Dallas Food & Beverage LLC v. United States Small Business Administration — Entry #12

Case 3:24-cv-01151-X          Document 12       Filed 07/15/24       Page 1 of 197       PageID 5880


                 UNITED STATES DISTRICT COURT
                              NORTHERN DISTRICT OF TEXAS

 Case No.: 3:24-cv-01151-X

 Dallas Food and Beverage, LLC; 2345 Meacham, LLC; 11000 Reeder, LLC; Gold Club – S.F.,
 LLC; S.A.W. Entertainment Limited; Smithville Bistro, LLC; Deja Vu Showgirls of Las Vegas,
 LLC; Office Minneapolis, LLC; Cats Meow of Vegas, LLC; Cats 701 Bourbon, LLC; Pole Position
 at Tacoma, LLC; Jamme Holdings, LLC; 90’s Minneapolis, LLC; Las Vegas Bistro, LLC; Stockton
 Enterprises, LLC,

                Plaintiffs,

 v.

 United States Small Business Administration; Isabel Casillas Guzman, in her Official Capacity as
 Administrator of the Small Business Administration; United States Of America; the Small
 Business Administration Office of Hearings and Appeals; Kimberly McLeod, in her Official
 Capacities as the Assistant Administrator and Chief Hearing Officer of the Office of Hearings and
 Appeals; and the United States of America,

                Defendants.


 PLAINTIFFS’ VERIFIED FIRST AMENDED COMPLAINT FOR DECLARATORY AND
         INJUNCTIVE RELIEF; ATTORNEY’S FEES AND COSTS UNDER
    THE EQUAL ACCESS TO JUSTICE ACT; AND JUDICIAL REVIEW OF FINAL
                             AGENCY ACTION


        NOW COME Plaintiffs, by and through counsel, and for their verified first amended

 complaint against the Defendants allege as follows:

                               INTRODUCTION AND SUMMARY

        1.      The Plaintiffs to this action are non-public businesses that are specifically identified

 and defined below, and the Defendants are governmental actors, also defined below, that are tasked

 with administering the Paycheck Protection Program (“PPP”) enacted to address the national

 financial fallout of the COVID-19 pandemic (the “Pandemic”). The current disputes among these

 parties arise under the loan programs set up by the PPP.


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        2.      Congress initially created the PPP as part of the Coronavirus, Aid, Relief, and

 Economic Security Act, Pub. L. 116-136 (2020) (the “CARES Act”). Through the CARES Act and

 the subsequent Consolidated Appropriations Act, 2021, Pub. L. 116-260, § 311 (2020), which

 Congress referred to as the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues

 Act (the “Appropriations Act” or “EAA”), the PPP ultimately set up two series of loan programs

 (now referred to as “first draw” and “second draw” loans). These programs authorized certain

 banks, specifically approved by the United States Small Business Administration (“SBA”), to issue

 loans under the PPP that would be guaranteed by the SBA. The first and second draw loan

 programs were then further amended via the American Rescue Plan Act of 2021 (“ARPA”), Pub.

 L. 117-2, § 5001 (Mar. 11, 2021). The authorized banks that issued PPP loans to these Plaintiffs

 are referred to hereinafter as the “Lending Banks.”

        3.      In this action, Plaintiffs seek, among other things, both declaratory and injunctive

 relief to bring to an end the Defendants’ continued, apparently never-ending, and now clearly

 escalating,   harassment   and   retaliation—through    vindictive,   retaliatory,   unlawful   and

 unconstitutional means delineated in exhaustive detail below and documented through voluminous

 attached exhibits—of the Plaintiffs and others that the SBA perceives to be “affiliated” with them;

 most but not all of which engage in, present, and/or permit, one or more forms of lawful

 entertainment protected under the First Amendment to the United States Constitution (including

 such noncontroversial forms of entertainment as karaoke bars).

        4.      The actions of the Defendants have caused, continue to cause, and/or will cause, as

 applicable, these Plaintiffs and certain businesses associated with them to: A) needlessly incur

 exorbitant sums of money in the form of attorneys’ fees, accountants’ fees, and other professional

 fees in responding to the actions of the Defendants; B) needlessly devote countless hours of their


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 staffs’ time in attempting to respond to voluminous and ever-changing requests and positions of

 the Defendants as they exhaustingly seek out a viable course of conduct to financially ruin these

 Plaintiffs in a manner that could be legally defended (where the SBA often demands documents

 that a particular Plaintiff simply does not possess and does not have the legal authority to acquire);

 and C) pay back loans that, according to the law, should be forgiven since they were fully approved,

 lawfully obtained, and the proceeds thereof were used in strict accordance with statutory

 requirements. In addition, as detailed shortly below, the Defendants have threatened a number of

 the Plaintiffs, as well as their Lending Banks, with both civil and criminal investigation if the

 Plaintiffs don’t fully bend to every demand--as unreasonable, outrageous, and legally deficient as

 it may be--of the Defendants.

        5.      Pursuant to 15 U.S.C. § 636(a)(36)(F)(i)(I) – (XI) and 15 U.S.C. §

 636(a)(37)(J)(iii)(I) – (VIII) of the PPP, loans were to be used for, and forgiveness of such loans

 was to be granted by the Lending Bank and/or SBA if the loaned funds were specifically expended

 upon, among other things, payroll costs, certain group health care benefits, rent, mortgage interest,

 utility bills, interest on other pre-Pandemic debt, personal protective equipment, and covered

 supplier costs (collectively, the “Permitted Uses”). If the loan is forgiven, the SBA then makes the

 Lending Bank whole.

        6.      All of the Plaintiffs had their PPP loans approved by their Lending Banks and/or

 the SBA (the “Loans”); received the full funds under those Loans (the “Loan Proceeds”); and used

 the amount requested via their loan forgiveness applications for the purposes specified in the PPP

 and in their loan documents (although a number of the Plaintiffs have actually returned a portion

 of their Loan Proceeds because they were unable, as a result of governmentally ordered business

 shutdowns arising from the Pandemic, to fully utilize such funds for the Permitted Uses).


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          7.    Now, however, the SBA has, for some of the Plaintiffs, denied forgiveness of the

 Loans through the issuance of what is known as a Final Loan Review Decision (hereinafter

 “FLRD,” or “Denial Letter”); for other Plaintiffs, the SBA has denied forgiveness of the Loans but

 has, at least temporarily, suspended such a determination pending “further investigation” after

 those Plaintiffs filed formal administrative appeals in the SBA’s Office of Hearings and Appeals

 (“OHA”) of the FLRDs issued to those Plaintiffs and needlessly expended tens of thousands of

 dollars in professional fees in doing so; for other Plaintiffs the SBA has done the same thing and

 has now issued “new and improved” Denial Letters triggering the requirement of those Plaintiffs

 to file yet a second administrative appeal in the OHA; and for yet other Plaintiffs that have not

 only received PPP Loans but have also obtained forgiveness of such Loans, the SBA has recently

 initiated audits, or what the SBA refers to as “Post-Payment Reviews,” of such Plaintiffs

 purportedly to “re-examine” the question of whether they were eligible for the Loans in the first

 place.

          8.    The OHA proceedings, in which many of these Plaintiffs have been compelled to

 participate, are nothing short of a mockery of due process. It is no exaggeration to state that, with

 the exception of motions to extend deadlines, all contested motions filed by the Plaintiffs in the

 OHA have been denied, and all contested motions filed by the SBA have been granted. But the

 OHA normally does not even wait until receipt of the SBA’s response to a Plaintiff’s motion before

 ruling; rather, such Plaintiff motions are usually denied within hours of filing. And, contested

 motions filed by the SBA in the OHA have been granted within one minute of the filing of the

 motion by the SBA.

          9.    In regard to the audits, or Post-Payment Reviews, some Plaintiffs have been

 informed by their Lending Bank that the SBA is “considering a full denial” of such Loans.


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         10.     If Loan forgiveness is denied, the Plaintiff is then required to pay the Loan Proceeds

 back to its Lending Bank. However, and simply put, having used the Loan Proceeds in strict

 accordance with the PPP (only for the Permitted Uses for the amounts requested to be forgiven),

 Plaintiffs are no longer in possession of the Loans Proceeds and have no lawful way to recover

 them in order to be able to pay them back—as demanded by the SBA—to their Lending Banks.

 The Loan Proceeds are, quite literally, in the hands of the Plaintiffs’ employees, utility providers,

 landlords, and the like.

         11.     In addition to denying or threatening to deny Loan Forgiveness, some Plaintiffs

 have been told through communication from the SBA to the Plaintiffs’ Lending Banks that the

 failure to provide each and every item of the voluminous materials requested by the SBA

 (unnecessary for the reasons set forth herein) “may include referral to the Office of Credit

 Management and/or transfer of this matter (borrower and lender) to the Office of Inspector

 General.” [Exhibit A (exemplar letter received by Plaintiff Office Minneapolis, LLC; clarification

 in original)]. As such, the SBA is now not just threatening the Plaintiffs, but it is also threatening

 the Plaintiffs’ Lending Banks as well and in doing so, in certain circumstances, is also

 compromising the ongoing business relationship that a number of the Plaintiffs have with their

 Lending Banks and associated financial institutions.

         12.     In addition, as further evidence of the vindictive, harassing, discriminatory, and

 retaliatory nature of the SBA’s treatment of these Plaintiffs and those that the Defendants believe

 to be “affiliated” with them, the SBA initiated, shortly before the filing of this suit, an investigation

 of a number of these Plaintiffs and certain others that the Defendants believe to be “affiliated” with

 them in regard to funds that such businesses received, as part of a federal court settlement

 following the initiation of litigation against some of these same Defendants for similar types of


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 misconduct, under another Pandemic-related funding program administered by the SBA (the

 Restaurant Revitalization Fund; “RRF”). These latest actions will likely be the subject of a separate

 proceeding in that federal court.

        13.     The SBA’s actions in denying Loan forgiveness of the Plaintiffs or, where

 forgiveness has already been granted, in commencing audits to “re-examine” the question of Loan

 eligibility, are purportedly based upon, directly or indirectly, either or both of what Plaintiffs will

 refer to herein as the Regulation” found at 13 C.F.R. § 120.110(p), or the “Affiliation Rules” found

 at 13 C.F.R. § 121.101, 13 C.F.R. § 121.103; 13 C.F.R. § 121.201, 13 C.F.R. § 121.301. Both the

 Prurience Regulation and the Affiliation Rules are at issue before this Court on claims asserted

 here by Plaintiffs that are located in the Northern District of Texas.

        14.     The dispute concerning the Prurience Regulation involves the question of whether

 certain of the Plaintiffs present forms of entertainment, or sell products, of a “prurient sexual

 nature.” The SBA contends that such businesses are not eligible for PPP loans under 13 C.F.R. §

 121.110(p).

        15.     The dispute regarding the Affiliation Rules revolves around the question of whether

 the Plaintiffs are what the PPP refers to as “NAICS code 72” businesses (including food and

 alcoholic beverage establishments, such as bars, taverns, restaurants, nightclubs, and

 discotheques). Such companies or “business concerns” are exempt, under the PPP pursuant to 15

 U.S.C. § 636(a)(36)(D)(iii)(I) and 15 U.S.C. § 636(a)(36)(D)(iv)(I) for first draw loans and 15

 U.S.C. § 636(a)(37)(D) and (E) for second draw loans (collectively, the “Affiliation Exception

 Provisions”), from the “normal” Affiliation Rules used by the SBA to determine whether a

 business, together with entities that the SBA contends are “related” to it, is “too big” to receive

 funding under certain of its loan and grant programs.


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        16.     “NAICS” stands for the North American Industry Classification System, which was

 jointly developed by the Office of Management and Budget, the U.S. Economic Classification

 Policy Committee, Statistics Canada, and Mexico’s Instituto Nacional de Estadistica y Geografia.

 The NAICS is currently maintained by the United States Census Bureau, with its website providing

 the latest information, (https://www.census.gov/naics/?99967 (last visited July 13, 2024)).

        17.     The NAICS is used for various statistical purposes by certain agencies of the federal

 government. The Census Bureau is one such agency. The Internal Revenue Service (“IRS”) also

 indirectly, and as is relevant to the circumstances of a number of the Plaintiffs here for the reasons

 discussed below, references them (albeit, also discussed hereinafter, with some differences).

        18.     All Plaintiffs are licensed bars, and/or restaurants, and/or taverns, and/or

 nightclubs, and are therefore, for PPP purposes, NAICS code 72 businesses.

        19.     In addition to the Prurience Regulation and the Affiliation Rules, the SBA has, in a

 number of their “audits” and as a purely pretextual matter in an effort to run up the Plaintiffs’ costs

 and to have them needlessly expend staff time and effort on unnecessary and extraneous matters,

 demanded that certain Plaintiffs immediately produce documentation to: A) verify that it indeed

 suffered a specified 25% reduction in aggregated gross receipts (that being an eligibility

 prerequisite for second draw PPP loans; see generally 5 U.S.C. § 636(a)(37)(A)(iv)(I)); and B) to

 permit the SBA to be able to calculate the original loan amount or forgiveness amount (the SBA

 claiming that for the latter Plaintiffs, “sufficient documentation” had not been previously produced

 even those such Loans had been approved and forgiven).

        20.     All Plaintiffs applying for and receiving second draw PPP loans suffered the

 statutory requisite 25% reduction in aggregated gross receipts in order to qualify for such second

 draw PPP loans.


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        21.     All Plaintiffs have sufficient and proper documentation to document the original

 amount of their requested PPP Loans and the amounts thereof sought to be forgiven.

        22.     As a result of the above and as further described in detail below, Plaintiffs challenge

 here as being unconstitutional under the First and Fifth Amendments to the United States

 Constitution: A) both facially and as applied by the Defendants to these Plaintiffs, the Prurience

 Regulation (already enjoined by, among other courts, the Southern District of Texas); B) the

 manner in which the Defendants are applying the Affiliation Exception Provisions to these

 Plaintiffs; C) both facially and as applied by the Defendants to these Plaintiffs, the Affiliation

 Rules; and D) both facially and as applied by the Defendants to these Plaintiffs, the rules of the

 OHA, as discussed and defined, infra, that apply specifically and exclusively to appeals emanating

 from PPP matters, 1 which include such stellar cornerstones of due process as, among other things,

 denying any and all forms of discovery whatsoever (13 C.F.R. § 134.1209(b)), while permitting

 SBA to “supplement” the administrative record at any time; requiring the appellant to file its appeal

 brief before it has even had an opportunity to view the “administrative record” that the SBA

 purports to have relied on in issuing the FLRD that is the subject of the appeal so that the appellant

 may respond accordingly (but which it is not even entitled to do as a matter of right) (13 C.F.R. §§

 134.1202, 134.1207); precluding any form of hearing or oral argument whatsoever to occur on the

 appeal (13 C.F.R. § 134.1209(b)); precluding the award of attorneys’ fees and costs under the Equal

 Access to Justice Act (5 U.S.C. § 504 & 28 U.S.C. § 2412) to appellants if otherwise eligible under

 that Act (13 C.F.R. § 134.1213); and permitting the SBA to “submit” administrative records to the

 OHA for its consideration of the appeal that have been so heavily redacted that the appellant cannot


 1
  Plaintiffs do not challenge the “normal” appellate rules of the OHA that apply to all other appeals
 except for PPP matters. Those, in contrast to the rules challenged here that pertain only to PPP
 decisions, actually provide some semblance of due process.


