITED STATES SMALL BUSINESS
  ADMINISTRATION, et al.,


       Defendants.
  __________________________________________________________________/

   ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS’
          EMERGENCY MOTION FOR A STAY (ECF No. 45)

         On May 13, 2020, Defendants filed an emergency motion to stay this Court’s

  Opinion and Order granting Plaintiffs’ and Intervenors’ motion for a preliminary

  injunction. (See Mot., ECF No. 45.) In the alternative, Defendants ask the Court for

  an additional 36 hours to comply with the Court’s order that they contact Plaintiffs’

  and Intervenors’ lenders and inform the lenders that the applications by Plaintiffs

  and Intervenors for PPP loans shall not be denied based on the “prurient sexual

  nature” provisions of the Original SBA Ineligibility Rule, the 2019 SOP, and/or the

  PPP Ineligibility Rule (as those terms were defined in the Opinion and Order). (See

  id.)   The Court DENIES Defendants a stay, but it GRANTS Defendants an

  additional 36 hours to comply with the Court’s Opinion and Order.

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Case 4:20-cv-10899-MFL-DRG ECF No. 47, PageID.<pageID> Filed 05/13/20 Page 2 of 3




        “A stay is an intrusion into the ordinary processes of administration and

  judicial review.” Dodds v. United States Dep’t of Education, 845. F.3d 217, 220 (6th

  Cir. 2016) (quoting Nken v. Holder, 556 U.S. 418, 425 (2009)). “To determine

  whether to stay the grant of a preliminary injunction, [courts] balance four factors:

  the movant’s likelihood of success on appeal; whether irreparable injury to the

  movant will result in the absence of a stay; prospective harm to others if a stay is

  granted; and the public’s interest in granting a stay.” Id. These are the “the same

  factors considered in determining whether to issue a TRO or preliminary injunction.”

  Ohio Republican Party v. Brunner, 543 F.3d 357, 361 (6th Cir. 2008).

        For all of the same reasons that the Court explained in its Opinion and Order,

  it remains persuaded that Plaintiffs and Intervenors are entitled to a preliminary

  injunction. Thus, for all of those same reasons, the Court concludes that Defendants

  have not shown a likelihood of success on appeal; that Defendants will not suffer

  irreparable injury in the absence of a stay; and that the harm to others and public

  interest factors weigh against a stay of the Court’s decision. Indeed, because the

  loan guarantees at issue here are made on a “first-come, first-serve” basis, a stay

  while the Court’s Opinion and Order is appealed could foreclose Plaintiffs and

  Intervenors from participating in the PPP program at all, even if they succeed on

  appeal. That possibility “outweighs any harm the [Defendants] would suffer without

  a stay.” (5/4/2020 Order Denying Stay, Camelot Banquet Rooms et. al. v. U.S. Small


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Case 4:20-cv-10899-MFL-DRG ECF No. 47, PageID.<pageID> Filed 05/13/20 Page 3 of 3




  Bus. Admin. et al., ECF No. 39-4, PageID.1145.) For all of these reasons, the Court

  declines to stay its Opinion and Order.

        However, the Court does conclude that a temporary extension of time for

  Defendants to comply with the Court’s Opinion and Order while Defendants seek a

  stay in the United States Court of Appeals for the Sixth Circuit will not unduly harm

  Plaintiffs or Intervenors. The Court will therefore grant Defendants’ request for an

  additional 36 hours to comply with the Court’s Opinion and Order.

        Accordingly, for all of the reasons stated above, IT IS HEREBY ORDERED

  that Defendants’ emergency motion for a stay (ECF No. 45) is GRANTED IN

  PART AND DENIED IN PART. Defendants’ request for a stay pending appeal is

  DENIED. Defendants’ request for an additional 36 hours to comply with the

  Court’s Opinion and Order is GRANTED. Defendants shall comply with the

  Court’s Opinion and Order by no later than 11:59 p.m. on May 15, 2020.

        IT IS SO ORDERED.

                                            s/Matthew F. Leitman
                                            MATTHEW F. LEITMAN
  Dated: May 13, 2020                       UNITED STATES DISTRICT JUDGE

         I hereby certify that a copy of the foregoing document was served upon the
  parties and/or counsel of record on May 13, 2020, by electronic means and/or
  ordinary mail.

                                            s/ Holly A. Monda
                                            Case Manager
                                            (810) 341-9764


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