Memorandum Opinion Denying PI — Vitolo v. Guzman (E.D. Tenn.)

Record facts

U.S. District Court for the Eastern District of Tennessee · No. 3:21-cv-00176-TRM-DCP · Doc. 32 · 2021-05-25 · Docket on CourtListener

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UNITED STATES DISTRICT COURT 
 
EASTERN DISTRICT OF TENNESSEE 
 
AT KNOXVILLE 
 
ANTONIO VITOLO and JAKE’S BAR 
AND GRILL, LLC, 
 
Plaintiffs, 
 
v. 
 
ISABELLA CASILLAS GUZMAN 
 
Defendant. 
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Case No. 3:21-cv-176 
 
Judge Travis R. McDonough 
 
Magistrate Judge Debra C. Poplin 
 
 
 
MEMORANDUM OPINION 
 
 
Before the Court is a motion for preliminary injunction filed by Plaintiffs Antonio Vitolo 
and Jake’s Bar and Grill, LLC (Doc. 11).  For the following reasons, the Court DENIES 
Plaintiffs’ motion.  
I. 
BACKGROUND 
On May 12, 2021,1 Plaintiffs filed a complaint asserting that the Restaurant Revitalization 
Fund (the “RRF”), created by § 5003 of the American Rescue Plan Act of 2021 (the “ARPA”), 
includes a twenty-one-day priority period that violates the United States Constitution’s equal 
protection clause and due process clause because it impermissibly grants benefits and priority 
 
