4-13-20 American Association of Political Consultants V SBA Complaint
4-13-20 American Association of Political Consultants V SBA Complaint
_________________________________________
)
AMERICAN ASSOCIATION OF )
POLITICAL CONSULTANTS )
)
RIDDER/BRADEN, INC. )
) Civil Case No. __________
Plaintiffs, )
)
v. )
)
UNITED STATES )
SMALL BUSINESS ADMINISTRATION, )
)
-and- )
)
JOVITA CARRANZA )
In her Official Capacity as )
Administrator of the )
U.S. Small Business Administration )
)
Defendants. )
_________________________________________ )
and Ridder/Braden, Inc., (collectively, “Plaintiffs”) bring this action for declaratory and
injunctive relief, against the Small Business Administration (“SBA”) and Jovita Carranza,
complain as follows:
INTRODUCTION
the COVID-19 virus have had on the United States economy, the Coronavirus Aid, Relief,
and Economic Security Act (“CARES Act”) established the Paycheck Protection Program
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(“PPP”) Loans. These Loans, which are administered and guaranteed by the SBA, assist
small businesses with expenses such as payroll, health insurance, and rent expenses during
the COVID-19 emergency and permit some recipients to qualify for loan forgiveness. Due
activities are ineligible for PPP loans (hereinafter the “Political Speech Prohibition”),
otherwise eligible recipient’s political or civic involvement clearly violates free speech and
equal protection. Specifically, the Political Speech Prohibition violates the First
activities from the PPP also deprives them of equal protection in violation of the Fifth
Amendment because other similarly situated businesses are eligible for those loans. Such
violations are made ever so much more egregious given the dire economic straits resulting
seeking declaratory and injunctive relief to prohibit the SBA from excluding Plaintiffs and
other businesses primarily engaged in political and lobbying activity from PPP loans.
PARTIES
of political and public affairs professionals. AAPC has over 1,500 members making it the
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largest association of political and public affairs professionals. Members include political
process at varying levels, ranging from local to national politics, and everything in-
between. AAPC has its headquarters in McLean, Virginia. Many AAPC members are
LLC is a full-service political consulting firm providing services to its clients at the federal,
state, and local level. Id. at ¶ 3. GR Pro, LLC focuses its efforts at advancing its clients’
candidacies for office and ballot measures, and occasionally engages in lobbying. Id. GR
Pro, LLC is a member of the AAPC. Id. at ¶ 6. GR Pro, LLC has already been forced to let
COVID-19 measures. Id. at ¶ 8. Absent a PPP loan, GR Pro, LLC will suffer even greater
financial hardship. Id. at ¶ 9. GR Pro, LLC intends to apply for a loan through PPP. Id. at
¶¶ 10, 15. GR Pro, LLC has not yet applied because it is ineligible due to the SBA’s
Political Speech Prohibition. Id. GR Pro, LLC is otherwise eligible to participate in PPP.
Id. at ¶¶ 18-21.
engages in lobbying, in Denver, Colorado. Ridder Aff. at ¶¶ 2-3 (attached hereto as Exhibit
E). Ridder\Braden, Inc., performs primarily general political consulting services and public
opinion polling services to candidates and ballot measures at the federal, state, and local
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levels. Id. at ¶¶ 2-3, 5. In addition, a small amount of the firm’s business is general public
affairs. One of its owners is currently a Colorado registered lobbyist for the Rocky
Mountain Wolf Action Fund. Id. at ¶ 4. Ridder\Braden, Inc., focuses its business at
advancing its clients’ candidacies for office and ballot measures, and policy goals.
Ridder\Braden, Inc. is also a member of the AAPC. Id. at ¶ 7. Ridder\Braden, Inc. has
already been forced to reduce their use of independent contractors due to the economic
turmoil created by COVID-19 measures. Id. at ¶ 9. Absent a PPP loan, Ridder\Braden, Inc.
will suffer even greater financial hardship. Id. at ¶ 10. Ridder\Braden, Inc. intends to apply
for a loan through PPP. Id. at ¶¶ 11, 16. Ridder\Braden, Inc. has not yet applied because it
is ineligible due to the SBA’s Political Speech Prohibition. Id. at ¶ 11. Ridder\Braden, Inc.
