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UNITED STATES DISTRICT COURT FOR THE

NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

ADMIRAL THEATRE INC.,

d/b/a The Admiral Theatre,
Civil Case No.
Plaintiff,

v.

UNITED STATES
SMALL BUSINESS ADMINISTRATION;
JOVITA CARRANZA
In her Official Capacity as
Administrator of the
U.S. Small Business Administration, and;
STEVEN MNUCHIN, in his Official Capacity as
United States Secretary of the Treasury,

Defendants.
/

VERIFIED COMPLAINT FOR DECLARATORY AND INJUNCTIVE RELIEF

I. INTRODUCTION

1. This is a civil action brought by the Plaintiff in order to obtain emergency declaratory and

injunctive relief restraining Defendants from discriminating on the basis of the content of

speech or damages resulting from discrimination that has already occurred. Plaintiff seeks

to prevent Defendants from discriminating against workers who are entitled to benefit

from the Paycheck Protection Program (“PPP”) provisions of the recently-enacted

Coronavirus, Aid, Relief, and Economic Security Act, Pub. L. No. 116-136 §§ 1101- 03,

1107, 1114 (2020) (the “CARES Act”). The PPP is designed to quickly provide

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emergency relief to workers and businesses affected by the current COVID-19 pandemic

following the President of the United States declaring a national emergency.

2. However, the emergency regulations promulgated by the Small Business Administration

to implement the PPP, which in part adopt existing regulations formulated to implement

narrower, existing, loan programs, unconstitutionally deprive businesses and workers

who are engaged in First Amendment protected expression from receiving benefits. The

regulations and operating procedures conflict with the text of the PPP and violate

businesses’ and workers’ fundamental rights under the First and Fifth Amendments of the

United States Constitution, among others.

3. Because the funding of the PPP is implemented on a first-come, first-served basis until

the fund is depleted, Plaintiffs bring this action on an emergency basis and seek a

Temporary Restraining Order to prevent irreparable injury to their workers, their

business, the entertainers who perform on it premises, and all their constitutional rights.

II. JURISDICTION AND VENUE

4. This Court has jurisdiction over this action pursuant to 28 U.S.C. §§ 1331, 1346(a)(2) and

(b)(2), 1361, and 2201.

5. Authority for judicial review of agency action is further provided by 5 U.S.C. § 702,

which states:

A person suffering legal wrong because of agency action, or adversely

affected or aggrieved by agency action within the meaning of a
relevant statute, is entitled to judicial review thereof. An action in a
court of the United States seeking relief other than money damages
and stating a claim that an agency or an officer or employee thereof
acted or failed to act in an official capacity or under color of legal
authority shall not be dismissed nor relief therein be denied on the
ground that it is against the United States or that the United States is an
indispensable party. The United States may be named as a defendant
in any such action, and a judgment or decree may be entered against

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the United States: Provided, That any mandatory or injunctive decree

shall specify the Federal officer or officers (by name or by title), and
their successors in office, personally responsible for compliance.
Nothing herein (1) affects other limitations on judicial review or the
power or duty of the court to dismiss any action or deny relief on any
other appropriate legal or equitable ground; or (2) confers authority to
grant relief if any other statute that grants consent to suit expressly or
impliedly forbids the relief which is sought.

6. The jurisdiction of the Court to grant injunctive relief is conferred upon this Court by Rule

65 of the Federal Rules of Civil Procedure and by 28 U.S.C. § 2202, which provides:

“Further necessary or proper relief on a declaratory judgment or decree may be granted,

after reasonable notice and hearing, against any adverse party whose rights have been

determined by such judgment.”

7. The Northern District of Illinois is the proper venue for this action because the Plaintiff’s

claims arose within the geographical boundaries of the Northern District of Illinois within

the meaning of 28 U.S.C. § 1391(b).

III. PARTIES

Plaintiffs

8. The Plaintiff, ADMIRAL THEATRE INC. is an Illinois “S corporation,” doing business

as the Admiral Theatre, and is a corporation with the capacity to sue and be sued in this

Court; it owns and operates the “Admiral Theatre,” located at 3940 West Lawrence

Avenue, Chicago, Cook County, Illinois.

9. The Admiral Theatre is a Gentlemen’s Club owned by the Plaintiff, with a restaurant

license and a facility to present erotic entertainment in the form of female dance

performers for the entertainment of its patrons.

