Conservative group files new brief in case against Atlanta VC firm

At issue is a $20k grant program of the Fearless Fund and its racial eligibility criteria
Steve Madden spoke to Clark Atlanta University students Wednesday, August 25, 2021 with Fearless Fund president Arian Simone. CONTRIBUTED



Steve Madden spoke to Clark Atlanta University students Wednesday, August 25, 2021 with Fearless Fund president Arian Simone. CONTRIBUTED

A conservative nonprofit has asked a federal appeals court to overturn a lower court ruling that denied the nonprofit’s effort to keep the venture capital firm Fearless Fund from enforcing racial eligibility criteria for one of its small-business grant programs.

The American Alliance for Equal Rights filed a brief Monday night asking the 11th Circuit Court of Appeals in Atlanta to overturn the district court’s ruling that allowed the Atlanta-based Fearless Fund to continue operating its grant program.

In its brief, the Alliance reiterated its claims that the Fearless Strivers Grant Contest, a $20,000 grant program for Black women small business owners, is racially discriminatory. The group alleged that by only allowing Black women to apply, what Fearless is doing today is essentially what white business owners after the Civil War did against Black Americans.

The Alliance was started by Edward Blum, a key activist in the successful challenge of affirmative action in college admissions. The group initially sued Fearless in early August, claiming the grant program violates Section 1981 of the Civil Rights Act of 1866, which prohibits discrimination based on race when making and enforcing contracts. The Alliance says Fearless is entering into a discriminatory contract with the applicant because the grants are only for Black women.

But Fearless says it’s not actually a contract, it’s a charitable donation, and that type of giving is protected under the First Amendment. U.S. District Court Judge Thomas Thrash agreed with that argument in a hearing in late September and denied the Alliance’s motion for a preliminary injunction. The Alliance immediately appealed.

Days later, a three-judge panel from the 11th Circuit put a temporary injunction in place while the appeals process played out. Two of the judges sided with the Alliance, saying “the plaintiffs have established an irreparable injury” and called the grant program “racially exclusionary.”

The dissenting judge who sided with Fearless said it was “a perversion of Congressional intent to use [section] 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 said that it would actually be Black women suffering irreparable harm from the injunction.

In the latest brief, the Alliance is optimistic the 11th Circuit will overturn the district court ruling and put in place a preliminary injunction because of the earlier split decision by the motions panel.

“The Alliance is ‘substantially likely’ to prove, according to that motions panel, that the district court erred when it denied a preliminary injunction below,” the Alliance wrote. “This Court should now reiterate that ruling, enforce [section] 1981 as written, and order the district court to enter a preliminary injunction.”

Fearless has until December 6 to file its response to the Alliance’s latest brief. It has asked the appeals court to hear oral arguments in the case in January once all the briefs are filed.

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