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 in the OHA proceeding fully understand and respond (even if permitted, in the complete and

 absolute discretion of the OHA) to the supposed reasoning of the SBA in denying loan or

 forgiveness eligibility—and thereby significantly limiting the Plaintiffs’ ability to later adjudicate

 such claims in a court of law. Plaintiffs also challenge the legality of the SBA having enacted the

 various challenged regulations and, based upon the extremely egregious conduct by the Defendants

 as detailed herein, the anti-injunction provisions of 15 U.S.C. § 634(b)(1) as uniquely construed

 by the Fifth Circuit.

        23.     The consequences of Defendants’ unlawful and unconstitutional actions have now

 reached the point where a number of these Plaintiffs are—and more will be if the Defendants are

 not stopped—on the precipice of financial ruin, which could result in the closure of such Plaintiffs’

 businesses and, for a number of the Plaintiffs, the cessation of the presentation of, and the ability

 of the adult public to view and participate in, constitutionally protected entertainment.

        24.     The matters set forth in the paragraph immediately above, together with the threats

 by the SBA to the Plaintiffs and to the Lending Banks to forward these disputes to the Office of

 Credit Management and/or the Office of Inspector General for “further handling,” and particularly

 in context of the sovereign immunity from claims for damages enjoyed by the Defendants,

 undeniably constitutes immediate and irreparable harm being suffered by these Plaintiffs. This

 harassment, targeting, and retaliation, resulting from the admitted disdain (detailed herein) that a

 certain senior representative of the SBA has for the nature of the entertainment presented by some

 of the Plaintiffs, continues up to the date of the filing of this action and must be stopped. Given the

 egregious conduct of the Defendants as detailed herein, Defendants and their agents, as public

 officials, cannot be presumed to be properly discharging or to have been properly discharging their

 official duties. United States v. Mezzanatto, 513 U.S. 196, 210 (1995).


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        25.     Plaintiffs have contacted, through the undersigned attorneys, legal counsel from the

 Department of Justice (“DOJ”) who had previously represented the SBA in numerous other

 lawsuits and disputes between the clients of the undersigned firm and the SBA informing him of

 the actions summarized above and as described in exhaustive detail below, but the unlawful and

 unconstitutional actions of the SBA continue unabated. 2

        26.     In fact, following the transmission of correspondence from the undersigned

 attorneys to (at least previous) legal counsel for the SBA as discussed in the paragraph immediately

 above, not only did the SBA commence the “review” of the settlement proceeds paid by the SBA

 under the RRF program discussed in paragraph 12 above, but its actions in initiating “audits” of

 the clients of the undersigned firm in order to “re-examine” loan eligibility or the use of Loan

 Proceeds increased precipitously. As the undersigned attorneys had been drafting the original

 complaint in this action, scores of new “audits” of their clients, as well as other businesses that the

 SBA apparently contends are somehow related to or tainted by them, had been initiated by the

 SBA.

        27.     As a result of the matters set forth in the paragraph immediately above, the current

 list of Plaintiffs identified in this action is merely representative of those businesses affected by

 unconstitutional and illegal actions of the Defendants detailed herein, with the Plaintiff list to

 increase as time permits amendments to these pleadings. Nevertheless, given the cascading actions

 of the Defendants, the filing of this lawsuit at this time is necessary in order to permit Plaintiffs


 2
   Plaintiffs do not attribute, in any way, the failure of SBA to conform its actions with the law
 and/or the U.S. Constitution to the actions or inactions of the aforementioned DOJ attorney; rather,
 as repeated herein, Plaintiffs attribute it exclusively and directly to the SBA and, in particular, to
 one of its senior officials with a stated animus towards the form of the constitutionally protected
 entertainment some of the Plaintiffs present.


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 the opportunity to seek and obtain preliminary injunctive relief and/or accelerated declaratory

 judgment.

                                  JURISDICTION AND VENUE

        28.     Jurisdiction is conferred on this Court for the resolution of the substantial

 constitutional questions presented herein by virtue of 28 U.S.C. § 1331; 28 U.S.C. § 1343(a)(1),

 (3), and (4); 28 U.S.C. § 1346(a)(2); 28 U.S.C. § 1361; and 28 U.S.C. § 2201.

        29.     Jurisdiction is conferred on this Court for resolution of all relevant questions of law,

 the interpretation of constitutional and statutory provisions, the determination of the meaning or

 applicability of the terms of the SBA’s actions as discussed herein, and over Plaintiffs’ facial and

 as applied challenges to the SBA’s regulations, by virtue of 5 U.S.C. §§ 702 and 706.

        30.     Jurisdiction is conferred on this Court for Plaintiffs’ claim(s) for attorneys fees and

 costs by virtue of 5 U.S.C. § 504 and 28 U.S.C. § 2412.

        31.     Jurisdiction is also proper under 15 U.S.C. § 634(b)(1).

        32.     No other action, civil or criminal, is pending in any state court involving the

 Plaintiffs regarding the activities and events discussed herein.

        33.     Plaintiff Gold Club – S.F., LLC, and any other Plaintiff that receives a final decision

 from the OHA regarding their PPP loan forgiveness application, is entitled to judicial review of

 SBA and the OHA’s decision. 13 C.F.R. § 134.1201(d); 13 C.F.R. § 134.1211(g).

        34.     This suit is authorized by law to redress deprivations of rights, privileges, and

 immunities secured by the First and Fifth Amendments to the United States Constitution.

        35.     Pursuant to 28 U.S.C. § 1391(e), venue in this Court is appropriate because

 Plaintiffs Dallas Food & Beverage, LLC, 2345 Meacham, LLC, and 11000 Reeder, LLC are

 located in the Northern District of Texas; the Small Business Administration operates in the


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 Northern District of Texas; and the injury complained of and acts causing the injury have occurred

 and will continue to occur in the Northern District of Texas.

         36.    Venue in this Court is appropriate for all Plaintiffs because Plaintiffs Dallas Food

 & Beverage, LLC, 2345 Meacham, LLC, and 11000 Reeder, LLC, are located in the Northern

 District of Texas. E.g., Crane v. Napolitano, 920 F. Supp. 2d 724, 746 (N.D. Tex. 2013) (“Because

 Plaintiff Engle resides in the Northern District of Texas, venue is proper in this district as to all

 plaintiffs.”), aff'd sub nom. Crane v. Johnson, 783 F.3d 244 (5th Cir. 2015); E. Texas Baptist Univ.

 v. Sebelius, No. CIV.A. H-12-3009, 2013 WL 4678016, at *7 (S.D. Tex. Aug. 30, 2013) (noting

 that the “only view adopted by the federal courts since 1971” is that “§ 1391(e)(1) [] provide[s]

 venue to all plaintiffs as long as one plaintiff resides in the district”); Exxon Corp. v. F.T.C., 588

 F.2d 895, 899 (3d Cir. 1978) (“There is no requirement that all plaintiffs reside in the forum

 district.”).

         37.    In addition, the claims of all Plaintiffs should be heard in this single action because:

 A) as a result of the financial hardships caused by the Pandemic and the actions of the Defendants

 detailed herein, a number of the Plaintiffs would not be able to financially afford to fund separate

 litigation predicated upon its individual circumstances; and B) individual lawsuits, which would

 be based upon the same facts, circumstances and law, and in particular the SBA’s contention that

 many of these Plaintiffs are part of the same “affiliation group” as discussed herein, could result

 in inconsistent decisions that would compound the violations of Plaintiffs’ constitutional rights.

                                           THE PARTIES

 Plaintiffs

         38.    Plaintiff Dallas Food and Beverage, LLC (“Dallas Food and Beverage”), is a Texas

 Limited Liability Company duly organized and authorized to conduct business in the State of


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 Texas. Dallas Food and Beverage does business as Bucks Cabaret at 2150 California Crossing Rd.

 in Dallas, Texas. These addresses will be referred to below as Dallas Food and Beverage’s

 “physical location.”

        39.     Plaintiff 2345 Meacham, LLC (“Meacham”) is a Limited Liability Company duly

 organized and licensed to do business in the State of Texas. Meacham does business as Buck’s

 Cabaret at 2345 Meacham Blvd, Fort Worth, Texas 76106. This address will be referred to below

 as Meacham’s “physical location.”

        40.     Plaintiff 1100 Reeder, LLC (“Reeder”) is a Texas Limited Liability Company duly

 organized and authorized to conduct business in the State of Texas. Reeder does business as Bucks

 Wild at 11327 Reeder Road in Dallas, Texas 75229. This address will be referred to below as

 Reeder’s “physical location.”

        41.     Plaintiff Gold Club SF, LLC (“Gold Club”) is a Limited Liability Company duly

 organized under the laws of the State of Nevada and authorized to conduct business in the State of

 California. Gold Club does business as Gold Club at 650 Howard Street, San Francisco, California

 94105. This address will be referred to below as Gold Club’s “physical location.”

        42.     Plaintiff S.A.W. Entertainment Limited (“SAW”), is a California Corporation duly

 organized and authorized to conduct business in the State of California. SAW does business as

 Larry Flynt’s Hustler Club at 1031 Kearny Street and Condor Club at 560 Broadway Street in San

 Francisco, California. These addresses will be referred to below as SAW’s “physical location.”

        43.     Plaintiff Smithville Bistro, LLC (“Smithville”), is a Tennessee Limited Liability

 Company duly organized and authorized to conduct business in the State of Tennessee. Smithville

 does business as Midnight Express - Smithville at 33847 Sparta Way in Smithville, Tennessee.

 These addresses will be referred to below as Smithville’s “physical location.”


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        44.     Plaintiff Deja Vu Showgirls of Las Vegas, LLC (“DVSG of LV”), is a Nevada

 Limited Liability Company duly organized and authorized to conduct business in the State of

 Nevada. DVSG of LV does business as Deja Vu Showgirls Las Vegas at 3247 Sammy Davis Jr.

 Drive, in Las Vegas, Nevada. These addresses will be referred to below as DVSG of LV’s “physical

 location.”

        45.     Plaintiff Office Minneapolis, LLC (“Office”), is a Minnesota Limited Liability

 Company duly organized and authorized to conduct business in the State of Minnesota. Office

 does business as The Office Pub & Grill at 307 N. Washington Ave., in Minneapolis, MN. These

 addresses will be referred to below as Office’s “physical location.”

        46.     Plaintiff Cats Meow of Vegas, LLC (“Cats”), is a Nevada Limited Liability

 Company duly organized and authorized to conduct business in the State of Nevada. Cats does

 business as Cat’s Meow at 450 Fremont Street, Suite 201, in Las Vegas, Nevada. This address will

 be referred to below as Cats’ “physical location.”

        47.     Plaintiff Cats 701 Bourbon, LLC (“Cats NOLA”), is a Nevada Limited Liability

 Company authorized to conduct and does conduct business in the State of Louisiana. Cats NOLA

 does business as Cat’s Meow at 701 Bourbon Street in New Orleans, LA. This address will be

 referred to below as Cats NOLA’s “physical location.”

        48.     Plaintiff Pole Position at Tacoma, LLC (“Pole Position”), is a Washington Limited

 Liability Company duly organized and authorized to conduct business in the State of Washington.

 Pole Position does business as Pole Position Sports Bar at 10707 Pacific Ave. S., Ste. F, in Tacoma,

 WA. This address will be referred to below as Pole Position’s “physical location.”

        49.     Plaintiff Jamme Holdings, LLC (“Jamme”), is a Pennsylvania Limited Liability

 Company duly organized and authorized to conduct business in the State of Pennsylvania. Jamme


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 does business as Dream Girls Wilkes-Barre at 205 Mundy Street in Wilkes-Barre, Pennsylvania.

 These addresses will be referred to below as Jamme’s “physical location.”

          50.   Plaintiff 90’s Minneapolis, LLC (“90s”), is a Minnesota Limited Liability Company

 duly organized and authorized to conduct business in the State of Minnesota. 90s does business as

 Gay 90’s Minneapolis at 408 Hennepin Ave. in Minneapolis, MN. These addresses will be referred

 to below as 90’s “physical location.”

          51.   Plaintiff Las Vegas Bistro, LLC (“LVB”), is a Nevada Limited Liability Company

 duly organized and authorized to conduct business in the State of Nevada. LVB does business as

 Larry Flynt’s Hustler Club – Las Vegas at 6007 Dean Martin Dr. in Las Vegas, NV. These addresses

 will be referred to below as LVB’s “physical location.”

          52.   Plaintiff Stockton Enterprises, LLC (“Stockton Enterprises”), is a Nevada Limited

 Liability Company authorized to conduct and does conduct business in the State of California.

 Stockton Enterprises does business as Showgirls of Stockton at 64206 N. West Ln., in Stockton,

 CA. These addresses will be referred to below as Stockton Enterprises’ “physical location.”

 Defendants

          53.   Defendant Small Business Administration (again, “SBA”) is an independent federal

 agency created and authorized pursuant to 15 U.S.C. § 633, et seq. The SBA maintains a branch

 office at 150 Westpark Way, Ste. 130 in Euless, Texas, which is within the Northern District of

 Texas.

          54.   Defendant Isabel Casillas Guzman (“Guzman,” or the “Administrator”) is the

 Administrator of the SBA, a Cabinet-level position, and is sued in her official capacity only as the

 Administrator of the SBA.


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            55.    Authority to sue the Administrator is granted by 15 U.S.C. § 634(b), which states,

 in part:


            In the performance of, and with respect to, the functions, powers, and duties vested
            in him by this chapter the Administrator may—(1) sue and be sued in any court of
            record of a State having general jurisdiction, or in any United States district court,
            and jurisdiction is conferred upon such district court to determine such
            controversies without regard to the amount in controversy . . . .

            56.    Defendant Office of Hearings and Appeals (again, “OHA”) is an independent office

 of the United States Small Business Administration in 1983 and which has an office in Washington,

 D.C., but maintains an email address for any internet user to email from anywhere in the world

 where there is access to the world wide web.

            57.    Defendant Kimberly McLeod (“McLeod”) is the Assistant Administrator for the

 OHA and is the Chief Hearing Officer for the OHA.

            58.    Defendant United States of America is a sovereign nation dedicated to the

 protection of life, liberty, and property as set forth in the Bill of Rights and other provisions of and

 amendments to the Constitution of the United States.

            59.    The SBA, the Administrator, the OHA, McLeod, and the United States of America

 are referred to collectively hereinafter as the “Defendants.”

            60.    Plaintiffs do not seek, at this time, damages and currently pray only for declaratory

 and injunctive relief under 5 U.S.C. § 701, et seq., in order to restrain the actions of the SBA, the

 Administrator, and McLeod in each of their official capacities. Plaintiffs do, however, make a

 claim for attorneys’ fees and costs under the Equal Access to Justice Act and applicable law, 5

 U.S.C. § 504 and 28 U.S.C. § 2412, as set forth herein. See Count XV.

                        FACTS RELATED TO THE SPECIFIC PLAINTIFFS

 Dallas Food & Beverage, LLC (“Dallas Food and Beverage”)


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           61.   Dallas Food and Beverage is a licensed food and alcohol serving, nightclub open

 to the consenting adult public, which presents on its premises a variety of non-obscene,

 constitutionally protected, female performance dance entertainment.

