A federal appeals court temporarily halted a grant program for Black women-owned businesses, exemplifying the intensifying conflict over corporate diversity rules. The 11th U.S. Circuit Court of Appeals in Atlanta ruled 2-1.
The Fearless Fund is temporarily barred from administering the Strivers Grant Contest, which awards $20,000 to firms that are at least 51 percent owned by Black women, among other restrictions.
The Atlanta-based Fearless Fund said in a statement Sunday that it would comply with the ruling but remained optimistic about ultimately winning the lawsuit, according to NBC News. The complaint was initiated by the American Alliance for Equal Rights, a group led by conservative activist Edward Blum, who claims that the fund violates a part of the Civil Rights Act of 1866 that bars racial discrimination in contracts.
The decree, released on Saturday, overturned a judgment issued by U.S. District Judge Thomas W. Thrash that refused the American Alliance's motion to suspend the program. The majority of the three-judge panel wrote that the Fearless Fund's program is "racially exclusionary" and that Blum's group is likely to prevail.
Perversion of Congressional Intent?
In his dissent, Judge Charles R. Wilson stated it was a "perversion of Congressional intent" to use the 1866 legislation against the Fearless Fund's program, considering that the Reconstruction-era law was intended to protect Black people from economic marginalization. Wilson believes the lawsuit will fail.
The lawsuit has become a test case as the struggle over racial concerns transfers to the workplace in the aftermath of the U.S. The Supreme Court's June decision to eliminate affirmative action in college admissions.
The Fearless Fund has hired notable civil rights attorneys, including Ben Crump, to fight the lawsuit. The lawyers claim that the grants are not contracts, but rather donations protected by the First Amendment.
The appeal panel disagreed, noting in its majority ruling that the First Amendment "does not give the defendants the right to exclude persons from a contractual regime based on their race."
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Three Lawsuits Filed Since August
Blum's Texas-based group has filed three lawsuits since August, challenging grant and fellowship programs developed by the venture capital fund and two law firms to provide Black, Hispanic, and other underrepresented minority groups more job options, as reported by Reuters.
A different nonprofit created by Blum, who is white, was behind the litigation that resulted in the June judgment, which was backed by the Supreme Court's 6-3 conservative majority, finding illegal Harvard University and the University of North Carolina's race-conscious student admissions criteria.
According to the Fearless Fund, Black women-owned enterprises in 2022 will get fewer than 1 percent of the $288 billion invested by venture capital firms.
The fund, which includes JPMorgan Chase, Bank of America, and MasterCard as investors, intends to rectify this gap. Since its inception in 2019, it has funded almost $27 million in 40 firms managed by minority women. It also offers grants, and Blum's lawsuit targeted its Fearless Strivers Grant Contest, which pays $20,000 in grants and other resources to Black women who operate small companies.
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