10. The President of ADMIRAL THEATRE INC. (the “Admiral”), Geralyn Q. Cecola, has

no convictions for violation of any local, state, or federal law or regulation, and no claims

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of violations of any local, state, or federal law are pending against her in any regard,

including as the president of ADMIRAL THEATRE INC.

Defendants

11. Defendant United States Small Business Administration (the “SBA”) is an independent

federal agency created and authorized pursuant to 15 U.S.C. § 633, et seq. The SBA

maintains an office at 500 West Madison St., Chicago Illinois, 60661.

12. Defendant Jovita Carranza (“Carranza,” or the “Administrator”) is the Administrator of

the SBA, a Cabinet-level position, and is sued in her official capacity only, as the

Administrator of the SBA.

13. Defendant, Steven Mnuchin, is the Secretary of the United States Treasury, and is sued in

his official capacity only, as the Secretary of the Treasury.

14. Authority to sue the Administrator is granted by 15 U.S.C. § 634(b), which states, in part:

In the performance of, and with respect to, the functions, powers,
and duties vested in him by this chapter the Administrator may—
(1) sue and be sued in any court of record of a State having general
jurisdiction, or in any United States district court, and jurisdiction is
conferred upon such district court to determine such controversies
without regard to the amount in controversy . . . .

IV. RELEVANT STATUTES AND REGULATIONS

20. On March 27, 2020, to provide a much-needed jolt to the American economy, which

had been ravaged by COVID-19, President Trump and Congress collaborated to enact

the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, Pub. L. No. 116-

136, 134 Stat. 281 (2020). The purpose of the CARES Act was “to provide immediate

assistance to individuals, families, and businesses affected by the COVID-19

emergency.” SBA Business Loan Program Temporary Changes; Paycheck Protection

Program at 4 (Interim Final Rule Apr. 2, 2020) (to be codified at 13 C.F.R. pt. 120)

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(attached hereto as Exhibit “A”).

21. The PPP provisions of the CARES Act instruct the SBA to promulgate rules as follows:

SEC. 1114. EMERGENCY RULEMAKING AUTHORITY.

Not later than 15 days after the date of the enactment of this Act,
the Administrator shall issue regulations to carry out this title and
the amendments made by this title without regard to the notice
requirements under section 553(b) of title 5, Unites States Code.

22. The CARES Act tasks the SBA with administering the PPP. The PPP provides at 15

U.S.C. § 636(a)(36)(F)(ii):

Delegated authority

In general
For purposes of making covered loans for the purposes described
in clause (i), a lender approved to make loans under this subsection
shall be deemed to have been delegated authority by the
Administrator to make and approve covered loans, subject to the
provisions of this paragraph.

Considerations
In evaluating the eligibility of a borrower for a covered loan with
the terms described in this paragraph, a lender shall consider
whether the borrower--
(aa) was in operation on February 15, 2020; and
(bb)(AA) had employees for whom the borrower paid salaries and
payroll taxes; or
(BB) paid independent contractors, as reported on a Form 1099-
MISC.

(iii) Additional lenders

The authority to make loans under this paragraph shall be extended
to additional lenders determined by the Administrator and the
Secretary of the Treasury to have the necessary
qualifications to process, close, disburse and service loans made
with the guarantee of the Administration.

23. Pursuant to the PPP, the SBA did, in fact, promulgate regulations on April 1, 2020. A

true and accurate copy of Business Loan Program Temporary Changes; Paycheck

Protection Program, RIN 3245-AH34 (Interim Final Rule Apr. 1, 2020) (“SBA 3245”), as

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promulgated by the SBA, is attached hereto as Exhibit “B” and is hereby incorporated by

reference.

24. SBA 3245 provides, in part:

Businesses that are not eligible for PPP loans are identified in
13 CFR 120.110 and described further in SBA’s Standard
Operating Procedure (SOP) 50 10, Subpart B, Chapter 2,
except that nonprofit organizations authorized under the Act
are eligible. SOP 50 10 can be found at

https://www.SBA.gov/document/sop-50-10-5-lender-development-companyloan-programs

25. SBA 3245 further provides that PPP loans with be provided on a first-come, first-served

basis until funds are exhausted. [See Ex. B, p.13]. The PPP has a total monetary limit of

$349,000,000,000.00 ($349 Billion).

26. A true and accurate copy of Business Loan Program, 60 Fed. Reg. 64356 et seq.

(proposed Dec. 15, 1995; to be codified at 13 C.F.R. § 120.110), as promulgated by the

SBA, is attached hereto as Exhibit “C” and is hereby incorporated by reference.

