A U.S. federal appeals court has granted a conservative group’s request to temporarily block a Black-owned venture capitalist firm from awarding grants exclusively to Black women entrepreneurs.
In a 2-1 decision, judges from the 11th Circuit Court of Appeals granted the American Alliance for Equal Rights’ motion for an injunction on Saturday, temporarily halting the Fearless Fund, a Black women-owned venture capitalist firm, and its foundation from awarding its Fearless Strivers Grant exclusively to Black women.
The alliance has argued the grant violates Section 1981 of the U.S. Code, which guarantees equal rights for all people to make and enforce contracts within the jurisdiction of the United States, without favor or discrimination based on race.
“We conclude that the plaintiff (AAER) has established that the defendants’ (the Fearless Fund) racially exclusionary program — the ‘Fearless Strivers Grant Contest’ — is substantially likely to violate 42 U.S.C. 1981,” Judge Robert Luck and Judge Andrew Brasher wrote in their opinion.
The decision overturns a lower court’s ruling last week that found the grant could continue because the funding was protected by the First Amendment.
But appellate Judges Luck and Brasher rejected that argument in their ruling writing, “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.”
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 gives momentum to the latest of a series of lawsuits filed by conservative activist Edward Blum, the same man behind the Students for Fair Admissions, Inc. v. President and Fellows of Harvard College lawsuit, which led to the Supreme Court dismantling affirmative action in colleges and universities in June.
“The members of the American Alliance for Equal Rights are gratified that the 11th Circuit has recognized the likelihood that the Fearless Strivers Grant Contest is illegal,” Blum, the founder and president of the alliance, told CNN. “We look forward to the final resolution of this lawsuit.”
Both judges who granted the injunction were appointed by former President Donald Trump. Judge Charles Wilson, who dissented, 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 appellate judges to take caution when intervening with decisions “withheld by the lower courts.”
Wilson, who implored judges to consider the context of the Civil Rights Act of 1866, noted the law granted “Freedmen basic economic rights,” and that “Congress enacted 1981 as the remedial mechanism for bringing these protections to life.”
“It is a perversion of Congressional intent to use 1981 against a remedial program whose purpose is to ‘bridge the gap in venture capital funding 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 AAER – Black women will suffer irreparable harm.”
Fearless Fund is an Atlanta-based company that was started in 2019 to break down the barriers Black women face trying to secure resources and funding for growing their business.
Their website lists corporate giants including Bank of America, JPMorgan Chase, Fifth Third Bank and Mastercard as partners. Fearless Fund runs a separate non-profit organization called the Fearless Foundation, where it gives charitable donations and grants to women of color entrepreneurs, according to co-founder and COO Ayana Parsons.
The Fearless Foundation’s Strivers Grant exclusively awards Black women entrepreneurs grants for up to $20,000.
Correction: This story has been updated to reflect Section 1981 is of the U.S. Code.