Judge declines to block grant program for Black women entrepreneurs | Courthouse News Service
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Judge declines to block grant program for Black women entrepreneurs

A conservative nonprofit sued an Atlanta-based venture capital firm founded by Black women, arguing its grant program is discriminatory.

ATLANTA (CN) — A federal judge denied a motion Tuesday from a conservative nonprofit to block a grant program for Black women entrepreneurs, finding the lawsuit is unlikely to succeed.

The lawsuit was filed in August by the American Alliance for Equal Rights. The group is led by Edward Blum, a conservative activist who was instrumental in the successful challenge to Harvard's race-conscious college admission policies.

It accuses the Fearless Fund, an Atlanta-based and Black women-founded venture capital firm, of violating the Civil Rights Act, arguing its grant program for Black women small business owners is racially discriminatory.

Senior U.S. District Judge Thomas Thrash denied the bid for a preliminary injunction to block the Fearless Fund from enforcing the racial eligibility criteria for its $20,000 grant program, after hearing arguments on the matter in a court hearing Tuesday. The application period for the grant closes on Sept. 30.

Blum said in a statement after the hearing that the alliance is "disappointed" with the court's decision and its attorney Cameron Norris immediately filed a notice of appeal to the 11th Circuit.

Lawyers for the group argued in court that the eligibility criteria for the grant program was a “textbook case” of racial discrimination. Attorney Gilbert Dickey said that the grant program promotes one race over others, because it is not open to other racial minorities such as Hispanics.

But Judge Thrash disagreed with this argument, saying the program sends a message that Fearless wants to support Black women business-owners, which is protected free speech under the First Amendment.

More than two dozen Fearless Fund supporters attended the hearing, including Atlanta's former Democratic Mayor Kasim Reed and civil rights activist Rev. Al Sharpton, who applauded the temporary victory outside of the courthouse after.

“When we look after the most overlooked, the most marginalized, the most underrepresented, that helps everyone,” said Ayana Parsons, chief operating officer and co-founder of the Fearless Fund.

The venture capital firm was created in 2018 to address barriers that exist in venture capital funding for businesses founded by women of color. Two demographic studies of startup founders by the nonprofit advocacy group DigitalUndivided, found that business with women of color CEOs get less than 1% of all venture capital funding each year.

An attorney for the Fearless Fund, Mylan Denerstein, said the section of the 1866 Civil Rights Act that is cited by the conservative group in its complaint was intended to ensure that Black people who were formerly enslaved would have the same rights as white people to enforce contracts after the Civil War.

“The plaintiff is attempting to turn this seminal civil rights law on its head,” Denerstein said.

Prominent civil rights attorney Ben Crump joined the legal counsel for the Fearless Fund last week. The Lawyers’ Committee for Civil Rights Under Law and six other civil rights groups have filed an amicus brief in support of the fund.

The American Alliance for Equal Rights has also filed similar lawsuits against two law firms, Perkins Coie LLP and Morrison & Foerster LLP, claiming their diversity fellowship programs for summer associates discriminate based on race. Criteria for the fellowship includes “membership in a group historically underrepresented in the legal profession, including students of color, students who identify as LGBTQ+, and students with disabilities.”

Amid the lawsuit, Morrison & Foerster changed the eligibility criteria for its "Excellence, Diversity, and Inclusion" fellowship to recognize students “with a demonstrated commitment to diversity and inclusion in the legal profession.”

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

A federal judge in August dismissed a lawsuit against Starbucks’ board of directors that opposed the coffee giant’s diversity, equity and inclusion policies, saying the courts have no business interfering with “legitimate and legal decisions made by the boards of directors of public corporations.”

Despite the array of corporate diversity programs and their ongoing backlash, America’s largest corporations are still predominantly led by white men, while women and people of color are concentrated at the lowest levels with less pay, fewer perks and rare opportunities for advancement, according to a recent USA Today analysis.

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Categories / Business, Civil Rights

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