Camelot Banquet Rooms, Inc. v. United States Small Business A ( 2022 )

In the
United States Court of Appeals
For the Seventh Circuit
____________________
No. 21-2589
CAMELOT BANQUET ROOMS, INC., et al.,
Plaintiffs-Appellees,
v.
UNITED STATES SMALL BUSINESS ADMINISTRATION, et al.,
Defendants-Appellants.
____________________
Appeal from the United States District Court for the
Eastern District of Wisconsin.
No. 2:21-CV-00447-LA — Lynn Adelman, Judge.
____________________
ARGUED NOVEMBER 1, 2021 — DECIDED JANUARY 26, 2022
____________________
Before KANNE, ROVNER, and HAMILTON, Circuit Judges.
HAMILTON, Circuit Judge. Plaintiffs-appellees in this case
are twenty-three businesses all over the country that offer live
adult entertainment in the form of nude or nearly nude danc-
ing. They seek to obtain loans under the second round of the
Paycheck Protection Program enacted by Congress to address
economic disruption caused by the COVID-19 pandemic. By
statute, Congress excluded plaintiffs and several other cate-
gories of businesses from the second round of the Program.
2 No. 21-2589
See 15 U.S.C. § 636(a)(37)(A)(iv)(III)(aa), incorporating 13
C.F.R. § 120.110, with two exceptions.
Plaintiffs assert that their exclusion from the Program vio-
lates their constitutional rights, primarily under the Free
Speech Clause of the First Amendment. The district court
agreed. It issued a preliminary injunction that enjoins the
United States Small Business Administration (SBA) from
denying plaintiffs eligibility for the loan program based on
the statutory exclusion that incorporates 13 C.F.R. § 120.110.
Camelot Banquet Rooms, Inc. v. U.S. Small Business Admin., — F.
Supp. 3d —, 2021 WL 3680369 (E.D. Wis. Aug. 19, 2021). We
granted the government’s stay of the preliminary injunction,
expedited briefing on the merits of this appeal, and held oral
argument on November 1, 2021. We now conclude that the
district court erred in granting the preliminary injunction.
I. Applicable Legal Standards
Plaintiffs who seek a preliminary injunction must show
that (1) they will suffer irreparable harm in the absence of an
injunction, (2) traditional legal remedies are inadequate to
remedy the harm, and (3) they have some likelihood of suc-
cess on the merits. If those elements are shown, the court must
then balance the harm the moving parties would suffer if an
injunction is denied against the harm the opposing parties
would suffer if one is granted, and the court must consider
the public interest, which takes into account the effects of a
decision on non-parties. E.g., Courthouse News Service v.
Brown, 908 F.3d 1063, 1068 (7th Cir. 2018).
On the merits, the district court concluded that plaintiffs
are likely to succeed on their free speech claim. The court
viewed the exclusion of plaintiffs from the Program as an
No. 21-2589 3
“attempt to suppress a dangerous idea” and a classification
that was not rationally related to a legitimate government
purpose. The court found that the other factors also sup-
ported an injunction. Receiving funds under the Program
only at the end of the lawsuit would likely come too late for
plaintiffs’ businesses to survive, and if it turned out that their
constitutional rights were violated, they would have no viable
damages remedy against the government or any official. The
court saw little harm to the government from an injunction,
which it thought would also serve the public interest by aid-
ing struggling businesses, consistent with the aims of the
broader COVID relief legislation.
On appeal, we review the district court’s issuance of a pre-
liminary injunction for an abuse of discretion, though an error
of law can often produce an abuse of discretion. E.g., Cooter &
Gell v. Hartmarx Corp., 496 U.S. 384, 405 (1990); Ty, Inc. v. Jones
Group, Inc., 237 F.3d 891, 896 (7th Cir. 2001); Abbott Labs. v.
