Mike Scarcella
(Reuters) – Venture capital fund Fearless Fund can’t resume making grants to Black women-owned businesses, a divided U.S. appeals court ruled on Monday, siding with an anti-affirmative action group that sued over the program.
The 11th U.S. Circuit Court of Appeals in Atlanta found that the group’s discrimination lawsuit was likely to succeed, overturning a judge’s ruling that the program should be allowed to continue while the case moves forward.
The decision is a victory for Edward Blum, the conservative activist behind the successful U.S. Supreme Court case against race-based college admissions policies.
Blum’s group, the American Equal Rights Alliance, said last year that the Fearless Fund violates a 19th-century federal law prohibiting racial bias in private contracts.
The lawsuit targets the Fearless Fund program, which provides black women small business owners $20,000 in grants and other resources to grow their businesses.
Black women-owned businesses received less than 1% of the $288 billion invested by venture capital firms in 2022, according to the Fearless Fund.
The 11th Circuit panel, led by U.S. District Judge Kevin Newsom, an appointee of former Republican President Donald Trump, found that the Fearless Fund program does not guarantee speech protection under the First Amendment.
Another Trump appointee, Robert Luck, joined Newsom’s order. District Judge Robin Rosenbaum, an Obama-era appointee, dissented, accusing the plaintiffs of pretending they were harmed by the program. The grant was suspended following a previous appeal court ruling.
Lawyers for the Fearless Fund said in a statement that Monday’s decision violates more than 150 years of civil rights law. They said the decision “is not the final result in this case.”
In January, the Fearless Fund argued in court that it has a constitutional right to express its belief in the importance of black women to the economy through philanthropy.
Blum said in a statement Monday that federal “civil rights laws do not allow for racial disparities because some groups are overrepresented in various occupations while others are underrepresented.”