9. Defendant SBA is tasked with assisting and protecting the interests of small
particularly when small businesses are victims of a disaster. 13 C.F.R. § 101.100. The SBA
is headed by an Administrator who is appointed by the President of the United States and
confirmed by the United States Senate. 13 C.F.R. § 101.101(a). Importantly here, the SBA
is vested with the authority to administer the PPP. 13 C.F.R. § 120.1 et seq.; CARES Act,
Pub. L. No. 116-136, §1102, 1006 134 Stat. 281 (2020).; see also Interim Final Rule,
Business Loan Program Temporary Changes; Paycheck Protection Program, Docket No.
10. Defendant Jovita Carranza is the Administrator of the SBA. Ms. Carranza
exercises “direction, authority, and control over SBA.” Ms. Carranza both determines and
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approves all of SBA’s programs to provide aid and assistance to small businesses in the
JURISDICTION
11. This Court has jurisdiction pursuant to 28 U.S.C. § 1331 because this case
engaged in political and lobbying activity from receiving loans that the SBA oversees,
violates the Free Speech Clause of the First Amendment and the Due Process Clause of the
12. This Court also has jurisdiction pursuant to 15 U.S.C. § 634(b)(1) which
vests jurisdiction in any United States District Court to adjudicate cases against the
because the SBA has its headquarters in the District of Columbia. See 13 C.F.R. § 101.102
FACTUAL ALLEGATIONS
14. As the night of an old decade turned to the dawn of a new decade, a novel
15. In the waning days of 2019, what is now known as the novel Coronavirus
disease 2019 (“COVID-19”) struck its first victims in the city of Wuhan, Hubei Province,
China.1
1
See Covid-19 Data Visualization Center, New Cases of COVID-19 in World Countries
(Apr. 11, 2020) available at https://coronavirus.jhu.edu/data/new-cases.
5
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16. Then, in early January 2020 this mysterious, insidious, and pernicious virus
surreptitiously slipped out of China and into Thailand and Japan, infecting more victims.2
17. On January 15, 2020 the World Health Organization (“WHO”) declared an
outbreak of this novel virus and warned countries in Asia to be prepared to combat this
virus. The WHO also identified this mysterious virus for the first time as COVID-19.3
18. Approximately, one week later, this insidious disease landed on American
soil.4
20. On January 25, 2020, The WHO began sounding the alarm throughout the
Mediterranean region. Four days later, The United Arab Emirates reported its first
confirmed COVID-19 victims. Highlighting the insidious nature of this pernicious disease,
2
See U.S. Department of Health and Human Services, Public Health Screening to Begin
at 3 U.S. Airports for 2019 Novel Coronavirus (Jan. 17, 2020) available at
https://www.cdc.gov/media/releases/2020/p0117-coronavirus-screening.html; see also
World Health Organization, WHO statement on novel coronavirus in Thailand (Jan. 13,
2020) available at https://www.who.int/news-room/detail/13-01-2020-who-statement-on-
novel-coronavirus-in-thailand.
3
See World Health Organization, Coronavirus outbreak shows Asia needs to step up
infection preparation (Jan. 15, 2020) available at
https://www.who.int/westernpacific/news/commentaries/detail-hq/coronavirus-outbreak-
shows-asia-needs-to-step-up-infection-preparation; see also World Health Organization,
Mission Summary: WHO Field Visit to Wuhan, China 20-21 January 2020 (Jan. 22,
2020) available at https://www.who.int/china/news/detail/22-01-2020-field-visit-wuhan-
china-jan-2020.
4
See supra n.1.
5
See World Health Organization, WHO’s Eastern Mediterranean Region Scales Up
Preparedness for Novel Coronavirus (Jan. 27, 2020) available at
http://www.emro.who.int/media/news/whos-eastern-mediterranean-region-scales-up-
preparedness-for-novel-coronavirus.html.
