Opinion ID: 6112665
Heading Depth: 1
Heading Rank: 4

Heading: Rational-Relation Review

Text: Like any statutory classiﬁcation, the statutory boundaries of the Paycheck Protection Program are subject to rational-relation review. See, e.g., Ysursa, 555 U.S. at 359, citing Regan, 461 U.S. at 546–51. The district court found here that the exclusion of plaintiﬀs’ adult-entertainment businesses failed the rational-relation test. The district court applied an erroneous and unduly rigorous form of judicial review, second-guessing legislative decisions and compromises on policy grounds, and concluding that the Program was both over- and under-inclusive in various respects. See Camelot Banquet Rooms, Inc., — F. Supp. 3d at —, 2021 WL 3680369, at –11. A government spending program, especially one responding to an economic emergency, is subject to the least rigorous form of judicial review. In enacting such legislation, Congress must respond quickly to an emergency and must hammer together a coalition of majority votes in both houses. The need for compromises and tradeoﬀs is never greater. No. 21-2589 9 When pressed in this suit to justify the exclusion of plaintiﬀs from the Program’s subsidies, the government pointed to the “secondary eﬀects” of sex-oriented businesses that can be used to justify time, place, and manner regulations of such businesses. See, e.g., City of Erie v. Pap’s A.M., 529 U.S. 277 (2000) (plurality opinion); BBL, Inc. v. City of Angola, 809 F.3d 317 (7th Cir. 2015). Plaintiﬀs and the district court responded by criticizing Congress for not having made a record on the subject at the time the legislation was enacted. Any expectation that Congress would have taken the time to make such a record is unrealistic, to put it mildly. And any requirement that Congress make such a record is contrary to constitutional doctrine. The rational-relation test requires a challenger in litigation to exclude any possible rational grounds that the legislature might have deemed suﬃcient for the statutory distinction. E.g., Heller v. Doe, 509 U.S. 312, 319– 20 (1993). It does not require the legislature to have made a contemporaneous record on the subject. Id. at 320–21, discussed in Wisconsin Education Ass’n, 705 F.3d at 653 (rational basis for limit on government subsidies need not be in the record “so long as it ﬁnds ‘some footing in the realities of the subject addressed by the legislation’”). Similarly, the view that the rationale for excluding plaintiﬀs is under-inclusive has little impact under the rational-relation test. All sorts of legislative classiﬁcations, exclusions, and compromises pass muster even if they are over- or underinclusive. “[C]ourts are compelled under rational-basis review to accept a legislature’s generalizations even when there is an imperfect ﬁt between means and ends. A classiﬁcation does not fail rational-basis review because it ‘is not made with mathematical nicety or because in practice it results in some 10 No. 21-2589 inequality,’” and “[t]he problems of government are practical ones and may justify, if they do not require, rough accommodations—illogical, it may be, and unscientiﬁc.” Heller, 509 U.S. at 321, ﬁrst quoting Dandridge v. Williams, 397 U.S. 471, 485 (1970), and then quoting Metropolis Theatre Co. v. City of Chicago, 228 U.S. 61, 69–70 (1913). 2 Plaintiﬀs also suggest that the government’s defense based on secondary eﬀects of sex-oriented businesses actually serves to condemn plaintiﬀs’ exclusion from the Program. They say the arguments show the government’s hostility to their “dangerous ideas.” This argument turns the rational-relation test upside down. Those secondary eﬀects are well known and widely recognized in First Amendment litigation and doctrine. See generally, e.g., City of Erie, 529 U.S. at 289– 301 (plurality opinion). Actual evidence of them can serve to justify time, place, and manner restrictions on businesses that are subject to “intermediate” constitutional scrutiny. We do not see how relying on those eﬀects shows animus toward any idea. If those secondary eﬀects can support time, place, and manner regulations, they surely provide a rational basis for Congress to choose not to subsidize this group of businesses. Plaintiﬀs’ arguments also lose sight of the fact that they were not singled out for this exclusion, even among 2Illustrating the sorts of inconsistencies that are tolerated under the rational-relation test, five of the original plaintiffs-appellees withdrew from this case because defendant SBA funded their separate requests for COVID relief under the separate Restaurant Revitalization Fund established under 15 U.S.C. § 9009c as part of the American Rescue Plan Act of 2021, which uses different eligibility standards. See Motion for Partial Dismissal of Certain Appellees, Dkt. No. 45 (Nov. 23, 2021). No. 21-2589 11 businesses engaged primarily in activity protected by the First Amendment. Congress also chose to exclude from the Program businesses “primarily engaged in political or lobbying activities.” 13 C.F.R. § 120.110(r). Such business activities are much closer to the core of the First Amendment than the dances at plaintiﬀs’ bars and clubs. Yet lobbyists and political consultants were also excluded. Congress chose not to require taxpayers to subsidize them. We do not see a plausible constitutional basis for requiring government subsidies of lobbyists, at least as long as there is no viewpoint discrimination. Accord, American Ass’n of Political Consultants, 810 F. App’x at 9– 10. Congress also excluded many other categories of businesses: banks, lenders, ﬁnance companies, and some pawn shops; life insurance companies; businesses located in foreign countries; pyramid sale distribution plans; businesses engaged in any illegal activity; private clubs; governmentowned businesses; loan packagers; businesses with an “Associate” who is in prison, on probation, on parole, or who has been indicted for a felony or crime of moral turpitude; and businesses that have previously defaulted on SBA or other federally assisted loans. See 15 U.S.C. § 636(a)(37)(A)(iv)(III)(aa), incorporating 13 C.F.R. § 120.110, with two exceptions. These exclusions are not diﬃcult to understand in terms of policy and politics. They all help defuse potential criticisms of a generous emergency program that might be used to undermine political support for the Program and the overall legislation. Such tailoring of legislation to build and maintain political support is perfectly constitutional, at least in the 12 No. 21-2589 absence of viewpoint or invidious discrimination, of which there is no sign here. 3