27. A true and accurate copy of SBA Business Loan Ineligible Businesses Rule, 13 C.F.R §

120.110 (2020), as actually enacted, is attached hereto as Exhibit “D” and is hereby

incorporated by reference.

28. The SBA guarantees 100 percent of the loans provided through the PPP. Additionally,

recipients can qualify for up to 100 percent loan forgiveness after applying for the

forgiveness and the SBA approves the request. Ex. A at 3.

29. Loan recipients can use loans through the PPP to help pay the following costs:

i. Payroll costs;

ii. costs related to the continuation of group health care benefits during

periods of paid sick, medical, or family leave, and insurance premiums;

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iii. employee salaries, commissions, or similar compensations;

iv. payments of interest on any mortgage obligation (which shall not

include any prepayment of or payment of principal on a mortgage

obligation;

v. rent (including rent under a lease agreement);

vi. utilities; and

vii. interest on any other debt obligations that were incurred before the

covered period.

CARES Act, Pub. L. No. 116-136, §1102(a)(2)(F)(i), 134 Stat. 281 (2020).

30. Lenders can rely on certifications of borrowers to determine eligibility for loans under

this program. Ex. A at 5.

31. The CARES Act proclaims that, “in addition to small business concerns, any business

concern, nonprofit organization, veterans organization, or Tribal business concern

described in section 31(b)(2)(C) shall be eligible to receive a covered loan . . .” CARES

Act, Pub. L. No. 116-136, §1102(a)(1)(B)(2)(D)(i), 134 Stat. 281 (2020).

32. To be eligible for this program, a business must:

i. have 500 employees or less; and

ii. have a principal place of business is in the United States; or

iii. operate a business within a certain industry that meets the SBA’s size

standards for that industry; and

iv. have been in operation on February 15, 2020 and had employees or

independent contractors that the business was paying;

33. Entities that are eligible for PPP include sole proprietorships, Non-profit

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entities that are organized under 501(c)(3) of the Internal Revenue Code, tax-exempt

veterans entities organized under 501(c)(19) of the Internal Revenue Code, and Tribal

businesses organized under Section 31(b)(2)(C) of the Small Business Act. Ex. A at 5-

6.

34. 13 C.F.R § 120.110 provides, in part: the following types of Businesses are ineligible:

* * *

(p) Businesses which:

Present live performances of a prurient sexual nature; or
Derive directly or indirectly more than de minimis gross
revenue through the sale of products or services, or the
presentation of any depiction or display, of a prurient sexual
nature;

35. The provisions set out in the immediately preceding Paragraph are hereinafter

referred to simply as the “Regulations.”

36. A true and accurate copy of the relevant portion of SBA Standard Operating Procedure

50 10 5(K) – Lender and Development Company Loan Programs (Apr. 1, 2019), is

attached hereto as Exhibit “E” and hereby incorporated by reference.

37. The SBA Standard Operating Procedure 50 10 5(K) – Lender and Development Company

Loan Programs (Apr. 1, 2019) provides, in part, at Ch.2 (III)(A):

15. Businesses Providing Prurient Sexual Material (13 CFR §

120.110 (p))

a. A business is not eligible for SBA assistance if:

It presents live or recorded performances of a prurient sexual
nature; or

It derives more than 5% of its gross revenue, directly or indirectly,

through the sale of products, services or the presentation of any
depictions or displays of a prurient sexual nature.

b. SBA has determined that financing lawful activities of a

prurient sexual nature is not in the public interest. The Lender

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must consider whether the nature and extent of the sexual

component causes the business activity to be prurient.

c. If a Lender finds that the Applicant may have a business aspect of

a prurient sexual nature, prior to submitting an application to the
LGPC (non-delegated) or requesting a loan number (delegated), the
Lender must document and submit the analysis and supporting
documentation to the Associate General Counsel for Litigation at
PSMReview@SBA.gov for a final Agency decision on eligibility.
Upon approval by SBA, the Lender may submit the application to
the LGPC or may proceed to process the loan under its delegated
authority. A non-delegated Lender must submit a copy of SBA’s
approval with the application to the LGPC. A delegated Lender must
retain its analysis, supporting documentation, and evidence of SBA’s
approval in its loan file and must submit the analysis and supporting
documentation to SBA with any request for guaranty purchase. SBA
also may review such documentation when conducting Lender
oversight activities.

(These provisions are hereinafter referred to as “SOP.”)

38. Defendant SBA is responsible for formulating, issuing, and enforcing the Regulations

and the SOP.

