The three business owners that sued the U.S. Small Business Administration on the grounds of discrimination for the Restaurant Revitalization Funds 21-day priority period of women and minority-owned businesses have received in total nearly $1 million in Restaurant Revitalization Fund grants, The New York Times reported. In a similar lawsuit filed by Eric Nyman, owner of the Penn Hotel Sports & Raw Bar and Janice and Jason Smith, owners of the Lost Cajun in Keller, Texas, Judge Reed OConnor ruled on May 28 that the SBA must dole out grants in accordance with a race-neutral, sex-neutral first come, first served policy. The Lost Cajun was approved for an award on May 29, and though the Penn Hotel Sports & Raw Bars case was under review for slightly longer (since the restaurant sought more than $300,000), both restaurants received grants on June 1. Mostly law professors | Sometimes contrarian | Often libertarian | Always independent, Eugene Volokh The decision overturned a Tennessee federal judge's original ruling that declined a temporary restraining request from Antonio Vitolo, the owner of Jake's Bar and Grill LLC in Harriman, Tenn. Vitolo applied to receive federal relief from the $28.6 billion Restaurant Revitalization Fund that was created as part of the American Rescue Plan Act. The SBA previously dropped prioritization of women and minority-owned businesses and rescinded payments promised to almost 3,000 restaurants following these three lawsuits, 2023 Informa USA, Inc., All rights reserved, The Penn Hotel Sports and Raw Bar / Facebook, Denny's raises over $1.2 million to fight childhood hunger in 12th annual No Kid Hungry fundraiser, Bojangles names Tom Boland as new chief marketing officer, Baskin-Robbins rolls out chicken-and-waffle flavored ice cream, How Jersey Mike's is becoming 'America's sandwich shop', Nations Restaurant News launches new CREATE Roadshow event series, San Diegos Trust Restaurant Group drives retention, innovation with culture of yes, Tech Tracker: Restaurant QR codes are evolving and so should yours, Congress introduces a $60 billion replenishment of the Restaurant Revitalization Fund, SBA data confirms that the current Restaurant Revitalization Fund cant meet demand, Allowed HTML tags:

. In mid-June, the SBA told nearly 3,000 restaurants that they would not receive grant money they were promised because of the federal lawsuits. The Biden administration has vowed that it will continue to fight the Texas judges injunction in court, but it remains a mystery when Restaurant Revitalization Fund applicants who applied as socially disadvantaged individuals will be able to receive the funds they need. In the US District Court for the Northern District of Texas, Judge Reed OConnor, found that the defendants lack[ed] the industry-specific inquiry needed to support a compelling interest for a government-imposed racial classification. OConnor concluded that the evidence shows Greer will suffer irreparable harm because the RRF will likely run out of money before his restaurant could even be considered for relief. Under the Biden restaurant relief program, restaurants and bars can qualify for grants equal to their pandemic-related revenue losses, with a cap of $10 million per business and $5 million per location. The group is appealing the decision. Greer prepared an application on behalf of his restaurant, is eligible for a grant from the RRF, but has not applied because he is barred from consideration altogether during the program's first twenty-one days from May 3 to May 24, 2021. A Sixth Circuit court panel ruled on May 28 that the Small Business Administrations prioritization of Restaurant Revitalization Fund grants on the basis of race and sex for the first 21 days of the program is unconstitutional. This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. On Thursday, a federal appeals court issued an injunction against prioritizing COVID relief to restaurants based on their owners race and sex, finding that was unconstitutionally discriminatory. The plaintiffs argue that even though the distributed grants cannot be returned, the Sixth Circuits decision will have further-reaching impacts on COVID-19-related federal aid: The Sixth Circuit decision sets the precedent that racial and gender priorities such as the ones in American Rescue Plan Act are unconstitutional, Rick Esenberg, president and general counsel for the WisconsinInstitute for Law and Libertysaid in a statement. The matter came to light days after a group of senators and congressmen from both parties had introduced a bipartisan proposal to re-up the RRF with $60 billion. Assuming arguendo that the evidence is relevant, even the case cited by Defendants recognizes the well-established principle about the industry-specific inquiry required to effectuate Section 8(a)'s standards: "The fact that Section 8(a) is constitutional on its face, however, does not give the SBA or any other government agency carte blanche to apply it without reference to the limits of strict scrutiny. We were like, 'What? The programs administrator, the U.S. Small Business Administration, hadnt hidden that preference, just as it had acknowledged setting aside $5 billion of the funds $28.6 billion for very small restaurant companies. NEXT: ACLU-Connecticut Condemns "Racial Ridicule" Arrest for Online Post. This is ugly, pernicious, and toxic. We Indeed, SBA Administrator Isabel Guzman proudly cited the preferences as a way of helping members of the industry who were most in need. Some business owners have seen their approved grants rescinded due to lawsuits and lack of additional action from Congress. Roughly $2.7 billion have already been administered to 21,000 restaurants under the program, the AP noted. Given those developments, the SBA alerted 2,965 female and disadvantaged applicants via letter that they would not be getting their grants, even though theyd been informed earlier that theyd been approved and would soon be receiving the funds. Related: SBA data confirms that the current Restaurant Revitalization Fund cant meet demand. 