Free Speech

Paycheck Protection Program Exclusion of Nude Dancing Establishments Likely Constitutional

So says the Seventh Circuit, agreeing with an earlier Second Circuit decision.

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From Camelot Banquet Rooms, Inc. v. U.S. SBA, decided Wednesday by the Seventh Circuit, in a per curiam opinion by Judges Michael Kanne, Ilana Rovner & David Hamilton:

Plaintiffs in this case are about fifty businesses all over the country that offer live adult entertainment in the form of nude or nearly nude dancing. They seek to obtain loans under the second round of the Paycheck Protection Program enacted by Congress to address economic disruption caused by the Covid-19 pandemic. By statute, Congress excluded plaintiffs and several other categories of businesses from the second round of the Program.

Plaintiffs assert that their exclusion from the Program violates their constitutional rights, primarily under the Free Speech Clause of the First Amendment.

For one brief shining moment, the district court agreed, and "issued a preliminary injunction that enjoins the United States Small Business Administration (SBA) from denying plaintiffs eligibility for the loan program based on the statutory exclusion." But the Seventh Circuit stayed the injunction pending appeal; though the matter still awaits a final decision, the question whether to grant the stay required the court to take a peek at the merits, and here's what it wrote (in an opinion that's quite consistent with a similar Second Circuit decision from March):

The problem with plaintiffs' First Amendment claim and the preliminary injunction here is that Congress is not trying to regulate or suppress plaintiffs' adult entertainment. It has simply chosen not to subsidize it. Such selective, categorical exclusions from a government subsidy do not offend the First Amendment.

The Supreme Court has repeatedly drawn a line between government regulation of speech, on one hand, and government subsidy of speech on the other. Its decisions show that the government is not required to subsidize activity simply because the activity is protected by the First Amendment….

[A] selective subsidy program may violate the First Amendment if it is "aim[ed] at the suppression of dangerous ideas." To take an easy example, even if Congress can exclude lobbyists entirely from the Program's subsidies, it could not choose to subsidize Democratic lobbyists while excluding Republicans. Plaintiffs' theory here is that Congress chose to exclude their businesses from the subsidy program because it deemed their "ideas" about sexuality to be dangerous.

This theory does not seem to distinguish between government suppression of protected activity and denial of a subsidy. Plaintiffs' theory seems to be that the denial of a subsidy is itself the act of suppression…. [But the selective-subsidy cases] surely require[] something more, like viewpoint discrimination, than denial of the subsidy itself….

The [district court's] theory was that even if the exclusion of plaintiffs' businesses from the Program was not "traditional viewpoint discrimination," the exclusion's focus on "prurience" created a free speech problem. The exclusion, as the court saw the issue, depends on prurience, which the court saw as the expressive, "sexually arousing" "message" of the adult entertainment. The court viewed the exclusion as thus an effort to use a subsidy exclusion to suppress a "dangerous idea[.]" …

[But t]he statutory exclusion from the Program of businesses with prurient live entertainment is better understood not as viewpoint discrimination but as a permissible classification based on subject matter. The Supreme Court made this point in R.A.V. v. City of St. Paul:

"When the basis for the content discrimination consists entirely of the very reason the entire class of speech at issue is proscribable, no significant danger of idea or viewpoint discrimination exists. Such a reason, having been adjudged neutral enough to support exclusion of the entire class of speech from First Amendment protection, is also neutral enough to form the basis of distinction within the class. To illustrate: A State might choose to prohibit only that obscenity which is the most patently offensive in its pruriencei.e., that which involves the most lascivious displays of sexual activity. But it may not prohibit, for example, only that obscenity which includes offensive political messages."

In effect, the Court was telling us, it would be a category mistake to think that prurience or lasciviousness reflects a "viewpoint" that the government may not discriminate against. The terms instead identify a category or subject matter of expressive conduct that may be subject to some forms of government regulation….

Accordingly, excluding the entire category or subject matter of prurient live performances from a government subsidy program does not violate the Free Speech Clause. See Pharaohs GC v. U.S. SBA (2d Cir. 2021) (term "prurient" in SBA regulation describes subject matter, not viewpoint, for exclusion from Program); PMG Int'l Division L.L.C. v. Rumsfeld (9th Cir. 2002) (treating "lascivious" materials as articulating a "viewpoint" would "risk eviscerating altogether the line between content and viewpoint"); General Media Communications, Inc. v. Cohen (2d Cir. 1997) ("[H]ow, for example, would one go about discussing and considering the political issues of the day from a lascivious viewpoint?").