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the WHO identified that some victims of COVID-19 were asymptomatic, meaning the
21. Approximately five days later Spain, Italy, and the United Kingdom
22. On February 24, 2020, with 35 Americans testing positive for COVID-19,
President Trump requested that Congress appropriate $1.25 billion in funds to prepare for
a COVID-19 outbreak.8
23. By the beginning of March 2020, COVID-19 had expanded its reach
surpassed 118,000, with victims in 114 countries, the WHO declared COVID-19 a global
pandemic.10
25. Two days later, on March 13, 2020, after this insidious and pernicious virus
6
See World Health Organization, WHO confirms first cases of novel coronavirus (2019-
nCoV) in the Eastern Mediterranean Region (Jan. 29, 2020) available at
http://www.emro.who.int/media/news/who-confirms-first-cases-of-novel-coronavirus-
2019-ncov-in-the-eastern-mediterranean-region.html.
7
See supra n.1.
8
See Derrick Taylor, The Trump Administration Asks Congress for $1.25 Billion For
Coronavirus Response, N.Y. Times (Apr. 7, 2020) available at
https://www.nytimes.com/article/coronavirus-timeline.html.
9
See World Health Organization, WHO Statement on Cases of COVID-19 Surpassing 100
000 (Mar. 7, 2020) available at https://www.who.int/news-room/detail/07-03-2020-who-
statement-on-cases-of-covid-19-surpassing-100-000.
10
See World Health Organization, WHO Director-General's Opening Remarks at the
Media Briefing on COVID-19 - 11 March 2020, available at
https://www.who.int/dg/speeches/detail/who-director-general-s-opening-remarks-at-the-
media-briefing-on-covid-19---11-march-2020.
11
See President Donald J. Trump, Proclamation on Declaring a National Emergency
Concerning the Novel Coronavirus Disease (COVID-19) Outbreak (Mar. 13, 2020)
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26. Then, on March 17, 2020, President Trump declared that, for a period of 15
27. The White House in collaboration with the Centers for Disease Control and
Prevention (“CDC”) published guidelines for how people should conduct themselves
during the following 15 days. Included within these guidelines was the recommendation
that, in areas where community spread of COVID-19 is present, “bars, restaurants, food
courts, gyms, and other indoor and outdoor venues where groups of people congregate
28. The CDC has recommended that people maintain a safe social distance of
at least six feet. 13 This is because contact with a person within six feet can facilitate
transmission of COVID-19.
29. State governments have issued orders requiring various businesses to close
available at https://www.whitehouse.gov/presidential-actions/proclamation-declaring-
national-emergency-concerning-novel-coronavirus-disease-covid-19-outbreak/. See also
Jordain Carney, Coronavirus pushes GOP's Biden-Burisma probe to back burner, The
Hill (Mar. 29, 2020) https://thehill.com/homenews/senate/489950-coronavirus-pushes-
gops-biden-burisma-probe-to-back-burner.
12
See The White House, The President’s Coronavirus Guidelines for America: 15 Days
to Slow the Spread, available at https://www.whitehouse.gov/wp-
content/uploads/2020/03/03.16.20_coronavirus-guidance_8.5x11_315PM.pdf (last visited
Mar. 19, 2020).
13
See Centers for Disease Control and Prevention, Interim U.S. Guidance for Risk
Assessment and Public Health Management of Healthcare Personnel with Potential
Exposure in a Healthcare Setting to Patients with Coronavirus Disease (COVID-19) (Mar.
7, 2020) available at https://www.cdc.gov/coronavirus/2019-ncov/hcp/guidance-risk-
assesment-hcp.html.
8
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30. For example, on March 12, 2020 Governor Northam of the Commonwealth
public health threat because it is a communicable disease.14 Four days later on Monday,
March 16, 2020, Governor Northam issued a directive stating that restaurants, fitness
centers, and theaters either had to reduce capacity to 10 people or close.15 On March 23,
2020, Governor Northam ordered all businesses to observe social-distancing practices and
to not allow more than 10 people in the business at any one time. If that business could not
adhere to those limitations, and it was not deemed an essential business, Governor Northam
ordered the business closed. Governor Northam also encouraged businesses that could do
so to telework as much as possible.16 Then, on March 30, Governor Northam issued a “stay
14
See Governor Ralph Northam, Executive Order No. 51 (2020) DECLARATION OF A
STATE OF EMERGENCY DUE TO NOVEL CORONAVIRUS (COVID-19) (Mar. 12,
2020) available at
https://www.governor.virginia.gov/media/governorvirginiagov/governor-of-
virginia/pdf/eo/EO-51-Declaration-of-a-State-of-Emergency-Due-to-Novel-Coronavirus-
(COVID-19).pdf.
