A year after the U.S. Small Business Administration rolled out its COVID-19 relief program for shuttered music venues, the agency is facing dozens of pending lawsuits from companies who say they were denied millions in aid unfairly.
At least 60 lawsuits have been filed in DC federal court over Shuttered Venue Operators Grants, a COVID-era relief program launched in April 2021 that’s distributed $14.5 billion in aid to thousands of live venues that saw huge losses during pandemic shutdowns.
According to the aggrieved venues, SBA has refused their requests without good reason or a proper explanation, putting particular companies at a huge disadvantage versus rivals who somehow got money. Attorneys involved in the cases claim that rates of refusal under SVOG “significantly exceed typical government grant programs.”
One of the companies that’s filed a lawsuit is Concert Investor LLC, a Tennessee firm that has produced shows for twenty one pilots, Little Big Town, O.A.R. and others. The company sought nearly $5 million in aid under SVOG, citing a 94 percent drop in revenue during the pandemic. But the SBA decided the company didn’t meet the criteria to be concert producer, saying the company “at best” merely “serves the needs” of artists by providing lighting and sound tech.
In a motion filed in court Monday, Concert Investor’s attorneys asked a federal judge to grant the company a final judgment in its case, arguing the SBA had “ignored” ample evidence about its eligibility and had unfairly awarded grants to direct competitors who provide the exact same services.
“This disparate treatment has placed Concert Investor at a severe and worsening competitive disadvantage relative to other concert producers that can use their SVOG awards to restore and grow their businesses while Concert Investor is deprived of the federal assistance for which it too qualifies,” the company wrote. SBA will soon file its own brief, and the judge will rule on the case in the months ahead.
Some of the lawsuits could be moving toward a more peaceful conclusion. Last week, the SBA said it would reconsider refusing $497,000 in aid to Superfan Live Inc., which offers VIP experiences at concerts from artists like Bon Jovi, Genesis, and Journey. The agency asked a federal judge for extra time, so that it could “thoroughly examine the allegations in the complaint prior to issuing a new decision.”
Jeff McFadden, an attorney who has filed more than 20 such lawsuits, said the SBA had made a similar move to reevaluate its decision in many of the SVOG cases – a decision he views as a “positive first step.” After performing such a re-do, McFadden said the SBA had voluntarily reversed itself in several of his cases.
“We’re pretty pleased with how this has been trending,” McFadden said. “We’ve had repeated conversations with the folks at the U.S. Attorney’s Office about how time sensitive this is. These businesses are in an extremely difficult situation and they need the money ASAP.”
Such quick reversals have already resolved many of the cases. One case, filed last month by a music venue in Macon, Georgia seeking $865,000 in aid, was voluntarily dropped just days after it was filed. But at least 33 lawsuits were still pending in federal court as of last week, according to a court filing by the SBA.
The lawsuits over SVOG have come from a wide range of companies. One was filed by the operators of the yoga-centric Wanderlust Festival, arguing the pandemic had had a “devastating impact” on its business and seeking $2.4 million. Another was filed by Mikes Mobile Detailing LLC – the innocuous name used by the Las Vegas erotic dance show inspired by the film “Magic Mike.” Like other aggrieved applicants, Magic Mike argued that SBA had awarded money to its Vegas competitors, including a whopping $6.3 million to Australia’s Thunder from Down Under.
A majority of the cases against the SBA have been filed by a single team of attorneys, hailing from the national law firm Akin Gump Strauss Hauer & Feld. They declined to comment on the litigation when reached by Billboard. Most of the other lawsuits have been filed by McFadden, working in tandem with lawyers from Florida-based Maher Law Firm and Kansas City-based Wagstaff & Cartmel.
Despite the allegations made in the lawsuits, the SVOG has seen large amounts of money disbursed to venues since it debuted in April 2021. According to a status report issued by SBA on Monday, just over $11 billion was handed out to more than 13,000 businesses in a first wave; a second round of supplemental grants awarded an additional $3.4 billion to more than 9000 businesses.
A spokesperson for the SBA declined to comment, citing longstanding agency policy to not discuss pending litigation.