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Thursday, February 3, 2022

PPP Exclusion of Adult Entertainment Businesses Did Not Violate First Amendment

The Seventh Circuit Court of Appeals recently ruled against a group of adult entertainment businesses that had filed a lawsuit to challenge the Small Business Administration's denial of benefits to the businesses under the Paycheck Protection Program (PPP). Camelot Banquet Rooms v. United States Small Business Administration.

When Congress enacted the PPP program to provide COVID relief funding to eligible businesses, it had expressly excluded businesses that present or derive more than a minimal gross revenue from live performances or depictions or displays "of a prurient sexual nature." 23 businesses that fall within this exclusion filed suit, claiming that the exclusion penalizes them from engaging in expressive activity protected by the First Amendment. The Seventh Circuit disagreed with the adult entertainment businesses, finding that the program does not restrict any First Amendment protected activities. Instead, by excluding the businesses from the PPP program, the federal government simply chose not to subsidize the adult entertainment, which does not implicate the First Amendment. The Court vacated the district court's preliminary injunction and remanded the case back for further proceedings.


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