A panel of the 11th Circuit, reversing a lower court ruling, says the venture capital firm may not issue the $20,000 grants while the legal case plays out.
Fearless Fund CEO Arian Simone listens to a speaker during a rally outside the U.S. Supreme Court in March. A panel on the U.S. Court of Appeals for the 11th Circuit ruled Monday that an Atlanta-based venture capital firm should be temporarily blocked from issuing grants reserved for Black women-owned businesses, in the view that doing so would likely discriminate against businesses owners of other races.
The ruling comes after the Fearless Fund, a venture capital firm dedicated to funding businesses founded by women of color, was sued last August by a group led by affirmative action opponent Edward Blum, whose cases against Harvard and the University of North Carolina culminated with the Supreme Court overturning race-conscious college admissions last summer. The panel reversed a lower court decision that the fund could proceed with its grant contest amid the litigation.
The case against the Fearless Fund is being closely watched because of its possible implications for race-conscious programs in the private sector, particularly in the world of grant-giving and foundations.
The appeals panel ruled 2-1 that allowing the $20,000 awards to be issued under the fund’s Fearless Strivers Grant Contest would “substantially likely” violate a federal statute that prohibits racial discrimination in contracts. The panel also ruled that the plaintiffs, who were not identified by name in their legal complaint, had standing to proceed with their case.The judges in the majority, Kevin Newsom and Robert Luck, were appointed by President Donald Trump.
“The American Alliance for Equal Rights is grateful that the court has ruled that the Fearless Fund’s racially exclusive grant competition is illegal,” Blum said in an emailed statement. “Our nation’s civil rights laws do not permit racial distinctions because some groups are overrepresented in various endeavors, while others are underrepresented.”
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