962 F.3d 838
5th Cir.2020Background
- Congress enacted the CARES Act creating the Paycheck Protection Program (PPP), implemented under 15 U.S.C. § 636 and administered by the SBA.
- The SBA issued a rule providing that applicants who are debtors in bankruptcy are ineligible for PPP loans.
- Hidalgo County Emergency Service Foundation, a Chapter 11 debtor, alleged it was denied a PPP loan due to its bankruptcy status and sued the SBA, asserting violations of 11 U.S.C. § 525 and the APA.
- The bankruptcy court entered a preliminary injunction ordering the SBA to process Hidalgo’s PPP application without regard to its bankruptcy status.
- The district court stayed that injunction and certified the case for direct appeal to the Fifth Circuit, which accepted the appeal.
- The Fifth Circuit concluded that 15 U.S.C. § 634(b)(1) and binding circuit precedent bar injunctive relief against the SBA Administrator, vacated the bankruptcy court’s injunction, and did not reach the merits of Hidalgo’s statutory or APA claims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether courts may enjoin the SBA Administrator | Create an exception here; emergency requires relief | 15 U.S.C. § 634(b)(1) forbids injunctions against Administrator | Injunctions against the SBA Administrator are barred by statute and circuit precedent |
| Validity of the bankruptcy court’s preliminary injunction | Injunction necessary to prevent discrimination under § 525 and to remedy APA violations | Bankruptcy court lacked authority to enjoin the Administrator | Bankruptcy court exceeded its authority; preliminary injunction vacated |
| Whether this panel may revisit or carve out an exception to precedent | Urged circuit to revisit/exception given extreme, time-sensitive context | Panel is bound by rule of orderliness and Teague precedent | Panel declined to create exception or revisit precedent; bound by prior Fifth Circuit law |
| Whether the court decided the merits of § 525 / APA claims | Alleged statutory discrimination and arbitrary agency action justify relief | Merits were moot given injunctive bar | Merits were not reached; disposition based on injunctive-bar jurisdictional rule |
Key Cases Cited
- Teague v. City of Flower Mound, 179 F.3d 377 (5th Cir. 1999) (rule of orderliness — panels are bound by circuit precedent)
- Enplanar, Inc. v. Marsh, 11 F.3d 1284 (5th Cir. 1994) (held injunctive relief against the SBA is precluded by § 634(b)(1))
- Valley Constr. Co. v. Marsh, 714 F.2d 26 (5th Cir. 1983) (precludes injunctions against the SBA Administrator)
- Expedient Servs., Inc. v. Weaver, 614 F.2d 56 (5th Cir. 1980) (suits seeking solely injunctive relief against the SBA are barred)