15
See Governor Ralph Northam, Governor Northam Announces New Measures to Combat
COVID-19 and Support Impacted Virginians (Mar. 17, 2020) available at
https://www.governor.virginia.gov/newsroom/all-releases/2020/march/headline-854487-
en.html.
16
See Governor Ralph Northam, Executive Order No. 53, Temporary Restrictions on
Restaurants, Recreational, Entertainment, Gatherings, Non-Essential Retail Businesses,
and Closure of K-12 Schools Due to Novel Coronavirus (Covid-19) (Mar. 23, 2020)
available at https://www.governor.virginia.gov/media/governorvirginiagov/executive-
actions/EO-53-Temporary-Restrictions-Due-To-Novel-Coronavirus-(COVID-19).pdf.
17
See Governor Ralph Northam, Executive Order No. 55, Temporary Stay at Home Order
Due to Novel Coronavirus (Covid-19) (Mar. 30, 2020) available at
https://www.governor.virginia.gov/media/governorvirginiagov/executive-actions/EO-55-
Temporary-Stay-at-Home-Order-Due-to-Novel-Coronavirus-(COVID-19).pdf.
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31. Also on March 16, Mayor Muriel Bowser of the District of Columbia issued
an order prohibiting all gatherings of 50 or more people. Mayor Bowser also ordered all
restaurants, gyms, nightclubs, spas, and theatres to close.18 On March 24, 2020, Mayor
32. Also on March 24, 2020, Governor J. Kevin Stitt of Oklahoma declared a
state of emergency for Oklahoma and ordered all non-critical businesses to close.20
33. The following day, on March 25, Governor Jared Polis of Colorado ordered
all non-critical businesses to close.21 Governor Polis has ordered non-critical businesses to
18
See Mayor Muriel Bowser, Prohibition on Mass Gatherings During Public Health
Emergency (Mar. 16, 2020) available at
https://mayor.dc.gov/sites/default/files/dc/sites/mayormb/publication/attachments/MO-
Prohibition-on-Mass-Gatherings-During-Public-Health-Emergency.pdf.
19
See Mayor Muriel Bowser, Closure of Non-Essential Businesses and Prohibition on
Large Gatherings During Public Health Emergency for the 2019 Novel Coronavirus
(COVID-19) (Mar. 24, 2020) available at
https://coronavirus.dc.gov/sites/default/files/dc/sites/mayormb/release_content/attachmen
ts/Mayor%27s%20Order%202020-053%20Closure%20of%20Non-
Essential%20Businesses%20and%20Prohibiti....pdf.
20
See Governor Kevin Stitt, Fourth Amended Executive Order 2020-07 (Mar. 24, 2020)
available at https://www.sos.ok.gov/documents/executive/1919.pdf.
21
See Governor Jared Polis, Executive Order D 2020-17 Ordering Coloradans to Stay at
Home Due to the Presence of COVID-19 in the State (Mar. 25, 2020) available at
https://www.colorado.gov/governor/sites/default/files/inline-
files/D%202020%20017%20Ordering%20Coloradans%20to%20Stay%20at%20Home_0
.pdf.
22
See Governor Jared Polis, Executive Order D 2020-24 Amending and Extending
Executive Order D 2020 017 Ordering Coloradans to Stay at Home Due to the Presence
of COVID-19 (Apr. 6, 2020) available at
https://www.colorado.gov/governor/sites/default/files/inline-
files/D%202020%20024%20Amending%20and%20Extending%20Executive%20Order%
20D%202020%20017%20Stay%20at%20Home%20Order_0.pdf.
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34. As of April 13, 2020, this insidious and pernicious virus has infected
35. But COVID-19 is not just ravaging the health of Americans, it is also
36. On January 22, 2020, approximately the day that the first case of COVID-
19 was reported in the United States, the Dow Jones Industrial Average closed at
37. But by Friday April 3, 2020, 41 states and the District of Columbia had
issued stay-at-home orders, meaning 316 million Americans have been ordered to stay at
38. Accordingly, on Thursday, April 9, 2020, the Dow Jones Industrial Average
had dropped to 23,719.37.26 Furthermore, between March 19 and April 9, 2020, the number
23
See supra n.1.