39. A true and accurate exemplar copy of the SBA Paycheck Protection Program Borrower

Application Form 2483 submitted by the Plaintiff herein to The Belmont Bank & Trust as

delegee of the SBA on April 6, 2020 is attached hereto as Exhibit “F”, and is hereby

incorporated by reference.

V. ALLEGATIONS OF FACT AS TO ALL CAUSES OF ACTION

40. The Admiral is an establishment that is open to the consenting adult public, and has both a

restaurant facility and has been licensed by the City of Chicago, in which it is located, to

operate a restaurant and a Gentlemen’s Club which features non-obscene erotic dance

entertainment.

41. All of the entertainment provided by the Admiral is non-obscene (and thus cannot be

deemed prurient), and is designed to appeal to a healthy interest in basic human sexuality

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and is in full compliance with the numerous licenses and permits that are held by the

Plaintiff, which have been reviewed by municipal authorities and renewed annually.

42. None of the live performances at the Admiral are obscene or unlawful in any way.

43. It is the sound belief of the Plaintiff that because its performances have been and are

intended in the future to be exclusively aimed at a normal and healthy interest in a normal

attraction to women, that none of its performances can fairly be said to be of a prurient

nature or to appeal to a prurient interest in sexuality, as the word “prurient” is properly

understood as a legal term of art. See Brocket v. Spokane Arcades, Inc., 472 U.S. 491, 105

S.Ct. 2794 (1985).

44. It has been established in American law that an appeal to a “prurient” interest means an

appeal to a shameful or morbid interest rather than a normal or healthy interest in sex.

45. On information and belief, the Defendants presently disagree and consider such

performances as the erotic dance which has been and will be presented by the Plaintiff to

appeal to a prurient interest merely because such presentation are aimed at even healthy

erotic attraction, and, on information and belief, those defendants intend to deny or to so

delay the processing of the the Plaintiff’s application for loan benefits under the PPP

program as to amount to a denial as a practical matter for solely that reason.

46. No entertainer performing at the Admiral has ever been charged with, let alone convicted

of, the crime of obscenity.

47. J.B. Pritzker, Governor of Illinois, issued “Executive Order in Response to COVID-19”

(EO#8), closing all “non-essential” an “amusement” locations to cease operations as of

March 20, 2020. See Exhibit “G”, attached hereto and hereby incorporated by reference.

Lori Lightfoot, the Mayor of Chicago has also embraced the closure of public

establishments as established in the Governor’s Proclamation. The governmental orders

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have had the effect of terminating the ability of the Plaintiff to operate its business and to

earn and receive any revenues.

48. The Admiral has been closed for business since March 15, 2020 and is currently

shuttered as a result of the above described orders.

49. As a direct and proximate result of such state-ordered closure, the Plaintiff has suffered

significant business losses, but hopes to reopen when legally permitted to do so, if the

Admiral can survive without incoming business revenue, including maintaining its

premises lease, which obligations it is presently unable to meet from any revenues, until

the aforesaid restrictions are lifted and the Plaintiff is permitted to resume operations.

50. In order to mitigate its business losses and to provide monetary relief to its employees –

since at least 75% of PPP loans are to be used for employee wages, the Plaintiff

determined to apply for a PPP loan.

51. The Admiral’s application was correctly and completely filled out and all necessary

documentation was attached and provided on April 6, 2020 to the Belmont Bank & Trust

Company (the “Belmont Bank”), the Bank at which the Admiral conducted its banking

business, located at 8250 West Belmont Ave., Chicago, Illinois 60634.

52. After many days of trying to inspire the Belmont Bank to submit its application for PPP

benefits to the SBA, on or about April 15, 2020, the Belmont Bank submitted the

completed application, along with a letter prepared by Plaintiff’s counsel explaining the

inapplicability of the concept of “prurience” to a lawful Gentlemen’s Club and further

asserting that any denial of PPP benefits to the Plaintiff would be completely

unsupportable. A copy of this letter is attached hereto as Exhibit “H.”

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53. Pursuant to 15 U.S.C. § 636(a)(36)(F)(ii)(I), Belmont Bank operates as a delegate of the

SBA in the processing and approval or disapproval of the PPP loans sought by Plaintiff.

54. The Plaintiff is fully qualified -- but for the Regulations and the SOP or the SBA’s

application thereof -- to receive a PPP loan under all relevant statutes, regulations, and

procedures.

