Equal Protection Project Influence Reflected in Court of Appeals “Fearless Fund” Antidiscrimination Ruling

Equal Protection Project Influence Reflected in Court of Appeals “Fearless Fund” Antidiscrimination Ruling

We have been following the “Fearless Fund” case out of Atlanta since a Georgia federal district (trial-level) court judge ruled, bizarrely, that racial discrimination can be “protected speech” under the First Amendment and, therefore, constitutional.

The case concerned a hedge fund that provided small business grants in the form of a contest, as long as you were a Black woman; others need not apply. The Plaintiffs argued that a federal statute, 42 U.S.C. § 1981, which has prohibited racial discrimination in contracting since 1866, was violated by Defendants’ racially discriminatory grant contest: Georgia Federal Judge Rules Racially Discriminatory Contracting Is “Speech and Expression” Protected By 1st Amendment – Emergency Appeal Filed:

Affirmative Action sure does make strange alliances. In this case, a desire to defend a grant program open only to black women may bring down the entire anti-discrimination legal infrastructure that has been in place for over 150 years, if a District Court ruling that racially discriminatory contracting is “speech and expression” protected by the First Amendment is not reversed.

The American Alliance for Equal Rights (AAER), a group formed by Ed Blum, whose Students for Fair Admissions won the Harvard affirmative action case, sued Fearless Fund in federal court for the Northern District of Georgia over a grant program open only to black women. The claim was brought under a post-civil war statute prohibiting discrimination in contracting, not under the Equal Protection Clause of the 14th Amendment (which arguably would not apply to a private investment company) or other discrimination statutes. You can read the Complaint and Motion for Preliminary Injunction.

* * * *

I was floored when I read the Judge’s comments and reasoning, which provided in pertinent part:

The Defendants, in my opinion, have a message that they are trying to communicate that black women business people have suffered discrimination and lack of equal access to capital to begin, expand, and promote businesses. And the Defendants, with their grants, are trying to send a message that they recognize that and want to support black female business people with their charitable donations….

The First Amendment protects the Defendants’ right to decide what message they want to promote, and that’s what the First Amendment is all about.

So for those reasons, I’m going to deny the Plaintiff’s motion for a preliminary injunction and deny the Plaintiff’s motion for an injunction pending appeal.

Wait, what? Did the judge really rule that racially discriminatory contracting is expression protected by the First Amendment? Can’t be, that goes against the entire body of law, and if true, would eviscerate a wide range of civil rights laws….

The plaintiffs have filed an Emergency Motion with the 11th Circuit seeking an administrative injunction (a holding mechanism to allow the court time to consider the motion) or alternatively an injunction pending appeal prior to the September 30 application deadline for the grant program….

The absurd implications of the District Court Order are apparent. Can a building owner say that having a “whites only” bathroom is speech and expression entitled to First Amendment protection. You probably can think of dozens of other counter-examples.

The civil rights groups supporting the racially discriminatory grant program at issue and arguing that discriminatory contracting is speech do not appreciate the implications of this District Court Order being upheld. They are so angry at Ed Blum for winning the Harvard case that they would rather see the entire regime of anti-discrimination laws cast aside so long as Blum does not win again….

[Note: If the appeals court takes up the case on a briefing schedule, it is the intention of the Equal Protection Project to file an Amicus Brief supporting AAER and seeking reversal of the District Court Court Order.]

[emphasis added]

Plaintiffs’ Emergency Motion for Injunction Pending Appeal Granted!

Interestingly enough, the 11th Circuit did, in fact, in September of last year, grant the Plaintiffs’ emergency motion for an administrative injunction pending appeal, so the racially discriminatory Black-women-only grant program was put on temporary hold during the pendency of the appeal, as we reported: Black-Women-Only Grant Program Halted, 11th Circuit Issues Injunction Pending Appeal in Fearless Fund Case:

The Court of Appeals for the 11th Circuit just issued an Injunction Pending Appeal completely rejecting the District Court’s use of the First Amendment to excuse discriminatory contracting….

[T]he district court reasoned that Section 1981 was likely unconstitutional under the First Amendment as applied to the defendants. We disagree. The defendants do not provide “expressive services” or otherwise engage in “pure speech.” 303 Creative LLC v. Elenis, 143 S. Ct. 2298, 2318 (2023). Although the First Amendment protects the defendants’ right to promote beliefs about race, it does not give the defendants the right to exclude persons from a contractual regime based on their race. Runyon v. McCrary, 427 U.S. 160, 176 (1976)….

In light of the plaintiffs’ likelihood of success on the merits, the plaintiffs have established an irreparable injury and that the balance of equities and public interest favor an injunction. See Gresham v. Windrush Partners, 730 F.2d 1417, 1424 (11th Cir. 1984). Accordingly, the defendants Fearless Fund Management, LLC, Fearless Fund II, GP, LLC, Fearless Fund II, LP, and the Fearless Foundation, Inc., are ENJOINED from closing the application window or picking a winner for the “Fearless Strivers Grant Contest” until further order of this Court.