Mead Johnson & Co., 971 F.2d 6, 13 (7th Cir. 1992). In this ap-
peal, we disagree with the district court’s pivotal conclusions
about the applicable constitutional law and on that basis find
an abuse of discretion. As we explain below, the SBA has
shown a strong likelihood of success on the merits. The other
injunction factors are essentially a wash, so the final result is
driven by the likelihood of success on the merits.
II. The Paycheck Protection Program
No one who has lived through the COVID-19 pandemic
will forget its devastating consequences for lives and health
or the massive economic disruption it has caused. Congress
responded with several rounds of massive economic assis-
tance, including the Paycheck Protection Program. Under the
Program, many small businesses became eligible for low-
4 No. 21-2589
interest loans that would be guaranteed by the federal gov-
ernment and even eligible for forgiveness if the businesses
used them, in essence, to keep employees on the payroll dur-
ing the economic downturn.
The first round of legislation was drafted and enacted in
just a few weeks. That legislation gave the SBA considerable
discretion to decide eligibility for the Program. In doing so,
the SBA borrowed from a regulation that identifies categories
of businesses that are not eligible for all or nearly all SBA loan
programs. See 13 C.F.R. § 120.110. The list includes non-profit
enterprises, banks and other financial companies, life insur-
ance companies, businesses located in foreign countries, pyr-
amid sale distribution plans, casinos and other gambling
businesses, loan packagers, political or lobbying businesses,
and speculative businesses.
Subsection (p) of that regulation excludes plaintiffs. It bars
loans to businesses that:
(1) Present live performances of a prurient sex-
ual nature; or
(2) Derive directly or indirectly more than de
minimis gross revenue through the sale of prod-
ucts or services, or the presentation of any de-
pictions or displays, of a prurient sexual na-
ture….
13 C.F.R. § 120.110(p).
In the first round of Paycheck Protection Program loans,
the SBA made an exception for non-profits, which the statute
expressly deemed eligible. See 85 Fed. Reg. 20811, 20812 (Apr.
15, 2020). In an earlier related case brought by plaintiff Cam-
elot Banquet Rooms in the Eastern District of Wisconsin, the
No. 21-2589 5
district court issued a preliminary injunction barring denial of
eligibility for the Program based on the regulation. That deci-
sion relied on statutory, administrative-law, and constitu-
tional grounds. Camelot Banquet Rooms, Inc. v. U.S. Small Busi-
ness Admin., 458 F. Supp. 3d 1044 (E.D. Wis. 2020). We denied
a stay of that injunction in a conclusory order, and the gov-
ernment soon dismissed the appeal. But see Pharaohs GC, Inc.
v. U.S. Small Business Admin., 990 F.3d 217 (2d Cir. 2021) (af-
firming denial of injunction in similar first-round case
brought by adult-entertainment club); American Ass’n of Polit-
ical Consultants v. U.S. Small Business Admin., 810 F. App’x 8,
9–10 (D.C. Cir. 2020) (affirming denial of injunctive relief in
similar First Amendment challenge to first-round exclusion of
lobbying and political consulting businesses).
The second round of the Paycheck Protection Program
was drafted with more time, and it took a different approach
to eligibility. Congress adopted statutory language to exclude
several categories of businesses, including plaintiffs’ adult-
entertainment venues. It did so by incorporating into the stat-
ute the terms of 13 C.F.R. § 120.110, the regulation that the
SBA had used on its own initiative for the first round. 15
U.S.C. § 636(a)(37)(A)(iv)(III)(aa). 1
1 Congress made exceptions for two categories of businesses in the
regulation, not-for-profit businesses and businesses engaged principally
in teaching, instructing, counseling, or indoctrinating religion or religious
beliefs. 15 U.S.C. § 636(a)(37)(A)(iv)(III)(aa). The new exception for reli-
gious businesses is easy to understand in light of Trinity Lutheran Church
v. Comer, 137 S. Ct. 2012 (2017) (religious school could not be excluded
from government program to assist school playground construction). The
Supreme Court has shown no indication that it would extend the Free Ex-
ercise Clause reasoning of Trinity Lutheran to cases like this one.