55. After further inquiries made to Belmont Bank as to the status of the Admiral’s PPP

application, the Bank sent a letter, dated May 4, 2020, to the Plaintiff, explaining that the

application and counsel’s letter were submitted to the SBA, and that, a full week later,

“On April 22, 2020, Mr. Bill Gery, Trial Attorney, Office of Litigation, Office of the

General Counsel, SBA, indicated that he was reviewing the Bank’s request and hoped to

have a response completed by Friday April 24, 2020.”

56. The letter further indicated that “Mr. Gery has made a recommendation on the issue of

Admiral’s eligibility to his superior. As of the date of this letter, Mr. Gery has not shared

his recommendation, as he has indicated that he was still awaiting the final ruling on the

Admiral’s SBA PPP eligibility from his superior.

57. The Plaintiffs have learned that numerous other similar businesses, which present non-

obscene female performance dance entertainment of an “exotic,” “topless” or fully nude

variety, have had their applications for PPP loans rejected by their SBA lending banks,

based on their banks’ stated belief that the business is disqualified by the Regulations

and/or the SOP.

58. In contrast, the SBA has approved many Gentlemen’s Clubs and other “adult” oriented

establishments for PPP benefits, and, based on information and belief, even one brothel in

Nevada, Bella’s Hacienda Ranch.

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59. Specifically, the Plaintiff has learned that other similar establishments have had their

applications for PPP loans rejected on the belief that the clubs present “live performances

of a prurient sexual nature” within the meaning of 13 C.F.R. § 120.110(p).

60. There are currently two other cases known to Plaintiff where complaints for declaratory

and injunctive relief have been filed by Gentlemen’s Clubs seeking the same SBA PPP

benefits at issue herein, on the same legal bases asserted herein.

61. The first of the cases is DV Diamond Club of Flint, LLC, etc., v. United States Small

Business Administration, et al, Case No.: 4:20-cv-10899-DRG, United States District

Court, Eastern District of Michigan, Southern Division. As the date of filing the instant

action, this Court has a Motion for Preliminary Injunction under advisement.

62. The second of these cases is Camelot Banquet Rooms, Inc., et al v. United States Small

Business Administration et al, Case No.: 2:20-cv-00601-LA. On the day it as filed, the

Court issued a Temporary Restraining Order, requiring the SBA to administer the

Plaintiff Clubs’ applications and ordering hat the applications be placed in the “queue” so

they would be on equal footing with other businesses whose application had not been

delayed. A copy of the minute entry reflecting the issuance of the TRO is attached hereto

as Exhibit “I.”

63. On May 1, 2020, the Court issued a Decision and Order, granting the Preliminary

Injunction, attached hereto as Exhibit “J.” The Court ordered:

the SBA and the Secretary of the Treasury…including the SBA’s lending
banks, are preliminarily enjoined from using 13 C.F.R. Sec. 120.110(p) and
the associated SAB Standard Operating Procedures (SOP 50 10 5 (k) Sec.
III.A,15) in making eligibility determinations for loans under 15 U.S.C.
Sec. 636(a)(36). By Monday, May 4, 2020, the Administrator of the U.S.
Small Business Administration and the Secretary of the Treasury shall
transmit guarantee authority to the plaintiffs’ lenders so that those lenders

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may finish processing the plaintiffs’ applications for PPP loans and
immediately fund the loans.” SEe Exhibit “K,” p. 33.

64. In both of the above pending cases, Counsel for the governmental Defendants have

vigorously opposed all relief requested by the Plaintiffs and, in the Wisconsin case, have

already filed an appeal and sought a stay, which was denied by the District Court.

65. The funds allocated for PPP loans are being extended on a first-come, first-served basis

until the funds are exhausted, which has previously occurred, and is destined to occur

again unless this Court grants relief to the Plaintiff.

66. Plaintiff fears that the customs and practices exhibited by the SBA in similar actions, the

nature of the Regulations and the SOP, and the clear delays and obfuscation exhibited by

the SBA in what should be a comparatively simple ministerial process, will cause its

application to be delayed until all PPP loan funds are exhausted, rendering any pending

or later request for judicial relief to be moot.

67. In fact, the original money funding the SBA PPP benefits, some $349 Billion for

distressed businesses earmarked by Congress for PPP benefits was exhausted, resulting in

the denial of the applications pending when the funds ran out.

68. The SAB PPP fund was then replenished on April 24, 2020, for another $321 Billion, so

the aspect of funds disappearing as time passes makes this matter ripe for the issuance of

a TRO and subsequent preliminary injunction.

