Tatyana Tandanpolie
Sat, February 10, 2024
Edward Blum
The same conservative activist that led the legal push behind last summer's Supreme Court takedown of race-based college admissions has set his sights on the corporate sector, now challenging the legality of a grant intended to support Black businesswomen's ventures.
Edward Blum's American Alliance for Equal Rights filed a complaint against venture capital firm Fearless Fund in early August, accusing the Black-women-founded group of discriminating against other races in offering a grant program solely to Black businesswomen.
The lawsuit, currently being considered in a federal appeals court which held oral arguments in the case last week, is a symbol of an active conservative legal assault — bolstered, in part, by the Supreme Court's June decision — on DEI and race-consciousness in a number of venues, the most recent being private businesses. The case, alongside a spate of others like it, is poised to spark a nationwide reckoning with corporate DEI policies, spurring other challenges that could ultimately upend a swath of efforts meant to assuage racial and ethnic disparities.
The Alliance and other organizations filing similar lawsuits "see an opening because of the Supreme Court's decision," Olatunde Johnson, the Ruth Bader Ginsburg '59 Professor of Law for Columbia Law School, told Salon, noting that these groups are taking on employment programs, corporate DEI programs and other initiatives like the Fearless Fund.
These sorts of cases will likely test the ability of public and private employers to address discrimination and take affirmative steps to address the disparity it causes, Johnson explained.
"We do expect over the years to come — not immediately — that we're really going to respond to the question of whether or not corporate DEI programs, fellowship programs and other affirmative efforts to address racial inequality are permissible," added Johnson, who specializes in constitutional and anti-discrimination law.
At issue in the Fearless Fund case is the firm's Strivers Grant Contest, which awards $20,000 to Black women seeking funding to boost their small businesses, according to The Associated Press. In order to be eligible for the program, the business must be at least 51 percent owned by Black women, revenue-generating (with a $50,000 minimum revenue "strongly preferred") and formed and operated under U.S. law, a 2023 webpage for the contest described.
The Alliance filed the suit on behalf of three of its members — anonymous businesswomen whom the Atlanta Journal-Constitution reported included white and Asian women — who it said felt they incurred personal harm by being deemed ineligible to receive the grant solely based on their racial identities. The lawsuit did not identify the women, referring to them only as Owner A, Owner B and Owner C.
The Alliance argues that "entry in the program forms a contractual relationship between Fearless Fund and the applicant" with the applicant agreeing to the official eligibility requirements — what the Alliance considers the contract — through their application.
"Under that contract, the applicant obtains a chance at $20,000," the original lawsuit reads. "In exchange, Fearless Fund obtains, among other things, the right to use information about the applicant for publicity and to use the ideas in the application without further compensation."
The conservative organization hinges its claim on section 1981 of the 1866 Civil Rights Act, a Civil War-era law intended to protect formerly enslaved Americans from discrimination. The law provided equal rights and benefits to all citizens of the U.S. as "enjoyed by white citizens" to "make and enforce contracts" among other legal maneuvers.
The Alliance and other anti-DEI entities in their own suits argue that the provision means race can't be taken into account in contracts at all.
“The common theme shared by all of these lawsuits is the challenge to race-based factors in corporate, governmental, cultural and academic endeavors,” Blum told the Wall Street Journal. “All of the lawsuits are attempting to eliminate race as a factor in these programs and policies.”
That argument, however, contradicts the original intent and historical context of the law they cite, according to Margaret Russell, a Santa Clara University professor of law, specializing in civil rights and constitutional law.
"If you take into account that section 1981 was really intended to prohibit discrimination on the basis of race, color and ethnicity when making and enforcing contracts and ensure that individuals have the same rights and benefits as quote 'enjoyed by white citizens,' that is not a flat out rule that you don't take race into account," Russell said. "It is very much rooted in time periods."