6 No. 21-2589
Accordingly, in this second round, the earlier issues of
statutory interpretation and administrative law have fallen
away. Plaintiffs can prevail only if denying them a subsidized
loan under the Program violates the Constitution. Plaintiffs
are unlikely to be able to make that showing.
III. Plaintiffs’ First Amendment Theory
Plaintiffs’ core claim is under the Free Speech Clause of the
First Amendment. They contend that excluding them from
the Program penalizes them for engaging in expressive activ-
ity protected by the First Amendment. See generally Barnes v.
Glen Theatre, Inc., 501 U.S. 560, 565–66 (1991) (plurality opin-
ion) (treating nude dancing as “marginally” within outer pe-
rimeters of First Amendment protection; affirming local ban
on completely nude dancing).
The problem with plaintiffs’ First Amendment claim and
the preliminary injunction here is that Congress is not trying
to regulate or suppress plaintiffs’ adult entertainment. It has
simply chosen not to subsidize it. Such selective, categorical
exclusions from a government subsidy do not offend the First
Amendment.
The Supreme Court has repeatedly drawn a line between
government regulation of speech, on one hand, and govern-
ment subsidy of speech, on the other. Its decisions show that
the government is not required to subsidize activity simply
because the activity is protected by the First Amendment.
E.g., Ysursa v. Pocatello Education Ass’n, 555 U.S. 353, 358–59
(2009) (“While in some contexts the government must accom-
modate expression, it is not required to assist others in fund-
ing the expression of particular ideas, including political
ones;” state could choose not to carry out payroll deductions
No. 21-2589 7
for political contributions to labor unions); Rust v. Sullivan,
500 U.S. 173, 193 (1991) (“The Government can, without vio-
lating the Constitution, selectively fund a program to encour-
age certain activities it believes to be in the public interest,
without at the same time funding an alternative program
which seeks to deal with the problem in another way. In so
doing, the Government has not discriminated on the basis of
viewpoint; it has merely chosen to fund one activity to the ex-
clusion of the other.”); Regan v. Taxation With Representation,
461 U.S. 540, 549 (1983) (“[A] legislature’s decision not to sub-
sidize the exercise of a fundamental right does not infringe
the right….”); accord, e.g., Wisconsin Education Ass’n Council
v. Walker, 705 F.3d 640, 646–47 (7th Cir. 2013).
To avoid the controlling line of subsidy cases, plaintiffs fo-
cus on language in Regan suggesting that a selective subsidy
program may violate the First Amendment if it is “aim[ed] at
the suppression of dangerous ideas.” 461 U.S. at 548. To take
an easy example of such viewpoint discrimination, even if
Congress can choose to exclude political lobbyists entirely
from the Program’s subsidies, it could not choose to subsidize
Democratic lobbyists while excluding Republicans. Plaintiffs’
theory here is that Congress chose to exclude their businesses
from the subsidy program because it deemed their “ideas”
about sexuality to be dangerous.
This theory fails to distinguish between government sup-
pression of protected activity and denial of a subsidy. Plaintiffs’
theory seems to be that the denial of a subsidy is itself the act
of suppression. That theory loses sight of the difference be-
tween regulation and denial of a subsidy—the difference at
the heart of Regan, Rust, Ysursa, and the rest of the selective-
subsidy line of cases. The only sign we see here of a supposed
8 No. 21-2589
effort to “suppress” is the choice not to subsidize. Whatever
door Regan left open—and as far as we can tell, the Supreme
Court has never struck down a denial of subsidy on this
ground—it surely requires something more, like viewpoint
discrimination, than denial of the subsidy itself. See Wisconsin
Education Ass’n, 705 F.3d at 650–52, and id. at 664–70 (Hamil-
ton, J., dissenting in relevant part) (majority and dissent de-
bating evidence of viewpoint discrimination in state’s choice
to subsidize payroll deductions for dues for some public em-
ployee unions but not others).