69. The SOP provides that if the “Lender finds that the Applicant may have a business aspect

of a prurient sexual nature” the lender is to email the SBA for a “final Agency decision

on eligibility.”

70. Given the pressures and workload placed on the SBA by the CARES Act and the

COVID-19 pandemic, the Plaintiff reasonably fears that no agency decision will be

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forthcoming while PPP funds remain, or that the SBA will decide that Plaintiff is not

eligible when there is no time for them to obtain relief while PPP funds still remain.

71. In the event that Plaintiff is unable to obtain PPP loans, it may lack the staff and/or funds

to reopen following the COVID-19 pandemic, resulting in the permanent ruination of its

business, the inability of Plaintiff to engaged in protected First Amendment activity, and

the inability of Plaintiff’s staff, entertainers, and customers to continue engaging in or

viewing protected First Amendment activity.

72. In asserting its First Amendment challenges to the Regulations and SOP, Plaintiff asserts

not only its own rights but also the rights of its employees, and the entertainers who

perform on its premises.

VI. VIOLATIONS OF LAW

COUNT I

Violation of the Free Speech Clause

of the First Amendment to the U.S. Constitution

73. Plaintiff incorporates by reference paragraphs 1-72 as if fully restated herein.

74. Statutes that regulate activity based upon the content of the speaker’s speech are

presumptively unconstitutional. Reed v. Town of Gilbert, 135 S. Ct. 2218 at 2226 (2015). A

regulation is content-based if it requires enforcement authorities to examine the content of

the message that is conveyed to determine whether an applicant for PPP benefits shall be

denied, resulting in a loss of benefits for “disaster relief” that encompasses all affected

small businesses.

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75. When a statute imposes a regulation that is based on the content of the speaker’s speech,

it is of no constitutional significance whether the statute is a complete prohibition or a

limitation. The statute is still presumptively unconstitutional and subject to strict scrutiny.

76. On their face, the SBA’s regulations and conduct are susceptible to an interpretation that

would deny Plaintiff benefits under the PPP program, presumably on the concept of a

finding that its loans are not eligible for “Businesses that present live performances of a

prurient sexual nature” or derive “directly or indirectly more than de minimis gross

revenue through the sale” of items of a prurient sexual nature.” 13 C.F.R. § 120.110(p) if

“prurient sexual nature” is construed to include performances that apply to a normal and

healthy interest in eroticism and sexuality.

77. The SBA’s Adult Business Restriction constitutes a content-based speech ban (likely to

cause the permanent cessation of the performances of affected businesses) because, to

enforce it, the SBA must look to the content of Plaintiffs’ speech, here dance.

78. The SBA does not have a compelling interest to prohibit Plaintiffs’ otherwise eligible

small businesses from obtaining loans under the PPP. In fact, neither the SBA nor the

government of the United States have any legitimate interest at all in denying otherwise

generally-available benefits to businesses merely because they present performances

appealing to a normal and healthy interest in sexuality.

79. Furthermore, the SBA’s means—a complete prohibition—are not narrowly tailored. Less

intrusive means other than a complete ban do exist.

80. Accordingly, the SBA’s Restriction found in 13 C.F.R. § 120.110(p) is an

unconstitutional content-based speech prohibition.

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81. Argument that the statute contemplates that, in the absence of this kind of relief, the

current economic situation will cause the destruction of affected businesses. This policy

of the SBA works as a closure of the businesses by denying them the kind of emergency

relief extended to all other lawful businesses based “pure and simple” on the kind of

expression they convey and knowingly intends, in light of the facts and circumstances

known to the SBA, that destruction of the applicant businesses and the cessation of the

kind of live entertainment they provide to the extent of the power of the SBA to effect.

COUNT II

Violation of the Due Process Clause

of the Fifth Amendment to the U.S. Constitution

82. Plaintiff incorporates by reference paragraphs 1-72as if fully restated herein.

83. Under the statute and regulations previously alleged herein, the defendants have been

authorized to create and administer a program of general economic relief, widely

available to a large and nearly universal class of small and medium-sized businesses,

excepting and disparately and adversely excluding only a small, limited, and

fragmentary portion of those businesses.

84. It is the aim of the program established under the statute and regulations to save and

preserve the operations of a wide and general class of such businesses during the

present pandemic against the sure knowledge that a substantial portion of them, without

such relief, will be unable to survive as viable businesses as a result of the pandemic.

