Home Venture Capital Fearless Fund is back in court tomorrow. Here’s what you need to...

Fearless Fund is back in court tomorrow. Here’s what you need to know

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— Aug. 2: Another group founded by Blum, the American Alliance of Equal Rights, sued the Fearless Fund and its foundation over $20,000 small business grants to Black women.

— Sept. 26: The first hearing in federal district court for the Northern District of Georgia is held. From the bench, District Court Judge Thomas Thrash denied the Alliance’s motion for a preliminary injunction against the Fearless program.

— Sept. 30: The Alliance appealed that decision and on Sept. 30, the same day the Fearless Foundation’s grant applications were to close, the appellate court issued a temporary injunction, though the decision was not unanimous.

— Jan. 31, 2024: A three-judge panel will hear the full appeals case. The panel is made up of two judges appointed by President Trump and one President Obama appointee.

File - Edward Blum, founder of the American Alliance for Equal Rights, speaks at a news conference in Washington, June 29, 2023. Blum's nonprofit filed a lawsuit against the Fearless Fund, a small venture capital firm. The case is one of a growing number legal challenges to corporate diversity programs. (AP Photo/Jose Luis Magana, File)

Credit: AP

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Credit: AP

Legal arguments

The Alliance alleges the Fearless grant program violates Section 1981 of the Reconstruction-era Civil Rights Act of 1866, which prohibits discrimination based on race when making and enforcing contracts. The Alliance says Fearless is entering into a contract with the applicant, and since the grants are only for Black women, it’s racially discriminatory.

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.

In briefs filed to the appeals court in November and December, each side reasserted their arguments.

What’s at stake

The lawsuit against Fearless Fund was one of the first in what is now a spate of lawsuits and legal threats against diversity programs in corporate America.

“They’re trying to shut everybody down, but using us,” Fearless Fund’s co-founder Arian Simone said in her new podcast that launched last week. “They are trying to stop all diversity, equity and inclusion. It’s an attack on that.”

Fearless has received an outpouring of support from the public and in the courts. The attorneys general of 18 states and the District of Columbia in December filed a brief in favor of Fearless’ grant program, saying “it would undermine the central purpose of 1981 to interpret that statute to prohibit charitable giving that is part of the nation’s long tradition of philanthropy aimed at helping historically excluded populations.”

Civil rights organizations and associations representing venture capital, banking and charitable foundations have also filed briefs in support of Fearless.

The Alliance has also received its share of support from organizations like America First Legal, which is led by Trump political advisor Stephen Miller.

Blum told The New York Times in July that he believes “an individual’s race and ethnicity should not be used to help them or harm them in their life’s endeavors.”

What to expect on Wednesday

The Fearless Fund is the last of four cases that the court will hear Wednesday starting at 9 a.m. EST. The hearing is expected to last around 30 minutes.

File - Attorney Alphonso David speaks during a news conference Aug. 10, 2023, in New York. David, legal counsel for the Fearless Fund, said that there's a "coordinated use of Section 1981 now that we did not see before." (AP Photo/Frank Franklin II, File)

Credit: AP

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Credit: AP

Fearless Fund attorney Alphonso David said in most appeals cases, decisions are issued within six months, but because Fearless requested an expedited hearing and because there is an emergency order, he hopes the court issues its decision quickly.

“It’s difficult to predict, of course, what a three-judge panel will conclude, but we feel very strongly that the law supports the Fearless Foundation’s activities,” David said.

Blum expects Wednesday’s hearing to “explore the legality of racially exclusive contracts,” he said in an email to The Atlanta Journal-Constitution. “Many observers anticipate questions about the legality of a white-male only contest.”

If the appeals court sides with Fearless, Blum said the Alliance intends to purse the litigation until the courts reach a final decision.

David didn’t disclose what Fearless’ next steps would be if the appeals panel sides with the Alliance, but he said the team is “committed to defending the Foundation’s activities.”

Audio of the arguments will be livestreamed from the circuit court’s website.


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