People For the American Way

Trump Judges Stop Private Program From Awarding Grants to Black Female-Led Businesses in Blow to Affirmative Action

Trump Judges Stop Private Program From Awarding Grants to Black Female-Led Businesses in Blow to Affirmative Action

Trump Judges Stop Private Program From Awarding Grants to Black Female-Led Businesses in Blow to Affirmative Action

 Judges Kevin Newsom and Robert Luck, both nominated by Donald Trump to the Eleventh Circuit court of appeals, issued a 2-1 ruling that granted a preliminary injunction against a private DEI program run by Fearless Fund that has provided grants to Black female-led businesses in order to help ”bridge the gap in venture capital funding for women of color.” A noted anti-affirmative action group led by affirmative action and diversity opponent Edward Blum brought the suit, which threatens to expand Supreme Court rulings against affirmative action in college admissions to affirmative action in the private sector as well.  The June 2024 ruling was in American Alliance for Equal Rights v Fearless Fund Management.

 

What is the background of the Fearless Fund and this case?     

 Fearless Fund is a private organization established in 2018 that has provided more than $3 million in funding through more than 345 grants to Black female-led businesses in the US. Its goal is to help women of color achieve “equal access to the resources and support they need to succeed in business.” As the Fund notes, the venture capital funding gap is so large that in 2018, out of a total of $130 billion in such funding raised by US businesses, only 2.2% went towards female-founded companies and “less than 1%” went towards “businesses founded by women of color.”

As part of his crusade against diversity and affirmative action, right-wing activist Edward Blum sued Fearless Fund through his American Alliance for Equal Rights in 2023. The Alliance claimed to be representing three members – businesses owned by “Owners A,B and C”  who are not minority females but wanted to seek grants from Fearless through a program open to businesses that are “at least ‘51% black women owned.’” A, B and C each filed declarations stating that they are “able and ready” to seek grants from Fearless but cannot do so because of the minority female ownership requirement. The Alliance asserted that this violates federal anti-discrimination law and sought a preliminary injunction to allow Owners A, B and C to seek grants and other assistance from Fearless in a grant cycle or contest that had just begun.

A Georgia federal district court did not dismiss the case but declined to grant a preliminary injunction. The Alliance appealed to the Eleventh Circuit.

 

How did Judges Newsom and Luck rule and why is it harmful?

Trump judges Newsom and Luck ruled in a 2-1 decision that the Alliance could challenge the Fearless affirmative action program because of the alleged injury to its members Owners A,B, and C. They also ruled that the lower court must enter a preliminary injunction that would allow all three to seek funding from the Fearless program designed to benefit minority female businesses as the case moves forward.

Judge Robin Rosenbaum, nominated by President Obama, strongly dissented. She explained that the Alliance and its 3 members did not suffer actual injury and thus do not have standing to challenge the Fearless program, As a result, she went on, the proper course would be to dismiss the complaint altogether and let Fearless proceed with its affirmative action program.

Judge Rosenbaum compared the alleged injury to A,B and C to soccer players trying to win a game by “flopping on the field” and “faking an injury” near their opponents’ goal and thus trying to “manufacture a foul that the player hasn’t actually experienced” in order to “manipulate the referee” into awarding “unwarranted penalty kicks”  leading to undeserved goals. To prevent the “legal version of flopping,” Rosenbaum continued, standing requirements mandate that a litigant must have a “genuine and personal stake in the matter – a real alleged injury.” But A,B and C had failed to show a “history” of seeking grants like those at issue, she went on, or to “demonstrate concrete plans to engage in the relevant conduct.”

As the majority itself acknowledged, Rosenbaum wrote, it was not enough to simply allege that A,B, and C were “ready and able” to seek grants from Fearless to prove injury and standing. She noted a number of circumstances in the record that “belie” this allegation. None of the declarations, she went on, actually say that any of the owners “would enter” or “plans” or “intends” to enter the grant competition, or “is even thinking” about doing so. In addition, she stated. the declarations are “cookie-cutter” documents that are “precisely fifteen paragraphs long” and “almost exactly the same,” containing some background on the business and the magic “ready and able” words and little else. None of the owners claim that they have ever sought such a grant before or from someone else. The declarations say “[a]lmost nothing” about how the corporations would meet the other criteria for awarding grants, such as viability and strength of business.  At bottom, Rosenbaum concluded, the Alliance and its members “have shown nothing more than flopping on the field” to prove injury and standing to sue.

Significant precedent supported Judge Rosenbaum’s dissenting opinion, including one case in which several Biden judges played an important role.  In Do No Harm v Pfizer, an anti-affirmative action group tried to challenge a fellowship program by Pfizer to increase racial and other diversity, based on the alleged injury to several of its members, also anonymous, who claimed they were not able to apply for the fellowship. Biden District Judge Jennifer Rochon dismissed the case, noting that the “sparse” declarations by the DNH members did not establish injury, and Biden Judge  Beth Robinson wrote a unanimous opinion that affirmed that ruling.

In contrast, however, the Fearless ruling by Trump judges Newsom and Luck allowed such a challenge by opponents to private affirmative action programs. It sets a dangerous precedent that could well encourage right-wing activists to seek out and try to invalidate private corporation and other efforts that meet the vital goal of increasing diversity. It threatens to expand much further the Supreme Court’s harmful ruling invalidating affirmative action in college admissions, The Fearless decision emphasizes the importance of confirming fair-minded judges like Robinson, Rochon, and Rosenbaum, and the significance of the issue of judicial nominations in this fall’s elections.