[emphasis added]

EPP Files Amicus Curiae Brief

The 11th Circuit appeal then proceeded in due course, and after the Plaintiffs, now Appellants, filed their Appeal Brief, the Equal Protection Project filed an amicus curiae, or “friend of the court,” brief supporting the Appellants.

Of critical importance, amicus briefs are not supposed to simply repeat the points made in the Appellants’ Appeal Brief: “An amicus curiae brief that brings to the attention of the Court relevant matter not already brought to its attention by the parties may be of considerable help to the Court. An amicus curiae brief that does not serve this purpose burdens the Court, and its filing is not favored.” U.S. Supreme Court Rule 37.1 (this Rule, while technically not applicable to the 11th Circuit, is nevertheless followed in all of the Courts of Appeals). In other words, if your amicus brief just regurgitates what the parties already said, the court will throw it out.

In their Appeal Brief, the Appellants’ main argument was that the district court was wrong on the First Amendment issue: just because you have a strong opinion about something does not give you the right to racially discriminate, a point, by the way, that the Equal Protection Project strongly agrees with.

But, EPP wanted to make a bigger point, which none of the parties had argued in their briefing. Namely, as Professor Jacobson had stated in his first post about this case: “[A] rule that racially discriminatory contracting is expression protected by the First Amendment…would eviscerate a wide range of civil rights laws.”

You can read our amicus curiae brief here, and at the bottom of this post. But here is the key argument, from the introductory “Summary of Argument” section:

[W]hile EPP supports Appellant’s merits arguments in favor of reversal, EPP argues below that a contrary decision would have unfathomably disastrous consequences for the nation because the district court’s order denying injunctive relief, if affirmed, will eviscerate not only § 1981, but also other civil rights laws.

And from the body of EPP’s amicus brief:

The district court’s decision would gut existing antidiscrimination civil rights laws.

[There are] disastrous consequences that lie ahead, should the district court’s order be affirmed, based on EPP’s experience opposing racially discriminatory conduct.

For example, in July of this year, EPP filed a civil rights Complaint with the U.S. Department of Education’s Office of Civil Rights (“OCR”) charging New York University (“NYU”) with civil rights violations for a racially discriminatory program. Specifically, EPP challenged NYU’s racially discriminatory school parents’ workshop, which was open only to white parents. The basis for the Complaint was that the program, as here, violated 42 U.S.C. § 1981, and also Title II of the Civil Rights Act of 1964 (“Title II”), Title VI of the Civil Rights Act of 1964 (“Title VI”), and New York State and New York City Human Rights Laws. See OCR Complaint at 1-2.

In explaining the reasoning for the racially discriminatory parents’ workshop, NYU and its representatives stressed the importance of gathering as a white anti-racist community” in order to “unlearn racism …. without having to … subject people of color to … undue trauma or pain.” OCR Complaint at 2. They also asserted that it was important to have “a space for white people to figure out what it means to be an anti-racist white person” and to “learn the skills needed to transform the larger white community.” Id…

While this case and the NYU case are not identical, the legal principle that needs to be vindicated is the same. It is not a legal defense that NYU might have “clearly intend[ed] to convey a particular message in promoting and operating its [parents’ workshop] program: “[Having a whites only space is] vital to [not burdening Black parents with potentially racist speech by whites].” Whatever NYU’s First Amendment free speech rights might or might not be, they cannot override § 1981, Title II, and Title VI’s antidiscrimination protections, as the district court did here regarding 42 U.S.C. § 1981 alone.

Other similar cases EPP has brought demonstrate as well that discriminatory conduct, even if there is some part that is expressive, cannot evade the civil rights laws. Otherwise, those civil rights laws would be rendered meaningless. This court must not let that happen.

One aspect of this case that Appellees appear not to have considered in their injunction pending appeal opposition papers is the impact affirmance of the district court’s order will have on the very minority individuals Appellees purport to be assisting. If Appellees prevail in this case, there would be nothing stopping another entity similar to Appellees from running an identical contest open only to entrepreneurs who are white.

Importantly, affirmance of the district court’s order would embrace the growth of an entire discriminatory, Jim Crow-like nationwide regime, where discrimination against any and all individuals based on any skin color would not only be legal, but it would also likely become the norm. All a business would have to do to evade liability is hold itself out as expressing a discriminatory opinion regarding the benefits its business solution provides to members of its preferred race.

In sum, this court must reverse the district court’s erroneous order that Appellees’ First Amendment speech rights trump conduct covered by 42 U.S.C. § 1981.

