Camelot Banquet Rooms, Inc. v. U.S. Small Business Administration

Ct. of Appeals granted defendants-federal officials’ motion to stay Dist. Ct.’s order that enjoined defendants from excluding plaintiffs-businesses that offered adult entertainment in form of nude or nearly nude dancing from second round of Paycheck Protection Program (Program), even though Congress excluded plaintiffs’ businesses and other categories of businesses from said Program. Ct. of Appeals found that defendants satisfied standards for obtaining stay of Dist. Ct.’s injunction pending appeal, where plaintiffs are unlikely able to show that denying them subsidized loans under Program violated Constitution. Ct. of Appeals further doubted plaintiffs’ claim that exclusion from Program violated their free speech, First Amendment rights, where Ct. observed that Congress’ exclusion of plaintiffs’ businesses from Program was not attempt to regulate or suppress plaintiffs’ adult entertainment businesses, but rather was choice not to subsidize them. Moreover, selective categorical exclusions from government subsidies do not offend First Amendment in absence of viewpoint or invidious discrimination. Also, defendant’s rationale for exclusion, i.e., to not subsidize deleterious secondary effects of sex-oriented businesses, satisfied rational-relation test and could provide rational basis for Congress to choose not to subsidize them.