The court also rejected the district court's conclusion that the exclusion lacks a rational basis:

The district court appears to have 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 over- and under-inclusive in various respects. 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 trade-offs is never greater.

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. 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 would seem unrealistic, to put it mildly. Any expectation or demand that Congress must 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 grounds for the statutory distinction. It does not require the legislature to have made a contemporaneous record on the subject.

Similarly, plaintiffs' and the district court's assertion that the rationale for excluding plaintiffs is under-inclusive is not easy to reconcile with the rational-relation test. All sorts of legislative classifications, exclusions, and compromises pass muster even if they are over- or under-inclusive. "[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 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." …

[Plaintiffs] were not singled out for this exclusion, even among businesses primarily engaged in activity protected by the First Amendment. Congress also chose to exclude from the Program businesses "primarily engaged in political or lobbying activities." 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.

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; government-owned 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.

These exclusions are not difficult to understand in terms of policy and politics. They all help defuse potential "gotcha" criticisms of this 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 absence of viewpoint or invidious discrimination, of which we see no signs here.

{The Constitution does not prohibit legislation on the basis of morality. Consider, for example, the possibility that Congress might choose to exclude from this or other subsidy programs alcoholic beverage makers, casinos and other gambling businesses, weapons makers, and so on. Such line-drawing is left to the legislature, absent viewpoint or invidious discrimination.}

NEXT: Justice Clarence Thomas: 2021 Tocqueville Lecture, Transcribed

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  1. “Put it back on, baby!”

    1. Could Medicaid or Medicare be denied based on viewpoint? Those are government subsidies. I do not see the difference.

      1. Imagine the fun when Medicare starts declining coverage for COVID cases in voluntarily-unvaxed people.

        1. The day of the month the SS check comes in, all of sudden, a lot of “nieces” are visiting in the nursing home. Is that a problem for the court? As an administrator, it is rational to subsidize sex workers for the old geezers since it markedly improves their behavior and decreases the problems they cause. That serves a strong government interest in preventing disruptions and injuries.

        2. Imagine the fun when reprehensibly smug individuals such as yourself realize you aren’t really hiding behind the maternal skirts of an imagined societal majority.

          1. The MAGA people are markedly undercounted by the fake polls conducted by registered Democrat pollsters.

          2. A guy who posts under a fake name is scolding the guy who uses a real one about hiding behind skirts?

  2. The Supreme Court has repeatedly drawn a line between government regulation of speech, on one hand, and government subsidy of speech on the other.

    This is the kind of hair-splitting quibble that not only gives lawyers their reputation, but has undermined the Constitution. Whether censorship or subsidy, the whole point of freedom of speech is to keep the government hands out of it.

    1. “whole point of freedom of speech”

      Haven’t been to a strip joint since my bachelor party but I don’t recall a lot of speech.

      Maybe other ones discuss the merits of vaccine merits, IDK.

      1. The first nonsense was allowing government to ban or restrict strip clubs specifically, as if economic liberty was not a fundamental right. “Don’t hurt people and don’t steal their stuff” is a pretty good philosophy.

        Then at some point, someone decided that banning strip clubs was not fair or right, but it just wouldn’t do to overturn two centuries of government meddling with economic liberty, so they made up the legalism that dancing is expressive, therefore covered by the first amendment.

        Then we get to this ruling, that keeping government hands off only applies when the restrict expressive dancing, not when they subsidize some of it.

        Legal quibbling and face saving, not daring to admit that 200 years of fucking up economic liberty was wrong.

        1. “someone decided that banning strip clubs was not fair or right”

          Who is “someone”? It is both “fair and right”.

          A decent society can certainly ban such things.

          1. A prudish paternalistic authoritarian society can certainly ban things. A free society does not.

            1. We had a free society when we banned them.

              Libertine does not equal liberty.

              1. We had a free society when only white male property owners could vote.

                Less free is not the same as more free.

                Your morals are yours; keep them to yourself, and I will keep my morals to myself. Anything else is just might makes right.

