Frank Franklin II/AP
Arian Simone, partner at Black women-owned venture capital firm The Fearless Fund, speaks during a press conference on August 10, 2023 in New York.
A U.S. federal appeals court has granted a conservative group’s request to temporarily block a Black-owned venture capital firm from making grants exclusively to Black women entrepreneurs.
In a 2-1 decision, 11th Circuit Court of Appeals judges granted The American Alliance for Equal Rights’ injunction motion on Saturday temporarily blocked the Fearless Fund, a black women-owned venture capital firm, and its foundation from awarding its Fearless Strivers grant exclusively to women black.
The alliance argued that this subsidy violates Section 1981 of the United States Code, which guarantees equal rights to all people to enter into and enforce contracts within the jurisdiction of the United States, without favor or discrimination based on race.
“We conclude that Plaintiff (AAER) has established that Defendants’ racial exclusion program (the Fearless Fund) – the ‘Fearless Strivers Grant Contest’ – is highly likely to violate 42 USC 1981,” Justices Robert Luck wrote and Andrew Brasher. in their opinion.
The ruling overturns a lower court’s ruling last week which concluded that the grant could continue because the funding was protected by the First Amendment.
But appeals judges Luck and Brasher rejected that argument in their ruling: “Although the First Amendment protects defendants’ right to promote beliefs about race, it does not give defendants the right to exclude people from a contractual regime based on their race. »
The injunction requires the Fearless Fund and its foundation to halt the grant selection process for the duration of the alliance’s lawsuit.
The decision adds momentum to the latest in a series of lawsuits filed by conservative activist Edward Blum, the same man behind the Students for Fair Admissions, Inc. v. Lawsuit. President and Fellows of Harvard College, which led to the Supreme Court. dismantle positive discrimination in colleges and universities in June.
“Members of the American Equal Rights Alliance are pleased that the 11th Circuit recognized the likelihood that the Fearless Strivers grant competition is unlawful,” Blum, the alliance’s founder and president, told CNN. “We look forward to the final resolution of this lawsuit.”
The two judges who granted the injunction were appointed by former President Donald Trump. Justice Charles Wilson, a dissenter, was appointed to his seat by former President Bill Clinton.
In his dissent, Wilson said he would have denied the alliance’s motion for an injunction and urged appeals judges to exercise caution when weighing in on rulings “denied by lower courts.”
Wilson, who implored the justices to consider the context of the Civil Rights Act of 1866, noted that the law granted “freedmen basic economic rights” and that “Congress enacted 1981 as a corrective mechanism to bring these protections to life.” .
“It is a perversion of Congressional intent to use 1981 against a corrective program whose goal is to ‘close the venture capital funding gap for women of color founders’ – a gap that is the result of centuries of intentional racial discrimination,” he wrote. .
“(The) irreparable harm that will result from the granting of this injunction will not be felt by the AAER – black women will suffer irreparable harm.”
Fearless Fund is an Atlanta-based company that was established in 2019 to eliminate barriers that Black women face when trying to obtain resources and funding to grow their businesses.
Their website lists giant corporations like Bank of America, JPMorgan Chase, Fifth Third Bank, and Mastercard as partners. Fearless Fund operates a separate nonprofit called Fearless Foundation, where it awards charitable donations and grants to women entrepreneurs of color, according to co-founder and COO Ayana Parsons.
The Fearless Foundation’s Strivers Grant exclusively awards grants to Black women entrepreneurs of up to $20,000.
Correction: This story has been updated to reflect U.S. Code Section 1981.