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The 11th Circuit temporarily blocks grant awards to Black women

A panel of the U.S. Court of Appeals for the 11th Circuit ruled Monday that an Atlanta-based venture capital firm should be temporarily barred from providing grants reserved for Black women-owned businesses, saying it would likely lead to discrimination from business owners of other races. .

The ruling comes after the Fearless Fund, a venture capital firm dedicated to financing companies founded by women of color, was sued last August by a group led by affirmative action opponent Edward Blum. The cases of Blum v. Harvard and the University of North Carolina culminated last summer with the Supreme Court overturning admissions to a race-conscious university.

Amid the lawsuit, the federal appeals court in Atlanta reversed a lower court decision that allowed the fund to proceed with its grant competition.

The case is being closely watched for its potential implications for race-conscious programs in the private sector, especially in the world of grantmaking and foundations. Observers have identified the case as a pivotal legal battle over civil rights and affirmative action, with support pouring in from groups on both sides of the issue.

“This is the first court decision in the more than 150-year history of post-Civil War civil rights law that has ended private charitable support for any racial or ethnic group,” said Jason Schwartz, an attorney with Gibson, Dunn & Crutcher. representative of the Fearless Fund, according to an emailed statement to The Washington Post. “The dissenting judge, the district court and other courts agree with us that these types of claims should not prevail.”

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Schwartz added that Fearless Fund and its legal team are “evaluating” their options and that “this is not the final outcome in this case.”

The appeals panel ruled 2-1 that allowing the $20,000 award under the fund’s Fearless Strivers Grant Contest would be “substantially likely” to violate a federal law prohibiting racial discrimination in contracts. The panel also ruled that the plaintiffs, who were not named in their legal complaint, had standing to pursue their case.

The majority judges, Kevin Newsom and Robert Luck, were appointed by President Donald Trump. The dissenting judge, Robin Rosenbaum, was appointed by President Barack Obama.

“The American Alliance for Equal Rights is grateful that the court has ruled that the Fearless Fund’s racially exclusive grant competition is illegal,” Blum said in an emailed statement. “Our nation’s civil rights laws do not allow for racial discrimination because some groups are overrepresented in various endeavors while others are underrepresented.”

The majority rejected the fund’s arguments that a contest exclusively for black women was a form of protected speech under the First Amendment and therefore exempt from the Civil Rights Act of 1866, a Reconstruction-era law that bans discrimination in contracts. Newsom and Luck also rejected the fund’s argument that it was a valid program designed to address racial imbalances in the world of venture financing. In addition, they rejected the fund’s claim that the three plaintiffs lacked standing because they are not named in the lawsuit.

The plaintiffs, all female business owners who are not black, are identified as “Owner A,” “Owner B,” and “Owner C.”

In her dissent, Rosenbaum focused on the issue of standing, likening the plaintiffs to “floppers” in a football game — players who feign injury to draw a penalty against the opposing team. She suggested that prosecutors have no real stake in the issues in the case and that “since the American Alliance has portrayed the alleged injuries to its members, it has shown nothing more than flopping on the field.”

But Newsom, who wrote the majority opinion, fired back. “We are talking about real flesh and blood people who were excluded from the opportunity to compete in Fearless’s competition solely because of the color of their skin,” he wrote in the majority opinion. “With all due respect, victims of racial discrimination – whether white, black or brown – are not flops.”