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Challenge to grant program for Black women entrepreneurs lands at 11th Circuit

The conservative activist who was instrumental in the Supreme Court's curtailing of affirmative action in colleges last year argues the grant is racially discriminatory.

(CN) — A conservative group that believes a grant program for Black women entrepreneurs is discriminatory took its fight to the 11th Circuit on Wednesday.

The American Alliance for Equal Rights is a nonprofit membership organization dedicated to challenging distinctions made on the basis of race and ethnicity. The group is led by Edward Blum, a conservative activist who was instrumental in the successful Supreme Court challenge to Harvard's race-conscious college admission policies in June, and who is also fighting the same policies at West Point.

In September, a judge denied the group's bid for a preliminary injunction to block the the Fearless Fund Foundation, an Atlanta-based and Black women-founded venture capital firm, from continuing its grant program for Black women who own small businesses.

The group immediately appealed, and the 11th Circuit ordered the Fearless Fund to pause its grant applications while the alliance's lawsuit makes its way through the court. Two judges sided with the alliance, finding “the plaintiffs have established an irreparable injury,” calling the grant program “racially exclusionary.” One judge dissented.

Attorney Gilbert Dickey argued to the three-judge panel on Wednesday that the grant program violates Section 1981 of the Reconstruction-era Civil Rights Act of 1866, which prohibits discrimination based on race when making and enforcing contracts. The alliance claims Fearless is entering into a contract with the grant applicant, and since the grants are only for Black women it’s racially discriminatory.

U.S. Circuit Judge Robin Rosenbaum noted that much of the precedent the alliance relies on for its argument revolves around government funding, when this case involves private funding. The Barack Obama appointee also questioned if the group's argument would still apply if Fearless simply gave a Black businesswoman money without the contest for it, or if the program was open for anyone to apply, but was awarded to whoever did the most to further businesses owned by Black women.

Jason Schwartz, the attorney for the Fearless Fund, argued the grant is a charitable donation which is protected speech under the First Amendment. He defended Senior U.S. District Judge Thomas Thrash's finding that the program's eligibility requirements sends a message that Fearless wants to support Black women business owners.

But U.S. Circuit Judge Kevin Newsom, a Donald Trump appointee, expressed concern with that logic. "What about a business owner that says they don't want to serve people of color. Is that not sending a message?" he asked Shwartz.

Schwartz said that a charitable donation such as the grant is not the same as employment or a commercial exchange where someone is purchasing something.

"The answer can't possibly be give to everyone or no one," he said.

Attorney Mylan Denerstein from the New York-based firm Gibson Dunn & Crutcher argued that the alliance does not even have standing to bring the case because they don't identify the anonymous businesses owners they argue are being discriminated against.

"They fail to state that they've applied for grants or need money or mentorship. They don't show the viability of their business," Denerstein said. "Should the court grant a preliminary injunction when we don't even known who the businesses are?"

Similar conservative groups and activists have also taken legal action to disrupt corporate diversity, equity and inclusion efforts following the Supreme Court's takedown of affirmative action in colleges last year. Several big-name companies including Comcast, Amazon, Target and McDonald's have faced lawsuits over what the plaintiffs say are race-based diversity programs.

“They’re trying to shut everybody down, but using us,” Fearless Fund’s co-founder Arian Simone said in her new podcast that launched last week. “They are trying to stop all diversity, equity and inclusion. It’s an attack on that.”

In December, the attorneys general of 18 states and the District of Columbia filed a brief in favor of Fearless’ grant program, saying “it would undermine the central purpose of 1981 to interpret that statute to prohibit charitable giving that is part of the nation’s long tradition of philanthropy aimed at helping historically excluded populations.”

Civil rights groups and associations representing venture capital, banking and charitable foundations have also filed briefs in support of Fearless.

The alliance has also received its share of support from organizations like America First Legal, which is led former President Donald Trump's political adviser Stephen Miller.

U.S. Circuit Judge Robert Luck, another Trump appointee, rounded out Wednesday's panel. They did not signal when they intend to issue a ruling.

Follow @Megwiththenews
Categories / Appeals, Business, Civil Rights, First Amendment

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