           62.   Dallas Food and Beverage has never been charged with, let alone convicted of, any

 crimes of obscenity. Similarly, none of the entertainers who have performed on Dallas Food and

 Beverage’s premises have ever been charged with, let alone convicted of, any crimes of obscenity

 related to their performances at the facility owned and operated by Dallas Food and Beverage.

           63.   Dallas Food and Beverage does not present any live performances, depictions or

 displays, or sell any products or services, of a prurient sexual nature or that otherwise appeal to a

 shameful, morbid, prurient, or unhealthy interest in sex.

           64.   Dallas Food and Beverage operates it nightclub pursuant to, and in accordance with,

 the following licenses/permits, which it maintains:

                 a.     Dance Hall License issued by the City of Dallas;

                 b.     A Liquor License issued by the State of Texas;

                 c.     An Alcohol Permit issued by Dallas County

                 d.     An Alcohol Permit issued by the City of Dallas; and

                 e.     An Adult Cabaret License issued by the City of Dallas.

           65.   As a consequence of the Pandemic, Dallas Food and Beverage was subject to

 various governmental closures orders imposed to mitigate the effects and spread of the COVID-

 19 virus. As a direct and proximate result thereof, the lingering effects of the Pandemic, and the

 supply chain disruptions related thereto, Dallas Food and Beverage suffered, as did a large

 percentage of businesses throughout the United States, devastating and catastrophic financial

 losses.


                                                  17


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         66.    In order to mitigate the financial impact caused to Dallas Food and Beverage by the

 Pandemic and the consequences thereof, including but not limited to its ability to retain and pay

 its employees, Dallas Food and Beverage submitted an application to its Lending Bank for a first

 draw PPP loan on or about April 7, 2020. At all times relevant hereto, Dallas Food and Beverage’s

 Lending Bank operated as a delegate of the SBA in processing and approving/disapproving of the

 first draw PPP loan sought by Dallas Food and Beverage.

         67.    Under the PPP, Dallas Food and Beverage was eligible to obtain, and did obtain, a

 first draw Loan.

         68.    On or about July 8, 2021, Dallas Food and Beverage applied for loan forgiveness

 of its first draw PPP loan. The Loan Proceeds amount that Dallas Food and Beverage applied for

 forgiveness of for its first draw Loan, Dallas Food and Beverage used exclusively for the Permitted

 Uses in full accordance with the PPP and its Loan Agreement. Consequently, it no longer possesses

 any of the Loan Proceeds from its first draw Loan.

         69.    On April 15, 2022, Dallas Food and Beverage received forgiveness of the full

 amount of forgiveness requested on its first draw PPP Loan.

         70.    On or about January 30, 2024, via letter, SBA notified Dallas Food and Beverage

 that it was initiating a Post-Payment Review of Dallas Food and Beverage’s first draw PPP Loan

 and requested that Dallas Food and Beverage provide a number of documents. The stated purpose

 for SBA’s requests via the Post-Payment Review was to review whether Dallas Food and Beverage

 was eligible for the PPP Loan under, among other factors, the Prurience Regulation and Affiliation

 Rules


                                                 18


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        71.     Because Dallas Food and Beverage operates an alcohol serving nightclub under the

 licenses/permits identified in paragraph 64, it is, for purposes of the PPP and the Affiliation Rules,

 a NAICS code 72 business.

        72.     Dallas Food and Beverage claimed NAICS Code 722410 on its first draw PPP loan

 forgiveness application, the SBA Form 3511, its second draw PPP loan application, and its second

 draw PPP loan forgiveness application.

        73.     At all times related to the relevant period for its first and second draw PPP Loans,

 Dallas Food and Beverage had no more than 113 persons employed at its physical location.

        74.     Under the PPP, Dallas Food and Beverage was eligible to obtain and did obtain a

 second draw PPP Loan.

        75.     The Loan Proceeds amount that Dallas Food and Beverage applied for forgiveness

 of for its second draw Loan, Dallas Food and Beverage used exclusively for the Permitted Uses in

 full accordance with the PPP and its Loan Agreement. Consequently, it no longer possesses any of

 the Loan Proceeds from its second draw Loan.

        76.     On or about May 24, 2022, Dallas Food and Beverage applied for forgiveness of

 its second draw PPP Loan. At all times during that forgiveness application process, Dallas Food

 and Beverage’s Lending Bank operated as a delegate of the SBA in processing and

 approving/disapproving of forgiveness of Dallas Food and Beverage’s second draw PPP Loan, and

 issued a forgiveness decision to SBA approving Dallas Food and Beverage’s loan forgiveness

 application in the amount of $889,157.00.

        77.     While Dallas Food and Beverage was eligible for forgiveness of its second draw

 PPP Loan, the SBA conducted a review of Dallas Food and Beverage’s Loan and denied

 forgiveness in an FLRD dated December 14, 2023. The claimed bases for the denial were due to


                                                  19


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 alleged “size issues” based on SBA’s application of the Affiliation Rules despite Dallas Food and

 Beverage’s obvious qualification for the Affiliation Exception Provisions and alleged ineligibility

 due to SBA’s application of the Prurience Regulation. Dallas Food and Beverage timely appealed

 that FLRD, but SBA filed a motion to dismiss on February 29, 2024, that was granted by the OHA

 the same day.

        78.      If forced to repay its second draw PPP Loan, and because of the precarious financial

 condition in which it finds itself still as a result of the lingering impact of the Pandemic and the

 consequences thereof, Dallas Food and Beverage may be forced to close its business and file for

 bankruptcy, which would result in the cessation of both the presentation of and the ability to view

 entertainment that is presumptively protected under the First Amendment to the United States

 Constitution, as well as the wholesale termination of its employees jobs; which the PPP was in fact

 designed to preclude from happening.

 2345 Meacham, LLC (“Meacham”)

        79.      Meacham is a licensed food and alcohol serving, nightclub open to the consenting

 adult public, which presents on its premises a variety of non-obscene, constitutionally protected,

 female performance dance entertainment.

        80.      Meacham has never been charged with, let alone convicted of, any crimes of

 obscenity. Similarly, none of the entertainers who have performed on Meacham’s premises have

 ever been charged with, let alone convicted of, any crimes of obscenity related to their

 performances at the facility owned and operated by Meacham.

        81.      Meacham does not present any live performances, depictions or displays, or sell

 any products or services, of a prurient sexual nature or that otherwise appeal to a shameful, morbid,

 prurient, or unhealthy interest in sex.


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        82.     Meacham operates it nightclub pursuant to, and in accordance with, the following

 licenses/permits, which it maintains:

                a.      A Specialized Certificate of Occupancy;

                b.      A Liquor Permit issued by Tarrant County;

                c.      A Liquor Permit issued by the City of Forth Worth;

                d.      A health permit issued by the City of Forth Worth; and

                e.      Alcoholic Beverage Permit issued by the Texas Alcoholic Beverage

        Commission.

        83.     As a consequence of the Pandemic, Meacham was subject to various governmental

 closures orders imposed to mitigate the effects and spread of the COVID-19 virus. As a direct and

 proximate result thereof, the lingering effects of the Pandemic, and the supply chain disruptions

 related thereto, Meacham suffered, as did a large percentage of businesses throughout the United

 States, devastating and catastrophic financial losses.

        84.     In order to mitigate the financial impact caused to Meacham by the Pandemic and

 the consequences thereof, including but not limited to its ability to retain and pay its employees,

 Meacham applied for, obtained, and obtained forgiveness of, a first draw PPP loan. Meacham also

 submitted an application its Lending Bank for a second draw PPP loan on or about March 9, 2021.

 At all times relevant hereto, Meacham’s Lending Bank operated as a delegate of the SBA in

 processing and approving/disapproving of the second draw PPP loan sought by Meacham.

        85.     Because Meacham operates a licensed food and alcohol-serving nightclub under

 the licenses and permits identified in paragraph 82, it is, for purposes of the PPP and the Affiliation

 Rules, a NAICS code 72 business. Since at least 2013, Meacham has claimed NAICS code 722410


                                                   21


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 as its “business activity code number” on its federal income tax returns, and claimed NAICS code

 722410.

        86.     At all times related to the relevant period for its second draw PPP loan, Meacham

 had no more than 118 persons employed at its physical location.

        87.     Under the PPP, Meacham was eligible to obtain its second draw Loan and received

 its second draw Loan.

        88.     The Loan Proceeds amount that Meacham applied for forgiveness of for its second

 draw Loan, Meacham used exclusively for the Permitted Uses in full accordance with the PPP and

 its Loan Agreement. Consequently, it no longer possesses any of the Loan Proceeds from its second

 draw Loan.

        89.     On or about April 15, 2022, Meacham applied for forgiveness of its second draw

 PPP Loan. At all times during that forgiveness application process, Meacham’s Lending Bank

 operated as a delegate of the SBA in processing and approving/disapproving of forgiveness of

 Meacham’s second draw PPP Loan, and issued a forgiveness decision to SBA approving

 Meacham’s loan forgiveness application in the amount of $760,910.00.

 Meacham’s Second Appeal to the OHA of SBA’s FLRD Denying Forgiveness of its Second Draw
 PPP Loan


        90.     While Meacham was eligible for forgiveness of its second draw PPP Loan, the SBA

 conducted a review of Meacham’s Loan, on or about June 21, 2023, issued Meacham an FLRD

 denying Meacham’s forgiveness application for its second draw PPP Loan because SBA had

 concluded that Meacham did not meet the size standards for the PPP or that SBA could not

 otherwise determine whether Meacham met the size standards despite Meacham’s obvious

 qualification for the Affiliation Exception Provisions.


                                                  22


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        91.     Meacham timely appealed that FLRD.

        92.     Shortly thereafter, Meacham and SBA filed a stipulated request to stay the appeal,

 which the OHA granted a few days later.

        93.     On September 13, 2023, SBA filed a motion to dismiss. Its stated basis for the

 motion was that it had, apparently that same day, withdrawn the FLRD that was the subject of that

 appeal because SBA determined that it was necessary to complete a further review of the loan.

        94.     That same day, without a response from Meacham, OHA granted SBA’s motion and

 dismissed the appeal.

 Meacham’s Second Appeal to the OHA of SBA’s FLRD Denying Forgiveness of its Second Draw

 PPP Loan

        95.     While Meacham was eligible for forgiveness of its second draw PPP Loan, the SBA

 conducted a review of Meacham’s Loan, on or about December 28, 2023, issued Meacham an

 FLRD this time denying Meacham’s forgiveness application for its second draw PPP Loan based

 on alleged ineligibility due to SBA’s application of the Prurience Regulation as its sole basis for

 the denial.

        96.     Meacham timely appealed that FLRD to the OHA.

        97.     On or about February 20, 2024, SBA filed a 458-page administrative record in that

 appeal, relevant excerpts of that administrative record are attached hereto as Exhibit B.

        98.     Meacham and its staff, as well as its attorneys, began reviewing the 458-page

 administrative record to determine whether objections were necessary and to prepare the same if

 necessary, which, pursuant to 13 C.F.R. § 134.1207 and the scheduling order in the appeal, were

 due within 10 calendar days of SBA filing the administrative record.


                                                 23


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         99.     On page 17 of Meacham’s administrative record, the second entry on the “SBA

 Internal Notes” record was made by Sara Renn on June 24, 2022, states that, based on “internet

 presence as viewed on www.bucksclubs.com/bucks-cabaret/fort-worth,” Meacham “operates as a

 ‘Gentlemen’s Club,” which is confirmed through open-source searches of the borrower’s

 business,” which is then followed by a redaction. [Id. at p. 19]. Later, on April 24, 2023, Sharon

 Drake stated that Meacham was an “ineligible business” based on “[a] visual search of Google

 (Addendum B) determined these businesses to be adult entertainment clubs, or of a prurient

 nature.” [Id. at p. 18].

         100.    On or about February 27, 2024, Meacham filed a 25-page motion for discovery

 accompanied by 1,669 pages of exhibits seeking necessary discovery in the form of document

 requests; a Fed. R. Civ. P. 30(b)(6) deposition of the SBA; a deposition of Eric Benderson, SBA’s

 Associate General Counsel for Litigation who had, in previous litigation, provided a declaration

 regarding how determinations are made under the Prurience Regulation; and the depositions of

 that person or those persons who made, or participated in any fashion in making, the decision to

 deny Plaintiff’s loan forgiveness application. This motion and other similar motions filed by other

 Plaintiffs in the OHA are discussed and attached to this First Amended Complaint, infra.

         101.    On March 7, 2024, Meacham filed various objections to the administrative record,

 including an objection to the presence of redactions in the administrative record. On March 12,

 2024, SBA responded to Meacham’s objections. On March 18, 2024, the OHA judge ruled on those

 objections and ordered SBA to state the privilege asserted for the redactions. A true and accurate

 copy of the OHA’s order referenced earlier is attached hereto as Exhibit C.

         102.    On March 20, 2024, SBA filed a Motion to Reconsider the OHA’s order on the

 objections to the administrative record. Therein, SBA asserted that the redacted materials were


                                                 24


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 irrelevant and were privileged pursuant to 5 U.S.C. § 552(b)(7). A true and accurate copy of SBA’s

 reconsideration motion is attached hereto as Exhibit D. On April 19, 2024, Meacham responded

 to SBA’s reconsideration motion.

           103.   On April 26, 2024, SBA filed its response to Meacham’s appeal, complete with a

 declaration from Sigmund Pannu which attached additional “evidence” SBA claims it relied upon

 but which was not included in the administrative record. A true and accurate copy of that response

 is attached hereto as Exhibit E. Therein, SBA argues that the open-source searches referenced

 above was “SBA’s effort to describe by polite means the nature of Appellant’s business and more

 specifically the nature of its performances[.]”

           104.   Based on SBA’s response, on April 27, 2024, the OHA ordered the parties to meet

 and confer and submit a joint status report no later than May 10, 2024. One of the items the OHA

 ordered the parties to discuss was whether “the parties agree that the documents in the affiant’s

 exhibits are the same as or consistent with what SBA reviewed prior to December 28, 2023?” A

 true and accurate copy of this order is attached hereto as Exhibit F.

           105.   On May 6, 2024, OHA counsel for Meacham met and conferred with SBA’s OHA

 counsel. SBA’s OHA counsel stated that the exhibits found in Sigmund Pannu’s declaration would

 be added to the administrative record either through stipulation as the OHA judge requested in

 order to allow the appeal to proceed or the SBA would withdraw the FLRD, include the exhibits

 from Pannu’s declaration into the AR, and reissue the FLRD on the same basis as the one under

 appeal.

           106.   On or about May 10, 2024, SBA and Meacham filed a joint status report, which is

 attached hereto as Exhibit G.


                                                   25


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        107.    On May 14, 2024, OHA issued an order granting Meacham’s appeal and remanding

 the FLRD. OHA concluded that Meacham was correct that the materials attached to Sigmund

 Pannu’s declaration were not found in the administrative record and was without a firm conviction

 that SBA’s FLRD is free from clear error. A true and accurate copy of this OHA order is attached

 hereto as Exhibit H.

        108.    If forced to repay its second draw PPP Loans, and because of the precarious

 financial condition in which it finds itself still as a result of the lingering impact of the Pandemic

 and the consequences thereof, Meacham may be forced to close its business and file for

 bankruptcy, which would result in the cessation of both the presentation of and the ability to view

 entertainment that is presumptively protected under the First Amendment to the United States

 Constitution, as well as the wholesale termination of its employees jobs; which the PPP was in fact

 designed to preclude from happening.

