LAW | Court casts doubt on racially exclusive fund
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On Sept. 30, a federal appeals court panel put a temporary hold on the grant-making activity of a venture capital fund that offers funding only to black women.
In the 2-1 ruling, the 11th U.S. Circuit Court of Appeals said the privately financed, race-based program violates a Reconstruction-era federal law. The court agreed with challenger Edward Blum’s American Alliance for Equal Rights that the Atlanta-based Fearless Fund violated Section 1981 of the 1866 Civil Rights Act, which bars racial bias in contracting.
The preliminary ruling—a full ruling on the case’s merits is still to come—arrived days after a lower court judge concluded that the First Amendment’s free speech guarantee protected Fearless Fund’s right to express its belief in the importance of black women through charity. Yet the panel disagreed that the fund was engaged in speech covered by the Constitution.
“Although the First Amendment protects the defendants’ right to promote beliefs about race, it does not give the defendants the right to exclude persons from a contractual regime based on their race,” wrote the court’s majority.
In a dissent, Circuit Judge Charles Wilson said Section 1981 was never intended to be used 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.”
Blum, a former stockbroker, has been behind several challenges to affirmative action policies and business diversity quotas—including a June Supreme Court ruling blocking race as a factor in Harvard and University of North Carolina admissions.
When it struck down affirmative action this summer, the Supreme Court exempted military academies, allowing the practice of using race as a factor in admissions to continue because of “potentially distinct interests”—though it did not elaborate. That three-sentence footnote is already being tested.
Students for Fair Admissions—the same Edward Blum–backed organization behind the Supreme Court case—filed a federal lawsuit in September challenging openly race-based “goals” for admission used by the U.S. Military Academy, aka West Point.
In a complaint filed in U.S. District Court in southern New York, challengers contend that “calls for blind judicial deference to the military on questions of racial discrimination are ‘gravely wrong,’ both legally and historically.” In the Supreme Court’s affirmative action case, military leaders argued that cutting off race-based admissions would limit the pool of officer candidates and reduce diversity. —S.W.
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