From American Alliance for Equal Rights v. Fearless Fund Mgmt., LLC, decided today by the Eleventh Circuit, in an opinion by Judge Kevin Newsom, joined by Judge Robert Luck:
[We hold that] the Fearless Strivers Grant Contest, an entrepreneurship funding competition open only to businesses owned by black women, [likely] violates 42 U.S.C. § 1981, which prohibits private parties from discriminating on the basis of race when making or enforcing contracts …, [and] is … unlikely to enjoy First Amendment protection ….
[The] stated mission [of Fearless Fund] is to "bridge the gap in venture capital funding for women of color founders building scalable, growth aggressive companies." In pursuit of that mission, Fearless supplies grants to businesses under its "Foundation" arm. Fearless makes those grants on the basis of a competitive application process.
The "Fearless Strivers Grant Contest" offers four winners $20,000 apiece and digital tools to assist with business growth, as well as mentorship….
The panel majority began by concluding that the contest is likely covered by 42 U.S.C. § 1981, a federal law that has been read as generally banning race discrimination (but not discrimination based on sex, religion, sexual orientation, and so on) in all public or private contracts (not just employment, public accommodations, education, and the like):