 11000 Reeder, LLC (“Reeder”)

        109.    Reeder is a licensed food serving and BYOB, nightclub open to the consenting adult

 public, which presents on its premises a variety of non-obscene, constitutionally protected, female

 performance dance entertainment.

        110.    Reeder has never been charged with, let alone convicted of, any crimes of obscenity.

 Similarly, none of the entertainers who have performed on Reeder’s premises have ever been

 charged with, let alone convicted of, any crimes of obscenity related to their performances at the

 facility owned and operated by Reeder.

        111.    Reeder does not present any live performances, depictions or displays, or sell any

 products or services, of a prurient sexual nature or that otherwise appeal to a shameful, morbid,

 prurient, or unhealthy interest in sex.


                                                  26


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        112.    Reeder operates it nightclub pursuant to, and in accordance with, the following

 licenses/permits, which it maintains:

        a.      A Sexually Oriented Business License;

        b.      A Health Permit issued by the City of Dallas;

        c.      A Dance Hall license; and

        d.      A certificate of occupancy.

        113.    As a consequence of the Pandemic, Reeder was subject to various governmental

 closures orders imposed to mitigate the effects and spread of the COVID-19 virus. As a direct and

 proximate result thereof, the lingering effects of the Pandemic, and the supply chain disruptions

 related thereto, Reeder suffered, as did a large percentage of businesses throughout the United

 States, devastating and catastrophic financial losses.

        114.    In order to mitigate the financial impact caused to Reeder by the Pandemic and the

 consequences thereof, including but not limited to its ability to retain and pay its employees,

 Reeder submitted an application to its Lending Bank for a first draw PPP loan on or about April 3,

 2020. At all times relevant hereto, Reeder’s Lending Bank operated as a delegate of the SBA in

 processing and approving/disapproving of the first draw PPP loan sought by Reeder.

        115.    In order to further mitigate the financial impact caused to Reeder by the Pandemic

 and the consequences thereof, including but not limited to its ability to retain and pay its

 employees, Reeder submitted an application to its Lending Bank for a second draw PPP loan on

 or about January 14, 2021. At all times relevant hereto, Reeder’s Lending Bank operated as a

 delegate of the SBA in processing and approving/disapproving of the second draw PPP loan sought

 by Reeder.


                                                  27


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         116.   Because Reeder operates a licensed food serving nightclub under the

 licenses/permits identified in paragraph 112, it is, and was at all times relevant to the PPP, for

 purposes of the PPP and the Affiliation Rules, a NAICS code 72 business.

         117.   Reeder claimed NAICS code 722410 on its first draw PPP loan forgiveness

 application, the SBA Form 3511, its second draw PPP Loan application, and its second draw PPP

 loan forgiveness application.

         118.   On or about December 28, 2020, Reeder applied for loan forgiveness of its first

 draw PPP loan. The Loan Proceeds amount that Reeder applied for forgiveness of for its first draw

 Loan, Reeder used exclusively for the Permitted Uses in full accordance with the PPP and its Loan

 Agreement. Consequently, it no longer possesses any of the Loan Proceeds from its first draw

 Loan.

         119.   On or about February 18, 2021, Reeder received forgiveness of the full amount of

 forgiveness requested on its first draw PPP Loan.

         120.   On or about November 17, 2021, Reeder applied for loan forgiveness of its second

 draw PPP Loan. The Loan Proceeds amount that Reeder applied for forgiveness of for its second

 draw Loan, Reeder used exclusively for the Permitted Uses in full accordance with the PPP and

 its Loan Agreement. Consequently, it no longer possesses any of the Loan Proceeds from its second

 draw Loan.

         121.   On or about November 24, 2021, Reeder received forgiveness of the full amount of

 forgiveness requested on its second draw PPP Loan.

         122.   On or about January 29, 2023, via separate letters, SBA notified Reeder that it was

 initiating a Post-Payment Review of Reeder’s first and second draw PPP Loans and requested that

 Reeder provide a number of documents. The stated purpose for SBA’s requests via the Post-


                                                28


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 Payment Review was to review whether Reeder was eligible for the PPP Loan under, among other

 factors, the Prurience Regulation and Affiliation Rules.

        123.    At all times related to the relevant period for its first and second draw PPP Loans,

 Reeder had no more than 57 persons employed at its physical location.

        124.    If forced to repay its first and second draw PPP Loans, and because of the precarious

 financial condition in which it finds itself still as a result of the lingering impact of the Pandemic

 and the consequences thereof, Reeder may be forced to close its business and file for bankruptcy,

 which would result in the cessation of both the presentation of and the ability to view entertainment

 that is presumptively protected under the First Amendment to the United States Constitution, as

 well as the wholesale termination of its employees jobs; which the PPP was in fact designed to

 preclude from happening.

 Gold Club – S.F., LLC (“Gold Club”)

        125.    Gold Club is a licensed food and alcohol serving restaurant/nightclub open to the

 consenting adult public, which presents on its premises a variety of non-obscene, constitutionally

 protected, female performance dance entertainment.

        126.    Gold Club has never been charged with, let alone convicted of, any crimes of

 obscenity. Similarly, none of the entertainers who have performed on Gold Club’s premises have

 ever been charged with, let alone convicted of, any crimes of obscenity related to their

 performances at the facility owned and operated by Gold Club.

        127.    Gold Club does not present any live performances, depictions or displays, or sell

 any products or services, of a prurient sexual nature or that otherwise appeal to a shameful, morbid,

 prurient, or unhealthy interest in sex.


                                                  29


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        128.    Gold Club operates it nightclub pursuant to, and in accordance with, the following

 licenses/permits, which it maintains:

                a.      Alcoholic Beverage License issued by the State of California’s Department

        of Alcoholic Beverage Control agency; and

                b.      A Class/Permit Number H26/32781 License Certificate issued by the City

        of San Francisco that describes Gold Club as an H26 Restaurant Over 2,000 SQ issued to

        Alternative Entertainment, Inc., a wholly owned subsidiary of Gold Club.

        129.    As a consequence of the Pandemic, Gold Club was subject to various governmental

 closures orders imposed to mitigate the effects and spread of the COVID-19 virus. As a direct and

 proximate result thereof, the lingering effects of the Pandemic, and the supply chain disruptions

 related thereto, Gold Club suffered, as did a large percentage of businesses throughout the United

 States, devastating and catastrophic financial losses.

        130.    In order to mitigate the financial impact caused to Gold Club by the Pandemic and

 the consequences thereof, including but not limited to its ability to retain and pay its employees,

 Gold Club submitted an application to its Lending Bank for a first draw PPP loan on or about April

 14, 2020, and for a second draw PPP loan in March of 2021. At all times relevant hereto, Gold

 Club’s Lending Bank operated as a delegate of the SBA in processing and approving/disapproving

 of the first and second draw PPP loans sought by Gold Club.

        131.    Because Gold Club operates a licensed food and alcohol-serving nightclub under

 the licenses/permits identified in paragraph 128, it is, for purposes of the PPP and the Affiliation

 Rules, a NAICS code 72 business. Since at least 2016, Gold Club has claimed NAICS code 722410

 as its “business code number” on its federal income tax returns, and claimed NAICS code 722410


                                                  30


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 on its second draw PPP loan application, its second draw PPP loan forgiveness application, and its

 SBA Form 3511.

        132.    At all times related to the relevant period for its first draw PPP loan, Gold Club had

 no more than 176 persons employed at its physical location.

        133.    At all times related to the relevant period for its second draw PPP loan, Gold Club

 had no more than 155 persons employed at its physical location.

        134.    Under the PPP, Gold Club was eligible to obtain its first draw Loan and it received

 its first draw Loan.

        135.    Under the PPP, Gold Club was eligible to obtain its second draw Loan and it

 received its second draw Loan.

        136.    The Loan Proceeds amount that Gold Club applied for forgiveness of for both its

 first and second draw Loans, were used by Gold Club exclusively for the Permitted Uses in full

 accordance with the PPP and its Loan Agreement. Consequently, it no longer possesses any of the

 Loan Proceeds from its first and second draw Loan.

 Gold Club’s Appeal to the OHA of SBA’s FLRD Denying Forgiveness of its First Draw PPP Loan

        137.    While Gold Club was eligible for forgiveness of its first draw Loan, the SBA

 conducted a review of Gold Club’s Loan and, on or about October 31, 2023, issued Gold Club an

 FLRD denying Gold Club’s forgiveness application for its first draw Loan because SBA had

 conclude that Gold Club was ineligible for that Loan for two reasons: 1) Gold Club was allegedly

 an ineligible business concern providing prurient sexual material (and therefore precluded from

 eligibility by application of the Prurience Regulation) and 2) Gold Club, together with the

 businesses SBA claims it is affiliated with, exceeded the maximum allowable number of

 employees and the SBA’s small business size standards.


                                                 31


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           138.   On or about November 30, 2021, Gold Club timely applied for forgiveness of its

 first draw PPP Loan. At all times during that forgiveness application process, Gold Club’s Lending

 Bank operated as a delegate of the SBA in processing and approving/disapproving of forgiveness

 of Gold Club’s first draw PPP Loan, and issued a forgiveness decision to SBA approving Gold

 Club’s loan forgiveness application in the amount of $262,664.96.

           139.   On December 11, 2023, the OHA served a scheduling order for the aforementioned

 appeal.

           140.   The next day, on December 12, 2023, Gold Club filed a motion for discovery

 seeking necessary discovery in the form of document requests; a Fed. R. Civ. P. 30(b)(6) deposition

 of the SBA; a deposition of Eric Benderson, SBA’s Associate General Counsel for Litigation who

 had, in previous litigation, provided a declaration regarding how determinations are made under

 the Prurience Regulation; and the depositions of that person or those persons who made, or

 participated in any fashion in making, the decision to deny Plaintiff’s loan forgiveness application.

 This motion and other similar motions filed by other Plaintiffs in the OHA are discussed and

 attached to this First Amended Complaint, infra.

           141.   At that time, no attorney for the SBA had yet filed an appearance.

           142.   The following day, December 13, 2023, without a response from SBA, the OHA,

 sua sponte, denied the aforementioned discovery motion stating that “OHA’s authority is limited

 to reviewing whether a loan forgiveness decision is based on clear error.”

           143.   On January 2, 2024, SBA filed the 5,967-page administrative record in that appeal.

           144.   Gold Club and its staff, as well as its attorneys and accountants, began reviewing

 the 5,967-page administrative record to determine whether objections were necessary and to


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 prepare the same if necessary, which, pursuant to 13 C.F.R. § 134.1207 and the scheduling order

 in the appeal, were due within 10 calendar days of SBA filing the administrative record.

        145.    Gold Club requested and was granted three unopposed extensions to file its

 objections to the administrative record.

        146.    On February 27, 2024, the day before Gold Club’s objections to the administrative

 record were due, SBA filed a motion to dismiss the appeal. Its stated basis for the motion was that

 it had, apparently, on February 20, 2024, withdrawn the FLRD that was the subject of the appeal

 because SBA determined that it was necessary to complete a further review of the loan.

        147.    That same day, without a response from Gold Club, OHA granted SBA’s motion

 and dismissed the appeal.

 Gold Club’s First Appeal to the OHA of SBA’s First FLRD Denying Forgiveness of its Second
 Draw PPP Loan

        148.    On or about April 22, 2022, Gold Club applied for forgiveness of its second draw

 Loan. At all times during that forgiveness application process, Gold Club’s Lending Bank operated

 as a delegate of the SBA in processing and approving/disapproving of forgiveness of Gold Club’s

 second draw PPP Loan, and issued a forgiveness decision to SBA approving Gold Club’s loan

 forgiveness application in the amount of $0.00. Gold Club, however, had applied for and qualified

 for forgiveness in the amount of $1,993,233.75.

        149.    While Gold Club was eligible for forgiveness of its second draw Loan, the SBA

 conducted a review of Gold Club’s Loan and, on or about October 31, 2023, issued Gold Club an

 FLRD denying Gold Club’s forgiveness application for its second draw PPP Loan because, despite

 Gold Club’s obvious qualification for the Affiliation Exception Provisions, SBA concluded that

 Gold Club was ineligible for the Loan for two reasons: 1) Gold Club was allegedly an ineligible

 business concern providing prurient sexual material (and therefore precluded from eligibility by


                                                 33


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 application of the Prurience Regulation) and 2) Gold Club, together with the businesses SBA

 claims it is affiliated with, exceeded the maximum allowable number of employees and the SBA’s

 small business size standards.

        150.    Gold Club timely appealed this FLRD.

        151.    On December 12, 2023, Gold Club filed a motion for discovery seeking necessary

 discovery in the form of document requests; a Fed. R. Civ. P. 30(b)(6) deposition of the SBA; a

 deposition of Eric Benderson, SBA’s Associate General Counsel for Litigation who had, in

 previous litigation, provided a declaration regarding how determinations are made under the

 Prurience Regulation; and the depositions of that person or those persons who made, or

 participated in any fashion in making, the decision to deny Plaintiff’s loan forgiveness application.

 This motion and other similar motions filed by other Plaintiffs in the OHA are discussed and

 attached to this First Amended Complaint, infra.

        152.    The next day, on December 13, 2023, OHA, sua sponte, denied that discovery

 motion, again, without any briefing from SBA.

        153.    On January 2, 2024, SBA filed the 920-page administrative record in that appeal.

 Gold Club and its staff, as well as its attorneys and accountants, began reviewing the 920-page

 administrative record to determine whether objections were necessary and to prepare the same, if

 necessary, which, pursuant to 13 C.F.R. § 134.1207 and the scheduling order in the appeal, were

 due within 10 calendar days of SBA filing the administrative record.

        154.    On January 8, 2024, Gold Club filed an unopposed motion for an extension of time

 to January 24, 2024, to file its objections to the administrative record.

        155.    The next day, on January 9, 2024, SBA filed a motion to dismiss the appeal. Its

 stated basis for that motion was that it had, apparently, on January 3, 2024, withdrawn the FLRD


                                                  34


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 that was the subject of that appeal because SBA determined that it was necessary to complete a

 further review of the Loan.

        156.    That same day, without a response or an opportunity for a response from Gold Club,

 OHA granted SBA’s motion and dismissed the appeal.

 Gold Club’s Second Appeal to the OHA of SBA Denying Forgiveness of its Second Draw PPP Loan

        157.    While Gold Club was eligible for forgiveness of its second draw Loan, the SBA

 conducted a further review of Gold Club’s Loan and, on or about January 30, 2024, SBA issued a

 second FLRD regarding Gold Club’s second draw Loan. This FLRD denied Gold Club’s

 forgiveness application for its second draw PPP Loan, this time denying forgiveness based solely

 on SBA’s conclusion that Gold Club was an ineligible business providing prurient sexual material.

 A true and accurate copy of this FLRD is attached hereto as Exhibit EEE.

        158.    On or about February 29, 2024, Gold Club timely appealed this second FLRD

 denying forgiveness of its second draw Loan seeking reversal of this FLRD (the “Appeal”).

        159.    In the Appeal petition of its second denial of forgiveness on its second draw Loan,

 Gold Club argued, among other things, that SBA’s decision was arbitrary and capricious for various

 reason including that it was not adequately explained, was not the product of reasoned decision

 making because it conflicts with the decision to award Gold Club’s second draw Loan in the first

 place, and it treats Gold Club differently than similarly situated businesses; that SBA revisiting the

 eligibility issue at the loan forgiveness stage conflicts with the PPP statute and is otherwise in

 excess of SBA’s jurisdiction/authority; that SBA lacks authority to provide a forgiveness amount

 different from the sum of specific costs incurred and expenditures made during the Loan’s covered

 period; an estoppel theory; and that SBA’s decision is violative of Gold Club’s constitutional rights.

