A federal appeals court this week blocked the Biden administration from prioritizing grants in its restaurant relief program on the basis of race and gender.
In a 2-1 ruling, the 6th Circuit Court granted an injunction to a restaurant that sued the Small Business Administration to challenge its use of race and sex preferences when distributing its $28.6 billion Restaurant Revitalization Funds. The court held that prioritizing women, and socially and economically disadvantaged business owners for the first 21 days of the application period violated the equal protection clause.
Judge Amul Thapar, who wrote the majority opinion, ruled that the federal government lacks a compelling interest to use race preferences in awarding the grants. He also wrote that even if the government had a compelling interest, its scheme fails to be narrowly tailored to the interest because race-neutral alternatives exist.
“Because these race-neutral alternatives exist, the government’s use of race is unconstitutional. Aside from the existence of race-neutral alternatives, the government’s use of racial preferences is both overbroad and underinclusive. This is also fatal to the policy,” Thapar wrote for the majority (pdf).
The ruling comes in a case brought by Jake’s Bar and Grill, a restaurant that is jointly owned by Antonio Vitolo, who is white, and his wife, who is Hispanic. The judge noted that if Vitolo’s wife owned 1 percent more of the restaurant, it would then be eligible for priority processing. He then argued that the policy is “plagued with other forms of underinclusivity.”
“Consider the requirement that a business must be at least 51% owned by women or minorities. How does that help remedy past discrimination? Black investors may have small shares in lots of restaurants, none greater than 51%. But does that mean those owners did not suffer economic harms from racial discrimination?” Thapar wrote.
“Indeed, the restaurant at issue, Jake’s Bar, is 50% owned by a Hispanic female. It is far from obvious why that 1% difference in ownership is relevant. Yet the government fails to explain why that cutoff relates to its stated remedial purpose,” he added.
The dissenting judge, Judge Bernice Bouie Donald, argued that the majority opinion undermines a principle that the Supreme Court allows for race-based classifications to “remediate past discriminations.”
“The majority’s reasoning suggests we live in a world in which centuries of intentional discrimination and oppression of racial minorities have been eradicated. The majority’s reasoning suggests we live in a world in which the COVID-19 pandemic did not exacerbate the disparities enabled by those centuries of discrimination,” Donald wrote.
“The majority’s reasoning suggests that we live in a world in which Congress passed the Restaurant Revitalization Fund (“RRF”) not to aid the nation’s economic recovery, but to arbitrarily provide special treatment to racial minorities and women.”
The SBA did not immediately respond to The Epoch Times request for comment.
This comes in the same month that a federal judge in Texas granted a request for a temporary restraining order to block the Biden administration from enforcing the same policy. The plaintiff, a cafe owner, has since asked the court to dismiss his lawsuit.