Fearless Fund also rejects the claim, arguing that the program constitutes a charitable donation and is considered a form of protected expression under the First Amendment. The firm cites as support the Supreme Court's 303 Creative v. Elenis ruling from last June that saw the justices establish an evangelical, Colorado web designer's right to refuse hypothetical commissions for same-sex wedding websites under the First Amendment on the grounds that she should not be forced to produce speech she disagrees with.
By that logic, lawyers for Fearless Fund argue, the firm can't be made to adhere to a “colorblind-at-all-costs viewpoint” it disagrees with, according to The Wall Street Journal.
“We are solving the disparities that exist,” chief executive and co-founder Arian Simone told the outlet. “It’s very disheartening, the moment we are in right now, to see the economic progress due to the racial reckoning of 2020 and seeing where we are four years later.”
A 2019 Harvard University Kennedy School Women and Public Policy Program report found that women received a slim 2.4 percent share of the billions of dollars in venture capital funding. While 2020 marked a year of growth in the amount of money invested in Black women's companies, just 0.34 percent of venture capital firm investments went to companies with them at the helm, according to Crunchbase, which analyzes venture capital data.
Through its Strivers Grant Contest, which is currently paused, the firm endeavored to bridge that gap between the overwhelming majority of venture capital funding that goes to white men and the dismal margin that ends up in the hands of Black women business owners.
"Honestly, I actually have the same belief as the plaintiff," Simone told a reporter, in part, following last Wednesday's hearing, according to a clip shared on her Instagram. "I would like a world that race-based things do not matter. But guess what? We live in America, and there are disparities that have to be solved for for us to get to that point."
Attorneys for Fearless Fund navigated tough questioning from the three-judge panel of the 11th Circuit Court of Appeals in Miami, composed of two Trump appointees and an Obama appointee, about the legality of the firm's grant program under the First Amendment and whether its exclusive support of Black women amounts to racial discrimination, according to the Atlanta Journal-Constitution.
Broadly speaking, current law permits efforts like the Fearless Fund as long as they are "remedying past or contemporary discrimination if there is a basis that's established ... for determining that there is past or present discrimination," Johnson said. "Whether any particular case rises or falls depends on whether they can prove that in their sector, whether that informed the design of their program, whether or not they tried other efforts."
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Fearless Fund sought a reversal of the October preliminary injunction suspending the operation of their grant program through the duration of the lawsuit. The foundation asked the court to rule in line with the U.S. District Court for the Northern District of Georgia's September decision that found it "clearly intends to convey a particular message in promoting and operating its grant program: ‘Black women-owned businesses are vital to our economy.’... The Foundation’s conduct at issue is, therefore, expressive and subject to the First Amendment,” per the Journal-Constitution.
The Alliance had appealed the ruling and an injunction was granted by an 11th Circuit panel days later. A decision on Fearless Fund's appeal following last week's hearing is still pending. The way the case is playing out in the lower courts signals it's likely to wind up before the Supreme Court, Russell told Salon.
The Supreme Court's emboldening ruling against affirmative action policies in college admissions determined that those programs were in violation of the Equal Protection Clause of the Constitution and arose from two cases brought against Harvard University and the University of North Carolina by Students for Fair Admissions, another non-profit led by Blum.
Though the decision did not apply to corporations or their DEI policies, it did open the door for a slew of additional challenges to racial preferences in other sectors to take hold amid the number of them that had already been filed against corporations in recent years.
"It's really tragic that the Supreme Court ruled the way that it did in the affirmative action cases, both for public and private institutions, Russell told Salon, noting that "measures of racial equality and equity have happened really only since institutions of higher education opened their doors."
"Ignoring that history of discrimination is, I think, at best it's disingenuous. It's trying to reinforce existing inequities," she added, arguing that the ruling also illustrates the extent of conservative thought's shift farther to the right from the era of Republican President Richard Nixon, who authorized early affirmative action programs.
According to Time, the volume of anti-affirmative action cases has vaulted since the Supreme Court determination with some minority- and woman-targeted business resources being hit with suits of their own; others have removed specific mention of DEI initiatives and policies from their websites to avoid legal trouble.