24
See Fred Imbert, Stocks Close Little Changed, IBM Leads Tech Shares Higher, CNBC
(Jan. 24, 2020) available at https://www.cnbc.com/2020/01/22/us-futures-point-to-higher-
open.html; see also U.S. Bureau of Labor and Statistics, Unemployment Rate 2.0 Percent
For College Grads, 3.8 Percent For High School Grads In January 2020 (Feb. 12, 2020)
available at https://www.bls.gov/opub/ted/2020/unemployment-rate-2-percent-for-
college-grads-3-8-percent-for-high-school-grads-in-january-2020.htm.
25
See Sarah Mervosh, Which States and Cities Have Told Residents to Stay at Home,
N.Y. Times (Apr. 7, 2020) available at
https://www.nytimes.com/interactive/2020/us/coronavirus-stay-at-home-order.html.
26
See Dow Jones Industrial Average, Wall Street Journal, available at
https://www.wsj.com/market-data/quotes/index/DJIA/historical-prices (last visited Apr.
11, 2020).
27
See Jim Zarroli, Jobs Carnage Mounts: 17 Million File For Unemployment In 3 Weeks,
National Public Radio (Apr. 9, 2020) available at
https://www.npr.org/sections/coronavirus-live-updates/2020/04/09/830216099/6-6-
million-more-file-for-unemployment-as-coronavirus-keeps-economy-shut.
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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
Program at 4 (Interim Final Rule Apr. 2, 2020) (to be codified at 13 C.F.R. pt. 120)
40. Congress vested the SBA with authority “to modify existing loan programs
and establish a new loan program to assist small businesses nationwide adversely impacted
41. Included in the Act is the PPP. Congress established this program to provide
economic relief to small businesses nationwide adversely impacted under the COVID-19
42. The SBA stated that due to the various health emergencies declared across
the Nation, including the stay-at-home orders state governments had ordered, “small
measures, including safe distance mandates, are decreasing economic activity for a host of
businesses. Ex. A at 3.
43. The SBA received from Congress $349 billion to “guarantee loans under
the [PPP] through June 30, 2020.” Congress’s intent with this program “is that SBA
28
See Administrator Jovita Carranza, Business Loan Program Temporary Changes;
Paycheck Protection Program (Apr. 2, 2020).
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are allowed to borrow up to $10 million unless the business, using a payroll-based formula,
44. 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.
45. Loan recipients can use loans through the PPP to help pay the following
costs:
a. Payroll costs;
premiums;
obligation;
f. utilities; and
g. 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).
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47. The CARES Act proclaims that, “in addition to small business concerns,
CARES Act, Pub. L. No. 116-136, §1102(a)(1)(B)(2)(D)(i), 134 Stat. 281 (2020).
c. operate a business within a certain industry that meets the SBA’s size
49. Entities that are eligible for PPP include sole proprietorships, Non-profit
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.
50. A small business is not eligible if it conducts illegal business under federal,
state, or local law, employs nannies and/or housekeepers, an owner of 20 percent or more
a felony within the last five years, or the business has obtained a federally guaranteed loan
that is not currently delinquent or within the past seven years, the business has defaulted
51. Importantly for Plaintiffs, a small business is also not eligible for the PPP if
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52. Businesses that are identified in that section include, but are not limited to:
a. Non-profit businesses;
or secular setting;
53. However, Congress, through the CARES Act, superseded the SBA’s
prohibition on certain non-profits receiving loans. See 13 C.F.R. § 120.110(a). Under the
CARES Act, 501(c)(3)’s, veterans’ groups, and Tribal businesses are eligible to receive
loans. Ex. A at 6.
54. Additionally, on Friday April 3, 2020, the SBA issued additional guidance
Exercising its authority “to modify existing loan programs and establish a new loan
program,” the SBA exempted church organizations from the SBA’s affiliation rules that
would otherwise make some churches too large to qualify for PPP or otherwise be
prohibited from receiving loans. Ex. B at 6-7, 9. This exemption was necessitated under
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55. Furthermore, the Administrator determined that the SBA did not have a
compelling interest “in denying emergency assistance to faith-based organizations that are
facing the same economic hardship to which the CARES Act responded and who would
be eligible for PPP but for their faith-based organizational and associational decisions.”
