In the United States District Court Eastern District of Arkansas Central Division

Case 4:20-cv-00505-KGB Document 12 Filed 07/13/20 Page 1 of 24 IN THE UNITED STATES DISTRICT COURT EASTERN DISTRICT OF ARKANSAS CENTRAL DIVISION DAVID BRENNAN PLAINTIFF v. Case No. 4:20-cv-00505-KGB UNITED STATES OF AMERICA, JOVITA CARRANZA, in her official capacity as Administrator of the U.S. Small Business Administration, and STEVEN MNUCHIN, in his official capacity as U.S. Secretary of the Treasury DEFENDANTS ORDER Before the Court is plaintiff David Brennan’s emergency motion for ex parte temporary restraining order and preliminary and permanent injunction (Dkt. No. 2). The Court denied previously Mr. Brennan’s motion to the extent that he requested an ex parte ruling without notice pursuant to Federal Rule of Civil Procedure 65(b)(1) and held under advisement Mr. Brennan’s request for a temporary restraining order and preliminary and permanent injunction (Dkt. No. 4). Defendants United States of America, Jovita Carranza, and Steve Mnuchin responded in opposition to Mr. Brennan’s motion (Dkt. No. 9), and Mr. Brennan replied (Dkt. No. 10). For the following reasons, the Court denies Mr. Brennan’s motion to the extent that he requests a temporary restraining order and preliminary injunction. At this time, the Court declines to enter a final judgment on the merits. I. Background Millions of American workers and businesses have been affected by the COVID-19 global pandemic. Congress passed the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) to help individuals, families, businesses, and health-care providers cope with the economic Case 4:20-cv-00505-KGB Document 12 Filed 07/13/20 Page 2 of 24 and public health crises triggered by COVID-19. See 15 U.S.C. §§ 9001–9080. Among other things, the CARES Act allows a business to seek an advance when applying to the Small Business Administration (“SBA”) for an Economic Injury Disaster Loan (“EIDL”) in response to COVID- 19. Congress authorized 20 billion dollars to be appropriated to the SBA for it to provide emergency grants under this feature of the CARES Act. See 15 U.S.C. § 9009(e)(7). The relevant portion of the CARES Act provides: (e) Emergency grant (1) In general During the covered period, an entity included for eligibility in subsection (b), including small business concerns, private nonprofit organizations, and small agricultural cooperatives, that applies for a loan under section 636(b)(2) of this title in response to COVID-19 may request that the Administrator provide an advance that is, subject to paragraph (3), in the amount requested by such applicant to such applicant within 3 days after the Administrator receives an application from such applicant. (2) Verification Before disbursing amounts under this subsection, the Administrator shall verify that the applicant is an eligible entity by accepting a self-certification from the applicant under penalty of perjury pursuant to section 1746 of Title 28. (3) Amount The amount of an advance provided under this subsection shall be not more than $10,000. (4) Use of funds An advance provided under this subsection may be used to address any allowable purpose for a loan made under section 636(b)(2) of this title [15 U.S.C. § 636(b)(2)], including— (A) providing paid sick leave to employees unable to work due to the direct effect of the COVID-19; (B) maintaining payroll to retain employees during business disruptions or substantial slowdowns; (C) meeting increased costs to obtain materials unavailable from the applicant's original source due to interrupted supply chains; 2 Case 4:20-cv-00505-KGB Document 12 Filed 07/13/20 Page 3 of 24 (D) making rent or mortgage payments; and (E) repaying obligations that cannot be met due to revenue losses. (5) Repayment An applicant shall not be required to repay any amounts of an advance provided under this subsection, even if subsequently denied a loan under section 636(b)(2) of this title. (6) Unemployment grant If an applicant that receives an advance under this subsection transfers into, or is approved for, the loan program under section 636(a) of this title, the advance amount shall be reduced from the loan forgiveness amount for a loan for payroll costs made under such section 636(a) of this title. (7) Authorization of appropriations There is authorized to be appropriated to the Administration $20,000,000,000 to carry out this subsection. (8) Termination The authority to carry out grants under this subsection shall terminate on December 31, 2020. 15 U.S.C.A. § 9009(e). The CARES Act was signed into law on March 27, 2020, and required that the Administrator of the SBA, Jovita Carranza (“Administrator”), “[n]ot later than 15 days after March 27, 2020, . issue regulations to carry out this title and the amendments made by this title without regard to the notice requirements under section 553(b) of Title 5.” 