 Additionally, Gold Club argued that it should be entitled to its costs and fees, including attorneys’


                                                  35


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 fees, pursuant to the Administrative Procedures Act and the Equal Access to Justice Act. A true

 and accurate copy of Gold Club’s second appeal petition of its second draw Loan is attached hereto

 as Exhibit I.

        160.     On or about March 25, 2024, SBA filed the 951-page administrative record in the

 Appeal. Attached hereto as Exhibit J is a true and accurate copy of relevant excerpts from the

 administrative record SBA filed in Gold Club’s second OHA appeal.

        161.     Gold Club and its staff, as well as its attorneys and accountants, began reviewing

 the 951-page administrative record to determine whether objections thereto were necessary and, if

 so, to prepare the same. Pursuant to 13 C.F.R. § 134.1207 and the scheduling order in the Appeal,

 objections to the administrative record were due within 10 calendar days of SBA filing the

 administrative record.

        162.     After an extension of time, on April 23, 2024, Gold Club filed various objections

 to the administration of record via a 17-page filing. Primarily, Gold Club objected to the redactions

 contained in the admirative record as well as the absence of certain documents, notes, and research

 referenced by SBA decision-makers in the administrative record that were not provided in the

 administrative record. A true and accurate copy of Gold Club’s objections to the administrative

 record in the Appeal is attached hereto as Exhibit K.

        163.     Simultaneously, on April 23, 2024, Gold Club filed a 23-page motion for discovery

 with 1,685 pages of exhibits seeking necessary discovery in the form of document requests; a Fed.

 R. Civ. P. 30(b)(6) deposition of the SBA; a deposition of Eric Benderson, SBA’s Associate General

 Counsel for Litigation who had, in previous litigation, provided a declaration regarding how

 determinations are made under the Prurience Regulation; and the depositions of that person or

 those persons who made, or participated in any fashion in making, the decision to deny Plaintiff’s


                                                  36


Case 3:24-cv-01151-X        Document 12        Filed 07/15/24       Page 37 of 197       PageID 5916


 loan forgiveness application. A true and accurate copy of this discovery motion along with its

 exhibits are attached hereto as Exhibit L. Gold Club also included the lack of documents

 responsive to these discovery requests and the absence of a transcript of the Fed. R. Civ. P. 30(b)(6)

 deposition in its objections to the administrative record in the Appeal.

        164.    That same day, on April 23, 2024, OHA, sua sponte and without any response from

 SBA, denied Gold Club’s discovery request stating that discovery is not permitted in appeals from

 SBA final loan review decisions regarding PPP loans. A true and accurate copy of OHA’s order

 denying Gold Club’s discovery motion in the Appeal is attached hereto as Exhibit M.

        165.    On May 8, 2024, SBA responded to Gold Club’s Appeal.

        166.    Included in its response was a Declaration from Sigmund Pannu (the “Pannu

 Declaration” with Sigmund Pannu being “Pannu”), a Supervisory Loan Specialist in the Office of

 Capital Access at SBA. The Pannu Declaration included numerous exhibits that were not included

 in the administrative record in the Appeal, which Pannu declared were “the same as or consistent

 with what I [he] reviewed during my [his] initial review of this loan prior to issuance of the final

 loan review decision.” A true and accurate copy of SBA’s response to Gold Club’s Appeal,

 including the Pannu Declaration with all exhibits and attachments thereto, is attached hereto as

 Exhibit N.

        167.    In its response to Plaintiff’s Appeal, SBA relied on the “evidence” included in the

 Pannu Declaration, which was not included in the administrative record. SBA argued, among other

 things, that 1) Gold Club failed to state or argue that it does not present live performances of a

 prurient sexual nature or that Gold Club does not derive more than de minimus revenue from

 services of a prurient sexual nature, 2) SBA cannot be bound by lender decisions, 3) SBA cannot

 be estopped from enforcing the law by an earlier decision, 4) SBA’s loan review of Gold Club’s


                                                  37


Case 3:24-cv-01151-X       Document 12        Filed 07/15/24    Page 38 of 197      PageID 5917


 eligibility for the Loan was consistent with the CARES Act and that SBA may review loans at any

 time, 5) SBA cannot be restricted under a promissory estoppel theory from denying loan

 forgiveness, 6) Gold Club cannot recover costs and fees before the OHA, and 7) OHA cannot

 adjudicate challenges to the constitutionality of SBA’s implementation of the CARES Act and

 EAA.

        168.    On May 10, 2024, Gold Club filed a Motion to Strike the Pannu Declaration and its

 exhibits and attachments in SBA’s response to Gold Club’s Appeal on, among other bases, the

 basis that these items were not included in the administrative record and should have been and

 SBA cannot add new evidence mid-appeal. See 13 C.F.R. § 134.1209. A true and accurate copy of

 Gold Club’s Motion to Strike in the Appeal is attached hereto as Exhibit O.

        169.    Four days later, on May 14, 2024, OHA issued an order affirming SBA’s FLRD in

 the Appeal and denying as moot Gold Club’s motion to strike (the “May 14 Order,” which is

 attached hereto as Exhibit P).

        170.    The May 14 Order addressed Gold Club’s objections to the administrative record

 and overruled each and every one of them. The May 14 Order also denied Gold Club’s Motion to

 Strike the Pannu Declaration as moot. The May 14 Order also affirmed the second FLRD issued

 regarding Gold Club’s second draw Loan and concluded that Gold Club was eligible for the final

 forgiveness amount of $0 and that the second FLRD issued regarding Gold Club’s second draw

 Loan was not based on clear error of fact or law.

        171.    As to Gold Club’s constitutional claims and claims for costs and fees under the

 EAJA raised in the Appeal, the May 14 Order stated that OHA “lack[s] authority to decide the[se]

 issues raised by” Gold Club.


                                                 38


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        172.    The required 30 days for the May 14 Order to become final has lapsed and,

 therefore, the OHA’s May 14 Order and SBA’s second FLRD issued regarding Gold Club’s second

 draw Loan is ripe for judicial review and this petition for the same is timely. 13 C.F.R. § 134.1211.

        173.    Gold Club has exhausted its administrative remedies prior to filing this First

 Amended Complaint and petition for judicial review.

        174.    In light of OHA’s orders and regulations regarding the PPP, Gold Club has resumed

 making repayments on its second draw Loan.

        175.    If forced to repay its first and second draw PPP Loans, and because of the precarious

 financial condition in which it finds itself still as a result of the lingering impact of the Pandemic

 and the consequences thereof, Gold Club may be forced to file for reorganization through

 bankruptcy, which may preclude the Gold Club from presenting First Amendment protected

 entertainment in the future.

 S.A.W. Entertainment, Ltd. (“SAW”)

        176.    SAW is a licensed food and alcohol serving, bar/restaurant/nightclub open to the

 consenting adult public, which presents on its premises a variety of non-obscene, constitutionally

 protected, female performance dance entertainment.

        177.    SAW has never been charged with, let alone convicted of, any crimes of obscenity.

 Similarly, none of the entertainers who have performed on SAW’s premises have ever been charged

 with, let alone convicted of, any crimes of obscenity related to their performances at the facility

 owned and operated by SAW.

        178.    SAW does not present any live performances, depictions or displays, or sell any

 products or services, of a prurient sexual nature or that otherwise appeal to a shameful, morbid,

 prurient, or unhealthy interest in sex.


                                                  39


Case 3:24-cv-01151-X        Document 12         Filed 07/15/24       Page 40 of 197       PageID 5919


        179.    SAW operates it nightclub pursuant to, and in accordance with, the following

 licenses/permits, which it maintains:

                a.      H26/11579 License Certificate issued by the City of San Francisco that

        describes SAW as an H26 Restaurant over 2,000 SQ;

                b.      Alcoholic Beverage License issued by the State of California Department

        of Alcoholic Beverage Control;

                c.      Live entertainment permit; and

                d.      Extended hours permit.

        180.    As a consequence of the Pandemic, SAW was subject to various governmental

 closures orders imposed to mitigate the effects and spread of the COVID-19 virus. As a direct and

 proximate result thereof, the lingering effects of the Pandemic, and the supply chain disruptions

 related thereto, SAW suffered, as did a large percentage of businesses throughout the United States,

 devastating and catastrophic financial losses.

        181.    In order to mitigate the financial impact caused to SAW by the Pandemic and the

 consequences thereof, including but not limited to its ability to retain and pay its employees, SAW

 submitted an application to its Lending Bank for a first draw PPP loan on or about April 14, 2020.

 At all times relevant hereto, SAW’s Lending Bank operated as a delegate of the SBA in processing

 and approving/disapproving of the first draw PPP loan sought by SAW.

        182.    Because SAW operates a licensed food and alcohol-serving nightclub under the

 licenses/permits identified in paragraph 179, it is, for purposes of the PPP and the Affiliation Rules,

 a NAICS code 72 business. Since at least 2016, SAW has claimed NAICS code 722410 as its

 “business activity code number” on its federal income tax returns, and claimed NAICS code

 722410 its SBA Form 3511.


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         183.   At all times related to the relevant period for its first draw PPP Loan, SAW had no

 more than 163 persons employed at its physical location.

         184.   Under the PPP, SAW was eligible to obtain its first draw Loan and it received its

 first draw Loan.

         185.   The Loan Proceeds amount that SAW applied for forgiveness of for its first draw

 Loan, SAW used exclusively for the Permitted Uses in full accordance with the PPP and its Loan

 Agreement. Consequently, it no longer possesses any of the Loan Proceeds from its first draw

 Loan.

 SAW’s First Appeal to the OHA of SBA’s First FLRD Denying Forgiveness of its First Draw PPP
 Loan

         186.   On or about November 12, 2021, SAW applied for forgiveness of its first draw PPP

 Loan. At all times during that forgiveness application process, SAW’s Lending Bank operated as

 a delegate of the SBA in processing and approving/disapproving of forgiveness of SAW’s first

 draw PPP Loan, and issued a forgiveness decision to SBA approving SAW’s loan forgiveness

 application in the amount of $222,800.19.

         187.   While SAW was eligible for forgiveness of its first draw Loan, the SBA conducted

 a review of SAW’s Loan, and on or about October 31, 2023, issued SAW an FLRD denying SAW’s

 forgiveness application of its first draw PPP Loan because, despite SAW’s obvious qualification

 for the Affiliation Exception Provisions, SBA concluded that SAW was ineligible for the Loan on

 the sole basis that SAW, together with the businesses SBA claims it is affiliated with, exceeded the

 maximum number of employees of 500 for PPP first draw Loans. A true and accurate copy of this

 FLRD is attached hereto as Exhibit Q.

         188.   SAW timely appealed this FLRD


                                                 41


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        189.    On December 13, 2023, SAW filed a 13-page discovery motion accompanied by

 27-pages of exhibits seeking necessary discovery in the form of document requests; a Fed. R. Civ.

 P. 30(b)(6) deposition of the SBA; a deposition of Eric Benderson, SBA’s Associate General

 Counsel for Litigation who had, in previous litigation, provided a declaration regarding how

 determinations are made under the Prurience Regulation; and the depositions of that person or

 those persons who made, or participated in any fashion in making, the decision to deny Plaintiff’s

 loan forgiveness application. This motion and other similar motions filed by other Plaintiffs in the

 OHA are discussed and attached to this First Amended Complaint, infra.

        190.    That same day, December 13, 2023, OHA, sua sponte, denied that discovery motion

 without any briefing from SBA.

        191.    On January 2, 2024, SBA filed a 6,206-page administrative record in that appeal.

 SAW and its staff, as well as its attorneys and accountants, began reviewing the 6,206-page

 administrative record to determine whether objections were necessary and to prepare the same, if

 necessary, which, pursuant 13 C.F.R. § 134.1207 and the scheduling order in the appeal, were due

 within 10 calendar days of SBA filing the administrative record. True and accurate excerpts (pages

 3542, 3547, 3550, and 3553-55) from this administrative record are attached hereto as Exhibit R.

        192.    On January 8, 2024, SAW filed an unopposed motion for an extension of time to

 January 24, 2024, to file its objections to the administrative record, which was granted the same

 day.

        193.    On January 10, 2024, SBA filed a motion to dismiss the appeal. Its stated basis for

 that motion was that it had, apparently, that same day (January 10, 2024), withdrawn the FLRD

 that was the subject of that appeal because SBA determined that it was necessary to complete a

 further review of the Loan.


                                                 42


Case 3:24-cv-01151-X        Document 12         Filed 07/15/24     Page 43 of 197        PageID 5922


         194.   That same day, without a response or an opportunity for a response from SAW,

 Judge Richard Ambrow granted SBA’s motion and dismissed the appeal.

 SAW’s Second Appeal to the OHA of SBA Denying SAW Forgiveness of its First Draw PPP Loan

         195.   While SAW was eligible for its first draw PPP Loan, SBA conducted a further

 review of SA’'s Loan and, on or about January 30, 2024, SBA issued a second FLRD denying

 SAW’s first draw Loan. This FLRD denied SAW’s forgiveness application for its first draw PPP

 Loan, this time denying forgiveness based solely on SBA’s conclusion that SAW was an ineligible

 business providing prurient sexual material.

         196.   SAW timely appealed this second FLRD denying forgiveness of its first draw PPP

 Loan.

         197.   In the Appeal petition of its second denial of forgiveness on its second draw Loan,

 SAW argued, among other things, that SBA’s decision was arbitrary and capricious for various

 reason including that it was not adequately explained, was not the product of reasoned decision

 making because it conflicts with the decision to award SAW’s first draw Loan in the first place,

 and it treats SAW differently than similarly situated businesses; that SBA revisiting the eligibility

 issue at the loan forgiveness stage conflicts with the PPP statute and is otherwise in excess of

 SBA’s jurisdiction/authority; that SBA lacks authority to provide a forgiveness amount different

 from the sum of specific costs incurred and expenditures made during the Loan’s covered period;

 an estoppel theory; and that SBA’s decision is violative of SAW’s constitutional rights.

 Additionally, SAW argued that it should be entitled to its costs and fees, including attorneys’ fees,

 pursuant to the Administrative Procedures Act and the Equal Access to Justice Act.

         198.   On or about May 20, 2024, SBA filed a motion to dismiss the appeal. Its stated

 basis for that motion was that it had, apparently, on May 17, 2024, withdrawn the FLRD that was


                                                  43


Case 3:24-cv-01151-X        Document 12        Filed 07/15/24      Page 44 of 197        PageID 5923


 the subject of that appeal because SBA determined that it was necessary to complete a further

 review of the Loan.

        199.    That same day, OHA ordered SAW to respond to the motion to dismiss no later than

 June 4, 2024, which SAW did.

        200.    On June 21, 2024, OHA dismissed SAW’s OHA appeal.

        201.    On June 28, 2024, SAW timely filed for reconsideration of that decision. SBA

 responded on July 11, 2024, and OHA denied reconsideration the next day on July 12, 2024. A true

 and accurate copy of the OHA’s order denying reconsideration is attached hereto as Exhibit S.