[emphasis added]

Oral Argument Confirms the Impact of EPP’s Amicus Brief

Professor Jacobson and I both listened to the 11th Circuit oral argument, which was held on January 31st of this year, and the major takeaway was that the court had obviously read EPP’s amicus brief, and the court got Fearless Fund’s attorney to admit during oral argument that a White-only racially discriminatory regime would be lawful – i.e. antidiscrimination laws would be gutted: Lawyer For Black-Women-Only Fearless Fund Contest Admits “Whites Only” Would Be Okay If 11th Circuit Rules Their Way:

Because the argument was audio only I couldn’t tell whether Judge Luck or Judge Newsom asked the next question, but it was a dagger. Whoever it was asked, and I’m paraphrasing, “if what you say is true, then could an entity run a grant contest just like Fearless Fund’s but only open to Whites”? Mr. Schwartz said as repugnant as that eventuality might be, yes it meets the standard. The judge reiterated, “what if the charity in question’s “protected expression” was that they “didn’t like people of color”? Mr. Schwartz stated that it is “clear” that charitable giving is protected activity.

At this point, Professor Jacobson, who was listening to the oral argument as well, messaged me: “Civil Rights” Lawyer Argues Whites-Only Contracting Is Protected”

The 11th Circuit Rules the Racially Discriminatory Contest Violates Federal Law, and Agrees with EPP that a Rule to the Contrary Would GUT Existing Antidiscrimination Law

And now, the 11th Circuit has, in fact, reversed the “district court’s erroneous order,” and held that First Amendment free speech rights do not excuse racially discriminatory conduct.

More importantly, in a passage bearing an eerie similarity to the argument EPP made in EPP’s amicus curiae brief, the 11th Circuit has recognized that excusing racial discrimination of free speech grounds would, in fact, gut existing racial antidiscrimination laws:

The fact remains, though, that Fearless simply—and flatly—refuses to entertain applications from business owners who aren’t “black females.” Official Rules at 3. If that refusal were deemed sufficiently “expressive” to warrant protection under the Free Speech Clause, then so would be every act of race discrimination, no matter at whom it was directed. And on Fearless’s theory, the more blatant and rampant the discrimination, the clearer the message: To take just one particularly offensive example, surely a business owner who summarily fires all his black employees while retaining all the white ones has at the very least telegraphed his perspective on racial equality. For better or worse, the First Amendment protects the owner’s right to harbor bigoted views, but it does not protect his mass firing. Fearless’s position—that the First Amendment protects a similarly categorial race-based exclusion— risks sowing the seeds of antidiscrimination law’s demise.

For all these reasons, we hold that it is substantially likely that the Alliance’s § 1981 claim here would overcome a First Amendment defense.

The highlighted sentence above reflects exactly the argument made in, and only in, EPP’s amicus curiae brief.

11th Circuit Also Agrees with Another EPP Argument

In EPP’s amicus brief, we also made the point that the racial discrimination Plaintiffs had suffered caused them per se, irreparable injury, as we say in the business, meaning that they weren’t required to actually apply and be denied to seek relief from the court, and the very fact of racial discrimination was harmful:

[Fearless Fund’s] position in this regard is especially suspect in that Fearless Fund’s very reason for this contest is that past discrimination against Black businesswomen, which it claims continues to this day, causes very real harms to those businesswomen…

Appellees’ argument is, in essence, that its contest is required to “level the playing field” because past and present discrimination against Black businesswomen caused them to be “disadvantaged,” but they simultaneously argue that the very same type of discrimination that black businesswomen suffered would not cause harm to those discriminated against by their contest. Appellees cannot have it both ways.

Other cases in and out of this Circuit agree that racially discriminatory conduct causes per se irreparable harm [citing cases].

And again, the 11th Circuit’s opinion makes it seem awfully likely that the judges had read EPPs brief and agreed with us on this issue:

First, contrary to the district court’s determination…the [Plaintiffs] would suffer irreparable injury. As an initial matter, we have described race discrimination as “subtle, pervasive, and essentially irremediable. [I]t demeans the dignity and worth of a person to be judged by ancestry instead of by his or her own merit and essential qualities. Moreover, and more specifically, each lost opportunity to enter Fearless’s contest works an irreparable injury because it prevents the Alliance’s members from competing at all—not just for the $20,000 cash prize but also for Fearless’s ongoing mentorship and the ensuing business opportunities that a contest victory might provide.

It sure is nice to get vindication that all of our hard work on this and numerous other amicus briefs we have filed are starting to bear fruit. Especially in a case as important as this.

Some key X commentary about this case:

JUST IN: The DEI agenda suffers another blow…

The 11th Circuit has upheld a district court determination that venture capital firm, Fearless Fund, was likely engaging in discriminatory behavior and violating the Civil Rights Act in attempting to award grants on the basis of… pic.twitter.com/Zgv0BMuQB3

— Will Hild (@WillHild) June 3, 2024

Dear Corporate America: you can't invest in startups & offer "grants" based on race. If you do, you're going to pay💰dearly. Today, the 11th Circuit ruled against the "Fearless Fund," a venture capital group funded by some of Wall Street's biggest names: @BankofAmerica… pic.twitter.com/pJdvlQnxxT

— Dan Lennington (@DanLennington) June 3, 2024

As Professor Jacobson sometimes points out, EPP is a small organization going up against powerful and wealthy government and private institutions devoted to DEI discrimination. Donations are greatly needed and appreciated.

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