On Saturday, the US Court of Appeals for the 11th Circuit temporarily blocked a venture capital fund’s program that would have awarded grants to Black women-run businesses. The program, Fearless Strivers Grant Contest, was set up to promote diversity in business and set aside grant money specifically for minority-owned businesses. The case is an appeal from the US District Court for the Northern District of Georgia Atlanta Division.
The American Alliance for Equal Rights (AAER) initiated the lawsuit by suing several venture capitalists involved in the program, claiming racial discrimination under § 1981 of the Civil Rights Act of 1866. § 1981 states:
All persons within the jurisdiction of the United States shall have the same right in every State and Territory to make and enforce contracts… as is enjoyed by white citizens, and shall be subject to like punishment, pains, penalties, taxes, licenses, and exactions of every kind, and to no other.
The 11th Circuit majority said that AAER demonstrated a likelihood of success on the merits of its claim, arguing that the Civil Rights Act of 1866 prohibited making contracts on the basis of race. The court noted that § 1981 “was meant, by its broad terms, to proscribe discrimination in the making or enforcement of contracts against, or in favor of, any race.” Thus, the court blocked the defendants from closing the program’s application window and picking a winner.
Circuit Judge Charles R. Wilson dissented. Wilson argued that AAER’s claim fails because it is an organization bringing a § 1981 claim on behalf of white members. The Civil Rights Act of 1866 was passed to protect the rights of formerly enslaved Black people and using it to end a program addressing the impacts of systemic racism would be “a perversion of Congressional intent.”
This lawsuit is one of many challenging affirmative action programs after the US Supreme Court effectively ended the use of race in college admissions this year.
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