Ex. B at 8.
SBA’s affiliation rules faith-based organizations that would otherwise be disqualified from
participation in PPP because of affiliations that are a part of their religious exercise. Ex. B
at 10.
57. But Plaintiff AAPC’s members and Plaintiff Ridder/Braden, Inc. here are
still prohibited from receiving funds through the PPP due to the SBA’s regulatory
58. Plaintiffs fully intend to apply for loans under the SBA’s Paycheck
Protection Program but for the SBA’s Political Speech Prohibition codified at 13 C.F.R. §
120.110(r).
59. If Plaintiffs are unable to participate in PPP and the CARE Act’s other
loans, Plaintiffs will be forced to abstain or substantially limit the exercise their
campaigns, and their right to petition government. Not only is this an injury to Plaintiffs,
but it is an injury to society as a whole, because speakers will be forced out of the
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60. That Plaintiffs are still permitted to personally lobby, or speak in political
campaigns, outside of their businesses does not address the harm that they suffer here. The
SBA’s speech activities ban, especially now during an economic crisis unprecedented since
the Great Depression, deprives Plaintiffs of the most effective way to petition government
and promote candidates for office, namely through speech on behalf of their clients. See
declares, under no uncertain terms, that “Congress shall make no law… abridging the
freedom of speech.” U.S. Const. amend. I; Citizens United v. FEC, 558 U.S. 310, 340
(2010). The First Amendment prohibits any law that “stands against attempts to disfavor
62. Speech about public issues “[i]s at the heart of the First Amendment's
because it is “the type of speech [that is] indispensable to decision making in a democracy.”
First Nat’l Bank v. Bellotti, 435 U.S. 765, 776-77 (1978). See also Eu v. San Francisco
Cty. Democratic Central Comm., 489 U.S. 214, 223 (1989) (“The First Amendment has its
fullest and most urgent application to speech uttered during a campaign for political
office.”) (internal quotation omitted); Garrison v. Louisiana, 379 U.S. 64, 74-75 (1964)
(“[S]peech concerning public affairs is more than self-expression; it is the essence of self-
government.”); Mills v. Alabama, 384 U.S. 214, 218 (1966) (“Whatever differences may
exist about interpretations of the First Amendment, there is practically universal agreement
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that a major purpose of that Amendment was to protect the free discussion of governmental
affairs.”).
63. Statutes that regulate activity based on the content of the speaker’s speech
are presumptively unconstitutional. Reed v. Town of Gilbert, 135 S. Ct. 2218, 2226 (2015).
of the message that is conveyed to determine whether a violation has occurred.” McCullen
v. Coakley, 573 U.S. 464, 479 (2014) (internal quotation marks omitted).
64. When a statute imposes a regulation that is based on the content of the
to strict scrutiny. Pursuing America's Greatness v. FEC, 831 F.3d 500, 510 (D.C. Cir.
2016) (citing and quoting United States v. Playboy Entm’t Grp., 529 U.S. 803, 812 (2000).
65. Furthermore, the government cannot grant benefits on the condition that
you abandon your right to free speech and association. See, e.g., Perry v. Sindermann, 408
U.S. 593, 597 (1972) (“For if the government could deny a benefit to a person because of
his constitutionally protected speech or associations, his exercise of those freedoms would
in effect be penalized and inhibited. This would allow the government to "produce a result
66. Stated more succinctly, “[t]he Government may not deny a benefit to a
person on a basis that infringes his constitutionally protected . . . freedom of speech even
if he has no entitlement to that benefit.” Agency for Int'l Dev. v. Alliance for Open Soc'y
Int'l, Inc., 570 U.S. 205, 214 (2013) (internal quotation marks omitted, alteration in the
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original). “The First Amendment supplies a limit on Congress’ ability to place conditions
67. For example, the First Amendment prohibits the provision of federal aid to
a noncommercial radio station on the condition the radio station never editorialize. FCC v.
68. The First Amendment also declares, in no uncertain terms that “Congress
shall make no law . . . abridging . . . the right of the people peaceably to assemble, and to
under the First Amendment’s right to petition government. This constitutionally protected
right to lobby endures even when the lobbyist receives compensation. Autor, 740 F.3d at
182; Citizens United, 558 U.S. at 339-40 (stating that political speech, especially in the
republic).
