Fearless Fund goes to court again in racial discrimination lawsuit

The Atlanta-based firm fielded questions from three circuit court judges in Miami
Co-founders and CEOs of The Fearless Fund Ayana Parsons, center, and Arian Simone, front left, speak to media outside the James Lawrence King Federal Building, Wednesday, Jan. 31, 2024, in Miami, as they leave with their legal team following a hearing. A federal appeals court in Miami heard oral arguments Wednesday in a lawsuit against The Fearless Fund, a small venture capital firm that provides early stage funding to businesses owned by women of color, and which conservative activists are targeting as part of a growing legal backlash against corporate diversity programs. (AP Photo/Rebecca Blackwell)

Credit: AP

Credit: AP

Co-founders and CEOs of The Fearless Fund Ayana Parsons, center, and Arian Simone, front left, speak to media outside the James Lawrence King Federal Building, Wednesday, Jan. 31, 2024, in Miami, as they leave with their legal team following a hearing. A federal appeals court in Miami heard oral arguments Wednesday in a lawsuit against The Fearless Fund, a small venture capital firm that provides early stage funding to businesses owned by women of color, and which conservative activists are targeting as part of a growing legal backlash against corporate diversity programs. (AP Photo/Rebecca Blackwell)

Lawyers for Atlanta-based venture capital firm Fearless Fund fielded questions Wednesday from three judges on the legality of a small-business grant program for Black women, the First Amendment and why explicitly supporting Black businesswomen is or is not racial discrimination.

Fearless asked a three-judge panel of the 11th Circuit Court of Appeals in Miami to uphold a lower district court ruling that said its nonprofit foundation “clearly intends to convey a particular message in promoting and operating its grant program: ‘Black women-owned businesses are vital to our economy.’... The Foundation’s conduct at issue is, therefore, expressive and subject to the First Amendment.”

Fearless Fund co-founders and CEO Ayana Parsons, left, and Arian Simone, center, Ben Crump, attorney, right, and supporters hold a  press conference after appearing in federal court at the James Lawrence King Federal Justice Building in Miami, Florida, on Wednesday, Jan. 31, 2024.�

Credit: cjuste@miamiherald.com

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Credit: cjuste@miamiherald.com

The program is being challenged by the American Alliance for Equal Rights, a group led by conservative activist Edward Blum, who was instrumental earlier in successfully challenging affirmative action in college admissions.

The Alliance, in challenging the Fearless Fund, is using the Reconstruction-era Section 1981 of the Civil Rights Act of 1866 prohibiting race in making and enforcing contracts, to argue that the program discriminates against non-Black women. The Alliance says it represents three anonymous Asian and white businesswomen who can’t apply for the grant.

After the district court ruled in September siding on behalf of Fearless, the Alliance appealed, seeking a preliminary injunction from the 11th Circuit that would bar Fearless from closing the application for the program. The appeals panel granted the injunction.

On Wednesday, Circuit Judges Robin Rosenbaum (an Obama appointee), Kevin Newsom and Robert Luck (Trump appointees) heard arguments from the Alliance and Fearless. Luck was one of the judges who sided with the Alliance in the initial motion for a preliminary injunction.

“You agree that if [Fearless] just on their own went about searching for a Black businesswoman and decided that they wanted to give that Black businesswoman money, that that would be perfectly fine?” Rosenbaum asked the lawyer representing the Alliance, Gilbert Dickey.

Dickey said that giving would not be prohibited by Section 1981, but added it wasn’t necessarily free speech either. When asked by Newsom about the first line of the eligibility rules for the grant program stating that it was only open to Black women, Dickey brought up segregation.

“It’s sort of like, you know, the whites-only signs that used to be outside restaurants,” he said. “The mere fact that there’s like some thing you could treat as speech around it doesn’t matter.”

Fearless’ attorney Jason Schwartz told the judges that the Alliance’s argument was “an unprecedented effort to use [Section] 1981 to force a charity to reverse its message or shut down. The argument from the Alliance is give to everyone or no one.”

Schwartz noted that there is a history in this country of organizations meant to help a specific racial or ethnic group, like the Sons of Italy or the Freedmen’s Savings Bank, which was created after the Civil War by Congress itself.

But Luck asked Schwartz if Fearless’ argument defending their grant program meant that a whites-only contest would also be protected.

“First of all, no matter how repugnant I might find that, the First Amendment protects all speech,” Schwartz said. “If the white man’s fund was set up in the same way [as the Fearless program], that it was a charitable contribution, given four times a year in small amounts in order to spread a message… does it present First Amendment protected speech? Probably so.”

Schwartz also said that ultimately, Fearless’ $20,000 grants were “a drop in the bucket” against the reality that 0.13% of venture capital funding goes to Black women.

“There’s no evidence in the record that the white applicants couldn’t get their funding from anywhere else,” Schwartz said.

But Luck said “it seems like at its core the premise of your argument is that so long as there are lots of other sources of funding out there that are not discriminating on the basis of race, we can. … Everyone else is saving us from our own unlawful conduct.”

Attorney Alphonso David, gives a statement as Fearless Fund co-founder Arian Simone, CEO, left, and others participate in the press conference after appearing in federal court at the James Lawrence King Federal Justice Building in Miami, Florida, on Wednesday, Jan. 31, 2024.�

Credit: cjuste@miamiherald.com

icon to expand image

Credit: cjuste@miamiherald.com

If the appeals court sides with Fearless, Blum said the Alliance intends to pursue the litigation until the courts reach a final decision. Fearless’ Alphonso David didn’t disclose what Fearless’ next steps would be if the appeals panel sides with the Alliance, but he said the team is “committed to defending the Foundation’s activities.”

The judges did not give a timetable for when they would issue their decision.


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