IV. Rational-Relation Review
Like any statutory classification, the statutory boundaries
of the Paycheck Protection Program are subject to rational-re-
lation review. See, e.g., Ysursa, 555 U.S. at 359, citing Regan,
461 U.S. at 546–51. The district court found here that the ex-
clusion of plaintiffs’ adult-entertainment businesses failed the
rational-relation test.
The district court applied an erroneous and unduly rigor-
ous form of judicial review, second-guessing legislative deci-
sions and compromises on policy grounds, and concluding
that the Program was both over- and under-inclusive in vari-
ous respects. See Camelot Banquet Rooms, Inc., — F. Supp. 3d
at —, 2021 WL 3680369, at *8–11. A government spending pro-
gram, especially one responding to an economic emergency,
is subject to the least rigorous form of judicial review. In en-
acting such legislation, Congress must respond quickly to an
emergency and must hammer together a coalition of majority
votes in both houses. The need for compromises and trade-
offs is never greater.
No. 21-2589 9
When pressed in this suit to justify the exclusion of plain-
tiffs from the Program’s subsidies, the government pointed to
the “secondary effects” of sex-oriented businesses that can be
used to justify time, place, and manner regulations of such
businesses. See, e.g., City of Erie v. Pap’s A.M., 529 U.S. 277(2000) (plurality opinion); BBL, Inc. v. City of Angola, 809 F.3d
317 (7th Cir. 2015). Plaintiffs and the district court responded
by criticizing Congress for not having made a record on the
subject at the time the legislation was enacted.
Any expectation that Congress would have taken the time
to make such a record is unrealistic, to put it mildly. And any
requirement that Congress make such a record is contrary to
constitutional doctrine. The rational-relation test requires a
challenger in litigation to exclude any possible rational
grounds that the legislature might have deemed sufficient for
the statutory distinction. E.g., Heller v. Doe, 509 U.S. 312, 319–
20 (1993). It does not require the legislature to have made a
contemporaneous record on the subject. Id. at 320–21, dis-
cussed in Wisconsin Education Ass’n, 705 F.3d at 653 (rational
basis for limit on government subsidies need not be in the rec-
ord “so long as it finds ‘some footing in the realities of the
subject addressed by the legislation’”).
Similarly, the view that the rationale for excluding plain-
tiffs is under-inclusive has little impact under the rational-re-
lation test. All sorts of legislative classifications, exclusions,
and compromises pass muster even if they are over- or under-
inclusive. “[C]ourts are compelled under rational-basis re-
view to accept a legislature’s generalizations even when there
is an imperfect fit between means and ends. A classification
does not fail rational-basis review because it ‘is not made with
mathematical nicety or because in practice it results in some
10 No. 21-2589
inequality,’” and “[t]he problems of government are practical
ones and may justify, if they do not require, rough accommo-
dations—illogical, it may be, and unscientific.” Heller, 509 U.S.
at 321, first quoting Dandridge v. Williams, 397 U.S. 471, 485
(1970), and then quoting Metropolis Theatre Co. v. City of Chi-
cago, 228 U.S. 61, 69–70 (1913). 2
Plaintiffs also suggest that the government’s defense
based on secondary effects of sex-oriented businesses actually
serves to condemn plaintiffs’ exclusion from the Program.
They say the arguments show the government’s hostility to
their “dangerous ideas.” This argument turns the rational-re-
lation test upside down. Those secondary effects are well
known and widely recognized in First Amendment litigation
and doctrine. See generally, e.g., City of Erie, 529 U.S. at 289–
301 (plurality opinion). Actual evidence of them can serve to
justify time, place, and manner restrictions on businesses that
are subject to “intermediate” constitutional scrutiny. We do
not see how relying on those effects shows animus toward
any idea. If those secondary effects can support time, place,
and manner regulations, they surely provide a rational basis
for Congress to choose not to subsidize this group of busi-
nesses.