85. This complaint deals with the adverse and disparate exclusion of Plaintiff, which, on

information and belief, the SBA will deny benefits which will cause the economic

destruction of the Plaintiff’s business while assisting the future survival and prosperity

of the large majority of small and medium-sized businesses in the United States which

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do not provide similar content of expression.

86. The defendants, on information and belief, have so accordingly attempted to craft and

engineer their improper and unconstitutional policy of economic exclusion against

adult-oriented entertainment oriented businesses by excluding any such businesses as

may provide what they now call “prurient” products or entertainments, despite the

established meaning of that term in American jurisprudence as a legal term of art which

applies only to “shameful or morbid” presentations, none of which occur at the

Admiral.

87. This result is a content-based discrimination aimed at the economic destruction of such

businesses during a prolonged period during which the Plaintiff is prohibited by law

and government regulation from performing its business of conducting public

performances.

88. The PPP program here at issue was not intended as a subsidy to any select program or

programs, but as a broad from of relief intended to benefit all businesses of a certain

size unless particularly excluded.

89. The Due Process Clause of the Fifth Amendment declares that no person shall be

“deprived of life, liberty, or property, without due process of law.” U.S. Const. amend.

V. Included within the Fifth Amendment’s Due Process Clause are the same equal

protection principles contained in the Fourteenth Amendment’s Equal Protection

Clause.

90. The injury in fact in an equal protection case of this variety is the denial of equal

treatment of Plaintiff and access to the PPP benefits at issue herein because of the

nature of its speech.

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91. SBA’s PPP benefits are available to all businesses, including 501(c)(3) nonprofits,

veterans organizations, and faith based groups. But, the SBA prevents businesses that

engage primarily in “adult” activity from obtaining these loans. 13 C.F.R. § 120.110(p).

92. Here, the SBA’s Restriction in 13 C.F.R. § 120.110(p) treats differently those who are

exercising their constitutional right to free speech from those who are not. In fact, those

exercising the constitutional rights described herein are completely prohibited from

obtaining these PPP loans. Other small businesses are not.

93. This is an unconstitutional distinction prohibiting those who exercise fundamental

constitutional rights from obtaining much needed loans while allowing those who do

not exercise fundamental constitutional rights to obtain them. This violates the equal

protection component of the Fifth Amendment’s Due Process Clause.

94. Like other small businesses that are coping with the economic impact of COVID-19,

Plaintiff is in dire need of an infusion of funds. They are otherwise eligible for loans

through the PPP. The SBA prohibits Plaintiff from obtaining this necessary cash

infusion because Plaintiff exercises its fundamental constitutional rights. This violates

the equal protection component of the Fifth Amendment.

95. The Equal Protection Clause requires that statutes affecting First Amendment interests

be narrowly tailored to their legitimate objectives.

96. A complete prohibition of adult-oriented businesses is not narrowly tailored. The

government does not have a legitimate interest during this global pandemic in

preventing small businesses from obtaining much needed cash to cover payroll and

health insurance for their employees just because these small businesses exercise

fundamental constitutional rights.

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97. The Regulations and the SOP violate and are contrary to the First Amendment of the

United States Constitution, on their face and as applied to Plaintiffs, for numerous

reasons including but not limited to:

i. They are impermissible content-based restrictions on expression that do not pass

muster under either strict scrutiny or intermediate scrutiny;

ii. They treat the performances at Plaintiffs’ club as though they were obscene, and in

so doing, fail to conform to the constitutional standards by which obscenity is

defined and regulated;

iii. They violate the doctrine of unconstitutional conditions; and

iv. They are unconstitutionally vague under the vagueness standards for matters

impacting speech and expression.

98. The Regulations and the SOP violate and are contrary to the Fifth Amendment of the

United States Constitution, on their face and as applied to Plaintiff, for numerous reasons

including but not limited to:

a. They treat establishments presenting certain forms of performance dance

entertainment, such as Plaintiff, differently and disparately without lawful

justification from establishments presenting other forms of entertainment or no

entertainment, for no compelling, important, or rational reason;

b. They treat workers at establishments presenting certain forms of performance dance

entertainment, such as those operated by the Plaintiff, differently from workers at

establishments presenting other forms of entertainment or no entertainment, for no

compelling, important, or rational reason;

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c. They violate the rights of Plaintiff, its employees, and the entertainers who perform

on its premises under the occupational liberty component of the Fifth Amendment;

and

d. They are impermissibly vague.

