The Lawsuit: The Wisconsin Institute for Law & Liberty (WILL) filed a federal lawsuit on behalf of a Tennessee restaurant owner against the United States Small Business Administration (SBA) over race and gender discrimination in the administration of the Restaurant Revitalization Fund, a $28.6 billion program authorized by the American Rescue Plan Act (ARPA). The law requires the SBA to give priority preference to restaurants owned by certain minorities and women, while bumping white males and other minorities to the back of the line, for funds available on a first-come, first-serve basis, and only until they run out.

Background: The $1.9 trillion American Rescue Plan Act, passed in March 2021, is President Joe Biden’s signature COVID-19 relief bill. But many of the law’s relief provisions include explicit race discrimination – like a farmer loan forgiveness program that excludes white people.

The Restaurant Revitalization Fund is another relief program that explicitly uses race and sex discrimination to award federal funds. The $28.6 billion fund, administered by the SBA, requires the federal agency to prioritize restaurants owned by women and minorities for the first 21 days. In practice, the SBA takes all applications and keeps shifting white male restaurant owners to the back of the line.

The way the federal government is allocating COVID relief – in the farmer loan forgiveness program and Restaurant Revitalization Fund – is illegal and unconstitutional. Race and sex discrimination are not permitted under the law.

WILL’s Client: WILL represents Antonio Vitolo, the owner of Jake’s Bar and Grill in Harriman, Roane County, Tennessee. Vitolo’s wife is Hispanic and owns 50% of the restaurant, but Jake’s Bar and Grill is not eligible for priority treatment because Vitolo is a white male. He applied for a grant on the first day the application opened, but the SBA will not process his application until all minority and female applications received during the first 21 days of the administration of the Restaurant Revitalization Fund are fulfilled. Vitolo may receive no COVID relief funds as a result.

WILL is asking the court for a temporary restraining order and injunction to halt the ongoing harm resulting from race and sex discrimination. Additionally, WILL is asking the court for a declaratory judgment that the administration of the Restaurant Revitalization Fund is unconstitutional.

Additional WILL Clients: On June 1, 2021, WILL filed an amended complaint with the Eastern District of Tennessee to add four restaurant owners from North Carolina, Indiana, Rhode Island, and New York to the lawsuit against the SBA.

• Byron Sackett is a white male who owns a catering/concessions company called Homesteads Management, LLC, in Charlotte, North Carolina.
• Kevin Pearson is a white male who owns S & K Soup Co., doing business as Zoup! in Mishawaka, Indiana.
• Alfred Castiglioni owns The 579 LLC, Chardonnays Inc., and Zinfandel LLC, doing business as 579 Benefit Street Restaurant in Pawtucket, Rhode Island, Chardonnay’s Restaurant in Seekonk, Massachusetts, and Meritage Restaurant in East Greenwich, Rhode Island.
• Denis Flanagan is a member of 3kad LLC, which does business as Draught 55 in New York City, New York. Mr. Flanagan and the other members of 3kad LLC are white males, with the sole exception of his wife, who is female.

Current Status: A divided panel of the Sixth Circuit Court of Appeals issued an injunction pending appeal on May 27, 2021. Judge Amul Thapar was joined by Judge Alan Norris in a decision that said, in part, “Since the government failed to justify its discriminatory policy, the plaintiffs will win on the merits of their constitutional claim.”

The decision emphasized, “As today’s case shows once again, the “way to stop discrimination on the basis of race is to stop discriminating on the basis of race.””