FLINT, Mich. — Another federal judge has ruled that a strip club cannot be blocked from obtaining emergency federal loans during the coronavirus pandemic.
U.S. District Judge Matthew Leitman issued a preliminary injunction Monday barring the Small Business Administration from enforcing a rule to exclude businesses that offer performances or sell products of a "prurient sexual nature" from loans under the Paycheck Protection Program, which is part of the $2.3 trillion Coronavirus Aid, Relief and Economic Security (CARES) Act.
In his ruling favoring the Little Darlings strip club in Flint, Mich., Leitman wrote that Congress intended to support all qualified small businesses, including ones that it might have been "disfavored" before the pandemic struck.
"Simply put, Congress did not pick winners and losers in the PPP," Leitman said. “It would ordinarily be absurd to conclude that Congress meant to provide financial assistance to, among others, certain sexually oriented businesses and private clubs that discriminate. But these are no ordinary times, and the PPP is no ordinary legislation."
Leitman noted that Little Darlings provides lawful “clothed, semi-nude, and/or nude performance entertainment.”
Leitman’s ruling followed a preliminary injunction made earlier this month by U.S. District Judge Lynn Adelman to stop the SBA from rejecting loans for four Wisconsin strip clubs operating as Silk Exotic Gentlemen's Club.
Adelman said the SBA chucked out strip clubs based on their speech, making the rule unconstitutional. The Justice Department is appealing Adelman’s ruling.
Leitman ordered that by Thursday, the SBA shall notify identified lender representatives in writing that Little Darlings application for PPP loans shall not be denied based on the “prurient sexual nature” provisions of the Original SBA Ineligibility Rule.
“In the event that [Little Darlings] meets the eligibility requirements for PPP loans, the SBA will guarantee the loans for which [they] have applied or attempted to apply,” Leitman wrote.