1 On the same day, Plaintiffs filed a motion for temporary restraining order (Doc. 12) and a 
motion for preliminary injunction (Doc. 11).  Plaintiffs also filed a single memorandum in 
support of their motion for temporary restraining order and preliminary injunction.  (Doc. 12-2.) 
On May 17, 2021, the Court entered an order denying Plaintiffs’ motion for temporary 
restraining order (Doc. 20), and, on May 19, 2021, the Court entered a memorandum opinion 
explaining its reasoning for denying Plaintiffs’ motion for temporary restraining order (Doc. 24).  
The facts underlying Plaintiffs’ motions for injunctive relief are more fully set forth in said 
memorandum opinion (Doc. 24) and are incorporated by reference herein. 
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consideration based on race and gender classifications.  (Doc. 1, at 8–9.)  Plaintiffs requested that 
the Court enter both a temporary restraining order prohibiting the Small Business Administration 
(“SBA”) from paying out grants from the RRF unless it processes applications in the order they 
were received (without regard to the race or gender of the applicant), and a preliminary 
injunction requiring the SBA to process applications and pay grants in the order received 
regardless of race or gender, among other forms of relief.  (Id. at 9–10.)   
The Court denied Plaintiffs’ motion for temporary restraining order on May 17, 2021.  
(Docs. 20, 24.)  On May 20, 2021, Plaintiffs notified the Court that they wanted to proceed with 
their motion for preliminary injunction, but proposed that “this Court give Defendant a short 
period to file any supplemental briefing, a short period for Plaintiffs to file a reply, and then rule 
on the preliminary injunction motion on the briefs, without another hearing.”  (Doc. 28, at 1.)  
Defendant filed a response to Plaintiffs’ motion for preliminary injunction on May 21, 2021 
(Doc. 30), and Plaintiffs moved for leave to file a reply in support of their motion for preliminary 
injunction (Doc. 31).  Plaintiffs’ motion for leave to file a reply is GRANTED, and Plaintiffs’ 
motion for preliminary injunction is ripe for review.   
II. 
ANALYSIS 
A. 
Standard of Law for Preliminary Injunction 
“In determining whether to issue a preliminary injunction, the Court must examine four 
factors:  (1) whether the movant has shown a strong likelihood of success on the merits; (2) 
whether the movant will suffer irreparable harm if the injunction is not issued; (3) whether the 
issuance of the injunction would cause substantial harm to others; and (4) whether the public 
interest would be served by issuing the injunction.” Overstreet v. Lexington-Fayette Urban Cnty. 
Gov’t, 305 F.3d 566, 573 (6th Cir. 2002) (citing Leary v. Daeschner, 228 F.3d 729, 736 (6th Cir. 
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2000)).  These factors are identical to those considered by the Court in denying Plaintiffs’ motion 
for temporary restraining order.  (Doc. 24, at 8.) 
B. 
Likelihood of Success on the Merits 
i. 
Article III Standing 
In addition to the arguments previously advanced in opposing Plaintiffs’ motion for a 
temporary restraining order, the Government now argues that Plaintiffs are unlikely to succeed 
on the merits of their claims because they have not established standing as it relates to their race-
based equal-protection claim.  (Doc. 30, at 3–6.)   
The case-or-controversy requirement of Article III, Section 2 requires that a plaintiff have 
standing to sue.  Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992).  To have standing, a 
plaintiff must have “(1) suffered an injury in fact, (2) that is fairly traceable to the challenged 
conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial decision.”  
Daunt v. Benson, 956 F.3d 396, 417 (6th Cir. 2020) (citing Spokeo, Inc. v. Robins, 136 S. Ct. 
1540, 1547 (2016)).  An injury, for standing purposes, means the “invasion of a legally protected 
interest which is (a) concrete and particularized, and (b) ‘actual or imminent.’”  Id. (citing Lujan, 
504 U.S. at 560).  “For an injury to be ‘particularized,’ it ‘must affect the plaintiff in a personal 
and individual way.’”  Spokeo, 136 S. Ct. at 1548.  A “concrete” injury in fact does not have to 
be tangible, but it must be “‘real,’ and not ‘abstract.’”  Id.  The plaintiff bears the burden of 
showing that he has standing.  Galaria, 663 F. App’x. at 387 (citing Summers v. Earth Island 
Institute, 555 U.S. 488, 493 (2009)).  When a case is at the pleading stage, the plaintiff must 
clearly allege facts demonstrating each element of standing.  See Spokeo, 136 S. Ct. at 1547 
(quoting Warth v. Seldin, 422 U.S. 490, 518 (1975)).  
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Plaintiffs allege that they have suffered an injury in fact “caused by the race and gender 
preferences in Section 5003 of the [ARPA].”  (Doc. 31-1, at 4.)  According to the complaint, 
Plaintiffs applied for funds from the RRF on May 3, 2021, but Plaintiffs’ application was 
designated as non-priority.  (Doc. 1, at 6–7.)  Plaintiffs contend that because they are “ineligible 
for the race-based and gender-based priority period” created by the SBA’s regulations and 
ARPA § 5003(c), this “amounts to a de facto denial of a government benefit.”  (Doc. 34-1, at 4, 
6.)  The Government argues, however, that Plaintiff has not alleged an injury traceable to the 
challenged provisions because “regardless of the race-conscious presumption at issue in this 
case, Plaintiff has not alleged that he is otherwise socially disadvantaged” as required to qualify 
for the priority period.  (Doc. 30, at 4.) 
The Sixth Circuit has stated: 
When plaintiffs allege a violation of the Equal Protection Clause in the context of 
a government program, courts must evaluate whether the claimed injury is one 
that invades a legally protected interest.  If the plaintiffs allege that a racial 
preference cost them some benefit under a government program, those plaintiffs 
may have alleged an injury in fact.  But if those same plaintiffs cannot also allege 
and show that “under a race-neutral policy” they would have received the benefit, 
those plaintiffs have not alleged an injury in fact because they have not alleged an 
invasion of some interest that the law protects.  Those plaintiffs lack Article III 
standing.  If, however, the plaintiffs allege some kind of on-going constitutional 
violation and seek forward-looking relief to level the playing field, then the 
plaintiffs need only show that the racial preference hinders their ability to 
“compete on an equal footing.” That plaintiffs would not have received the 
benefit even absent the preference is irrelevant to an Equal Protection analysis. 
 
