The American Alliance for Equal Rights spearheaded the lawsuit in which the U.S. Supreme Court ultimately abolished the use of affirmative action in higher education. Now, the conservative activist group headed by Edward Blum has set its sights on prohibiting equity policies and funding to minority-owned businesses, with the larger goal of eliminating workplace diversity programs.
American Alliance for Equal Rights vs. Fearless Fund Management, LLC
This group and other conservative activists are filing lawsuits using Section 1981 of the Civil Rights Act of 1886 to challenge these programs. Blum is currently using Section 1981 to go after the Fearless Fund, a group that invests in businesses owned by women of color. As a result, a federal appeals court has temporarily blocked the Fearless Fund's grant program.
In response to the lawsuit, Fearless Fund argues that its grant program is not the type of "contract" Section 1981 was meant to address. Instead, its grants are donations protected by the First Amendment. Counsel for the Fund pointed out that many foundations issue grants to groups with only certain characteristics or demographics.
While the use of Section 1981 in this manner is not new, conservative activists now appear to be using it in a targeted manner to prove reverse discrimination in the workplace. Now that affirmative action in higher education has been eliminated, activists' focus has turned to the workplace and setting up a challenge before the majority-conservative U.S. Supreme Court.
Similar lawsuits have impacted other fellowship programs that used race as a main or major consideration. For instance, two large law firms changed the criteria for their fellowship programs by opening them to individuals of all races after Blum filed suit against them. Blum later dropped the lawsuits. Pfizer also dropped race-based eligibility requirements for its college student fellowship program after a conservative nonprofit group filed suit against the company. Although a court dismissed the lawsuit, the group is appealing the dismissal.
Understanding Section 1981
Section 1981 of the Act was originally meant to protect formerly enslaved people from economic exclusion. It prohibits discrimination based on race, color, and ethnicity when entering and enforcing contracts. The U.S. Supreme Court expanded its protections in 1976 when it found that Section 1981 also prohibits racial discrimination in employment against white people and people of color. Due to the standard that the high Court established in a 2020 decision, a plaintiff who sues for racial discrimination must meet a very high burden of proof to be successful. More specifically, the plaintiff must show that race was the central cause in denying a contract opportunity.
Plaintiffs may choose Section 1981 over Title VII of the 1964 Civil Rights Act to pursue their racial discrimination claims because it has a broader scope. While Title VII only applies to employers with 15 or more employees, Section 1981 applies to all employers. Title VII also caps total compensatory and punitive damages at $300,000, whereas Section 1981 has no such caps.
Pursuing a Section 1981 claim is also much quicker. To pursue a Title VII claim, an individual must first file a charge with the U.S. Equal Employment Opportunity Commission (EEOC), which is a process that can take up to 180 days. On the other hand, there is no such prerequisite to filing a Section 1981 claim. The only downside to a Section 1981 claim is that the burden of proof is higher than in a Title VII claim, in which plaintiffs only must show that race was a motivating factor rather than a central cause.
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