Memorandum Opinion Denying Additional Plaintiffs' TRO — Vitolo v. Guzman (E.D. Tenn.)

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U.S. District Court for the Eastern District of Tennessee · No. 3:21-cv-00176-TRM-DCP · Doc. 44 · 2021-06-10 · 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, et al., 
 
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 temporary restraining order and preliminary injunction 
filed by Plaintiffs Byron Sackett, Homesteads Management, LLC, Kevin L. Pearson, S & K 
Soup Co., Alfred Castiglioni, The 579 LLC, Chardonnays Inc., Zinfandel LLC, Denis Flanagan, 
and 3KAD LLC (collectively, the “Additional Plaintiffs”).  (Doc. 39.)  For the following reasons, 
the Court DENIES the Additional Plaintiffs’ motion.  
I. 
BACKGROUND 
As part of the American Rescue Plan Act of 2021 (the “ARPA”), Congress appropriated 
$28,600,000,000 to a Restaurant Revitalization Fund (the “RRF”) and tasked the Administrator 
of the Small Business Administration (“SBA”) with disbursing funds to restaurants and other 
eligible entities that suffered COVID-19 pandemic-related revenue losses.  The ARPA directs 
the Administrator to “award grants to eligible entities in the order in which applications are 
received,” except that “during the initial 21-day period in which the Administrator awards 
grants,” the Administrator “shall prioritize” awarding grants to: (1) business concerns owned and 
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controlled by women; (2) business concerns owned and controlled by veterans; and (3) socially 
and economically disadvantaged business concerns. 
On May 12, 2021,1 Plaintiffs Antonio Vitolo and Jake’s Bar and Grill (the “Original 
Plaintiffs”) filed a complaint asserting that the ARPA’s twenty-one-day priority period violates 
the United States Constitution’s equal protection clause and due process clause because it 
impermissibly grants benefits and priority consideration based on race and gender classifications.  
(Doc. 1, at 8–9.)  The Original Plaintiffs requested that the Court enter both a temporary 
restraining order prohibiting the Small Business Administration 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 the Original Plaintiffs’ motion for temporary restraining order on May 
17, 2021.  (Docs. 20, 24.)  The Court subsequently denied the Original Plaintiffs’ motions for an 
injunction pending appeal of the temporary restraining order (Doc. 27) and for a preliminary 
injunction (Doc. 32.)  The Original Plaintiffs appealed the Court’s orders denying a temporary 
restraining order (Doc. 25) and preliminary injunction (Doc. 33) to the United States Court of 
Appeals for the Sixth Circuit.  On May 27, 2021, the Sixth Circuit granted the Original 
Plaintiffs’ motion for an injunction pending appeal, finding that the Original Plaintiffs were 
likely to succeed on the merits of their case.  (Doc. 37.)  The injunction required the Government 
 