3.1.2023 2:50 PM, 2022 Reason Foundation | The pause in disbursement prevents more than 2,900 of those businesses from receiving COVID relief funds allocated in the Restaurant Revitalization Fund, according to Reuters. The SBA argued that the government has a compelling interest in redressing the effects of past and present discrimination against minority-owned small businesses and that the prioritization scheme furthers that interest. The restaurant started as a pop-up during the pandemic and later turned into a brick-and-mortar space, closing for four months of renovations and reopening in May. There was no word from the Justice Department on whether they would appeal the ruling. As of June 30, the program had distributed all $28.6 billion to 105,000 restaurants, according to an email to business owners from the Small Business Administration (SBA). The lawsuit filed in the Eastern District of Tennessee is seeking a temporary restraining order and injunction to halt the administration from paying out any grants, unless it starts processing and paying out money in the order applications were received regardless of an applicant's gender or race. Federal judges in Texas and Tennessee agreed, and the SBA halted all payments to priority applicants. The SBA responded to a request for this article but has not yet shared the total number of businesses that have had their grants revoked. Heres What You Need to Know, Restaurant Group Joins Class-Action Suit Claiming Banks Mishandled PPP Applications, What the $900 Billion Stimulus Means for Restaurants: The Good, the Bad, and the Disappointing, With Restaurants in Crisis, the James Beard Foundation Has a New Mission, The American Restaurant Industry Is On Life Support, This Is the Only Way to Save the Restaurants You Love, Restaurant Relief Has Been Dropped from the Omnibus Spending Bill, As Coronavirus Shutters Restaurants Across the Country, a Swell of Support for Workers Rises Up, tool to quickly contact elected representatives. She's worried for the future of her restaurant, one of the only places in her area that serves locally sourced food at accessible prices. The suit alleges that the Smiths are being subjected to unconstitutional race and sex discrimination by the priorities that the statute commands for minority- and women-owned businesses, and that because more than half of the requests for Restaurant Revitalization Fund monies were made by business owners under those categories, its possible that the entire $28.6 billion that Congress allocated to the Restaurant Revitalization Fund will be depleted before the plaintiffs can even be considered for relief under the program.. Eugene Volokh is the Gary T. Schwartz Distinguished Professor of Law at UCLA. A US federal judge issued a preliminary ruling Tuesday in favor of a white male restaurateur who claimed he had been discriminated against in connection to his application for some of the nearly $29 billion in relief offered by the Biden administration. While the Court is mindful of statistical disparities and expert conclusions based on those disparities, "[d]efining these sorts of injuries as 'identified discrimination' would give governments license to create a patchwork of racial preferences based on statistical generalizations about any particular field of endeavor." On March 2, 1917, President Woodrow Wilson signed the Jones-Shafroth Act, granting Puerto Rico status a United State territory and granting all of its residents U.S. citizenship. In a recent Zoom call with independent restaurant operators, Erika Polmar, executive director of the Independent Restaurant Coalition (IRC) said that it's unlikely the measure will pass as a standalone bill, but instead might be added to a reconciliation package like the bipartisan infrastructure package, potentially in July. Nearly 3,000 restaurateurs approved to receive a Restaurant Revitalization Fund (RRF) grants have been alerted that they wont be getting the money because of | The funds, she said, will help her reinvest. The SBA argued that the decision would be moot as most of the Restaurant Revitalization Funds have already been distributed and the decision would not retroactively re-collect them. The 2,965 operators are all women, persons deemed socially and economically disadvantaged, or military veterans. . The judge wrote that Congress has gathered myriad evidence suggesting that small businesses owned by minorities have suffered more severely than other kinds of businesses during the COVID-19 pandemic, and that the Governments early attempts at general economic stimulus disproportionately failed to help those businesses directly because of historical discrimination patterns., Similarly, McDonough said Congress had before it evidence showing that woman-owned businesses suffered historical discrimination that exposed them to greater risks from an economic shock like COVID-19, and that they received less benefit from earlier federal COVID-19 relief programs.. Thursdays lawsuit from America First Legal (AFL) specifically takes issue with the Small Business Administrations (SBA) handling of the $28.6 billion in the Restaurant As part of the SBAs response to the rulings, restaurants party to the lawsuits received grants on June 1. According to the lawsuit, Janice Smith and Jason Smith applied for assistance from the Restaurant Revitalization Fund on May 5 and discovered that they were entitled to more than $187,000 in relief. Vang says the funds helped her to strategize. WILL argues in its lawsuit that Vitolo would be economically disadvantaged were it not for the racial classification in that definition, adding that the restaurant owner was harmed and treated differently because of their race and gender.. These business owners had their Restaurant Revitalization Fund grant applications approved as part of a program that prioritized traditionally underserved owners women, veterans, people of color, and other disadvantaged groups. The program aimed at helping restaurants hit hard by the pandemic has seen applications seeking twice as much aid as the program has funds for, signaling just how much strain COVID-19 has put on the industry. Related: The Restaurant Revitalization Fund application portal is closing on May 24, When the government promulgates race-based policies, it must operate with a scalpel, the