In a case brought by the anti-affirmative action campaigner behind the viable U.S. Supreme Court challenge to race-conscious college admission standards, a federal appeals court barred a venture capital fund from moving forward with an initiative that awards funding to businesses run by Black women.
On a 2-1 vote, the 11th U.S. Circuit Court of Appeals in Atlanta approved a request from Edward Blum’s American Alliance for Equal Rights to temporarily halt Fearless Fund’s decision-making process regarding award applications from solely Black women-led companies.
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When a judge recently denied Blum’s group a preliminary injunction preventing Fearless Fund from carrying out its “racially exclusive program,” Blum’s organization appealed the decision, and the court granted their request. Grant applications had a deadline on Saturday.
The majority of the judges, U.S. Circuit Judges Robert Luck and Andrew Brasher, concurred with Blum’s group that Fearless Fund’s “racially exclusionary” grant program most likely violated Section 1981 of the 1866 Civil Rights Act. However, U.S. District Judge Thomas Thrash, who presided over courtrooms during the Civil War, earlier this week found that Fearless Fund was entitled to use the First Amendment’s free speech protections to express its views on the value of Black.
However, the majority of the appeals court—which was made up of two Donald Trump appointees—argued that the First Amendment, “does not give the defendants the right to exclude persons from a contractual regime based on race.”
In a statement, Blum claimed that his group was “gratified that the 11th Circuit has recognized the likelihood that the Fearless Strivers Grant Contest is illegal.” Defense attorneys stated that they intended to request more appellate review.
According to Jason Schwartz, a lawyer representing Fearless Fund, “We remain committed to defending our clients’ meaningful work.”
Fearless Fund’s website states that it is, “built by women of color for women of color.”
One of three lawsuits Blum’s Texas-based group has brought since August, it is contesting grant and fellowship programs created by two law firms, a venture capital fund, and other underrepresented minority groups to enable them have more job options.
The lawsuit that resulted in the June ruling, supported by the Supreme Court’s 6-3 conservative majority, declaring racially discriminatory student admissions policies used by Harvard University and the University of North Carolina unlawful, was brought by a different organization founded by white activist Blum.
The Fearless Fund estimates that fewer than 1% of the $288 billion in venture capital investments made in 2022 will go to enterprises run by Black women.
With JPMorgan Chase (JPM.N), Bank of America (BAC.N), and MasterCard (MA.N) among its investors, the fund seeks to redress this discrepancy. Since its creation in 2019, it has contributed roughly $27 million to 40 firms run by minority women.
Blum’s complaint targeted the organization’s Fearless Strivers Grant Contest, which gives Black women who own small companies $20,000 in grants and other resources to help them expand. The organization also offers grants.
The fund claimed that by filing a lawsuit under a Civil War-era provision intended to shield formerly enslaved Black people from racial discrimination, Blum was attempting to “turn a seminal civil rights statute on its head.”
To apply that legislation against a corrective program like Fearless Fund’s was a “perversion” of Congress’ meaning, according to U.S. Circuit Judge Charles Wilson, a choice of Democratic former President Bill Clinton.