70. In the analogous context of granting tax exempt status to entities, “the
discriminatory denial of tax exemptions can impermissibly infringe free speech.” Big
Mama Rag v. United States, 631 F.2d 1030, 1034 (D.C. Cir. 1980) (citing Speiser v.
CLAIM I
Violation of the Free Speech Clause of the First Amendment to the U.S. Constitution
herein.
72. Statutes that regulate activity based upon the content of the speaker’s speech
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conveyed to determine whether a violation has occurred.” McCullen, 573 U.S. at 479
73. When a statute imposes a regulation that is based on the content of the
from using the name of a candidate in their official committee name is an unconstitutional
75. Similarly, statutes that prohibit robocalls that are “of a political nature
including, but not limited to, calls relating to political campaigns” are an unconstitutional
content-based speech prohibition. Cahaly v. LaRosa, 796 F.3d 399, 402-06 (4th Cir. 2015).
76. This is not the first time the SBA has enacted a content-based speech
regulation known as the “opinion molder rule.” Mission Trace Invs., Ltd. v. SBA, 622 F.
Supp. 687, 688 (D. Colo. 1985) rev. on other grounds sub. nom. Ascot Dinner Theatre,
Ltd. v. Small Business Admin., 887 F.2d 1024 (10th Cir. 1989). Similar to the SBA’s current
political and lobbying activity prohibition, the “opinion molder rule” stated the following:
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Mission Trace Invs., Ltd., 622 F. Supp. at 689 (quoting 13 C.F.R. § 120.2(d)(4)(1985).
78. After concluding that the “opinion molder rule” “completely deprives
otherwise qualified applicants of all their potential SBA benefits solely because they
engage in constitutionally protected activity[]” id. at 696, the court turned then to analyze
prohibition.” Id.
79. The court concluded that the “opinion molder rule” constituted a content-
based speech ban. Id. at 697 (“[T]he opinion molder rule discriminates against expression
because of the content of that expression.”). The “opinion molder rule” constituted a
content-based speech ban even though it banned an entire topic of speech without taking a
position within that topic. Id. Furthermore, to enforce the “opinion molder rule,” the rule
“requires the SBA to examine the content of a loan applicant's speech.” Id.
80. Noting that the SBA’s “opinion molder rule” permits commercial
advertising, the court ruled that the First Amendment does not permit favoritism between
commercial speech and speech that promotes ideas. Id. at 699. The court concluded that
“the opinion molder rule inhibits important media of public expression because of the
81. After balancing the interests under constitutional scrutiny, the court held
that the “opinion molder rule” violated the First Amendment. Id. at 702. The court
viable small businesses may not deny benefits to applicants solely because they engage in
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constitutionally protected expression.” Id. The SBA did not challenge this holding on
appeal and the Tenth Circuit did not review it. Ascot Dinner Theatre, 887 F.2d at 1026.
82. Now, making a similar mistake, the SBA has declared that its loans are not
eligible for “[b]usinesses [that are] primarily engaged in political or lobbying activities.”
13 C.F.R. § 120.110(r).
ban because, to enforce it, the SBA must look to the content of Plaintiffs’ speech, here
84. The SBA does not have a compelling interest to prohibit Plaintiffs’
otherwise eligible small businesses from obtaining loans under the PPP.
tailored. Less intrusive means other than a complete ban do exist. Pursuing America’s
Greatness, 831 F.3d at 510; League of Women Voters of Cal., 468 U.S. at 400-01 (stating
that if the federal government granted federal dollars to non-commercial radio stations on
the condition that the federal funds not be used for electioneering, but the radio station
could use private funds for electioneering, such a grant system would be constitutional).
CLAIM II
Violation of Unconstitutional Conditions Doctrine of the First Amendment to the U.S.
Constitution
herein.
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88. The First Amendment declares, under no uncertain terms that “Congress
shall make no law . . . abridging . . . the right of the people peaceably to assemble, and to
89. Lobbying and political speech are constitutionally protected activities under
the First Amendment’s right to petition government. This constitutionally protected right
to lobby endures even when the lobbyist receives compensation. Autor, 740 F.3d at 182.
