Hidalgo Cty Emer Svc Fdn v. Jovita Carranza ( 2020 )


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  •     Case: 20-40368   Document: 00515461681    Page: 1   Date Filed: 06/22/2020
    IN THE UNITED STATES COURT OF APPEALS
    FOR THE FIFTH CIRCUIT   United States Court of Appeals
    Fifth Circuit
    FILED
    No. 20-40368                    June 22, 2020
    Lyle W. Cayce
    Clerk
    In re: HIDALGO COUNTY EMERGENCY SERVICE FOUNDATION,
    Debtor.
    HIDALGO COUNTY EMERGENCY SERVICE FOUNDATION,
    Appellee,
    versus
    JOVITA CARRANZA, U.S. Small Business Administration,
    Appellant.
    Appeal from the United States District Court
    for the Southern District of Texas
    Before SMITH, HIGGINSON, and ENGELHARDT, Circuit Judges.
    JERRY E. SMITH, Circuit Judge:
    As the reality of the coronavirus global pandemic took hold, markets
    plummeted and unemployment soared. Congress responded with the Corona-
    virus Aid, Relief, and Economic Security Act, Pub. L. No. 116-136, 134 Stat.
    Case: 20-40368      Document: 00515461681        Page: 2    Date Filed: 06/22/2020
    No. 20-40368
    281 (2020) (“CARES Act”). The CARES Act, inter alia, made $659 billion of
    government-guaranteed loans available to qualified small businesses through
    the Paycheck Protection Program (“PPP”). 1 The PPP is implemented under
    section 7(a) of the Small Business Act, 15 U.S.C. § 636, which is administered
    by the Small Business Administration (“SBA”).
    The SBA quickly promulgated several regulations concerning PPP
    eligibility. At issue here is its determination that “[i]f [an] applicant . . . is the
    debtor in a bankruptcy proceeding, . . . th[at] applicant is ineligible to receive
    a PPP loan.” Business Loan Program Temporary Changes; Paycheck Protec-
    tion Program—Requirements—Promissory Notes, Authorizations, Affiliation,
    and Eligibility, 85 Fed. Reg. 23,450, 23,451 (Apr. 28, 2020).
    Hidalgo County Emergency Service Foundation (“Hidalgo”)—which is in
    Chapter 11 bankruptcy—alleges that it was denied a PPP loan based on its
    status as a bankruptcy debtor. It filed an adversary proceeding against the
    SBA in bankruptcy court, contending that the SBA’s decision to preclude
    bankrupt parties from obtaining PPP loans (1) violates 11 U.S.C. § 525(a),
    which prohibits discrimination based on bankruptcy status under certain
    circumstances, (2) is “arbitrary, capricious, an abuse of discretion, or otherwise
    not in accordance with law,” 5 U.S.C. § 706(2)(A), and (3) is “in excess of
    statutory jurisdiction, authority, or limitations, or short of statutory right,”
    id. § 706(2)(C).
    The bankruptcy court sided with Hidalgo and issued a preliminary
    injunction mandating that the SBA handle Hidalgo’s PPP application without
    consideration of its ongoing bankruptcy.            The district court stayed the
    1  Congress initially funded the PPP with $349 billion, CARES Act § 1102(b)(1),
    134 Stat. at 293, then increased that to $659 billion, Paycheck Protection Program and
    Health Care Enhancement Act, Pub. L. No. 116-139, § 101(a)(1), 134 Stat. 620, 620 (2020).
    2
    Case: 20-40368         Document: 00515461681            Page: 3      Date Filed: 06/22/2020
    No. 20-40368
    preliminary injunction and certified the case for direct appeal to the Fifth
    Circuit. We granted permission to take the direct appeal under 28 U.S.C.
    § 158(d).
    As a threshold matter, the SBA Administrator contends that the Small
    Business Act forecloses injunctive relief by providing that “no . . . injunction . . .
    shall be issued against the Administrator or his property.”                              15 U.S.C.
    § 634(b)(1). Additionally—and as Hidalgo concedes—“this [c]ircuit has con-
    cluded that all injunctive relief directed at the SBA is absolutely prohibited.” 2
    Hidalgo requests that we create “an exception” to that absolute prohibition
    “under the extreme facts and highly compressed time frame presented in this
    case” or that the doctrine “should be revisited entirely.”                      Under our well-
    recognized rule of orderliness, however, a panel of this court is bound by circuit
    precedent. See Teague v. City of Flower Mound, 
    179 F.3d 377
    , 383 (5th Cir.
    1999).
    The issue at hand is not the validity or wisdom of the PPP regulations
    and related statutes, but the ability of a court to enjoin the Administrator,
    whether in regard to the PPP or any other circumstance. Because, under well-
    established Fifth Circuit law, the bankruptcy court exceeded its authority
    when it issued an injunction against the SBA Administrator, we VACATE its
    preliminary injunction.
    2 Enplanar, Inc. v. Marsh, 
    11 F.3d 1284
    , 1290 n.6 (5th Cir. 1994) (emphasis added)
    (quotation marks omitted); see also Valley Constr. Co. v. Marsh, 
    714 F.2d 26
    , 29 (5th Cir.
    1983) (“The Small Business Act, 15 U.S.C. § 634(b)(1), precludes injunctive relief against the
    SBA.”); Expedient Servs., Inc. v. Weaver, 
    614 F.2d 56
    , 58 (5th Cir. 1980) (“Section 634(b)(1)
    provides, inter alia, that no ‘injunction . . . or other similar process . . . shall be issued against
    the Administrator.’ . . . [A] suit praying solely for injunctive relief against the Administrator
    is barred by the language of § 634(b)(1). Since we have determined that the sole relief prayed
    for in the instant case was injunctive in nature, the suit should have been dismissed.”).
    3