Plaintiffs’ arguments also lose sight of the fact that they
were not singled out for this exclusion, even among
2Illustrating the sorts of inconsistencies that are tolerated under the
rational-relation test, five of the original plaintiffs-appellees withdrew
from this case because defendant SBA funded their separate requests for
COVID relief under the separate Restaurant Revitalization Fund estab-
lished under 15 U.S.C. § 9009c as part of the American Rescue Plan Act of
2021, which uses different eligibility standards. See Motion for Partial Dis-
missal of Certain Appellees, Dkt. No. 45 (Nov. 23, 2021).
No. 21-2589 11
businesses engaged primarily in activity protected by the
First Amendment. Congress also chose to exclude from the
Program businesses “primarily engaged in political or lobby-
ing activities.” 13 C.F.R. § 120.110(r). Such business activities
are much closer to the core of the First Amendment than the
dances at plaintiffs’ bars and clubs. Yet lobbyists and political
consultants were also excluded. Congress chose not to require
taxpayers to subsidize them. We do not see a plausible consti-
tutional basis for requiring government subsidies of lobbyists,
at least as long as there is no viewpoint discrimination. Ac-
cord, American Ass’n of Political Consultants, 810 F. App’x at 9–
10.
Congress also excluded many other categories of busi-
nesses: banks, lenders, finance companies, and some pawn
shops; life insurance companies; businesses located in foreign
countries; pyramid sale distribution plans; businesses en-
gaged in any illegal activity; private clubs; government-
owned businesses; loan packagers; businesses with an “Asso-
ciate” who is in prison, on probation, on parole, or who has
been indicted for a felony or crime of moral turpitude; and
businesses that have previously defaulted on SBA or other
federally assisted loans. See 15 U.S.C.
§ 636(a)(37)(A)(iv)(III)(aa), incorporating 13 C.F.R. § 120.110,
with two exceptions.
These exclusions are not difficult to understand in terms
of policy and politics. They all help defuse potential criticisms
of a generous emergency program that might be used to un-
dermine political support for the Program and the overall leg-
islation. Such tailoring of legislation to build and maintain po-
litical support is perfectly constitutional, at least in the
12 No. 21-2589
absence of viewpoint or invidious discrimination, of which
there is no sign here. 3
V. Viewpoint Discrimination
The district court was also persuaded to apply more strin-
gent judicial review. The theory was that even if the exclusion
of plaintiffs’ businesses from the Program was not “tradi-
tional viewpoint discrimination,” the exclusion’s focus on
“prurience” created a free-speech problem. The exclusion, as
the court saw the issue, depends on prurience, which the
court saw as the expressive, “sexually arousing” “message”
of the adult entertainment. Camelot Banquet Rooms, Inc., — F.
Supp. 3d at — & n.7, 2021 WL 3680369, at *9–10 & n.7. The
court viewed the exclusion as thus an effort to use a subsidy
exclusion to suppress a “dangerous idea,” which Regan sug-
gested could violate the First Amendment. 461 U.S. at 548.
Plaintiffs’ argument along these lines is creative but not
consistent with the role that prurience plays in the larger
sweep of First Amendment doctrine. The statutory exclusion
from the Program of businesses with prurient live entertain-
ment is better understood not as viewpoint discrimination but
as a permissible classification based on subject matter. The Su-
preme Court made this point in R.A.V. v. City of St. Paul:
When the basis for the content discrimination
consists entirely of the very reason the entire
3The Constitution does not prohibit legislation on the basis of moral-
ity. Consider, for example, the possibility that Congress might choose to
exclude from this or other subsidy programs alcoholic beverage makers,
casinos and other gambling businesses, weapons makers, and so on. Such
line-drawing is left to the legislature, absent viewpoint or invidious dis-
crimination.