              2. Somehing happen during your time in the club, Bob? See something you weren’t prepared for?

                You talked about not having been in one since you were in one, then jumped directly to being in favor of banning them.

          2. “‘someone decided that banning strip clubs was not fair or right’

            Who is ‘someone’? It is both ‘fair and right’.

            A decent society can certainly ban such things.”

            If you don’t like girls, you don’t have to go.

            Or is it just that you prefer to get your naked people via Internet? Same story, you still don’t have to go to the strip club if you prefer the online world.

            1. Government should be able to ban porn whether live or on the internet or on tape in peep joints.

              1. Because consenting adults is bad….

                1. Absolutely!
                  Consenting implies individual decision and action; only the federal government is capable of determining right and wrong.
                  Week by week, as it turns out.

                2. Yes, sometimes.

                  Ask that woman Trevor Bauer had “rough sex” with. Judge at the tro hearing found beating her was within the bounds of her consent.

              2. Being naked isn’t porn.

              3. “Government should be able to ban porn”

                Actually, Bob, people who don’t want government making decisions for them won’t agree with you.

    2. Á àß äẞç ãþÇđ âÞ¢Đæ ǎB€Ðëf ảhf: Can that be right? Just to give the clearest example, public schools involve massive public funding of government speech. Maybe we shouldn’t have them, but we do and we will. And the government (chiefly at the local and state level) necessarily has great power to control what’s taught there, even as to materials that it can’t regulate directly. Surely the government isn’t keeping its hands out of that.

      Now perhaps one can bracket that as involving government speech, and say that when the government funds private speech, it must do so on a purely content-neutral basis (at least setting aside the existing categories of speech that can be regulated, such as libel). But is that really right?

      1. If you allow that government should be in charge of education, sure you can find a rationale for subsidizing some and not other. But whatever the rationale for government funding of education, I do not believe government should have any say in what is taught.

        1. So… who does?

          1. Gosh … parents? I dunno, ya got me there.

            1. Which parents? The vocal minority? The ones who are just trying to live their lives and make it to their two or three jobs on time? Is it a vote? Does majority rule? How granular would it be? Would parents get to approve each word of a history text? Challenge interpretations in a civics text? Ban a book in English because they don’t like the subject? How much intrusion is allowed to various factions of parents?

              1. Well, for sure we want to tell them that the only effective birth control is absinence, despite ample evidence that abstinence-only sex ed results in more pregnant teenage girls.

      2. “the government (chiefly at the local and state level) necessarily has great power to control what’s taught there, even as to materials that it can’t regulate directly.”

        Texas censors school textbooks, and because it’s cheaper to have just one edition rather than a Texas version and a not-Texas version, a lot of other states wind up stuck with textbooks censored to Texas sensibilities.

        1. “Texas censors school textbooks”
          I mean, no? Texas isn’t stopping anybody from publishing textbooks. I think what you mean is “Texas is deciding what school textbooks to use.”

          1. The good news is plenty of students don’t read those textbooks at all, so it all comes out right in the end.

            1. It’s more complicated than that. The textbook goes to the student. The teacher edition goes to the teacher, along with all sorts of supporting materials.

                1. You having trouble keeping up?

          2. “I think what you mean is ‘Texas is deciding what school textbooks to use.’”

            If you could read, you’d have noticed that what I meant was “Texas is deciding what school textbooks states which are not Texas can use”

          3. “‘Texas censors school textbooks’
            I mean, no?”

            And by “no”, you of course mean “they sure do!”

      3. “Can that be right? Just to give the clearest example, public schools involve massive public funding of government speech.”

        And people are compelled to go and listen to it, which usually wouldn’t be allowed. Extrapolating from public education to other forms of speech seems problematic.

        1. In United States V. American Library Association, the Court held the federal government could condition funding of public libraries used for internet access on those libraries installing filtering software that blocks pornography.

          The Association argued that Congress could not directly require the filtering software because it infringed on the libraries’ First Amendment rights, and therefore it violated the unconstitutional conditions doctrine to condition funding on installing the software. The government countered public libraries do not have such a right.

          The Court did not reach whether public libraries have the right. Instead, it assumed it did for the sake of argument and nonetheless concluded the unconstitutional conditions doctrine did not preclude the filtering requirement

          when the Government appropriates public funds to establish a program it is entitled to define the limits of that program.

