Court filing

Complaint — Vitolo v. Guzman

Filed May 12, 2021 in Vitolo v. Guzman; one of 25 filings from this case.

Record facts

Court	U.S. District Court for the Eastern District of Tennessee
Filed	2021-05-12

U.S. District Court for the Eastern District of Tennessee · No. 3:21-cv-00176-TRM-DCP · Doc. 1 · 2021-05-12 · Docket on CourtListener

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IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF TENNESSEE
______________________________________________________________________________
JAKE’S BAR AND GRILL, LLC, and
ANTONIO VITOLO,

Plaintiffs,

ISABELLA CASILLAS GUZMAN,

Defendant.
______________________________________________________________________________
COMPLAINT
______________________________________________________________________________
Plaintiffs allege their complaint against Defendant as follows:
INTRODUCTION
1.
“The Constitution created a government dedicated to equal justice under
law.” Cooper v. Aaron, 358 U.S. 1, 19 (1958). The government may not frustrate this
principle of equality by making “distinctions between individuals based solely on
differences that are irrelevant to a legitimate governmental objective.” Lehr v.
Robertson, 463 U.S. 248, 265 (1983). Whether it be discrimination based on race or
gender, “unreasonable discrimination” by the government is never permitted. Bolling
v. Sharpe, 347 U.S. 497, 499 (1954).
2.
In March 2021, the United States pushed aside equality under the law
by enacting a grant program that gives special treatment based on race and gender.
Under Section 5003 of the American Rescue Plan Act (ARPA), Congress appropriated
$28.6 billion to create the Restaurant Revitalization Fund, to be administered by
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Defendant, who runs the Small Business Administration (SBA). This fund provides
relief for restaurants impacted by the COVID-19 pandemic. Under the terms of the
law, however, Defendant must administer the fund in a discriminatory manner. For
the first 21 days, which started May 3, 2021, Defendant is obligated to “prioritize
awarding grants” to restaurants owned by certain minorities and women.
3.
To implement this discriminatory mandate, Defendant adopted a first-
come, first-serve queue to process grant requests until the money runs out, but has
then re-sorted applicants within the queue based on their race and gender, putting
white male restaurant owners behind certain minority or female applicants,
regardless of when they filed an application. Given the limited pot of funds, this puts
white male applicants at significant risk that, by the time their applications are
processed, the money will be gone. Every day that goes by increases this risk, as
Defendant pays out grants to minority and female applicants but holds requests from
white male applicants.
4.
Antonio Vitolo is a white male who owns Jake’s Bar and Grill in
Harriman, Roane County, Tennessee. Although his wife is Hispanic and owns 50% of
the restaurant, Jake’s Bar and Grill is not eligible for priority treatment because
Vitolo is a white male. Vitolo applied for a grant on the first day the application
opened, but because of his race and gender, Defendant will not process his application
until after applications from certain minority and female owners received during the
first 21 days of the administration of the Restaurant Revitalization Fund.
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5.
Defendant has no justification for granting these priorities based on race
and gender. Therefore, the program is unconstitutional and should be enjoined.
Moreover, because this program involves a limited pot of funds that is quickly
running out, this Court should immediately enjoin Defendant from paying out any
claims until she stops discriminating on the basis of race and gender.
THE PARTIES
6.
Jake’s Bar and Grill, LLC, is a Tennessee limited liability company, with
its principal place of business in Harriman, Roane County, Tennessee.
7.
Antonio Vitolo is a white male who owns Jake’s Bar and Grill, LLC. His
wife is Hispanic and, by operation of state law, she owns 50% of the business. Vitolo
applied for a grant from the Restaurant Revitalization Fund on May 3, 2021; however,
Vitolo’s application has been put on hold because he is a white male. Other restaurant
owners’ applications, however, have been and are being processed because they are
not white males.
8.
Defendant Isabella Casillas Guzman is the Administrator of SBA.
Under Section 5003 of ARPA, Defendant Guzman is responsible for administering
the Restaurant Revitalization Fund. She is sued in her official capacity for
declaratory and injunctive relief.
JURISDICTION AND VENUE
9.
This Court has jurisdiction over this complaint under 28 U.S.C. § 1331,
§ 2201, and 5 U.S.C. § 702, because this case presents a substantial question of federal
law, specifically whether Section 5003 of ARPA—and Defendant’s implementation of
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that section—violates the United States Constitution’s guarantee of equal protection
of the laws.
10.
This Court has authority to issue a declaratory judgment and to order
injunctive relief and other relief that is necessary and proper pursuant to 28 U.S.C.
§§ 2201 and 2202.
11.
Venue is appropriate in this district under 28 U.S.C. § 1391(e)(1). A