90. Although the government has the authority to appropriate funds, Art. I, §8,
cl. 1., the “First Amendment supplies a limit on Congress’ ability to place conditions on
the receipt of funds.” Agency for Int'l Dev., 570 U.S. at 214.
91. Accordingly, the government cannot grant benefits on the condition that a
speaker abandon his or her right to free speech and association. See, e.g., Perry, 408 U.S.
at 597.
92. Stated more succinctly, “[t]he Government may not deny a benefit to a
person on a basis that infringes his constitutionally protected . . . freedom of speech even
if he has no entitlement to that benefit.” Agency for Int'l Dev., 570 U.S. at 214 (internal
noncommercial radio station receiving any federal aid that the radio station must never
the SBA, Plaintiffs must not be “Businesses [that are] primarily engaged in political or
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95. But Plaintiffs are exercising their First Amendment rights by lobbying on
behalf of clients and consulting on political speech made in the height of campaigns. But
for exercising their constitutional rights, Plaintiffs are otherwise eligible to receive loans
96. The SBA does not provide Plaintiffs with any alternative means to obtain
restructure their corporate affairs in such a manner as to obtain these necessary funds
because, in the final analysis, Plaintiffs’ businesses are still primarily engaged in political
and lobbying activity. Regan v. Taxation With Representation, 461 U.S. 540, 544 (1983)
(holding that lobbying prohibition for entities organized under 501(c)(3) of the Tax Code
is not an unconstitutional condition because the plaintiff could establish a dual corporate
structure where plaintiff could receive tax-deductible contributions for its non-lobbying
97. The SBA cannot condition the grant of its loans through the PPP on the
basis of Plaintiffs abandoning their constitutional right engaged in speech and petition
related activities.
CLAIM III
Violation of the Due Process Clause of the Fifth Amendment to the U.S. Constitution
herein.
99. 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
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100. “The injury in fact in an equal protection case of this variety is the denial of
equal treatment resulting from the imposition of the barrier, not the ultimate inability to
obtain the benefit.” Gratz v. Bollinger, 539 U.S. 244, 262 (2003).
veterans organizations, and faith based groups. But, the SBA prevents businesses that
engage primarily in political or lobbying activity from obtaining these loans. 13 C.F.R. §
120.110(r).
102. Here, the SBA’s Political Speech Prohibition treats differently those who
are exercising their constitutional right to speak and petition government from those who
are not. In fact, those who are exercising their constitutional right to speak and petition
government are completely prohibited from obtaining these PPP loans. Other small
businesses are not. 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. Autor v. Blank,
892 F. Supp. 2d 264, 273 (D.D.C. 2012) rev.’d 740 F.3d 176, 184 (2014) (“Because
[Plaintiffs] have plausibly alleged that the ban denies them a benefit available to others on
account of their exercise of a fundamental right, we must reverse the district court's
103. Like other small businesses that are coping with the economic impact of
COVID-19, Plaintiffs are in dire need of an infusion of funds. They are otherwise eligible
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for loans through the PPP. The SBA prohibits Plaintiffs from obtaining this necessary cash
infusion because Plaintiffs exercise their fundamental constitutional rights. This violates
104. “The Equal Protection Clause requires that statutes affecting First
able to obtain loans is not narrowly tailored. League of Women Voters of Cal., 468 U.S. at
399-401. 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
120.110(r), as applied to Plaintiffs because the Political Speech Prohibition violates the
B. Enjoin all Defendants, their agents, and assigns from enforcing the
D. Award all other relief that this Court deems just and necessary.
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CERTIFICATE OF SERVICE
I, Jason Torchinsky, hereby certify that on April 13, 2020, the foregoing has been
filed via the CM/ECF system and by email to [email protected]. By
agreement of the parties, this filing was also sent via electronic mail and First Class
Certified Mail to the Counsel for the Defendants listed below:
David Morrell
Deputy Assistant Attorney General
Federal Programs Branch
Civil Division
U.S. Department of Justice
Washington, DC 20530
[email protected]
James J. Gilligan
Special Litigation Counsel
Civil Division, Federal Programs Branch
U.S. Department of Justice
P.O. Box 883
Washington, D.C. 20044
Tel: 202-514-3358
[email protected]
Timothy J. Shea
United States Attorney
District of Columbia
555 4th St NW,
Washington, DC 20530
202-252-7566
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