Plaintiffs' Reply in Support of Second Emergency Motion for TRO — Vitolo v. Guzman

Record facts

UNITED STATES DISTRICT COURT · No. 3:21-cv-00176-TRM-DCP · Doc. 43 · 2021-06-07 · Docket on CourtListener

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IN THE UNITED STATES DISTRICT COURT 
FOR THE EASTERN DISTRICT OF TENNESSEE 
 
 
ANTONIO VITOLO, JAKE’S BAR AND GRILL,  
LLC, BYRON SACKETT, HOMESTEADS  
MANAGEMENT, LLC, KEVIN L. PEARSON,  
S & K SOUP CO., ALFRED CASTIGLIONI,  
THE 579 LLC, CHARDONNAYS INC., ZINFANDEL  
LLC, DENIS FLANAGAN, 3KAD LLC 
 
 
Plaintiffs, 
 
v. 
 
 
 
 
 
 
 
 
Case No. 3:21-cv-176 
 
 
ISABELLA CASILLAS GUZMAN,  
 
Defendant. 
 
PLAINTIFFS’ REPLY IN SUPPORT OF SECOND  
EMERGENCY MOTION FOR A TEMPORARY RESTRAINING  
ORDER AND PRELIMINARY INJUNCTION 
 
In their response to Plaintiffs’ second motion for a temporary restraining order 
and preliminary injunction, Defendant now asserts, for the very first time, that SBA 
has stopped “processing any priority applications” and “will only resume processing 
these applications once it completes processing for all previously filed non-priority 
applications, and only then if the RRF is not first exhausted.” Dkt. 41-1, ¶ 15. If that 
is true and SBA follows through, Plaintiffs acknowledge that this would be similar to 
the relief Plaintiffs have sought since this case was first filed. See Dkt. 11. An 
injunction is still warranted, however, for two reasons. First, to ensure that SBA does 
follow through—as Defendant’s filings reveal, SBA has been changing its process day-
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by-day throughout this litigation. Second, the injunction Plaintiffs request, which is 
identical to the injunction the Sixth Circuit ordered, will avoid arbitrariness in which 
applicants get paid based on how long they take to process, unlike SBA’s process.  
In a letter and declaration SBA filed with the Sixth Circuit on May 26—after 
the priority period had ended—SBA did not claim at that time that it had stopped 
processing unfinished priority applications. See Dkt. 16, No. 21-5517 (6th Cir. May 
26, 2021). Instead, SBA merely asserted that it stopped considering priority status 
“when beginning to process an otherwise eligible claim.” Id. ¶ 16. Plaintiffs 
emphasized—and the Sixth Circuit agreed—that this still gave priority applicants a 
“processing head start … on the basis of race and sex.” Vitolo v. Guzman, No. 21-5517, 
2021 WL 2172181, at *3 (6th Cir. May 27, 2021).  
Then, on May 28, after the Sixth Circuit’s decision, Defendant submitted 
another letter and declaration, asserting that it had “reordered its processing queue 
based on the time that applicants submitted their applications,” and therefore, SBA 
argued, it was no longer “processing applicants solely based on priority status.” Dkt. 
23, No. 21-5517 (6th Cir. May 28, 2021). But Defendant continued to represent that 
SBA was still actively and concurrently “processing all pending applications—both 
priority and non-priority.” Id. ¶ 6.1  
                                            
1 The quoted sentence goes on to say “in the order in which they were filed.” However, the very 
next paragraph explained that SBA’s review process is concurrent, such that “RRF applications will 
not necessarily be approved and awarded in the order in which they are filed.” And SBA still made no 
representation that it had halted processing priority applications until earlier-filed non-priority 
applications were complete.  
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Only after Plaintiffs filed a new injunction motion did SBA first represent that 
it has completely halted processing any priority applications until all earlier-filed 
non-priority applications have been fully processed. Notably, this most recent 
declaration does not assert that SBA halted processing priority applications back on 
May 24, when the priority period ended; but instead carefully says only that it “is not 
currently processing any priority applications”—a further indication that SBA’s 
process has been changing daily in response to Plaintiffs’ arguments in this case. Dkt. 
41-1, ¶ 15.  
Given that history, and to ensure that SBA does not change its process again, 
this Court should still enter the injunction Plaintiffs requested. See Friends of the 
Earth, Inc. v. Laidlaw Env’t Servs. (TOC), Inc., 528 U.S. 167, 190, 120 S. Ct. 693, 709, 
145 L. Ed. 2d 610 (2000) (“[A] defendant claiming that its voluntary compliance moots 
a case bears the formidable burden of showing that it is absolutely clear the allegedly 
wrongful behavior could not reasonably be expected to recur.”). The injunction 
Plaintiffs request is worded exactly as the injunction the Sixth Circuit ordered; and 
it requires something very similar to what SBA now says it is doing, so SBA should 
have no reason to oppose it.  
Defendant’s only objection to the injunction is that requiring SBA to fund 
applications in the order they were filed, without regard to processing time, would 
“gum up the works” because a “single deficient or particularly complex application” 
would prevent other, simpler applications from receiving funds. Dkt. 41:9. But SBA 
can simply set aside funds for any such applications while it deals with any 
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complexities, allowing it to continue with all other applications. Indeed, SBA already 
did exactly that with respect to Plaintiff Jake’s Bar’s application. See Dkt. 13, ¶ 6, 
No. 21-5517 (6th Cir. May 28, 2021) (“SBA is reserving authorization for one RRF 
grant application in the amount of $104,590.20 for Jake’s Bar and Grill, LLC.”). There 
is no reason SBA cannot do the same if Plaintiffs’ or other applicants’ applications 
have complexities that cause delays in processing.  
Furthermore, allowing funding to depend on how long the application takes to 
process creates arbitrariness in who ultimately gets paid—or worse, an opportunity 
for SBA to affect who gets paid by how quickly they process applications. The Sixth 
Circuit’s injunction avoided this by requiring SBA to fund Plaintiff Jake’s Bar’s 
application before any later-filed applications, “without regard to processing time.” 
Vitolo, 2021 WL 2172181 at *9 (emphasis added). Plaintiffs are simply asking for the 
exact remedy the Sixth Circuit already found was warranted.  
Even if this Court concludes that an injunction is no longer warranted, it 
should, at the very least, order Defendant to set aside the funds for Amended 
Plaintiffs’ applications, as SBA did for Jake’s Bar’s. Plaintiffs made this request in 
their principal brief, and Defendant did not make any statement or argument in 
opposition. This Court should also require Defendant to notify the Court and 
Plaintiffs before SBA resumes processing any priority applications, so that Plaintiffs 
and this Court can confirm that their applications have been fully processed 
(assuming they were filed earlier) before any later-filed, but still-outstanding, priority 
applications.  
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Dated: June 7, 2021 
WISCONSIN INSTITUTE FOR LAW & LIBERTY 
Rick Esenberg 
rick@will-law.org 
Daniel P. Lennington (pro hac vice) 
dan@will-law.org 
/s/ Luke N. Berg 
Luke N. Berg (pro hac vice) 
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 
 
Case 3:21-cv-00176-TRM-DCP   Document 43   Filed 06/07/21   Page 5 of 5   PageID #: 355

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