No. 21-2589 13
class of speech at issue is proscribable, no signif-
icant danger of idea or viewpoint discrimina-
tion exists. Such a reason, having been adjudged
neutral enough to support exclusion of the en-
tire class of speech from First Amendment pro-
tection, is also neutral enough to form the basis
of distinction within the class. To illustrate: A
State might choose to prohibit only that obscen-
ity which is the most patently offensive in its
prurience—i.e., that which involves the most las-
civious displays of sexual activity. But it may
not prohibit, for example, only that obscenity
which includes offensive political messages.
505 U.S. 377, 388 (1992), citing Kucharek v. Hanaway, 902 F.2d
513, 517 (7th Cir. 1990).
In effect, the Court was telling us, it would be a category
mistake to think that prurience or lasciviousness reflects a
“viewpoint” that the government may not discriminate
against. The terms instead identify a category or subject mat-
ter of expressive conduct that may be subject to some forms
of government regulation. That’s the point we made in the
Kucharek case cited in R.A.V. We said that a statute could pro-
hibit obscene (prurient) material entirely (a subject matter)
but could not “distort the marketplace of erotic discourse by
suppressing only that obscenity which conveys a disfavored
message.” 902 F.2d at 517.
Accordingly, excluding the entire category or subject mat-
ter of prurient live performances from a government subsidy
program does not amount to viewpoint discrimination and
does not violate the Free Speech Clause. See Pharaohs GC, 990
F.3d at 231 (term “prurient” in SBA regulation describes
14 No. 21-2589
subject matter, not viewpoint, for exclusion from Program);
PMG Int’l Division L.L.C. v. Rumsfeld, 303 F.3d 1163, 1171 (9th
Cir. 2002) (treating “lascivious” materials as articulating a
“viewpoint” would “risk eviscerating altogether the line be-
tween content and viewpoint”); General Media Communica-
tions, Inc. v. Cohen, 131 F.3d 273, 282 (2d Cir. 1997) (“[H]ow,
for example, would one go about discussing and considering
the political issues of the day from a lascivious viewpoint?”).
VI. Unconstitutional Conditions Doctrine
Plaintiffs also rely on a line of First Amendment and other
constitutional decisions in which the Supreme Court has held
that a government may not condition certain government
benefits upon a recipient’s agreement to refrain from exercis-
ing her constitutional rights. For instance, in Speiser v. Randall,
the Supreme Court declared unconstitutional a condition on
a property tax exemption that required owners to sign decla-
rations stating that they did not “advocate the overthrow of
the Government of the United States … by force or violence.”
357 U.S. 513, 515 (1958). As the Court explained: “To deny an
exemption to claimants who engage in certain forms of speech
is in effect to penalize them for such speech.” Id. at 518. The
condition was thus unconstitutional. See also, e.g., FCC v.
League of Women Voters of California, 468 U.S. 364 (1984) (fed-
eral financial assistance to non-commercial radio and televi-
sion stations conditioned on stations refraining from any edi-
torializing; condition violated First Amendment).
Plaintiffs argue here that the exclusion of prurient busi-
nesses constitutes an unconstitutional condition on Program
funding. As explained above, however, the Court has also
said repeatedly that Congress is not required to “grant a
No. 21-2589 15
benefit such as [a tax exemption] to a person who wishes to
exercise a constitutional right.” Regan, 461 U.S. at 545.
How does one tell the difference between an unconstitu-
tional condition and a permissible congressional choice about
whom to include in a government spending or subsidy pro-
gram? It can be difficult in close cases, but the Supreme Court
provided guidance in Agency for International Development v.
Alliance for Open Society International, Inc., 570 U.S. 205 (2013),
where the Court addressed grants to non-governmental or-
ganizations to combat HIV/AIDS around the world. Congress
had prohibited using the money to promote legalization of
prostitution or human trafficking. That condition was not
even challenged in the case and posed no First Amendment
problem. But the statute also required grant recipients to
adopt a policy “explicitly opposing prostitution and sex traf-
ficking.” Id. at 210, quoting 22 U.S.C. § 7631(f). The Court
struck down that policy requirement.
