MILWAUKEE, WI—U.S. District Judge Lynn S. Adelman on Friday issued a preliminary injunction preventing the Small Business Administration (SBA), its Administrator Jovita Carranza, Treasury Secretary Steve Mnuchin and the United States of America from using the phrase "prurient sexual nature" to make five gentlemen's clubs in the state (and likely all others as well) ineligible for forgivable SBA loans under the Paycheck Protection Program (PPP) that is part of the CARES Act recently signed into law by President Trump. But that decision was put on hold late Monday by the Seventh Circuit Court of Appeals.
"What happened was, the government was ordered by Judge Adelman that by noon Monday Central Time, they were supposed to give information to the lending banks not to enforce the regulation or the SOP, Standard Operating Procedure," First Amendment attorney Brad Shafer, who has a similar case under way in Michigan, told AVN. "But before the time had tolled for the SBA to comply, they filed an emergency motion for a stay with Judge Adelman and asked for two things: One was to stay his order entirely; the other was, if he wouldn't stay the order, they wanted an additional 36 hours to be able to comply. Before the judge could rule on that, the government also filed similar motions with the Seventh Circuit Court of Appeals, also seeking a stay from them.
"First, Judge Adelman denied their motion to stay, but granted the 36-hour extension to comply," Shafer continued. "Then, last night, the Seventh Circuit entered an order temporarily staying the enforcement of the order to allow time to file briefing on whether or not the order should be stayed, and Jeff Olsen's brief is due tomorrow, and the government's reply brief, if they want, is due on Friday, so I would expect some order from the Seventh Circuit by mid- to late Friday, though they might wait over the weekend—but they acted very quickly in granting the temporary stay, so I would expect them to rule reasonably quickly. Then the case will go to expedited briefing before the Seventh Circuit."
So what does that mean? Well, the Wisconsin plaintiffs' relief is currently on hold, though technically their "place in line" for PPP loans before the SBA should remain, and based on Judge Adelman's ruling, the government has scant legal backing to deny the clubs' legal ability to file for and receive loans under the PPP.
"I feel Judge Adelman's decision is correct and it's a very good decision," Shafer agreed, but noted that there are several lawsuits already filed in other parts of the country challenging the SBA's regulations and SOP, and how other courts deal with those suits may affect the outcome of the Silk Exotic suits.
Bottom line: To take off on Benjamin Franklin's concerns about the newly formed U.S. Republic, "Great decision ... if you can keep it."
Judge Adelman's full decision can be found here.
