The US Court of Appeals has temporarily blocked the “Fearless Strivers Grant”, a venture capital fund program that has awarded grants to businesses run by Black women.
The grant was set up to promote diversity in business and set aside grant money specifically for minority-owned businesses, however, the American Alliance for Equal Rights (AAER) initiated a lawsuit by suing several venture capitalists involved in the program.
AAER claimed the grant flouts racial discrimination rules under the Civil Rights Act of 1866. The relevant portions of the Act states that:
“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 AAER 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.
The 11th Circuit majority said on Saturday, Sept. 30, 2023, that AAER demonstrated a likelihood of success on the merits of its claim, arguing that the Civil Rights Act of 1866 prohibited making contracts based on race.
The court noted that Article 1981 of the Civil Rights Act of 1866:
“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.
The case was an appeal from the US District Court for the Northern District of Georgia Atlanta Division.
Meanwhile, Circuit Judge Charles R. Wilson dissented, arguing that AAER’s claim fails because it is an organization bringing a § 1981 claim on behalf of white members. He explained that 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.”