        202.    If forced to repay its first draw PPP Loan, and because of the precarious financial

 condition in which it finds itself still as a result of the lingering impact of the Pandemic and the

 consequences thereof, SAW may be forced to file for reorganization through bankruptcy , which

 may preclude the SAW from presenting First Amendment protected entertainment in the future.

 Smithville Bistro, LLC (“Smithville”)

        203.    Smithville is a licensed alcohol serving nightclub open to the consenting adult

 public, which presents on its premises a variety of non-obscene, constitutionally protected, female

 performance dance entertainment.

        204.    Smithville has never been charged with, let alone convicted of, any crimes of

 obscenity. Similarly, none of the entertainers who have performed on Smithville’s premises have

 ever been charged with, let alone convicted of, any crimes of obscenity related to their

 performances at the facility owned and operated by Smithville.

        205.    Smithville does not present any live performances, depictions or displays, or sell

 any products or services, of a prurient sexual nature or that otherwise appeal to a shameful, morbid,

 prurient, or unhealthy interest in sex.


                                                  44


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        206.     Smithville operates it nightclub pursuant to, and in accordance with, the following

 licenses/permits, which it maintains: Beer Permit issued by the County of DeKalb, Tennessee;

        207.     As a consequence of the Pandemic, Smithville was subject to various governmental

 closures orders imposed to mitigate the effects and spread of the COVID-19 virus. As a direct and

 proximate result thereof, the lingering effects of the Pandemic, and the supply chain disruptions

 related thereto, Smithville suffered, as did a large percentage of businesses throughout the United

 States, devastating and catastrophic financial losses.

        208.     In order to mitigate the financial impact caused to Smithville by the Pandemic and

 the consequences thereof, including but not limited to its ability to retain and pay its employees,

 Smithville submitted an application to its Lending Bank for a second draw PPP loan on or about

 February 14, 2021. At all times relevant hereto, Smithville’s Lending Bank operated as a delegate

 of the SBA in processing and approving/disapproving of the second draw PPP loan sought by

 Smithville.

        209.     Because Smithville operates a licensed alcohol-serving nightclub under the

 license/permit identified in paragraph 206, it is, for purposes of the PPP and the Affiliation Rules,

 a NAICS code 72 business. Smithville has also claimed NAICS code 722410 on its first draw PPP

 loan forgiveness application, the SBA Form 3511, its second draw PPP Loan application, and its

 second draw PPP loan forgiveness application.

        210.     Smithville applied for and obtained a first draw PPP loan. Smithville obtained

 partial loan forgiveness of its first draw PPP loan pursuant to a settlement agreement it entered into

 with the SBA.

        211.     At all times related to the relevant period for its second draw PPP Loan, Smithville

 had no more than 11 persons employed at its physical location.


                                                  45


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        212.    Under the PPP, Smithville was eligible to obtain its second draw Loan and it

 received its second draw Loan.

        213.    The Loan Proceeds amount that Smithville applied for forgiveness of for its second

 draw Loan, Smithville used exclusively for the Permitted Uses in full accordance with the PPP and

 its Loan Agreement. Consequently, it no longer possesses any of the Loan Proceeds from its second

 draw Loan.

        214.    On or about May 16, 2022, Smithville applied for forgiveness of its second draw

 PPP Loan. At all times during that forgiveness application process, Smithville’s Lending Bank

 operated as a delegate of the SBA in processing and approving/disapproving of forgiveness of

 Smithville’s second draw PPP Loan, and issued a forgiveness decision to SBA approving

 Smithville’s loan forgiveness application in the amount of $38,871.00.

        215.    While Smithville was eligible for forgiveness of its second draw PPP Loan, the

 SBA conducted a review of Smithville’s Loan and denied forgiveness in an FLRD dated December

 14, 2023. The claimed basis for the denial was due to alleged “size issues” based on SBA’s

 application of the Affiliation Rules despite Smithville’s obvious qualification for the Affiliation

 Exception Provisions, and alleged ineligibility due to SBA’s application of the Prurience

 Regulation. Smithville timely appealed that FLRD to the OHA and that appeal remains pending.

        216.    If forced to repay its second draw PPP Loan, and because of the precarious financial

 condition in which it finds itself still as a result of the lingering impact of the Pandemic and the

 consequences thereof, Smithville may be forced to close its business and file for bankruptcy, which

 would result in the cessation of both the presentation of and the ability to view entertainment that

 is presumptively protected under the First Amendment to the United States Constitution, as well


                                                 46


Case 3:24-cv-01151-X        Document 12        Filed 07/15/24      Page 47 of 197        PageID 5926


 as the wholesale termination of its employees jobs; which the PPP was in fact designed to preclude

 from happening.

 Deja Vu Showgirls of Las Vegas, LLC (“DVSG of LV”)

        217.    DVSG of LV is a licensed alcohol serving nightclub and service bar open to the

 consenting adult public, which presents on its premises a variety of non-obscene, constitutionally

 protected, female performance dance entertainment.

        218.    DVSG of LV has never been charged with, let alone convicted of, any crimes of

 obscenity. Similarly, none of the entertainers who have performed on DVSG of LV’s premises

 have ever been charged with, let alone convicted of, any crimes of obscenity related to their

 performances at the facility owned and operated by DVSG of LV.

        219.    DVSG of LV does not present any live performances, depictions or displays, or sell

 any products or services, of a prurient sexual nature or that otherwise appeal to a shameful, morbid,

 prurient, or unhealthy interest in sex.

        220.    DVSG of LV operates it nightclub pursuant to, and in accordance with, the

 following licenses/permits, which it maintains:

                a.      Business License Adult Book / Video Sales Rental issued by Clark County,

        Nevada;

                b.      Business License Adult Entertainment Cabaret issued by Clark County,

        Nevada;

                c.      Business License Adult Novelty issued by Clark County, Nevada;

                d.

                e.      Business License Amusement Machines issued by Clark County, Nevada;

                f.      Business License Book Sales issued by Clark County, Nevada;


                                                   47


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                 g.     Business License Erotic Dance Establishment issued by Clark County,

        Nevada; and

                 h.     Quarterly Liquor License issued by Clark County, Nevada.

        221.     As a consequence of the Pandemic, DVSG of LV was subject to various

 governmental closures orders imposed to mitigate the effects and spread of the COVID-19 virus.

 As a direct and proximate result thereof, the lingering effects of the Pandemic, and the supply

 chain disruptions related thereto, DVSG of LV suffered, as did a large percentage of businesses

 throughout the United States, devastating and catastrophic financial losses.

        222.     In order to mitigate the financial impact caused to DVSG of LV by the Pandemic

 and the consequences thereof, including but not limited to its ability to retain and pay its

 employees, DVSG of LV submitted an application to its Lending Bank for a second draw PPP loan

 on or about February 5, 2021. At all times relevant hereto, DVSG of LV’s Lending Bank operated

 as a delegate of the SBA in processing and approving/disapproving of the second draw PPP loan

 sought by DVSG of LV.

        223.     Because DVSG of LV operates a licensed alcohol-serving nightclub under the

 licenses/permits identified in paragraph 220, it is, for purposes of the PPP and the Affiliation Rules,

 a NAICS code 72 business. DVSG of LV has also claimed NAICS code 722410 on its first draw

 PPP loan forgiveness application, the SBA Form 3511, and its second draw PPP Loan application.

        224.     DVSG of LV applied for and obtained a first draw PPP loan. DVSG of LV obtained

 partial loan forgiveness of its first draw PPP loan pursuant to a settlement agreement it entered into

 with the SBA.

        225.     At all times related to the relevant period for its second draw PPP Loan, DVSG of

 LV had no more than 72 persons employed at its physical location.


                                                   48


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        226.    Under the PPP, DVSG of LV was eligible to obtain its second draw Loan and it

 received its second draw Loan.

        227.    The Loan Proceeds amount that DVSG of LV applied for forgiveness of for its

 second draw Loan, DVSG of LV used exclusively for the Permitted Uses in full accordance with

 the PPP and its Loan Agreement. Consequently, it no longer possesses any of the Loan Proceeds

 from its second draw Loan.

        228.    On or about July 6, 2022, DVSG of LV applied for forgiveness of its second draw

 PPP Loan. At all times during that forgiveness application process, DVSG of LV’s Lending Bank

 operated as a delegate of the SBA in processing and approving/disapproving of forgiveness of

 DVSG of LV’s second draw PPP Loan, and issued a forgiveness decision to SBA approving DVSG

 of LV’s loan forgiveness application in the amount of $313,605.98.

        229.    While DVSG of LV was eligible for forgiveness of its second draw PPP Loan, the

 SBA conducted a review of DVSG of LV’s Loan and denied forgiveness in an FLRD dated

 December 14, 2023. The claimed basis for the denial was due to alleged “size issues” based on

 SBA’s application of the Affiliation Rules despite DVSG of LV’s obvious qualification for the

 Affiliation Exception Provisions, and alleged ineligibility due to SBA’s application of the

 Prurience Regulation. DVSG of LV timely appealed that FLRD to the OHA and that appeal

 remains pending.

        230.    If forced to repay its second draw PPP Loan, and because of the precarious financial

 condition in which it finds itself still as a result of the lingering impact of the Pandemic and the

 consequences thereof, DVSG of LV may be forced to close its business and file for bankruptcy,

 which would result in the cessation of both the presentation of and the ability to view entertainment

 that is presumptively protected under the First Amendment to the United States Constitution, as


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 well as the wholesale termination of its employees jobs; which the PPP was in fact designed to

 preclude from happening.

 Office Minneapolis, LLC (“Office”)

        231.    Office is a licensed alcohol serving bar and grill open to the consenting adult public.

        232.    Office does not present any live performances, depictions or displays, or sell any

 products or services, of a prurient sexual nature or that otherwise appeal to a shameful, morbid,

 prurient, or unhealthy interest in sex

        233.    Office operates its bar and grill pursuant to, and in accordance with, the following

 licenses/permits, which it maintains:

        a.      Two Liquor Permits issued by the City of Minneapolis;

        b.      A Liquor Permit allowing Office to close at 2 am; and

        c.      A retail buyer’s card for liquor.

        234.    As a consequence of the Pandemic, Office was subject to various governmental

 closures orders imposed to mitigate the effects and spread of the COVID-19 virus. As a direct and

 proximate result thereof, the lingering effects of the Pandemic, and the supply chain disruptions

 related thereto, Office suffered, as did a large percentage of businesses throughout the United

 States, devastating and catastrophic financial losses.

        235.    In order to mitigate the financial impact caused to Office by the Pandemic and the

 consequences thereof, including but not limited to its ability to retain and pay its employees, Office

 submitted an application to its Lending Bank for a first draw PPP loan on or about April 7, 2020.

 At all times relevant hereto, Office’s Lending Bank operated as a delegate of the SBA in processing

 and approving/disapproving of the first draw PPP loan sought by Office.


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         236.   Because Office operates a licensed alcohol-serving bar and grill under the

 licenses/permits identified in paragraph 233, it is, and was at all times relevant to the PPP, for

 purposes of the PPP and the Affiliation Rules, a NAICS code 72 business.

         237.   Office claimed NAICS code 722410 on its first draw PPP loan forgiveness

 application and the SBA Form 3511.

         238.   On or about June 1, 2021, Office applied for loan forgiveness of its first draw PPP

 loan. The Loan Proceeds amount that Office applied for forgiveness of for its first draw Loan,

 Office used exclusively for the Permitted Uses in full accordance with the PPP and its Loan

 Agreement. Consequently, it no longer possesses any of the Loan Proceeds from its first draw

 Loan.

         239.   On or about June 25, 2021, Office received forgiveness of the full amount of

 forgiveness requested on its first draw PPP Loan.

         240.   On or about January 30, 2024, via letter, SBA notified Office that it was initiating

 a Post-Payment Review of Office’s first draw PPP Loan and requested that Office provide a

 number of documents. The stated purpose for SBA’s requests via the Post-Payment Review was to

 review whether Office was eligible for the PPP Loan under, among other factors, the Prurience

 Regulation and Affiliation Rules.

         241.   At all times related to the relevant period for its first draw PPP Loan, Office had no

 more than 13 persons employed at its physical location.

 Cats Meow of Vegas, LLC (“Cats”)

         242.   Cats is a licensed alcohol serving, karaoke bar and nightclub open to the consenting

 adult public, which presents on its premises a variety of constitutionally protected live karaoke


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 production entertainment as well as other live performance entertainment including singing and

 dancing.

        243.    Cats does not present any live performances, depictions or displays, or sell any

 products or services, of a prurient sexual nature or that otherwise appeal to a shameful, morbid,

 prurient, or unhealthy interest in sex.

        244.    Cats operates it nightclub pursuant to, and in accordance with, the following

 licenses/permits, which it maintains:

                a.      A L38 Tavern – Limited License, issued by the City of Las Vegas, Nevada;

        and

                b.      a D19-Karaoke Business Licenses, issued by the City of Las Vegas, Nevada.

        245.    As a consequence of the Pandemic, Cats was subject to various governmental

 closures orders imposed to mitigate the effects and spread of the COVID-19 virus. As a direct and

 proximate result thereof, the lingering effects of the Pandemic, and the supply chain disruptions

 related thereto, Cats suffered, as did a large percentage of businesses throughout the United States,

 devastating and catastrophic financial losses. In fact, Cats sued the state of Nevada in order to

 reopen. See Cats Meow of Vegas, LLC v. Nevada, No.: 2:20-cv-02055 (D. Nev. 2020).

        246.    In order to mitigate the financial impact caused to Cats by the Pandemic and the

 consequences thereof, including but not limited to its ability to retain and pay its employees, Cats

 submitted an application to its Lending Bank for a first draw PPP loan on or about April 22, 2020,

 and a second draw PPP loan on or about April 1, 2021. At all times relevant hereto, Cats’ Lending

 Bank operated as a delegate of the SBA in processing and approving/disapproving of the first and

 second draw PPP loan sought by Cats.


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        247.    Because Cats operates a licensed alcohol-serving karaoke bar and nightclub under

 the licenses and permits identified in paragraph 244, it is, for purposes of the PPP and the

 Affiliation Rules, a NAICS code 72 business. Cats claimed NAICS code 722410 as its “business

 code number” on its 2019 federal income tax returns, and claimed NAICS code 722410 on both

 of its PPP loan applications and PPP loan forgiveness applications.

        248.    At all times related to the relevant period for its first draw PPP loan, Cats had no

 more than 35 persons employed at its physical location.

        249.    At all times related to the relevant period for its second draw PPP loan, Cats had no

 more than 57 persons employed at its physical location.

        250.    Under the PPP, Cats was eligible to obtain its first draw Loan and it received its

 first draw Loan.

        251.    Under the PPP, Cats was eligible to obtain its second draw Loan and it received its

 second draw Loan.

        252.    The Loan Proceeds amounts that Cats applied for forgiveness of for both its first

 and second draw Loans, Cats used exclusively for the Permitted Uses in full accordance with the

 PPP and its Loan Agreement. Consequently, it no longer possesses any of the Loan Proceeds from

 its first or second draw Loan.

        253.    On or about July 13, 2021, Cats applied for forgiveness of its first draw PPP Loan.

 At all times during that forgiveness application process, Cats’ Lending Bank operated as a delegate

 of the SBA in processing and approving/disapproving of forgiveness of Cats’ first draw PPP Loan,

 and issued a forgiveness decision to SBA approving Cats’ loan forgiveness application in the

 amount of $171,851.69.


