Posted on June 3, 2021

Biden Administration’s Blatant Institutional Racism Gets Rebuke from Sixth Circuit

Margot Cleveland, The Federalist, June 1, 2021

Last week, while the press drooled over the president’s ice cream selection, the Sixth Circuit Court of Appeals in Vitolo v. Guzman declared unconstitutional the Biden administration’s race-based approach to distributing COVID-relief funds.

While Vitolo only addressed the race- and sex-based reverse discrimination in the American Rescue Plan Act of 2021, the precedent could prove fatal to many other federal and state statutes, regulations, or practices, leaving the Biden administration with a difficult choice: accept defeat in Vitolo and risk a domino effect, or appeal and face an even more unpalatable decision from a newly comprised Supreme Court.


In passing the American Rescue Plan Act of 2021 (ARPA), Congress created a $28.6 billion fund for grants to restaurants impacted by the “uncertainty of current economic conditions.” But rather than provide Americans access to these funds equally, Congress expressly mandated race- and sex-based discrimination in doling out the money.

Specifically, the ARPA provides that during the “initial 21-day period in which the Administrator awards grants,” the Small Business administrator, who is currently the named defendant Isabella Casillas Guzman, must “prioritize grants to . . . small business concerns owned or controlled by women,” veterans, or “socially and economically disadvantaged small business concerns.”


On May 3, 2021, the first day the SBA accepted applications, Antonio (“Tony”) Vitolo submitted an application to the SBA, seeking a grant for Jake’s Bar and Grill, LLC, a Tennessee restaurant Vitolo owns with his wife. However, even though his wife is Hispanic, because Tony is white and because they equally own Jake’s Bar and Grill—and thus a controlling 51 percent interest is not owned by a woman or a government-sanctioned race—the ARPA and SBA frozen consideration of his application.

After receiving email confirmation from the SBA that it would not process his grant request because it was focusing “reviews on the priority applications that have been submitted,” Vitolo and Jake’s Bar and Grill sued Guzman. In his one-count complaint, Vitolo alleged that the ARPA, as implemented by the SBA, violates the Equal Protection Clause of the U.S. Constitution by discriminating on the basis of race and sex.

With the SBA reporting that as of May 12, 2021, it had received more than 147,000 “priority” applications seeking a total of nearly $30 billion in grants—an amount in excess of the entire allocated by the ARPA to restaurants—Vitolo sought a temporary restraining order to halt the unconstitutional distribution of grants, as without an injunction the fund would likely be depleted before the SBA considered his application. {snip}

Vitolo filed an emergency appeal with the Sixth Circuit Court of Appeals, seeking an injunction pending further proceedings. On Thursday, in a split 2-1 decision, the federal appellate court granted Vitolo’s emergency motion and enjoined the SBA from using the race- and sex-based criteria in processing Vitolo’s application.


The Sixth Circuit’s majority opinion began by rejecting the Biden administration’s arguments that Vitolo lacked standing and that the case had become moot because the priority period had ended. The opinion, authored by Trump-appointee Amul Thapar and joined by Reagan-appointee Alan Norris, then focused on the constitutionality of priority based on race.

“Government policies that classify people by race are presumptively invalid,” the Vitolo court explained, and “to overcome that presumption, the government must show that favoring one race over another is necessary to achieve a compelling state interest,” and the government “must narrowly tailor its remedy to advance that interest.”

The court further explained that while “remedying past societal discrimination” may constitute a compelling state interest,” to qualify, three criteria must be met: “First, the policy must target a specific episode of past discrimination. It cannot rest on a ‘generalized assertion that there has been past discrimination in an entire industry.’ Second, there must be evidence of intentional discrimination in the past. . . . Third, the government must have had a hand in the past discrimination it now seeks to remedy.”

The SBA’s asserted reason for using race to distribute the restaurant funds failed to satisfy any of these criteria, Judge Thapar explained, first because the government has not identified any “specific incidents of past discrimination.” Rather, the government pointed to “societal discrimination against minority business owners.” Second, the government failed to show there was past intentional discrimination in play, with the SBA instead focusing on statistical disparities. Finally, the government failed to show that it had participated in the discrimination it seeks to remedy.


Even had the government established a compelling governmental purpose for awarding COVID-relief funds based on the race of the applicants, the state-sanctioned discrimination would still violate the Equal Protection Clause, Judge Thapar explained, because the discriminatory disbursements of grants were “not narrowly tailed to further that interest.” {snip}


The Biden administration must now decide whether to accept defeat or to whether seek further review, either by asking the full Sixth Circuit to rehear the case or by petitioning the Supreme Court for review. Absent reversal, the Vitolo precedent will put at risk all race and sex-based preferential spending programs. But rehearing or an appeal to a freshened Supreme Court chances a broader declaration against state-sanctioned discrimination.

While the Biden administration weighs its options, Vitolo’s lead attorney Rick Esenberg, of the Wisconsin Institute for Law and Liberty, remains confident in the outcome.

“The Sixth Circuit recognized what the Biden administration apparently does not. The Supreme Court has made clear that racial preferences cannot be justified by the desire to achieve racial balance or to comport with fashionable ideas like ‘equity,’” Esenberg said in an interview. And “[i]f the case goes to the Supreme Court,” Esenberg added, “we are confident that it will reiterate that each of us has the right to be treated as an individual and not to be discriminated against on the basis of race or sex.”