Aiken v. Hackett, 281 F.3d 516, 519 (6th Cir. 2002) (citations omitted).   
Plaintiffs allege that the race-conscious language of both the SBA presumption and the 
definition of “socially disadvantaged” as applied in ARPA § 5003(c)(3)(a) denies them equal 
protection under the law, as the processing of Plaintiffs’ RRF application is being delayed on the 
basis of race.  This is an allegedly ongoing constitutional violation, as well as an invasion of a 
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legally protected interest that is particularized to Plaintiffs.  Plaintiffs therefore “need not allege 
that [they] would have obtained the benefit” of otherwise qualifying for the priority period or 
receiving funds from the RRF absent the challenged language.  See Ne. Fla. Chapter, Associated 
Gen. Contractors of Am. v. Jacksonville, 508 U.S. 656, 666 (1993).  If the court struck down the 
race-based presumption of the SBA regulations or the race-conscious portions of the definition 
of “socially disadvantaged,” at the very least the playing field in qualifying for the priority period 
would be “leveled” in that the race of the applicant would not factor into the order in which 
applications are processed by SBA.  This is sufficient to confer standing. 
Further, Defendant does not argue that Plaintiffs have not established standing for their 
gender-based equal-protection claim, and the Court finds that standing exists.  Plaintiffs are 
allegedly injured because Plaintiff Vitolo is excluded from the priority period on the basis of his 
gender.  This exclusion is caused by the fact that women, but not men, qualify for the priority 
period per the language of ARPA § 5003(c) and are therefore considered for eligibility for RRF 
funds before men.  Finally, were the Court to strike the gender-based limitation on the priority 
period, Plaintiff Vitolo would no longer be excluded from applying for the priority period on the 
basis that he is male.  Accordingly, the Court finds that Plaintiffs have standing to bring this 
action and seek injunctive relief. 
ii. 
Supplemental Findings from the Congressional Record 
The Court’s prior denial of Plaintiffs’ motion for a TRO addresses the same factors that 
control the preliminary-injunction analysis, and the Court incorporates that reasoning by 
reference.  (See generally Doc. 24.)  Plaintiffs did not wish to hold a preliminary-injunction 
hearing (see Doc. 28, at 1) and have not submitted additional evidence since the Court’s denial of 
their motion for a TRO.  Defendant submitted additional materials from the Congressional record 
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that bear upon whether a compelling interest justifies the race-based priority period at issue and 
an important interest justifies the gender-based priority period at issue.  (Doc. 30, at 6–9.) 
Defendant’s additional materials from the Congressional record strengthen the Court’s 
prior conclusion that Plaintiffs are unlikely to succeed on the merits.  For example, a 
Congressional committee received the following testimony, which linked historical race and 
gender discrimination to the early failures of the Paycheck Protection Program (the “PPP”): 
As noted by my fellow witnesses, closed financial networks, longstanding 
financial institutional biases, and underserved markets work against the efforts of 
women and minority entrepreneurs who need capital to start up, operate, and grow 
their businesses. While the bipartisan CARES Act got money out the door quickly 
[through the PPP] and helped many small businesses, the distribution channels of 
the first tranche of the funding underscored how the traditional financial system 
leaves many small businesses behind, particularly women- and minority-owned 
businesses. 
Access Denied: Challenges for Women- and Minority-Owned Businesses Accessing Capital and 
Financial Services During the Pandemic, at 9 (July 9, 2020), available at 
https://www.govinfo.gov/content/pkg/CHRG-116hhrg43195/pdf/CHRG-116hhrg43195.pdf 
(testimony of Karen Kerrigan, president of the Small Business & Entrepreneurship Council); see 
also id. at 78 (Kerrigan’s written statement noting that “[m]inority and women-owned business 
owners who lack relationships with banks or other financial institutions participating in PPP 
lacked early access to the program”); id. at 2 (Chairwoman Beatty observing that historical lack 
of access to capital among minority- and women-owned businesses contributed to significantly 
higher closure rates among those businesses during the COVID-19 pandemic, and that the PPP 
disproportionately failed to reach those businesses); How Invidious Discrimination Works and 
Hurts: An Examination of Lending Discrimination and Its Long-Term Economic Impacts on 
Borrowers of Color, Congressional Research Service (Feb. 24, 2021), available at 
https://www.congress.gov/117/meeting/house/111236/documents/HHRG-117-BA09-20210224-
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SD002-U1.pdf (explaining that lending discrimination against people of color continues to the 
present and that contemporary wealth distribution is linked to the intergenerational impact of 
historical disparities in credit access).   
 
Plaintiffs have not attempted to rebut this evidence.  As with the TRO, then, the Court 
cannot conclude that Plaintiffs are likely to succeed on the merits.   
C. 
Other Preliminary Injunction Factors 
The points raised in the parties’ briefing on Plaintiff’s motion for preliminary injunction 
have not impacted the Court’s analysis with respect to the remaining preliminary injunction 
factors.  Accordingly, for the reasons stated in the Court’s memorandum opinion denying 
Plaintiff’s motion for a temporary restraining order (Doc. 24), a preliminary injunction is not 
warranted. 
III. 
CONCLUSION 
For the reasons stated herein, Plaintiffs’ motion for preliminary injunction (Doc. 11) is 
DENIED.   
SO ORDERED.  
 
 
 
 
 
 
 
 
 
/s/ Travis R. McDonough 
 
 
 
 
 
 
 
 
 
TRAVIS R. MCDONOUGH 
 
 
 
 
 
 
UNITED STATES DISTRICT JUDGE 
 
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