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        254.    On or about November 30, 2021, Cats applied for forgiveness of its second draw

 PPP Loan. At all times during that forgiveness application process, Cats’ Lending Bank operated

 as a delegate of the SBA in processing and approving/disapproving of forgiveness of Cats’ second

 draw PPP Loan, and issued a forgiveness decision to SBA approving Cats’ loan forgiveness

 application in the amount of $128,866.00.

        255.    Cats received forgiveness on both its first and second draw PPP Loans.

        256.    Despite Cats being eligible for forgiveness of its first and second draw PPP Loans,

 and receiving forgiveness on the same, the SBA conducted a review of both of Cats’ first and

 second draw PPP loans due to alleged “size issues,” despite its obvious qualification for the

 Affiliation Exception Provisions, based on SBA’s application of the Affiliation Rules, an allegation

 that the 25% reduction in aggregated gross receipts for its second draw PPP Loan may not have

 been met, and alleged “insufficient documentation” to enable SBA to calculate the Loan amounts

 and forgiveness amounts.

        257.    If forced to repay its first and second draw PPP Loan, and because of the precarious

 financial condition in which it finds itself still as a result of the lingering impact of the Pandemic

 and the consequences thereof, Cats may be forced to close its business and file for bankruptcy,

 which would result in the cessation of both the presentation of and the ability to view entertainment

 that is presumptively protected under the First Amendment to the United States Constitution, as

 well as the wholesale termination of its employees jobs; which the PPP was in fact designed to

 preclude from happening.

 Cats 701 Bourbon, LLC (“Cats NOLA”)

        258.    Cats NOLA is a licensed alcohol serving, karaoke bar and nightclub open to the

 consenting adult public, which presents on its premises a variety of constitutionally protected live


                                                  54


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 karaoke production entertainment as well as other live performance entertainment including

 singing and dancing.

        259.    Cats NOLA does not present any live performances, depictions or displays, or sell

 any products or services, of a prurient sexual nature or that otherwise appeal to a shameful, morbid,

 prurient, or unhealthy interest in sex.

        260.    Cats NOLA operates its nightclub pursuant to, and in accordance with, the

 following licenses/permits, which it maintains:

                a.      A Liquor License issued by the City of New Orleans; and

                b.      A Liquor License issued by the State of Louisiana with a Restaurant

        endorsement.

        261.    As a consequence of the Pandemic, Cats NOLA was subject to various

 governmental closures orders imposed to mitigate the effects and spread of the COVID-19 virus.

 As a direct and proximate result thereof, the lingering effects of the Pandemic, and the supply

 chain disruptions related thereto, Cats NOLA suffered, as did a large percentage of businesses

 throughout the United States, devastating and catastrophic financial losses.

        262.    In order to mitigate the financial impact caused to Cats NOLA by the Pandemic and

 the consequences thereof, including but not limited to its ability to retain and pay its employees,

 Cats NOLA submitted an application to its Lending Bank for a first draw PPP loan on or about

 April 7, 2020. At all times relevant hereto, Cats NOLA’s Lending Bank operated as a delegate of

 the SBA in processing and approving/disapproving of the first draw PPP Loan sought by Cats

 NOLA.


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         263.   Because Cats NOLA operates a licensed alcohol-serving karaoke bar and nightclub

 under the licenses and permits identified in paragraph 260, it is, for purposes of the PPP and the

 Affiliation Rules, a NAICS code 72 business.

         264.   Cats NOLA claimed NAICS code 722410 as its “business code number” on its 2019

 federal income tax returns, and claimed NAICS code 722410 on its PPP loan forgiveness

 application.

         265.   At all times related to the relevant period for its first draw PPP loan, Cats NOLA

 had no more than 65 persons employed at its physical location.

         266.   Under the PPP, Cats NOLA was eligible to obtain its first draw Loan and it received

 its first draw Loan.

         267.   On or about July 8, 2021, Cats NOLA applied for forgiveness of its first draw PPP

 Loan. The Loan Proceeds amount that Cats NOLA applied for forgiveness of for its first draw

 Loan, Cats NOLA used exclusively for the Permitted Uses in full accordance with the PPP and its

 Loan Agreement. Consequently, it no longer possesses any of the Loan Proceeds from its first draw

 Loan.

         268.   On or about September 20, 2021, Cats NOLA received forgiveness of the fully

 amount of forgiveness requested on its first draw PPP Loan.

         269.   On or about January 30, 2024, via email, SBA notified Cats NOLA that it was

 initiating a Post-Payment Review of Cats NOLA’s first draw PPP Loan and requested that Cats

 NOLA provide a number of documents.

         270.   There was no stated purpose for the Post-Payment Review stated in the email

 informing Cats NOLA of the Post-Payment Review.


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        271.    If forced to repay its first draw PPP Loan, and because of the precarious financial

 condition in which it finds itself still as a result of the lingering impact of the Pandemic and the

 consequences thereof, Cats NOLA may be forced to close its business and file for bankruptcy,

 which would result in the cessation of both the presentation of and the ability to view entertainment

 that is presumptively protected under the First Amendment to the United States Constitution, as

 well as the wholesale termination of its employees jobs; which the PPP was in fact designed to

 preclude from happening.

 Pole Position at Tacoma, LLC (“Pole Position”)

        272.    Pole Position was a licensed alcohol and food serving sports bar open to the

 consenting adult public. Pole Position permanently closed its doors in March of 2023 as a result

 of the economic downturn due to COVID restrictions.

        273.    Pole Position does not present any live performances, depictions or displays, or sell

 any products or services, of a prurient sexual nature or that otherwise appeal to a shameful, morbid,

 prurient, or unhealthy interest in sex.

        274.    Pole Position operates its sports bar pursuant to, and in accordance with, the

 following licenses/permits, which it maintains:

                a.      A business license issued by the State of Washington endorsed as a

        spirits/beer/wine restaurant lounge; and

                b.      A food establishment and cocktail lounge permit issued by Pierce County.

        275.    As a consequence of the Pandemic, Pole Position was subject to various

 governmental closures orders imposed to mitigate the effects and spread of the COVID-19 virus.

 As a direct and proximate result thereof, the lingering effects of the Pandemic, and the supply


                                                   57


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 chain disruptions related thereto, Pole Position suffered, as did a large percentage of businesses

 throughout the United States, devastating and catastrophic financial losses.

         276.   In order to mitigate the financial impact caused to Pole Position by the Pandemic

 and the consequences thereof, including but not limited to its ability to retain and pay its

 employees, Pole Position submitted an application to its Lending Bank for a second draw PPP loan

 and received the second draw PPP loan on or about May 3, 2021. At all times relevant hereto, Pole

 Position’s Lending Bank operated as a delegate of the SBA in processing and

 approving/disapproving of the second draw PPP Loan sought by Pole Position.

         277.   Because Pole Position operated a licensed alcohol-serving sports bar under the

 licenses and permits identified in paragraph 274, it is, for purposes of the PPP and the Affiliation

 Rules, a NAICS code 72 business.

         278.   Pole Position claimed NAICS code 722410 on its second draw PPP loan and loan

 forgiveness applications.

         279.   At all times related to the relevant period for its second draw PPP loan, Pole

 Position had no more than 31 persons employed at its physical location.

         280.   Under the PPP, Pole Position was eligible to obtain its second draw Loan and it

 received its second draw Loan.

         281.   Pole Position applied for forgiveness of its second draw PPP Loan. The Loan

 Proceeds amount that Pole Position applied for forgiveness of for its second draw Loan, Pole

 Position used exclusively for the Permitted Uses in full accordance with the PPP and its Loan

 Agreement. Consequently, it no longer possesses any of the Loan Proceeds from its second draw

 Loan.


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        282.    On or about March 26, 2022, Pole Position received forgiveness of the fully amount

 of forgiveness requested on its second draw PPP Loan.

        283.    On or about December 21, 2023, via email, SBA notified Pole Position that it was

 conducting a “review” of the loan and informed Pole Position that it may “request more

 information on any PPP loan of any size at any time.” The “review” requested that Pole Position

 provide a number of documents.

        284.    There was no stated purpose for the “review” stated in the email informing Pole

 Position of the “review.”

        285.    Pole Position is closed, and, if forced to repay its second draw PPP Loan, Pole

 Position would be unable to do so.

 Jamme Holdings, LLC (“Jamme”)

        286.    Jamme is a licensed alcohol serving nightclub open to the consenting adult public,

 which presents on its premises a variety of non-obscene, constitutionally protected, female

 performance dance entertainment.

        287.    Jamme has never been charged with, let alone convicted of, any crimes of obscenity.

 Similarly, none of the entertainers who have performed on Jamme’s premises have ever been

 charged with, let alone convicted of, any crimes of obscenity related to their performances at the

 facility owned and operated by Jamme.

        288.    Jamme does not present any live performances, depictions or displays, or sell any

 products or services, of a prurient sexual nature or that otherwise appeal to a shameful, morbid,

 prurient, or unhealthy interest in sex.

        289.    Jamme operates it nightclub pursuant to, and in accordance with, the following

 licenses/permits, which it maintains:


                                                59


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                a.      A Liquor License issued by the State of Pennsylvania that includes Sunday

        sales, extended food hours, and an amusement permit;

                b.      A Certificate of Occupancy that includes an adult entertainment nightclub

        use permission; and

                c.      A Health Permit for a Food Facility.

        290.    As a consequence of the Pandemic, Jamme was subject to various governmental

 closures orders imposed to mitigate the effects and spread of the COVID-19 virus. As a direct and

 proximate result thereof, the lingering effects of the Pandemic, and the supply chain disruptions

 related thereto, Jamme suffered, as did a large percentage of businesses throughout the United

 States, devastating and catastrophic financial losses.

        291.    In order to mitigate the financial impact caused to Jamme by the Pandemic and the

 consequences thereof, including but not limited to its ability to retain and pay its employees,

 Jamme submitted an application to its Lending Bank for a first draw PPP loan on or about April 7,

 2020. At all times relevant hereto, Jamme’s Lending Bank operated as a delegate of the SBA in

 processing and approving/disapproving of the first draw PPP loan sought by Jamme.

        292.    In order to further mitigate the financial impact caused to Jamme by the Pandemic

 and the consequences thereof, including but not limited to its ability to retain and pay its

 employees, Jamme submitted an application to its Lending Bank for a second draw PPP loan on

 or about April 1, 2021. At all times relevant hereto, Jamme’s Lending Bank operated as a delegate

 of the SBA in processing and approving/disapproving of the second draw PPP loan sought by

 Jamme.


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         293.   Because Jamme operates a licensed alcohol-serving nightclub under the

 licenses/permits identified in paragraph 289, it is, and was at all times relevant to the PPP, for

 purposes of the PPP and the Affiliation Rules, a NAICS code 72 business.

         294.   Jamme claimed NAICS code 722410 on its first draw PPP loan forgiveness

 application, the SBA Form 3511, its second draw PPP Loan application, and its second draw PPP

 loan forgiveness application.

         295.   On or about July 1, 2021, Jamme applied for loan forgiveness of its first draw PPP

 loan. The Loan Proceeds amount that Jamme applied for forgiveness of for its first draw Loan,

 Jamme used exclusively for the Permitted Uses in full accordance with the PPP and its Loan

 Agreement. Consequently, it no longer possesses any of the Loan Proceeds from its first draw

 Loan.

         296.   On or about July 30, 2021, Jamme received forgiveness of the full amount of

 forgiveness requested on its first draw PPP Loan.

         297.   On or about January 30, 2024, via letter, SBA notified Jamme that it was initiating

 a Post-Payment Review of Jamme’s first draw PPP Loan and requested that Jamme provide a

 number of documents. The stated purpose for SBA’s requests via the Post-Payment Review was to

 review whether Jamme was eligible for the PPP Loan under, among other factors, the Prurience

 Regulation and Affiliation Rules.

         298.   On or about May 23, 2022, Jamme applied for loan forgiveness of its second draw

 PPP Loan. The Loan Proceeds amount that Jamme applied for forgiveness of for its second draw

 Loan, Jamme used exclusively for the Permitted Uses in full accordance with the PPP and its Loan

 Agreement. Consequently, it no longer possesses any of the Loan Proceeds from its second draw

 Loan.


                                                61


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        299.    As of the date of this filing, Jamme has not received a final forgiveness decision

 from SBA regarding Jamme’s second draw PPP Loan.

        300.    At all times related to the relevant period for its first and second draw PPP Loans,

 Jamme had no more than 38 persons employed at its physical location.

        301.    If forced to repay its first draw PPP Loan, and because of the precarious financial

 condition in which it finds itself still as a result of the lingering impact of the Pandemic and the

 consequences thereof, Jamme may be forced to close its business and file for bankruptcy, which

 would result in the cessation of both the presentation of and the ability to view entertainment that

 is presumptively protected under the First Amendment to the United States Constitution, as well

 as the wholesale termination of its employees jobs; which the PPP was in fact designed to preclude

 from happening.

 90’s Minneapolis, LLC (“90s”)

        302.    90s is a licensed alcohol serving nightclub open to the consenting adult public,

 which presents on its premises a variety of non-obscene, constitutionally protected, male and

 female performance dance entertainment.

        303.    90s has never been charged with, let alone convicted of, any crimes of obscenity.

 Similarly, none of the entertainers who have performed on 90s’s premises have ever been charged

 with, let alone convicted of, any crimes of obscenity related to their performances at the facility

 owned and operated by 90s.

        304.    90s does not present any live performances, depictions or displays, or sell any

 products or services, of a prurient sexual nature or that otherwise appeal to a shameful, morbid,

 prurient, or unhealthy interest in sex.


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        305.    90s operates it nightclub pursuant to, and in accordance with, the following

 licenses/permits, which it maintains:

                a.      A Liquor License;

                b.      A Food License-Sidewalk Café; and

                c.      A Liquor Permit allowing 90s to close at 2 am.

        306.    As a consequence of the Pandemic, 90s was subject to various governmental

 closures orders imposed to mitigate the effects and spread of the COVID-19 virus. As a direct and

 proximate result thereof, the lingering effects of the Pandemic, and the supply chain disruptions

 related thereto, 90s suffered, as did a large percentage of businesses throughout the United States,

 devastating and catastrophic financial losses.

        307.    In order to mitigate the financial impact caused to 90s by the Pandemic and the

 consequences thereof, including but not limited to its ability to retain and pay its employees, 90s

 submitted an application to its Lending Bank for a first draw PPP loan on or about April 7, 2020.

 At all times relevant hereto, 90s’s Lending Bank operated as a delegate of the SBA in processing

 and approving/disapproving of the first draw PPP loan sought by 90s.

        308.    In order to further mitigate the financial impact caused to 90s by the Pandemic and

 the consequences thereof, including but not limited to its ability to retain and pay its employees,

 90s submitted an application to its Lending Bank for a second draw PPP loan on or about April 27,

 2021. At all times relevant hereto, 90s’s Lending Bank operated as a delegate of the SBA in

 processing and approving/disapproving of the second draw PPP loan sought by 90s.

        309.    Because 90s operates a licensed alcohol-serving nightclub under the

 licenses/permits identified in paragraph 305, it is, and was at all times relevant to the PPP, for

 purposes of the PPP and the Affiliation Rules, a NAICS code 72 business.


