By Mike Scarcella
(Reuters) - Venture capital fund Fearless Fund cannot resume making grants to Black women-owned businesses, a divided U.S. appeals court ruled on Monday, siding with an anti-affirmative action group that sued over the program.
The Atlanta-based 11th U.S. Circuit Court of Appeals found that the group's discrimination lawsuit was likely to succeed, reversing a judge’s decision that the program should be allowed to continue while the case moves forward.
The ruling is a victory for Edward Blum, the conservative activist behind the successful U.S. Supreme Court challenge to race-conscious college admissions policies.
Blum’s group American Alliance for Equal Rights last year alleged the Fearless Fund was violating a 19th century federal law that bars racial bias in private contracts.
The lawsuit targeted a Fearless Fund program that awards Black women who own small businesses $20,000 in grants and other resources to grow their businesses.
Businesses owned by Black women in 2022 received less than 1% of the $288 billion that venture capital firms deployed, according to the Fearless Fund.
The 11th Circuit panel, led by Circuit Judge Kevin Newsom, an appointee of former Republican U.S. President Donald Trump, concluded that Fearless Fund’s program did not warrant speech protections under the U.S. Constitution’s First Amendment.
Another Trump appointee, Robert Luck, joined Newsom’s order. Circuit Judge Robin Rosenbaum, an Obama-era appointee, dissented, accusing the plaintiffs of pretending to be harmed by the program. The grant initiative had been on hold following an earlier decision from the appeals court.
Attorneys for Fearless Fund in a statement said Monday's ruling contradicted more than 150 years of civil rights law. They said the decision "is not the final outcome in this case."
Fearless Fund had argued to the court in January that it had a constitutional right to express its belief in the importance of Black women to the economy through charity.
Blum in a statement on Monday said federal “civil rights laws do not permit racial distinctions because some groups are overrepresented in various endeavors, while others are under-represented.”