majority opinion stated. The law Get browser notifications for breaking news, live events, and exclusive reporting. The restaurants that sued the SBA for discrimination received almost $1 million in Restaurant Revitalization Fund grants The SBA previously dropped prioritization of The flow ofSmall Business Administration funds has been halted forthousands of restaurantbusinesses owned by women, socially or economically disadvantaged individuals and veteransbecause of lawsuits filed by several white business owners. Lindsay Mescher, owner of Greenhouse Cafe in Lebanon, Ohio said she started to get nervous after eight or nine days passed with no bank deposit. Do not sell my personal infoPrivacy PolicyContact UsRSS, SBA stops Restaurant Revitalization Fund payments after courts rule they're discriminatory. Follow @SusanMariecooks on Twitter. According to the lawsuit, Janice Smith and Jason Smith applied for assistance from the Restaurant Revitalization Fund on May 5 and discovered that they were entitled The Wisconsin Institute for Law and Liberty filed suit against Small Business Administration head Isabella Guzman, accusing the agency of race and gender discrimination in the administration of the Restaurant Revitalization Fund, the program passed as part of the American Rescue Plan to provide relief to hard-hit restaurants and bars. The Restaurant Revitalization Fund has been depleted. "I'm going to try to restart my business because I have no choice other than personal bankruptcy," she said. Senate group wades into tough talks on Social Security. Experience: Kristen Hawley has nearly two decades of experience in the media industry. These four House Republicans broke with the GOP to oppose inflation estimates McCarthy, GOP pump brakes on release of Jan. 6 footage to Tucker Carlson. WebSouth China receives no funding from any government for the production of this publication. He asked the court to issue a temporary restraining order prohibiting the SBA from administering the RRF on the basis of sex or race. The lawsuit opens the door for a class action suit, in which all restaurant owners and restaurants in the United States who are encountering or who will encounter race or sex discrimination from the Small Business Administration, could be potentially entitled to relief from the court. They're legitimate and they deserve to be funded.". In the suit, the Lost Cajun owners Janice Smith and Jason Smith, along with Pennsylvania restaurant owner Eric Nyman, allege that the Small Business Administrations plan to distribute pandemic relief funds to small businesses is unconstitutional. The $28.6 billion Restaurant Revitalization Fund has only been processing and funding requests from businesses owned by women; veterans; or socially and economically disadvantaged individuals. As of May 12, the Small Business Administration said those businesses had already applied for $29 billion, more than the fund's total amount. "Under the guise of pandemic relief, the American Rescue Plan Act enables the federal government to engage in illegal and unconstitutional race and sex discrimination. An appellate court later overturned McDonoughs decision. Affected business owners aren't sure what comes next. The lawsuit from AFL on Thursday follows one with similar complaints filed Wednesday alleging that the SBA in its distribution of funds unconstitutionally gave priority to women and specified minorities, while pushing aside white men and other minority groups. Some say they're considering collective legal action, others fear this roadblock could be the final nail in the coffin for their beleaguered businesses. CBS News reporter covering economic policy. She called the SBA's hotline and was told the money was on its way. An online portal that served as an information and application hub for the program will close on July 14, leaving hundreds of thousands of restaurants out of the grant program. Copyright 2023, JURIST Legal News & Research Services, Inc. M. Tyler Gillett | U. Pittsburgh School of Law, US, Federal judge rules restaurant relief fund discriminated against white man. from America First Legal (AFL) specifically takes issue with the Small Business Administrations (SBA) handling of the $28.6 billion in the Restaurant Revitalization Fund within President Bidens American Rescue Plan package passed by Congress. As of May 12, the Small Business Administration said those businesses had already applied for $29 billion, more than the fund's total amount. As a result of the settlement, the delivery companies have agreed to no longer offer discounts or incentives based on race, color, religion, sex, national origin or ancestry., The ongoing health and economic crisis disproportionately devastated communities of color and highlighted disparities in opportunity for vulnerable populations, a DoorDash spokesperson said in a statement. Its estimated that 1 in 6 restaurants across the country permanently closed due to the pandemic. The fund itself was based on the RESTAURANTS Act, a congressional proposal that sought $120 billion in direct aid to independent restaurants. Eligibility was slated to open broadly afterward. U.S. District Judge Travis R. McDonoughsoriginal ruling stated that the plaintiffs argument had failed to rebut the federal governments priority in halting the impacts of historical discrimination based on sex and race. They alleged that they were the victims of discrimination and asked that funds not be distributed to the priority groups as the SBA had planned so the money could be allocated more fairly. His claim was approved by the SBA on May 25 prior to the court order, and he received his $104,590 grant on June 1. A letter obtained by Nation's Restaurant News told those applicants awaiting funds: The SBA is not able to pay 2,965 priority applicants including yourself who were previously approved and notified of their approval. After filing his request for funding, Vitolo was told women and minority restaurant owners would be prioritized during the first 21 days of fund disbursement, which began on May 3. And lack of additional action from Congress Tennessee agreed, and the SBA all... 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