                                                  63


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        310.    90s claimed NAICS code 722410 on its first draw PPP loan forgiveness application,

 the SBA Form 3511, its second draw PPP Loan application, and its second draw PPP loan

 forgiveness application.

        311.    On or about July 8, 2021, 90s applied for loan forgiveness of its first draw PPP loan.

 The Loan Proceeds amount that 90s applied for forgiveness of for its first draw Loan, 90s used

 exclusively for the Permitted Uses in full accordance with the PPP and its Loan Agreement.

 Consequently, it no longer possesses any of the Loan Proceeds from its first draw Loan.

        312.    On or about July 22, 2021, 90s received forgiveness of the full amount of

 forgiveness requested on its first draw PPP Loan.

        313.    On or about January 30, 2024, via letter, SBA notified 90s that it was initiating a

 Post-Payment Review of 90s’s first draw PPP Loan and requested that 90s provide a number of

 documents. The stated purpose for SBA’s requests via the Post-Payment Review was to review

 whether 90s was eligible for the PPP Loan under, among other factors, the Prurience Regulation

 and Affiliation Rules.

        314.    On or about May 13, 2022, 90s applied for loan forgiveness of its second draw PPP

 Loan. The Loan Proceeds amount that 90s applied for forgiveness of for its second draw Loan, 90s

 used exclusively for the Permitted Uses in full accordance with the PPP and its Loan Agreement.

 Consequently, it no longer possesses any of the Loan Proceeds from its second draw Loan.

        315.    On or about May 23, 2023, 90s received forgiveness of the full amount of

 forgiveness requested on its second draw PPP Loan.

        316.    At all times related to the relevant period for its first and second draw PPP Loans,

 90s had no more than 49 persons employed at its physical location.


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        317.    If forced to repay its first draw PPP Loan, and because of the precarious financial

 condition in which it finds itself still as a result of the lingering impact of the Pandemic and the

 consequences thereof, 90s may be forced to close its business and file for bankruptcy, which would

 result in the cessation of both the presentation of and the ability to view entertainment that is

 presumptively protected under the First Amendment to the United States Constitution, as well as

 the wholesale termination of its employees jobs; which the PPP was in fact designed to preclude

 from happening.

 Las Vegas Bistro, LLC (“LVB”)

        318.    LVB is a licensed alcohol serving nightclub open to the consenting adult public,

 which presents on its premises a variety of non-obscene, constitutionally protected, male and

 female performance dance entertainment.

        319.    LVB has never been charged with, let alone convicted of, any crimes of obscenity.

 Similarly, none of the entertainers who have performed on LVB’s premises have ever been charged

 with, let alone convicted of, any crimes of obscenity related to their performances at the facility

 owned and operated by LVB.

        320.    LVB does not present any live performances, depictions or displays, or sell any

 products or services, of a prurient sexual nature or that otherwise appeal to a shameful, morbid,

 prurient, or unhealthy interest in sex.

        321.    LVB operates it nightclub pursuant to, and in accordance with, the following

 licenses/permits, which it maintains:

                a.      An Adult Entertainment Cabaret License issued by Clark County

                b.      A Liquor License issued by Clark County; and

                c.      A Food (Restaurant) License issued by Clark County


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        322.    As a consequence of the Pandemic, LVB was subject to various governmental

 closures orders imposed to mitigate the effects and spread of the COVID-19 virus. As a direct and

 proximate result thereof, the lingering effects of the Pandemic, and the supply chain disruptions

 related thereto, LVB suffered, as did a large percentage of businesses throughout the United States,

 devastating and catastrophic financial losses.

        323.    In order to mitigate the financial impact caused to LVB by the Pandemic and the

 consequences thereof, including but not limited to its ability to retain and pay its employees, LVB

 submitted an application to its Lending Bank for a first draw PPP loan on or about April 7, 2020.

 It submitted a revised application on May 21, 2020. At all times relevant hereto, LVB’s Lending

 Bank operated as a delegate of the SBA in processing and approving/disapproving of the first draw

 PPP loan sought by LVB.

        324.    Because LVB operates a licensed alcohol-serving nightclub under the

 licenses/permits identified in paragraph 321, it is, and was at all times relevant to the PPP, for

 purposes of the PPP and the Affiliation Rules, a NAICS code 72 business.

        325.    LVB claimed NAICS code 722410 on its first draw PPP loan forgiveness

 application and the SBA Form 3511.

        326.    On or about July 1, 2021, LVB applied for loan forgiveness of its first draw PPP

 loan. The Loan Proceeds amount that LVB applied for forgiveness of for its first draw Loan, LVB

 used exclusively for the Permitted Uses in full accordance with the PPP and its Loan Agreement.

 Consequently, it no longer possesses any of the Loan Proceeds from its first draw Loan.

        327.    On or about July 27, 2021, LVB received forgiveness of the full amount of

 forgiveness requested on its first draw PPP Loan.


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        328.    On or about January 30, 2024, via letter, SBA notified LVB that it was initiating a

 Post-Payment Review of LVB’s first draw PPP Loan and requested that LVB provide a number of

 documents. The stated purpose for SBA’s requests via the Post-Payment Review was to review

 whether LVB was eligible for the PPP Loan under, among other factors, the Prurience Regulation

 and Affiliation Rules.

        329.    At all times related to the relevant period for its first draw PPP Loan, LVB had no

 more than 120 persons employed at its physical location.

 Stockton Enterprises, LLC (“Stockton Enterprises”)

        330.    Stockton Enterprises is a licensed alcohol serving nightclub open to the consenting

 adult public, which presents on its premises a variety of non-obscene, constitutionally protected,

 female performance dance entertainment.

        331.    Stockton Enterprises has never been charged with, let alone convicted of, any

 crimes of obscenity. Similarly, none of the entertainers who have performed on Stockton

 Enterprises’ premises have ever been charged with, let alone convicted of, any crimes of obscenity

 related to their performances at the facility owned and operated by Stockton Enterprises.

        332.    Stockton Enterprises does not present any live performances, depictions or

 displays, or sell any products or services, of a prurient sexual nature or that otherwise appeal to a

 shameful, morbid, prurient, or unhealthy interest in sex.

        333.    Stockton Enterprises operates it nightclub pursuant to, and in accordance with, the

 following licenses/permits, which it maintains:

                a.        Business License issued by San Joaquin County;

                b.        Liquor License #364893 issued by the State of California; and

                c.        A Health Permit for a Restaurant / Bar (#PT0002172).


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        334.    As a consequence of the Pandemic, Stockton Enterprises was subject to various

 governmental closures orders imposed to mitigate the effects and spread of the COVID-19 virus.

 As a direct and proximate result thereof, the lingering effects of the Pandemic, and the supply

 chain disruptions related thereto, Stockton Enterprises suffered, as did a large percentage of

 businesses throughout the United States, devastating and catastrophic financial losses.

        335.    In order to mitigate the financial impact caused to Stockton Enterprises by the

 Pandemic and the consequences thereof, including but not limited to its ability to retain and pay

 its employees, Stockton Enterprises submitted an application to its Lending Bank for a first draw

 PPP loan on or about April 7, 2020. At all times relevant hereto, Stockton Enterprises’ Lending

 Bank operated as a delegate of the SBA in processing and approving/disapproving of the first draw

 PPP loan sought by Stockton Enterprises.

        336.    Because Stockton Enterprises operates a licensed alcohol-serving nightclub under

 the licenses/permits identified in paragraph 333, it is, and was at all times relevant to the PPP, for

 purposes of the PPP and the Affiliation Rules, a NAICS code 72 business.

        337.    Stockton Enterprises claimed NAICS code 722410 on its first draw PPP loan

 forgiveness application and the SBA Form 3511.

        338.    On or about July 15, 2021, Stockton Enterprises applied for loan forgiveness of its

 first draw PPP loan. The Loan Proceeds amount that Stockton Enterprises applied for forgiveness

 of for its first draw Loan, Stockton Enterprises used exclusively for the Permitted Uses in full

 accordance with the PPP and its Loan Agreement. Consequently, it no longer possesses any of the

 Loan Proceeds from its first draw Loan.

        339.    On or about July 23, 2021, Stockton Enterprises received forgiveness of the full

 amount of forgiveness requested on its first draw PPP Loan.


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        340.    On or about January 30, 2024, via letter, SBA notified Stockton Enterprises that it

 was initiating a Post-Payment Review of Stockton Enterprises’ first draw PPP Loan and requested

 that Stockton Enterprises provide a number of documents. The stated purpose for SBA’s requests

 via the Post-Payment Review was to review whether Stockton Enterprises was eligible for the PPP

 Loan under, among other factors, the Prurience Regulation and Affiliation Rules.

        341.    At all times related to the relevant period for its first draw PPP Loan, Stockton

 Enterprises had no more than 115 persons employed at its physical location.

        342.    If forced to repay its first draw PPP Loan, and because of the precarious financial

 condition in which it finds itself still as a result of the lingering impact of the Pandemic and the

 consequences thereof, Stockton Enterprises may be forced to close its business and file for

 bankruptcy, which would result in the cessation of both the presentation of and the ability to view

 entertainment that is presumptively protected under the First Amendment to the United States

 Constitution, as well as the wholesale termination of its employees jobs; which the PPP was in fact

 designed to preclude from happening.

                                   GENERAL ALLEGATIONS

        343.    The causes of action contained herein all revolve around the actions of the SBA in

 administering the Loans under the PPP.

        344.    As a result of the issuance of its PPP Loan at issue, each Plaintiff was required to

 enter into a loan agreement, normally by way of executing a Promissory Note (the “Loan

 Agreements”), with its Lending Bank. The Loan Agreements of the Plaintiffs are collectively

 attached hereto as Exhibit T.

        345.    Procedurally, Plaintiffs fall into five categories (although, as demonstrated, some

 Plaintiffs actually fall into more than one category because of multiple PPP Loans obtained by


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 them). First, Plaintiffs Gold Club (first draw), DV SG of LV, and Smithville have had their Loans

 granted but forgiveness thereof denied by the SBA through the issuance of an FLRD. Second,

 Plaintiffs Meacham, SAW, Dallas Food and Beverage, and Gold Club (second draw) have had their

 Loans granted but forgiveness denied by the SBA through the issuance of FLRDs, with the SBA

 then, following those Plaintiffs having appealed to the OHA, withdrawing the applicable FLRD

 and indicating that the SBA would be undertaking further investigation, and, upon motion by the

 SBA, the OHA subsequently dismissing such appeal. Third, Plaintiffs Gold Club (second draw)

 and Meacham have had their Loans granted but forgiveness denied by the SBA through the

 issuance of FLRDs, with the SBA then, following those Plaintiffs having appealed to the OHA,

 withdrawing the applicable FLRD and indicating that the SBA would be undertaking further

 investigation, and, upon motion by the SBA, the OHA subsequently dismissing such appeal, and

 with the SBA then issuing a second “new and improved” FLRD. Third, Plaintiff Gold Club (second

 draw) has had its Loan granted but forgiveness denied by the SBA through issuance of multiple

 FLRDs, which were appealed, with the OHA having affirmed SBA’s “new and improved” FLRD

 such that Gold Club seeks judicial review of those orders by way of this lawsuit. Fourth, Plaintiff

 Meacham has had its Loan granted but forgiveness denied by the SBA through issuance of multiple

 FLRDs, which Meacham timely appealed, with the OHA having granted Meaham’s appeal of

 SBA’s “new and improved” FLRD and remanded the same back to SBA and SBA has not issued

 a new FLRD or otherwise issued forgiveness on that Loan. Fifth, Plaintiffs Cats of Vegas, the

 Office, Pole Position, Jamme, 90’s, Las Vegas Bistro, Stockton, Reeder, and Cat’s NOLA, have

 had both their Loans and forgiveness thereof granted, yet the SBA has recently informed those

 Plaintiffs that it was reconsidering the Plaintiffs’ eligibility for such Loans and requested from

 them voluminous documentary materials. This has required the staffs and professionals of such


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 Plaintiffs to devote substantial resources, and the Plaintiffs to expend substantial sums, to comply

 with such requests.

        346.    Under the PPP and Bank Fraud Enforcement Harmonization Act of 2022, Pub. L.

 117-166 , 136 Stat. 1365 (Jan. 3, 2022), now codified at 15 U.S.C. § 636(a)(36)(W) and (a)(37)(P),

 criminal charges or civil enforcement actions alleging that a borrower engaged in fraud with

 respect to a PPP Loan may be brought not later than 10 years after the alleged offense was

 committed.

        347.    Under and/or pursuant to 15 U.S.C. § 636m(l); 15 U.S.C. § 636m(E); 13 C.F.R. §

 120.461(d); and/or SBA 7(a) Loan Servicing and Liquidation, SOP 50 57 3, § 3.D.5 (Aug. 1, 2023),

 the SBA has six years after a PPP loan is forgiven to audit and reconsider the decision. At the pace

 that the undersigned firm has seen the SBA recently issue such audit notices, it is expected that a

 large number of the clients of the undersigned firm will be audited in the near future.

        348.    For those Plaintiffs that have had forgiveness of their Loans denied through the

 issuance by the SBA of an un-withdrawn FLRD, since the SBA is—under the terms of the PPP—

 the guarantor of such Loans, the Lending Banks have demanded, are demanding, and/or will be

 demanding, repayment of such Loans.

        349.    As reported by NPR based on SBA data, 92% of all PPP loans have been forgiven.

        350.    All attached Exhibits are incorporated by reference as though fully set forth herein.

  THE SBA’S AND CONGRESS’ GERRYMANDERING OF EMERGENCY PANDEMIC
   FUNDING TO ASSIST PREVIOUSLY EXCLUDED BUSINESS ACTIVITIES AND
                   TO DAMAGE “DISFAVORED” SPEECH

        351.    Congress created the SBA on July 30, 1953, through the Small Business Act of

 1953, Pub. L. 83-163, tit. II, 67 Stat. 232, et seq., (1953); see also https://www.sba.gov/about-

 sba/organization#:~:text=Congress%20created%20SBA%20with%20the,is%20periodically%20a


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 mended%20by%20Congress (last visited Feb. 12, 2024). The Small Business Act referenced in

 the previous sentence and all subsequent amendments thereto are collectively referred to

 hereinafter as the “SBA Act.”

        352.    On March 28, 2020, the President signed the CARES Act into law which, among

 other things, created the PPP.

        353.    The PPP is part of the SBA Act.

        354.    The PPP instructs the SBA to promulgate rules as follows:

        SEC. 1114. EMERGENCY RULEMAKING AUTHORITY.

        Not later than 15 days after the date of the enactment of this Act, the Administrator
        shall 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, United
        States Code.

 CARES Act, Pub. L. 116-136 § 1114; codified as 15 U.S.C. § 9012.

        355.    The CARES Act specifically tasked the SBA with administering the PPP. The PPP

 further provides:

        (I) In general

        For purposes of making covered loans for the purposes described in clause (i), a
        lender approved to make loans under this subsection shall be deemed to have been
        delegated authority by the Administrator to make and approve covered loans,
        subject to the provisions of this paragraph.

        (II) Considerations

        In evaluating the eligibility of a borrower for a covered loan with the terms
        described in this paragraph, a lender shall consider whether the borrower—

        (aa) was in operation on February 15, 2020; and

        (bb)(AA) had employees for whom the borrower paid salaries and payroll taxes; or

        (BB) paid independent contractors, as reported on a Form 1099-MISC.

        (iii) Additional lenders