15 U.S.C. § 9012 (footnotes omitted). On April 7, 2020, the SBA announced that EIDL advance grants would be limited to $1,000.00 per employee, up to $10,000.00 (Dkt. No. 9-1, at 6). Once the SBA verifies an entity’s eligibility and approves the applicant’s advance grant, the information is transmitted to the United States Department of the Treasury (“Treasury”), which disburses the advance grant to the entity (Id., at 2). Mr. Brennan is a sole proprietor and is primarily engaged in a political podcast and the sale of political-themed T-shirts and novelty items (Dkt. No. 1, ¶ 1). Mr. Brennan represents that he 3 Case 4:20-cv-00505-KGB Document 12 Filed 07/13/20 Page 4 of 24 accessed the SBA website on March 31, 2020, and completed the streamlined application for an EIDL and Emergency EIDL Grant (Id., ¶ 14). According to Mr. Brennan, at the time he submitted his application, it was the policy of the Administrator to advance the full $10,000.00 to every applicant who requested an advance in that amount (Id.). Mr. Brennan represents that, despite checking the box to request the advance, he did not receive the $10,000.00 advance within three days (Id.). He represents that it was 21 days before he received any advance at all and that, when he did receive an advance, it was only in the amount of $1,000.00 (Id., ¶¶ 14, 18). Mr. Brennan thus sues defendants and seeks immediate disbursal of the remaining $9,000.00 that he requested (Id., ¶ 21). Mr. Brennan claims that, without immediate disbursal of the remaining $9,000.00 that he requested, he will suffer irreparable harm, including the permanent loss of his technological equipment, furnishings, and fixtures with the inability to re-lease due to the damage to and loss of his business reputation and goodwill with lease-creditors in the local lease creditor community (Id.). He claims that he will suffer the permanent loss of his podcast and T-shirt business and the inability to exercise his right to freedom of political speech through his podcast and T-shirt sales (Id.). II. Consolidation With Trial On The Merits At this time, the Court declines to consolidate its consideration of this motion with a trial on the merits under Federal Rule of Civil Procedure 65(a). Mr. Brennan first requested consolidation in his reply to defendants’ response to Mr. Brennan’s motion for temporary restraining order and preliminary injunction. Specifically, Mr. Brennan asserts that, because the Court denied his request for an ex parte temporary restraining order, “it seems elementary that the issue of the [temporary restraining order] is decided in the negative, and it is therefore appropriate to view the motion now solely as one for a preliminary and permanent injunction pursuant to 4 Case 4:20-cv-00505-KGB Document 12 Filed 07/13/20 Page 5 of 24 Federal Rule of Civil Procedure 65(a).” (Dkt. No. 10, at 5). Mr. Brennan contends that consolidation of the instant motion and a trial on the merits is appropriate (Id.). He asserts that the relief sought in the complaint is identical to the relief sought in the motion and that his claims for relief will therefore be determined according to the same material facts, law, and legal theory (Id.). Because Mr. Brennan first made this consolidation request in his reply, defendants were not provided with the opportunity to prepare arguments for the Court to consider in a trial on the merits when filing defendants’ response. Instead, defendants responded to Mr. Brennan’s request for temporary restraining order and preliminary injunctive relief only. The parties agreed to submit this matter to the Court on the briefs, without a hearing. Consequently, the Court declines at this time to consolidate the instant motion with a trial on the merits. Instead, the Court in this Order considers and rules on only Mr. Brennan’s motion for temporary restraining order and preliminary injunctive relief. III. Analysis Of Request For Relief The Court begins with the threshold question of whether it has subject matter jurisdiction over Mr. Brennan’s claim and specifically his request for injunctive relief. Mr. Brennan contends that the Court has subject matter jurisdiction over his claims, but defendants argue the Court lacks subject matter jurisdiction. Defendants have mounted a factual attack on the Court’s jurisdiction, so Mr. Brennan does not enjoy the benefit of the allegations in his pleading being accepted as true by this Court. See Branson Label, Inc. v. City of Branson, 793 F.3d 910, 915 (8th Cir. 2015). Having considered this matter, the Court determines that, at least at this stage of the proceedings, Mr.

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