          That is, for targeted funding, the government can establish conditions consistent with the goals of that funding even when it cannot directly require those conditions because of the First Amendment. And note, that holding applies to public and private recipients alike.

          1. The point the Court glossed over is that the filtering software didn’t just filter porn. It also filters a bunch of other stuff, like commentary critical of porn filtering software.

            1. The Court assumed for the sake of argument that the filter violated the First Amendment rights of the libraries. Therefore, I don’t see how your distinction makes a difference in the outcome.

              1. What is a first amendment right of a library? The first amendment protects US from the government. Guess who runs the libraries?

                1. The government argued as you just did that there is no First Amendment right for a public library. But, the Court explicitly chose not to answer that question and instead assumed for the sake of argument a public library does have such a First Amendment right.

    3. I agree with whatever the fuck his name is. Nitpicking like that is in bad faith, it is lying. It should be sanctioned by judicial review boards. Get rid of all nitpickers on the bench. Nitpickers is what lawyers do. They did it to impeach Clinton, then Trump. If the disciplinary bodies fail to rein in these out of control unethical lawyers, as ass kicking has full justification in formal logic. Formal logic is a total defense to a crime, since it has more certainty than the laws of physics.

      1. Without such nitpicking, how can we ever truly know the meaning of “is”?

      2. ” Nitpickers is what lawyers do.”

        And you don’t.

  3. Someone should have advised these litigants to advance a religion-based claim.

    1. Ask the feds to reimburse you for all the money you spent on sacred temple prostitutes.

      1. There is actually a group called the goddesses who celebrate by swimming naked in the Clackamas river just south of Portland, OR. They have bouncers, though.

        1. Plenty of religions celebrate naked. Some conceal it. Some facilitate it, including with respect to abuse of minors. Some lie about it. Some are hypocrites about it. Some provide the venues for it.

          1. No one will stand up for their preferred flavor of superstition?

            Oh, ye of paltry faith!

            It’s barely fun or sporting to kick you guys around any more.

  4. I wonder how many W-2 employees those places actually have? I always thought their business model was to require the dancers to pay them — then the dancers keep some or all of their tips.

    1. It has been, but these places keep losing wage-and-hour lawsuits against that practice, so they may have changed.

      1. losing a wage-and-hour lawsuit requires a finding that an employer-employee relationship exists in the first place. For most such establishments, that would be tricky.

        As to the question about W-2 employees, they have bartenders, bouncers, and sometimes cooks and wait staff.
        there was a time when Portland was littered with the nudie bars. It was like there was one in every commercial building (strip malls, no pun intended.) Last time I passed through, it was all weed stores, and the nudie bars were starting to shutter. And that was BEFORE the pandemic. And all the fuss was over whether or not the “bikini baristas” at the bikini coffee shops were dressed enough to serve food. y’see, what happened was, the Oregon Supreme Court issued a ruling that the Oregon Constitution was even more protective of “expressive-conduct-as-speech” than is the federal one. So, to overturn this ruling, the prudes tried to put a state-constitutional amendment on the ballot to allow more state regulation. They did not get their amendment, and now the prudes are in full retreat, at least at the state level.

        1. Not sure that it’s so tricky. As DN points out, the dancers have been doing pretty well in court. Courts applying the six-factor employment test often (something like 90 percent of the time) find that ordinary dancers are employees even though this was not how venues classified them and often the venues did not pay the dancers at all. This does indeed often hurt venues’ economics.

          1. You can skip all the trickiness by just deciding what outcome you want to reach, and then working backward from there.

  5. Speech law in the US is skewed towards prudes.

    1. I dunno.

      “Fuck the Draft” and “Bong Hits 4 Jesus” both passed constitutional muster (albeit both by 5 – 4).

      1. Neither of those cases involved nekkid pippel.

      2. The government won Morse v. Frederick (the bong hits for Jesus case).

  6. “. . . required the court to take a peek at the merits. . . .”

    I see what you did there you BAD BOY.

    1. I wonder if they looked at arguments from pastie cases?

  7. The Constitution may not prevent legislation of morality but it’s pretty nearly always a bad idea.

    1. No, I disagree with your premise. The Constitution is nearly always a good idea.

    2. The single purpose of the criminal code is to legislate morality.

      1. The single purpose of the criminal code is to get in the way, to get paid to get back out of the way.

        Everything else is just like a broken clock right twice a day. Things like murder and theft apparently weren’t even needed to be codified until recently.