88. Because it is clear and unambiguous as to which businesses are eligible for PPP loans

under the CARES Act, including this Plaintiff, the SBA lacked authority to promulgate

regulations with restricted or otherwise “clarified” what businesses were eligible for PPP

Loans.

VI I. D AMAGES

89. As a direct and proximate result of the unconstitutional aspects of the Regulations and

SOP related to PPP Loans, and the Defendants’ and their delegates’ application of the

Regulations and the SOP against Plaintiff and its interests, the Plaintiff, Plaintiff’s

employees, and the entertainers who perform on Plaintiff’s premises have suffered and

will continue to suffer irreparable injuries, including but not limited to financial ruin,

business ruination, and the inability to present protected First Amendment protected

entertainment.

90. As a direct and proximate result of the invalid portions of these Regulations and SOP and

the Defendants’ and their delegates’ application of the Regulations and the SOP against

Plaintiff and its interests, Plaintiff’s employees, and the entertainers who perform on

Plaintiff’s premises have suffered and will continue to suffer irreparable injuries including

but not limited to financial ruin and business ruination.

III. CONDITIONS PRECEDENT

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91. All conditions precedent to this action, within the meaning of Rule 9(c), Fed. R. Civ.

Pro., have been performed or have otherwise occurred.

IX. PRAYER FOR RELIEF

WHEREFORE, the Plaintiffs pray that the Court grant judgment against the Defendants

as follows:

92. Pursuant to 28 U.S.C. §§ 2201 and 2202, declare unconstitutional the Paycheck

Protection Program’s Adult Business Restriction contained in 13 C.F.R. § 120.110(p), as

applied to Plaintiff because the Adult Business Restriction violates the First, Fifth, and

Fourteenth Amendments to the U.S. Constitution.

93. Pursuant to 28 U.S.C. §§ 2201 and 2202, declare that use of the word “prurient” in any of

the regulations at issue herein be construed as having the same meaning and definition as

determined by prior decisions of the United States Supreme Court, and inapplicable to

lawfully operating and licensed Gentlemen’s Clubs presenting presumptively protected

First Amendment dance performances, such as Plaintiff.

94. Issue orders granting a Temporary Restraining Order, Preliminary, and Permanent

Injunction enjoining the Defendants, as well as their employees, agent and representatives,

including the SBA’s lending banks, from enforcing or utilizing in any fashion or manner

whatsoever, 13 C.F.R. § 120.110(p) and SBA SOP 50 10 5(K), Ch. 2(III)(A)(15) in regard

to loan applications made pursuant to the Payroll Protection Program of the CARES Act;

95. As part of those orders, order the Defendants, as well as their employees, agent and

representatives, to notify, as expeditiously as possible, all SBA lending banks to

immediately discontinue utilizing 13 C.F.R. § 120.110(p) and/or SBA SOP 50 10 5(K),

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Ch. 2(III)(A)(15) as criteria for determining PPP loan application eligibility, and to fully

process all PPP loan applications without reference to such regulations and procedures;

96. As a further part of those orders, order the Defendants, as well as their employees, agent

and representatives, including the SBA’s lending banks, to restore Plaintiffs to the place in

the application queue as they were at the time of application in the event that their

applications have already been formally denied, derailed, or paused because of the

challenged regulations and procedures challenged here;

97. Award monetary damages in amounts that will fairly compensate the Plaintiffs for their

injuries; and

98. Award Plaintiffs reasonable attorneys’ fees pursuant to the Equal Access to Justice Act

(“EAJA”), 28 U.S.C. § 2412(d). Award all other relief that this Court deems just and

necessary.

Date: May 8, 2020 Respectfully submitted,

/s/__J.D. Obenberger___________

J. D. Obenberger
J. D. Obenberger and Associates
20 North Clark Street, Suite 3300
Chicago, IL 60602
Office Telephone 312.558.6420
Cellular Telephone 312.405.6420
obiwan@xxxlaw.net
Admitted to the Trial Bar of this Honorable Court
Attorneys for Plaintiffs
LOCAL COUNSEL

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/s/Luke Lirot

Luke Lirot, Esq.

Florida Bar Number 714836
LUKE CHARLES LIROT, P.A.
2240 Belleair Road, Suite 190
Clearwater, Florida 33764
Telephone: (727) 536-2100
Facsimile: (727) 536-2110
Attorneys for Plaintiffs
luke2@lirotlaw.com (primary e-mail)
krista@lirotlaw.com (secondary e-mail)
sean@lirotlaw.com (secondary e-mail)
SUBJECT TO ADMISSION PRO HAC VICE

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