Jersey strip club suing SBA for denial of PPP funding during the pandemic shutdown

GLOUCESTER, NJ – During the COVID-19 pandemic, Governor Phil Murphy shut down strip clubs because, well, it’s pretty hard to get a lap dance while socially distanced. The shutdown affected the state’s remaining gentlemen’s clubs, but those clubs were denied access to federal grant money under the PPP paycheck protection program.

The reason, they are “sexually prurient” businesses, according to the Philadelphia Inquirer. Cheerleaders, which operates in New Jersey and Pennsylvania has joined a lawsuit by seven companies that operate eight clubs.

“The SBA determines whether a business presents live performances of a prurient sexual nature without having ever visited the establishments or having viewed the live performances at the establishment,” the strip club operators say in the complaint. “Plaintiffs do not present live performances of a prurient sexual nature on their premises. All of the performances on plaintiffs’ premises appeal to normal, healthy, sexual desires.”

Other adult-oriented businesses had challenged similar restrictions on Paycheck Protection Program loans and won, including in DV Diamond Club of Flint, LLC v. United States Small Business Administration, the suit said. The Eastern District of Michigan had barred the SBA from following its previous definition of “prurient” in denying pandemic relief, but the agency continued to do so for the RRF program, the complaint claimed.

Calling strip clubs “prurient” and potentially denying them funds based on the expression going on in the clubs violated employees’ and patrons’ First Amendment rights while treating them differently from workers and customers of other establishments, such as comedy clubs, without good reason or due process violated their Fifth Amendment rights, the suit said.

Law 360.com

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