  8. They lost me in the discussion of R.A.V. v. City of St. Paul

    “When the basis for the content discrimination consists entirely of the very reason the entire class of speech at issue is proscribable, no significant danger of idea or viewpoint discrimination exists. Such a reason, having been adjudged neutral enough to support exclusion of the entire class of speech from First Amendment protection, is also neutral enough to form the basis of distinction within the class. To illustrate: A State might choose to prohibit only that obscenity which is the most patently offensive in its prurience—i.e., that which involves the most lascivious displays of sexual activity. But it may not prohibit, for example, only that obscenity which includes offensive political messages.”

    So this looks to be saying that discriminating in subsidies between things that are not 1A protected – eg different forms of obscene “speech” – is OK. Fair enough.

    In effect, the Court was telling us, it would be a category mistake to think that prurience or lasciviousness reflects a “viewpoint” that the government may not discriminate against. The terms instead identify a category or subject matter of expressive conduct that may be subject to some forms of government regulation….

    No it’s not. It’s saying that the government may distinguish, in its subsidies, between more prurient obscene speech and less prurient obscene speech, since both are forms of obscenity, and neither are protected under 1A. Likewise between obscene speech expressed in French, and obscene speech expressed in Serbo-Croat. But all of this is predicated on the prior conclusion that we’re dealing with non 1A protected speech.

    But the question is – is prurient lapdancing obscene “speech” ? If it is then we need go no further. But if it isn’t obscene then the government no longer has the defense that it is merely distinguishing between different categories of obscene speech.

    So as the cups move faster beneath the hands of the practised trickster, we seem to have dodged answering the necessary questions – is what goes on in the clubs (a) a form of speech and (b) a form of obscene speech that isn’t protected by 1A ?

    1. If being naked is obscene, why not start punishing new mothers for delivering naked babies? I bet you could get it passed in Texas, or Alabama…

      1. Mississippi . . . West Virginia . . . South Carolina . . . Wyoming . . . Idaho . . . Utah . . . Oklahoma . . . plenty of knuckle-dragging, superstition-steeped states from which to choose.

        1. The trick is to compare which states generate the most traffic to Internet pornography sites. Looking at the ones that ban strip clubs only gives you part of the story.

          It seems that there are two kinds of people in the United States… those who openly consume pornography, and those who do so in secret.

    2. I think that part of the opinion only countered the district court’s conclusion that viewpoint discrimination occurred assuming the speech was not protected.

  9. Try declining to subsidize the parts of the government you don’t like, when the tax bill comes in.

  10. Is there a limiting principle here?

    To take an extreme, suppose the tax rate on businesses was set to 100% but “selected” businesses were “subsidized” with rebate of 85% of the tax. One hopes that would not be upheld, especially if it was targeted at conduct the government is not permitted to ban directly.

    I’d suggest that to get upheld on “it’s a subsidy not a ban” grounds, it should either be a subsidy that is only given to a small fraction of all businesses, or a subsidy that is only a small fraction of any business’s income.

  11. “Such selective, categorical exclusions from a government subsidy do not offend the First Amendment.”

    So after Trump wins in 20204, the feds can offer subsidies that exclude any business that ever said a good thing about BLM?
    (hint: NOT bureau of land management)

    1. Trump has a chance to win a few litigations . . . but not much else.

      Just not enough poorly educated, superstition-addled, roundly bigoted right-wingers and desolate, can’t-keep-up, ignorant backwaters left in America to enable Trump to win.

      Losing has consequences, clingers. In this case . . . more losing.

    2. “So after Trump wins in 20204”

      After 18,000 years, maybe we can let him ruin the country again.

  12. They talk about how excluding lobbyists from the subsidy program, but only Republican lobbiests because their ideas are dangerous, is wrong, then go on to explain why the exact same wrongness judgement is right for strippers.

    1. Why can’t someone be a Republican and a stripper, like the late Earl Warren?

      (apologies to the Simpsons for appropriating the concept of their joke)

    2. “lobbiest”

      WTF? You spelled the word correctly just one sentence earlier.

    1. Without looking, I’m guessing baby chickens with no shells on.

  13. How about that… guessed pretty much correctly, you child-bird pornographer, you.

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