Three major law firms sued by the Alliance over fellowship programs for students of color, particularly those from underrepresented demographics in the field, expanded their programs to all students, prompting the alliance to drop the suits, Time noted.
The groups behind these suits are "ignoring" the baseline conditions of racial and gender discrimination in various sectors, Johnson argued.
"I think that these cases — and they're successful at doing so, no doubt, because they attract a lot of attention from media and other resources — they focus attention on the discriminatory point as being [what is actually] the remedy for discrimination," Johnson told Salon. "And I would like to see more attention paid to what are the barriers, how do we address those barriers, including by the groups that bring these suits."
Johnson expects to see a spike in legal challenges to race-conscious programs or efforts to address racial inequality over the next few years that will result in an array of appellate rulings — and possibly a Supreme Court decision — and determine the scope of section 1981 and Title VII to address racial inequality and past or present discrimination.
"Fearless Fund is really just the tip of the iceberg," Russell said, adding that these "challenges are not just legal challenges. They are very much rhetorical challenges to try to change public perceptions of what racial equality means."
"If I were writing about this I would want to know, why is this the goal of these organizations? What kind of America do they want to see at the end? Who's financing them?" Johnson added, "because they adopt a very zero-sum view of economic prosperity in this country, and I think ultimately, that's a dangerous thing. We have to think about how we're going to design an inclusive democracy.
MICHAEL GOLDBERG
Fri, February 9, 2024
Florida House Minority Leader Fentrice Driskell, D-Tampa, listens to Gov. Ron DeSantis give his State of the State address during a joint session of the Senate and House of Representatives in Tallahassee, Fla., Tuesday, Jan. 9, 2024. Driskell thinks the ideological motive behind restricting DEI is intertwined with an economic agenda that downplays the role of identity in exacerbating inequality.
JACKSON, Miss. (AP) — Diversity initiatives would be defunded or banned from universities and other public institutions under a slate of bills pending in Republican-led legislatures, with some lawmakers counting on the issue resonating with voters in this election year.
Already this year, Republican lawmakers have proposed about 50 bills in 20 states that would restrict initiatives on diversity, equity and inclusion — known as DEI — or require their public disclosure, according to an Associated Press analysis using the bill-tracking software Plural.
This is the second year Republican-led state governments have targeted DEI. This year’s bills, as well as executive orders and internal agency directives, again focus heavily on higher education. But the legislation also would limit DEI in K-12 schools, state government, contracting and pension investments. Some bills would bar financial institutions from discriminating against those who refuse to participate in DEI programs.
Meanwhile, Democrats have filed about two dozen bills in 11 states that would require or promote DEI initiatives. The bills cover a broad spectrum, including measures to reverse Florida’s recent ban on DEI in higher education and measures to require DEI considerations in K-12 school curricula in Washington state.
The Supreme Court’s June decision ending affirmative action at universities has created a new legal landscape around diversity programs in the workplace and civil society.
But DEI's emergence as a political rallying cry has its roots on campus, with Republican opponents saying the programs are discriminatory and promote left-wing ideology. Democratic supporters say the programs are necessary for ensuring institutions meet the needs of increasingly diverse student populations.
Republican Oklahoma Sen. Rob Standridge, who has authored four bills aiming to hollow out DEI programs in the state, said it has become a salient campaign theme.
“I think it’s become more of a political thing," Standridge said. “In other words, people are using it in their campaigns in a positive way. So now all of a sudden, maybe the people that didn’t care before are like, well, wait a minute, I can use this on a flier next year. And Trump brings light to it, too.”
The organizations that help power the conservative agenda say DEI's emergence at the center of political debate makes their crusade against it ripe for expansion.
“This has opened a window of opportunity, and we don’t want the window to close,” Mike Gonzalez, a fellow at powerful conservative think tank The Heritage Foundation, said in an interview. “We want to meet this window with a robust policy agenda.”