1 On the same day, the Original Plaintiffs filed a motion for temporary restraining order (Doc. 
12) and a motion for preliminary injunction (Doc. 11).  The Original Plaintiffs also filed a single 
memorandum in support of their motions for temporary restraining order and preliminary 
injunction.  (Doc. 12-2.) 
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to “fund the [Original Plaintiffs’] grant application, if approved, before all later-filed 
applications, without regard to processing time or the applicants’ race or sex.”  (Id. at 17.)   
On June 1, 2021, the Original Plaintiffs amended their complaint to add the Additional 
Plaintiffs.  (Doc. 34.)  Plaintiffs Sackett, Pearson, Castiglioni, and Flanagan allege that they all 
applied for grants from the RRF on May 3, 2021 and were “denied a priority preference based on 
[their] race and gender.”  (Id. at 3; see also Doc. 39-1, at 2; Doc. 39-2; Doc. 39-3; Doc 39-4.)  
The Additional Plaintiffs then filed a motion for a temporary restraining order and preliminary 
injunction on June 2, 2021  (Doc. 39.) 
In responding to the Additional Plaintiffs’ motion, the Government submitted the 
declaration of John A. Miller, Deputy Associate Administrator of Capital Access at SBA.  (Doc. 
41-1.)  In his declaration, Miller declared, under the penalty of perjury, that SBA:  (1)  has 
already commenced processing non-priority applications, including the Additional Plaintiffs’ 
applications, in a sequential order based on its ordinary review practices; (2) is not currently 
processing any priority applications and will only resume processing for priority applications 
once it completes processing for all previously filed non-priority applications, and only then if 
the RRF is not first exhausted; and (3) has already initiated processing and consideration for all 
of the Additional Plaintiffs’ applications.  (Id. at 3–5.) 
II. 
ANALYSIS 
The Additional Plaintiffs seek an injunction identical to the one that the Sixth Circuit 
entered for the Original Plaintiffs, “ordering [the Government] to pay Additional Plaintiffs’ grant 
applications, if approved, before all later-filed applications, without regard to processing time or 
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the applicant’s race or sex.”2  (Doc. 39, at 1.)  In opposing the Additional Plaintiffs’ motion for 
temporary restraining order and preliminary injunction, the Government argues that the 
Additional Plaintiffs’ claims are moot because the priority period has already expired, so there is 
no additional relief that the Court could afford the Additional Plaintiffs under SBA’s current 
processing procedures.  (Doc. 41, at 6–7.)  
“Article III, § 2 of the United States Constitution vests federal courts with jurisdiction to 
address ‘actual cases and controversies.’”  Thomas v. City of Memphis, No. 20-6118, 2021 U.S. 
App. LEXIS 12953, at *8 (6th Cir. Apr. 30, 2021) (citing Coal. for Gov’t Procurement v. Fed. 
Prison Indus., Inc., 365 F.3d 435, 458 (6th Cir. 2004) (citations omitted)).  Federal courts are 
prohibited from rendering decisions that “do not affect the rights of the litigants.”  Id. (citations 
omitted).  “A case becomes moot ‘when the issues presented are no longer live or parties lack a 
legally cognizable interest in the outcome.’”  Id. (citing Cleveland Branch, N.A.A.C.P. v. City of 
Parma, Ohio, 263 F.3d 513, 530 (6th Cir. 2001) (citations omitted)).  “The ‘heavy burden’ of 
demonstrating mootness falls on the party asserting it.”  Id. at *8–*9 (citing Friends of the Earth, 
Inc. v. Laidlaw Envt’l. Servs., 528 U.S. 167, 189 (2000)). 
“Voluntary cessation of [] alleged illegal conduct does not, as a general rule, moot a case 
and ‘deprive the tribunal of power to hear and determine the case.’  Voluntary cessation will only 
moot a case where there is ‘no reasonable expectation that the alleged violation will recur,’ and 
‘interim relief or events have completely and irrevocably eradicated the effects of the alleged 
violation.’”  Speech First, Inc. v. Schlissel, 939 F.3d 756, 767 (6th Cir. 2019) (citing Los Angeles 
 
2 This Court acknowledges that it is bound by the Sixth Circuit’s decision granting the Original 
Plaintiffs an injunction pending appeal, which found that the Original Plaintiffs were likely to 
succeed on the merits of their claim.  The Additional Plaintiffs are nearly identical to the 
Original Plaintiffs in that they are white male business owners who applied for relief from the 
RRF on May 3, 2021, and were denied priority status on the basis of their gender and race. 
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Cnty. v. Davis, 440 U.S. 625, 631 (1979) (quotation omitted)).  “[T]he burden in showing 
mootness is lower when it is the government that has voluntarily ceased its conduct,” because 
“‘cessation of [] allegedly illegal conduct by government officials has been treated with more 
solicitude by the courts than similar action by private parties’ and [] ‘[the Government’s] self-
correction provides a secure foundation for a dismissal based on mootness so long as it appears 
genuine.’”  Id. at 767 (quoting Bench Billboard Co. v. City of Cincinnati, 675 F.3d 974, 981 (6th 
Cir. 2012) (quotation omitted)). The Court “presume[s] that the same allegedly wrongful conduct 
by the government is unlikely to recur.”  Id. (citing Friends of the Earth, 528 U.S. at 189).  
However, determining whether the ceased action could reasonably be expected to recur “takes 
into account the totality of the circumstances surrounding the voluntary cessation, including the 
manner in which the cessation was executed.”  Id. at 768.  “If the discretion to effect the change 
lies with one agency or individual, or there are no formal processes required to effect the change, 
significantly more than the bare solicitude itself is necessary to show that the voluntary cessation 
moots the claim.”  Id. (citations omitted). 
A. 
The Additional Plaintiff’s Claims are Moot Because an Injunction Would 
Not Affect Their Rights. 
 
  The Additional Plaintiffs joined this lawsuit on June 1, 2021, a week after the twenty-
one-day statutory priority period expired.   Because the twenty-one-day priority period has 
expired, the Government is:  (1) processing non-priority applications, including the Additional 
Plaintiffs’ applications, in a sequential order based on its ordinary review practices; and (2) not 
currently processing any priority applications and will only resume processing priority 
applications once it completes processing all previously filed non-priority applications, and only 
then if the RRF is not first exhausted.   
 
