A federal appeals court has temporarily blocked a venture capital competition that provided grants to businesses owned by black women amid an anti-discrimination lawsuit.
In a 2-1 decision on Monday, the U.S. Court of Appeals for the 11th Circuit ordered a federal court in Georgia to issue a preliminary injunction against venture capital firm Fearless Fund’s competitive grant program for black women business owners while the lawsuit plays out.
The appellate court found in favor of the American Alliance for Equal Rights, which represented three of its members who were disqualified from participating in the competition “because they were the wrong race,” it said in a statement.
The alliance argued that the contest likely violated federal anti-discrimination law, which prohibits racial discrimination in contracts. The conservative organization, led by Edward Blum, describes itself as being committed to ending racial classifications. It contends that the grant contest discriminates against non-black applicants.
The case comes after the Supreme Court struck down affirmative action in higher education.
In the ruling, Circuit Judge Kevin Newsom, joined by Judges Robin Rosenbaum and Robert Luck, upheld the alliance’s standing to sue, finding it likely to prevail in its lawsuit against the Atlanta-based venture firm.
Specifically, the panel, consisting of two judges appointed by former President Donald Trump and one appointed by former President Barack Obama, concluded that the contest is substantially likely to violate section 1981 of the 1866 Civil Rights Act, which prohibits discrimination based on race when enforcing contracts.
The appeals court panel also found against the Fearless Fund’s argument that the grants are not contracts but charitable donations and, therefore, are protected under the First Amendment. Furthermore, the panel found the program causes irreparable harm to those excluded from participation.
The opinion stated that while the First Amendment gives a business owner the right to hold “bigoted views,” it does not protect the mass firing of one race over another.
“Fearless’s position—that the First Amendment protects a similarly categorial race-based exclusion—risks sowing the seeds of antidiscrimination law’s demise,” the opinion states.
The program, the Strivers Grant Contest, offers $20,000 to businesses in which a black woman owns at least a 51 percent stake. The ruling overturns a previous decision from a federal judge who had allowed the contest to continue.
The grant contest had previously been suspended after a separate panel granted Mr. Blum’s request for an emergency injunction last October when he challenged the judge’s original order.
Mr. Blum welcomed the ruling, saying that civil rights laws don’t permit racial distinctions just because some groups are overrepresented in a particular space while others are not.
“Programs that exclude individuals based on their race, such as those implemented by the Fearless Fund, are unjust and polarizing,” he said in a statement to media outlets. “Significant majorities of all Americans believe that an individual’s race should not be a factor in our nation’s public policies.”
Fearless Fund CEO and founder Arian Simone said the ruling was “devastating” for the organizations and the women it has invested in.
“The message these judges sent today is that diversity in Corporate America, education, or anywhere else should not exist,” she said in a statement to media outlets. “These judges bought what a small group of white men were selling.”
The Epoch Times contacted Fearless Fund for further comment.
