RALEIGH — On June 29, the Supreme Court announced its decision in Students for Fair Admissions Inc., v. President & Fellows of Harvard College. In a 6-2 decision the Court stated that the admissions programs at Harvard and UNC violated the equal protection clause of the 14th Amendment, and effectively eviscerated the practice of affirmative action.
Two months later, lawsuits are targeting any space that hints at offering advantages for minorities. Venture Capital firms were an early target, but other funding and employee support programs are also under attack.
Small Business Administration sued
On the government side, a lawsuit is affecting the Small Business Administration’s 8(a) program. The 8(a) program is intended to award at least 5% of all federal contracting dollars to small disadvantaged businesses each year, and endeavors to help these entrepreneurs gain access to the federal marketplace.
Applying precedent from the Students for Fair Admissions v. Harvard case, a U.S. District Court for the Eastern District of Tennessee removed the “rebuttal presumption of social disadvantage” that exists for certain minority groups, causing the 8(a) program to temporarily suspend applications. The program has reopened, however, it now requires participants who are relying on the presumption of disadvantage to submit an additional “social disadvantage narrative.” According to guidelines, the narrative should be approximately 3 pages and include “descriptions of incidents in which bias or discrimination has occurred.”
The North Carolina District Office for the U.S. Small Business Administration declined to comment.
The man behind the lawsuits
Edward Blum, the man behind the Students for Fair Admissions, started his effort in 2008 when he recruited the daughter of an old friend to be the plaintiff in a suit against the University of Texas. That case also reached the Supreme Court; in 2016 it ruled 4-3 against Blum. Later suits against Harvard and UNC, arrived at a much different Court, that reached much different results.
Now, having found success, Blum and other conservatives are empowered.
In August, Blum formed the group American Alliance for Equal Rights to file suits to “broadly challenge race-based policies used by private corporations.” It is this group that has sued the Atlanta VC Firm owned by two Black Women, claiming discrimination from one of their grant programs.
And last week the group filed two more lawsuits, this time against law firms Perkins Coie and Morrison & Foerster. Both firms offer stipends for associates from underrepresented communities and Morrison & Foerster also offers a diversity training initiative. These cases will go to courts in Dallas and Miami.
Blum also has pending lawsuits with the group Alliance for Fair Board Recruitment. Started in 2021 the Fair Board Recruitment group is the plaintiff in suits against Nasdaq rules and California laws related to both gender and racial diversity on corporate boards.
“I’m a one-trick pony,” Blum was quoted in a Reuters article. “I hope and care about ending these racial classifications and preferences in our public policy.”
Diversity, equity & inclusion after Supreme Court decision – where does private sector stand?
More Challenges to Come
Following the Students for Fair Admissions v. Harvard decision, 13 Republican state attorneys general to send a letter to Fortune 100 companies in July, warning them of the legal consequences of using race in hiring and employment practices. The letter went further and suggested that Diversity, Equity, and Inclusion programs could also be a form of discrimination.
Separately, Senator Tom Cotton, an Arkansas Republican sent a letter to Target CEO Brian Cornell following the Supreme Court decision. In it, he claimed the company would face “significant and costly litigation” claiming that the company’s DEI program and “racial quota for hiring” were discriminatory in light of the recent case.
Experts point out that the recent Supreme Court ruling has nothing to do with employer’s focus on diversity, equity, and inclusion. And in funding, the decision to invest in minority businesses has plenty of data behind it from reports like the Kauffman Fellows which show that Black, Latino, and female founders return 30% more to investors, on average.
If these lawsuits follow other cases it will likely be 5 or more years before all decisions and appeals are finalized. In that time there remains the potential that government and corporate programs with similar aims will face more lawsuits and threats to be suspended, stopped, or sharply curtailed. The fallout remains to be seen but likely represents extra challenges for a population that still struggles with systemic bias and underfunding.
