A Grant Program for Black Women Business Owners Is Discriminatory, Appeals Court Rules

A U.S. federal court of appeals panel suspended a venture capital firm’s grant program for Black women business owners, ruling that a conservative group is likely to prevail in its lawsuit claiming that the program is discriminatory.

The ruling against the Atlanta-based Fearless Fund is another victory for conservative groups waging a sprawling legal battle against corporate diversity programs that have targeted dozens of companies and government institutions.

The case against the Fearless Fund was brought last year by the American American Alliance for Equal Rights, a group led by Edward Blum, the conservative activist behind the Supreme Court case that ended affirmative action in college admissions.

{snip}

In a 2-1 ruling, the panel of the U.S. Court of Appeals for the 11th Circuit in Miami found that Blum was likely to prevail in his lawsuit claiming the grant program violates section 1981 of the 1866 Civil Rights Act, which prohibits discrimination on the basis of race when enforcing contracts. The Reconstruction-era law was originally intended to protect formally enslaved people from economic exclusion, but anti-affirmative action activists have been leveraging it to challenge programs intended to benefit minority-owned businesses.

The court ordered the Fearless Fund to suspend its Strivers Grant Contest, which provides $20,000 to businesses that are majority owned by Black women, for the remainder of the lawsuit that is being litigated in a federal court in Atlanta. The ruling reversed a federal judge’s ruling last year that the contest should be allowed to continue because Blum’s lawsuit was likely to fail. However, the grant contest has been suspended since October after a separate panel of the federal appeals court swiftly granted Blum’s request for an emergency injunction while he challenged the federal judge’s original order.

The appeals court panel, consisting of two judges appointed by former President Donald Trump and one appointed by former President Barack Obama, rejected the Fearless Fund’s arguments that the grants are not contracts but charitable donations protected by the First Amendment right to free speech.

“The fact remains, though, that Fearless simply —and flatly — refuses to entertain applications from business owners who aren’t ‘black females,’” the court’s majority opinion said, adding “every act of race discrimination” would be deemed expressive conduct under the Fearless Fund’s argument.

{snip}

The court’s ruling wasn’t surprising because of its conservative leaning and previous skepticism towards the argument presented by the Fearless Fund, said David Glasgow, executive director of the Meltzer Center for Diversity, Inclusion, and Belonging at New York University’s School of Law.

“We are going to see some pro-DEI outcomes in liberal circuits and anti-DEI outcomes in conservative circuits,” Glasgow said.

{snip}

The Strivers Grant Fund is one of several programs run by the foundation arm of the Fearless Fund, which was founded to address the wide racial disparity in funding for businesses owned by women of color. Less than 1% of venture capital funding goes to businesses owned by Black and Hispanic women, according to the nonprofit advocacy group digitalundivided.

{snip}