substantial part of the events giving rise to this claim occurred in this district and a
substantial part of the property subject to this action is situated in this district.
STATEMENT OF CLAIM
12.
On March 11, 2021, the President of the United States signed ARPA into
law.
13.
Through Section 5003 of ARPA, Congress appropriated $28.6 billion for
the Restaurant Revitalization Fund to be administered by Defendant who is the
Administrator of SBA. ARPA provides that the “Administer shall use amounts in the
Fund to make grants” to restaurants that require grant support due to “the
uncertainty of current economic conditions.”
14.
Section 5003(c)(3) of ARPA provides a priority to certain applicants:
“During the initial 21-day period in which the Administrator awards grants under
this subsection, the Administrator shall prioritize awarding grants to eligible entities
that are small business concerns owned and controlled by women, [veterans], or
socially and economically disadvantaged small business concerns.”
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15.
ARPA incorporates another federal law called the Small Business Act,
which provides that “[s]ocially disadvantaged individuals are those who have been
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.” 15 U.S.C.
§ 637(a)(4)(A).
16.
SBA regulations further define “socially disadvantaged individuals” and
“economically disadvantaged individuals” as those individuals who belong to certain
racial groups. 13 C.F.R. §§ 124.103, .104. To fit into these groups, individuals must
be a member of one of the following groups: “Black Americans; Hispanic Americans;
Native Americans (including Alaska Natives and Native Hawaiians); Asian Pacific
Americans; or Subcontinent Asian Americans.”
17.
Vitolo is not a member of any of the racial or ethnic groups identified in
13 C.F.R. § 124.103 or any other group identified by Defendant as “socially
disadvantaged” or “economically disadvantaged.”
18.
Vitolo and Jake’s Bar and Grill, LLC are eligible for a grant under the
Restaurant Revitalization Fund, except they are not eligible for priority consideration
because Antonio Vitolo is a white male.
19.
On April 30, 2021, SBA sent an email to restaurants detailing the
process for the Restaurant Revitalization Fund. The email included the following
information: “All businesses can and should apply on Monday. Due to limited funds
and the first-come, first-served basis, the earliest possible submission of your
application is the best way to maximize your chance of receiving the grant. The law
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mandates a 21-day priority window for businesses owned and controlled by women,
veterans, and socially and economically disadvantaged individuals. The SBA has
indicated it will fund those applications first, as required.”
20.
On May 3, 2021, Vitolo applied for a grant under the Restaurant
Revitalization Fund at restaurant.sba.gov. During the application process, SBA
notified Vitolo that “SBA will accept applications from all eligible applicants, but only
process and fund priority group applications.” The website continued that priority
applicants include businesses owned by “women, veterans, or socially and
economically disadvantaged individuals.” SBA’s website further explains that
“socially disadvantaged individuals” and “economically disadvantaged individuals”
must be “a member of a group” that has “been subjected to racial or ethnic prejudice
or cultural bias.”
21.
Vitolo applied for the grant and chose “white” as his race and “male” as
his gender, which means his application is pushed to the back of the queue behind
certain minority applicants and women.
22.
Vitolo would be “economically disadvantaged” were it not for the racial
classification in that definition.
23.
On May 4, 2021, SBA sent Vitolo an email explaining that because he is
a white male, he will not have the same privileges as other non-white and female
restaurant owners: “As outlined by Congress, the SBA will focus their reviews on the
priority applications that have been submitted. Applicants who have submitted a
non-priority application will find their applications remain in a Review status while
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the priority applications are processed during the first 21 days. Applicants in this
status should not anticipate any outreach from the SBA during this period.”
24.
On May 7, 2021, SBA sent Vitolo an email stating that the SBA received
186,200 applications in the first two days. The email goes on to explain that 46,400
applications were from women and 30,800 applications were from minority
restaurant owners.
25.
Plaintiffs are harmed in multiple ways. First, they have been pushed to
the back of the line, regardless of when they applied, for a limited fund that may run
out before their application is processed. Second, even if the fund does not run out,
Plaintiffs are harmed by being treated differently because of their race and gender
during the application process for a grant under the Restaurant Revitalization Fund
program.
26.
Unless Defendant is immediately enjoined, Plaintiffs may never be able
to recover from the Restaurant Revitalization Fund program if the funds run out
before the application is processed.
CAUSE OF ACTION
EQUAL PROTECTION VIOLATION

