Federal appeals court blocks Fearless Fund from issuing grants to only Black women

(CNN) — The U.S. Court of Appeals for the 11th Circuit has blocked a Black-owned venture capitalist firm from awarding grants exclusively to Black women entrepreneurs.

In an opinion released Monday, the judges ruled that the Fearless Fund’s Fearless Strivers Grant Contest is “substantially likely to violate” the provisions of Title 42 of the US Code, which ensures equal rights under the law and prohibits the use of race when awarding and enforcing contracts.

In the ruling, the appellate court ordered a federal court in Georgia to enter a preliminary injunction blocking the fund from closing its grant application process while the case continues to be litigated.

It also states that the fund’s program is unlikely to be protected by the First Amendment.

The court’s decision marks a victory for anti-affirmative action legal strategist Edward Blum, who filed a lawsuit last August against the fund on behalf of his group American Alliance for Equal Rights.

AAER attorneys have argued that their members, who were unnamed in the lawsuit, were excluded from the grant program because they weren’t Black and that they faced “additional harm” from the illegal act of racial discrimination, CNN previously reported.

Blum, the legal strategist behind the Supreme Court case that dismantled affirmative action in college admissions last year, said in a statement Monday that he was “grateful” for the court’s ruling.

“Our nation’s civil rights laws do not permit racial distinctions because some groups are overrepresented in various endeavors, while others are under-represented,” Blum said.

“Programs that exclude certain individuals because of their race such as the ones the Fearless Fund has designed and implemented are unjust and polarizing. Significant majorities of all Americans believe that an individual’s race should not be a factor in our nation’s public policies.”

Arian Simone, CEO and founding partner of Fearless Fund and founder of the Fearless Foundation, said in a statement to CNN Monday that the court’s ruling was “devastating.”

“I am shattered for every girl of color who has a dream but will grow up in a nation determined not to give her a shot to live it,” Simone said. “On their behalf, we will turn the pain into purpose and fight with all our might.”

Simone said the ruling sends a message that diversity in corporate America and education should not exist.

“America is supposed to be a nation where one has the freedom to achieve, the freedom to earn, and the freedom to prosper,” she said. “Yet, when we have attempted to level the playing field for underrepresented groups, our freedoms were stifled.”

Eleventh Circuit Judge Robin Rosenbaum issued a dissenting opinion in the case, arguing that Blum’s lawsuit is the equivalent of an athlete “flopping” on the field to draw a foul.

“As American Alliance has portrayed its members’ alleged injuries, it has shown nothing more than flopping on the field,” Rosenbaum wrote in the opinion.

“Although three of American Alliance’s members pay lip service to the idea they are ‘ready and able’ to participate in Fearless’ Contest, their declarations show, in context, that none has a genuine interest in actually entering the Contest.”

In September 2023, the 11th Circuit Court of Appeals in Atlanta granted the AAER’s motion for an injunction, which halted the program for the duration of the AAER’s lawsuit. The Fearless Fund later challenged that ruling and its attorneys presented oral arguments to the appeals court in January.

The legal battle over the venture capitalist firm’s grant program comes amid a string of attacks against diversity, equity and inclusion (DEI) programs in corporate America, schools and higher education in recent months.

Blum and other conservative strategists have filed lawsuits against organizations challenging their race-based programs.

In March, the Smithsonian’s National Museum of the American Latino settled a lawsuit with the AAER that required the museum to open its Latino-focused internship program to students of all races and ethnicities.

Black business leaders say they fear these efforts to dismantle DEI programs stand to undo decades of progress toward leveling the playing field for Black and brown people.

CNN’s Justin Gamble contributed to this report.

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