The Court explained the familiar scope of the govern-
ment’s spending power: “As a general matter, if a party ob-
jects to a condition on the receipt of federal funding, its re-
course is to decline the funds.” 570 U.S. at 214. “At the same
time, however, we have held that the Government ‘may not
deny a benefit to a person on a basis that infringes his consti-
tutionally protected … freedom of speech even if he has no
entitlement to that benefit.’” Id. (omission in original), quoting
Rumsfeld v. Forum for Academic and Institutional Rights, Inc., 547
U.S. 47, 59 (2006). To distinguish between permissible limits
on spending programs and unconstitutional conditions, the
Court clarified that “the relevant distinction … is between
conditions that define the limits of the government spending
program—those that specify the activities Congress wants to
16 No. 21-2589
subsidize—and conditions that seek to leverage funding to
regulate speech outside the contours of the program itself.”
Id. at 214–15.
The Court acknowledged that this line is “hardly clear”
and should not turn the First Amendment into “a simple se-
mantic exercise,” id. at 215 (citation omitted), but after dis-
cussing Regan, along with League of Women Voters, 468 U.S. at399–401, and Rust, 500 U.S. at 193, 196, the Court found that
the condition requiring recipients to adopt specific policy
views about prostitution and sex trafficking was not permis-
sible because it went “outside the scope of the federally
funded program.” 570 U.S. at 218, quoting Rust, 500 U.S. at
197. The condition on the activities the government would
fund, however, so as not to subsidize advocacy of prostitution
or human trafficking, was not even challenged in the case, and
we have no doubt it was permissible under the First Amend-
ment.
The Paycheck Protection Program limits at issue in this
case fit comfortably on the permissible Regan, Rust, and Ysursa
side of the line as conditions that limit the scope of the sub-
sidy/loan program. Just as Congress was not trying to require
lobbyists to stop lobbying as a condition of the Program, it
was not trying to pressure plaintiffs to change their adult en-
tertainment. Congress was instead simply choosing to ex-
clude certain categories of businesses from the program. In
the words of Regan, Congress “has not infringed any First
Amendment rights or regulated any First Amendment activ-
ity” by excluding prurient businesses from receiving Program
funding. See 461 U.S. at 546. We thus agree with the Second
and District of Columbia Circuits that the Program’s exclu-
sions are not designed to regulate speech. See Pharaohs, 990
No. 21-2589 17
F.3d at 229–30 (for Program’s first round of loans, the pruri-
ence exclusion did not “improperly leverage[ ] the subsidy to
regulate speech”); American Ass’n of Political Consultants, 810
F. App’x at *9 (Program’s lobbying exclusion did not “seek to
leverage funding to regulate speech outside the contours of
the [Program] itself,” quoting Alliance for Open Society, 570
U.S. at 214–15).
VII. Other Factors for Injunctive Relief
Finally, the other factors for an injunction either favor the
government or are neutral. Each side faces a threat of irrepa-
rable harm, depending on whether an injunction is issued.
If the government were erroneously required to guarantee
subsidized loans to plaintiffs, there is no reason to expect that
it could recover such funds. Because the government is likely
to prevail on the merits, denying plaintiffs an injunction
serves the public interest by implementing the policy chosen
by Congress.
On the other hand, if the government were unlikely to pre-
vail on the merits, an injunction would serve the public inter-
est by enforcing constitutional rights and allowing plaintiffs
to take advantage of a generous program of emergency eco-
nomic relief. If we are mistaken in denying injunctive relief
to plaintiffs, they risk going out of business, and governmen-
tal immunity would prevent any monetary recovery from the
government or its officials. That risk is mitigated somewhat
by the government’s assurances that it has set funds aside for
plaintiffs during the course of this litigation, but we recognize
that delay in providing those funds could prevent plaintiffs
from benefiting at all. On balance, however, the government’s
18 No. 21-2589
strong likelihood of success on the merits weighs decisively
against a preliminary injunction.
For these reasons, the district court’s preliminary injunc-
tion is VACATED and the case is REMANDED for further
proceedings.