27.
Plaintiffs reallege and incorporate by reference the allegations set forth
above as if fully set forth herein.
28.
The Constitution forbids “discrimination by the general government . . .
against any citizen because of his race.” Gibson v. State of Mississippi, 162 U.S. 565,
591 (1896).
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29.
Gender discrimination is also unconstitutional. Courts “carefully
inspect[ ] official action that closes a door or denies opportunity to women (or to men).”
United States v. Virginia, 518 U.S. 515, 532 (1996).
30.
“The liberty protected by the Fifth Amendment’s Due Process Clause
contains within it the prohibition against denying to any person the equal protection
of the laws.” United States v. Windsor, 570 U.S. 744, 774 (2013).
31.
“[A]ll racial classifications imposed by government must be analyzed by
a reviewing court under strict scrutiny.” Johnson v. California, 543 U.S. 499, 505
(2005) (citation omitted). “Under strict scrutiny, the government has the burden of
proving that racial classifications are narrowly tailored measures that further
compelling governmental interests.” Id. (citation omitted).
32.
When gender discrimination is employed, the burden “rests entirely” on
the government to offer an “exceedingly persuasive” justification and to prove that
“the discriminatory means employed are substantially related to the achievement of
those objectives.” Virginia, 518 U.S. at 532 (citations omitted).
33.
Section 5003 of ARPA imposes racial classifications and grants a
benefit—priority consideration—based on those racial classifications.
34.
Section 5003 of ARPA likewise uses gender discrimination as a method
of distributing funds through a gender-based priority consideration.
35.
Defendant is responsible for interpreting and implementing Section
5003 of ARPA.
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36.
Although Plaintiffs suffered from the COVID-19 pandemic and are
otherwise eligible for a grant under the Restaurant Revitalization Fund, Plaintiffs
are ineligible for priority consideration and instead are pushed to the back of the line,
because Vitolo is a white male.
37.
Plaintiffs applied for a grant under Section 5003 of ARPA and were
denied priority consideration because Vitolo is a white male.
38.
The
racial
classifications
under
Section
5003
of ARPA
are
unconstitutional because they violate the Equal Protection and Due Process
guarantees in the United States Constitution. These racial classifications under
Section 5003 of ARPA are not narrowly tailored to serve a compelling government
interest.
39.
The gender-based classification under Section 5003 of ARPA is
unconstitutional because it violates the Equal Protection and Due Process guarantees
in the United States Constitution. This gender-based classification is not supported
by an exceedingly persuasive objective, and the discriminatory means employed are
not substantially related to the achievement of any such objective.
RELIEF REQUESTED

Plaintiffs respectfully request that this Court:
A.
Immediately enter a temporary restraining order prohibiting Defendant
from paying out any grants from the Restaurant Revitalization Fund, unless
Defendant begins processing applications and paying grants in the order that the
applications were received, without regard to the race or gender of the applicant.
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B.
Enter a temporary injunction requiring Defendant to process
applications and pay grants, including Plaintiffs’ application, in the order that they
were received, regardless of the applicant’s race or gender.
C.
Enter a declaratory judgment that the race- and gender-based
classifications under Section 5003 of ARPA are unconstitutional.
D.
Enter an order permanently enjoining Defendant from applying race-
and
gender-based
classifications
when
determining
eligibility
or
priority
consideration for grants under Section 5003 of ARPA.

E.
Grant Plaintiffs such other and further relief as the court deems
appropriate.

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Dated: May 11, 2021

WISCONSIN INSTITUTE FOR LAW & LIBERTY
Rick Esenberg (pro hac vice pending)
rick@will-law.org
/s/ Daniel P. Lennington
Daniel P. Lennington (pro hac vice pending)
dan@will-law.org
Luke N. Berg (pro hac vice pending)
luke@will-law.org
330 E. Kilbourn Ave., Suite 725
Milwaukee, WI 53202
Phone: (414) 727-9455
Fax: (414)727-6385

/s/ Matthew J. McClanahan
Matthew J. McClanahan (BPR #036867)
McClanahan & Winston, PC
PO Box 51907
Knoxville, Tennessee 37950
Telephone: (865) 347-3921
Fax: (865) 444-0786
Email: matt@tennadvocate.com

Attorneys for Plaintiffs

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Complaint — Vitolo v. Guzman

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