In South Carolina, Rep. Josiah Magnuson, who introduced legislation to restrict DEI, said the issue reflects a growing sentiment among Republican lawmakers that ideologies disfavored by conservatives grow with the help of campus bureaucracies.
“We’re finding that our colleges and universities were kind of off the rails, and we need to rein them back in,” Magnuson said. "And so I think that’s another thing that’s providing a growing impetus to get our state universities under control.”
Not all Republicans are unified about which government approach is best suited to eliminate DEI.
In Oklahoma, Republican Gov. Kevin Stitt signed an executive order in December barring state agencies and universities from spending money on the programs. Standridge said it’s not clear what authority the order would have because Oklahoma’s universities are regulated by the Oklahoma State Regents for Higher Education, not the governor’s office.
“I appreciate the executive order but, arguably, it doesn’t really have the authority to force the schools to do anything," Standridge said. “I ran several bills thinking maybe the moderates that are in control of the Senate would allow us to do something against DEI.”
For Washington state Sen. Marko Liias, DEI is crucial to serving a diverse society. Liias introduced a bill in the Democratic-controlled Legislature in 2023 to weave DEI concepts into the state's K-12 learning standards. The bill, which is up for consideration again in 2024, is designed to meet the needs of a diversifying student population, he said.
"I think the opposition is organized around a political agenda, whereas I’m trying to respond to a diverse community that I represent and the experiences that they’re bringing to me," Liias said. "So it’s sort of reality versus theory, what’s happening in our families and schools versus an agenda driven by national foundations. That’s the divide.”
Republican-led Florida and Texas were the first states to adopt broad-based laws banning DEI efforts in higher education. Since then, other state leaders have followed.
“The idea to study how much we were spending on DEI came from me seeing what other states were doing. Specifically, Ron DeSantis in Florida,” said Mississippi State Auditor Shad White, a Republican.
In a 2023 report, White said Mississippi’s public universities are spending millions on DEI programs instead of student scholarships.
In the opening weeks of Mississippi’s 2024 session, Rep. Becky Currie introduced a bill that would implement sweeping bans on not only DEI offices but also on funding campus activities deemed “social activism.” The bill has been referred to a House committee. Currie declined to be interviewed.
Utah Gov. Spencer Cox signed a bill into law on Jan. 30 that makes the state the latest to prohibit diversity training, hiring and inclusion programs at universities and in state government. Cox has called using diversity statements in hiring “bordering on evil.”
Republican legislators in Wisconsin brokered a narrowly approved deal with regents in December for the state’s public university system to limit diversity positions at its two dozen campuses. Assembly Speaker Robin Vos, a Republican, later said he had only just begun to remove “cancerous DEI practices” and requested a review of diversity initiatives across state government.
The crackdown on DEI is part of the same legislative project as the earlier movement to restrict the academic and legal ideas termed critical race theory, said Jonathan Butcher, a research fellow in education policy for The Heritage Foundation.
Critical race theory is a way of thinking about America’s history based on the idea that racism is systemic in the nation’s institutions.
“There is no separation. DEI is the application of critical race theory. DEI officers are the administrative control panels that are putting critical race theory into place,” Butcher said.
Rep. Fentrice Driskell, Florida’s Democratic House minority leader, thinks the ideological motive behind restricting DEI is intertwined with an economic agenda that downplays the role of identity in exacerbating inequality.
“It’s a flashpoint because the conservatives like to talk about meritocracy as their vision for a society where everybody can advance,” Driskell said. “Real life is actually more complicated than that. And that is what DEI programs are there to solve.”
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Associated Press writers Trisha Ahmed in Minneapolis, David Lieb in Jefferson City, Missouri, Hannah Schoenbaum in Salt Lake City and Todd Richmond in Madison, Wisconsin, contributed to this story.
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Michael Goldberg is a corps member for the Associated Press/Report for America Statehouse News Initiative. Report for America is a nonprofit national service program that places journalists in local newsrooms to report on undercovered issues.
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