FLINT, Mich. — An Eastern Michigan court decision on Monday established that local strip clubs should be eligible for the Payment Protection Program (PPP) administered by the Small Business Administration (SBA) as part of the U.S. Congress-approved COVID-19 relief package, regardless of the “prurient clause” included as part of the application.
According to the ruling by U.S. District Court for the Eastern District of Michigan Judge Matthew F. Leitman, Congress "provided temporary paycheck support to all Americans employed by all small businesses that satisfied the two eligibility requirements — even businesses that may have been disfavored during normal times."
Leitman entertained the SBA lawyers’ argument that “it would ordinarily be absurd to conclude that Congress meant to provide financial assistance to, among others, certain sexually oriented businesses."
“But,” the judge continued, ruling in favor of the strip clubs, “these are no ordinary times, and the PPP is no ordinary legislation.”
The “prurient” clause on the SBA loan application form, as XBIZ has been reporting, replicates mid-1990s language designed to discriminate against sexually oriented businesses.
The form compels applicants to declare that they do not “present live performances of a prurient sexual nature or derive directly or indirectly more than de minimis gross revenue through the sale of products or services, or the presentation of any depictions or displays, of a prurient sexual nature.”
The word “prurient” is an imprecise, obscure word that means “appealing to unhealthy sexual interests” and was used by the U.S. Supreme Court in a landmark 1973 ruling. Several members of the adult entertainment community and First Amendment lawyers have pointed out that people who do not consider their sexual expression “unhealthy” are exempt from application of the “prurient” clause.”
DV Diamond Club of Flint LLC and other 41 other strip clubs sued the SBA, alleging they were put in the position of being denied for PPP loans because of the “prurient clause.”
On Monday, Judge Leitman issued an injunction ordering the SBA “not exclude Plaintiffs from participating in the PPP on the ground that they present entertainment or sell products of a ‘prurient sexual nature.’”