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Accordingly, there is no need for an order enjoining the Government to fund the 
Additional Plaintiffs’ grant applications, “if approved, before all later-filed applications, without 
regard to processing time or the applicants’ race or sex.”  (See Doc. 37, at 17.)  SBA is already 
processing the Additional Plaintiffs’ applications without regard to race or sex, so an injunction 
would not “affect the rights of the litigants” because “the issues presented are no longer live.”  
Thomas, 2021 U.S. App. LEXIS 12953, at *8 (citations omitted).   
 
Further, because SBA is no longer processing any priority applications, there is no need 
for an injunction with respect to processing time.  In its order granting an injunction pending 
appeal, the Sixth Circuit was concerned about the “processing head start” that priority 
applications received compared to the Original Plaintiffs.  (Doc. 37, at 8.)  Specifically, the Sixth 
Circuit noted that: 
[T]he [RRF] program’s race and sex preferences did not end with the priority 
phase. That just marks when the Small Business Administration starts processing 
applications from non-priority restaurants. The agency says processing takes 
approximately 14 days.  So all of the “priority” applications that were received in 
the 21-day window are still being processed first. And no application is paid out 
before going through the 14-day processing window. So with these preferences in 
place, the fund may be depleted before the plaintiffs’ application has been 
processed. . . . Vitolo submitted his application on May 3. Restaurants that 
submitted “priority” applications on May 24 will likely receive their grants before 
the agency has time to finish processing Vitolo’s application. . . . Since it 
normally takes 14 days to process an application, this means that the agency 
should be almost through priority applications received between May 3 and May 
11. But that leaves all the priority applications received between May 12 and May 
24, which have gotten a processing head start relative to Vitolo’s application. 
There is a real risk that the funds will run out, unless the agency processes 
Vitolo’s application before the May 12 to May 24 batch.  
 
(Id. (citations omitted).)  Plaintiffs argue that entering an injunction identical to that ordered by 
the Sixth Circuit “will avoid arbitrariness in which applicants get paid based on how long they 
take time to process.”  (Doc. 43, at 2.)  However, the case at bar does not challenge the ordinary 
internal review practices of SBA in processing RRF applications, but rather the SBA’s use of a 
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race- and gender-based priority period that gave priority applicants a “head start” on having their 
application processed.  The SBA is no longer processing any priority applications.  The Court, 
therefore, declines to enjoin the Government to require that the Additional Plaintiffs’ 
applications be approved without respect to processing time when processing time is no longer 
affected by the race- or gender-based priority period challenged in this suit. 
B. The Government Has Clearly Shown that the Allegedly Wrongful Behavior 
Cannot Reasonably Be Expected to Recur. 
 
SBA Deputy Associate Administrator Miller has sworn under penalty of perjury that the 
Additional Plaintiffs’ applications are being processed sequentially without regard to race or 
gender, and that no additional priority applications will be processed by SBA unless and until all 
previously-filed non-priority applications, including the Additional Plaintiffs’ applications, have 
been processed.  Although formal legislative processes are not required to change the SBA’s 
internal application-review procedures, the Court considers the totality of the circumstances, 
including the Government’s self-corrections throughout this case, and determines that there is a 
secure foundation for a dismissal based on mootness because the Government’s cessation 
appears genuine and has completely and irrevocably eradicated the effects of the alleged 
Constitutional violation against the Additional Plaintiffs.  Therefore, the Court finds that it is 
clear that the allegedly wrongful behavior harming the Additional Plaintiffs cannot reasonably be 
expected to recur, and therefore the Additional Plaintiffs’ claims are moot. 
However, the Government is ORDERED to file a notice with the Court as soon as 
possible if and/or when:  (1) the Additional Plaintiffs’ applications have been funded, and (2) 
SBA decides to resume processing of priority applications, before SBA begins to process said 
priority applications. 
   
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III. 
CONCLUSION 
For the reasons stated herein, the Additional Plaintiffs’ motion for temporary restraining 
order and preliminary injunction (Doc. 39) is DENIED.  The Government is ORDERED to file 
a notice with the Court as soon as possible if and/or when:  (1) the Additional Plaintiffs’ 
applications have been funded, and (2) SBA decides to resume processing of priority 
applications. 
SO ORDERED.  
 
 
 
 
 
 
 
 
 
/s/ Travis R. McDonough 
 
 
 
 
 
 
 
 
 
TRAVIS R. MCDONOUGH 
 
 
 
 
 
 
UNITED STATES DISTRICT JUDGE 
 
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