Home » News » Excluding adult businesses from PPP funds did not violate First Amendment, 7th Circuit rules

By David L. Hudson Jr., published on February 7, 2022

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Congress could exclude adult businesses from COVID-based financial relief under the Paycheck Protection Program, a federal appeals court has ruled. The appeals court reasoned that Congress did not discriminate against the businesses on the basis of their speech, but merely chose not to subsidize these businesses.


Amid the pandemic, Congress enacted forms of economic relief to businesses, including PPP. However, the program excluded certain types of businesses, such as those centered on gambling, lobbying, and pyramid sale distribution plans, to name a few. It also excluded businesses that “present live performances of a prurient sexual nature.”


Twenty-four businesses that offer nude or semi-nude dancing sued, claiming that the exclusion violated their First Amendment free-speech rights. A federal district court agreed and granted a preliminary injunction. The district court said excluding the adult businesses was “an attempt to suppress a dangerous idea.”


On appeal, a three-judge panel of the 7th U.S. Circuit Court of Appeals reversed the lower court in its Jan. 26, 2022, decision in Camelot Banquet Rooms, Inc. v. United States SBA.


“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,” Judge David Frank Hamilton wrote for the panel. “It has simply chosen not to subsidize it.”


Hamilton also emphasized that Congress chose not to subsidize many other types of businesses, such as lobbyists and political consultants. “We do not see a plausible constitutional basis for requiring government subsidies of lobbyists, at least as long as there is not viewpoint discrimination,” Hamilton wrote.


The adult businesses argued that their exclusion was a form of viewpoint discrimination, because the law focused on “prurient sexual nature.”


The 7th Circuit panel was not persuaded, writing: “The 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.”


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David L. Hudson Jr. is a professor at Belmont University College of Law who writes and speaks regularly on First Amendment issues. He is the author of Let the Students Speak: A History of the Fight for Free Expression in American Schools (Beacon Press, 2011), and of First Amendment: Freedom of Speech (2012). Hudson is also the author of a 12-part lecture series, Freedom of Speech: Understanding the First Amendment (2018), and a 24-part lecture series, The American Constitution 101 (2019).




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