After the Supreme Court’s decision in Students for Fair Admissions v. Harvard in 2023 that said colleges and universities could not expressly consider race in the admissions process, we knew it was only a matter of time until similar groups went after corporate DEI programs.
And they did.
But this week, DEI got a win.
Attacks on Corporate DEI Programs Post-Harvard
Shortly after the ruling from the Supreme Court came down, attorney generals from 13 Republican controlled states sent a letter to the CEOs of Fortune 100 companies. The Republican AGs warned these companies that using race-based preferences may violate federal and state anti-discrimination laws, even when the preferences are “under the label of “diversity, equity, and inclusion” or otherwise.”
America First Legal (more on them in a second) lodged complaints against more than 20 companies with the Equal Employment Opportunity Commission. Companies such as American Airlines, McDonald’s, and the NFL. There’s also been at least 9 lawsuits attacking DEI programs as well.
The same activist that won in Harvard is also suing law firms, small businesses and startups, and an Atlanta-based venture capital firm called Fearless Fund (I’m not involved in that case despite it being an Atlanta case).
When the Fearless Fund was sued, they lost investors and fundraising dollars because of the suit. Then a judge halted its grant program because it was racially exclusionary. And staff cuts had to be made.
See Also: Corporate Diversity in 2024: What Companies Should Be Doing
America First Legal sues Hello Alice
America First Legal was created by Stephen Miller, a former Trump adviser noted for his far-right policies like family separation, the Muslim ban, and ending DACA. In other words, completely anti-DEI. But America First Legal isn’t a law firm because Miller isn’t an attorney. This group has been busy – filing lawsuits against school districts, amicus briefs in favor of Florida drag bans and Trump, and EEOC complaints against a variety of companies.
One of which was Hello Alice. Hello Alice is a fintech platform for small businesses. Hello Alice’s goal is to connect small business owners with capital and other resources to help them start, grow, and succeed. In particular, Hello Alice has a commitment and a goal to provide equitable access to capital to underrepresented entrepreneurs – like people of color and women. They work with corporate partners, such as Mastercard, to provide much of the funding.
One of the grants that they promoted in 2023 was one backed by Progressive Insurance, for black-owned small businesses to purchase a commercial vehicle. Progressive and Hello Alice were offering 10 grants of $25,000 each.
According to the complaint, an Ohio man started a trucking company and became a customer of Progressive. In May 2023, Progressive advertised this grant program but the plaintiff did not qualify for as he is white and thus not a black-owned business.
This class action lawsuit followed.
Court Dismisses Lawsuit
On May 21, 2024, the federal judge in the Ohio court dismissed the lawsuit, saying that the court did not have subject matter jurisdiction over the case because the plaintiff lacked standing to sue.
Standing is a legal concept that makes the statement “anyone can sue over anything at any time” slightly untrue. See, standing requires that the person suing has an “injury in fact” that is concrete and particularized, actual or imminent, and not just hypothetical. Additionally, the injury must be caused by the defendant and likely that the court can do something about it.
This is why you’ll hear lawyers talk about injuries, harm, and damages. And then talk about the actions that you’d like the court to take, all before we head to litigation. Remember, litigation is expensive for everyone involved.
However, the Plaintiff did not allege anywhere that he would have received one of the grants if offered under a race-neutral policy. Plaintiff argued that it was unnecessary to show that he would have received the grant; it was only necessary to show he could not compete for one.
But since all this happened in the past, the Plaintiff is looking for compensatory damages for having the race-based barrier. However, compensatory damages are not appropriate here since awarding compensatory damages would put the Plaintiff in a better position than if the discrimination did not occur. In fact, the appropriate action would be prospective relief to remove the barrier going forward.
But Progressive’s 2024 grant program didn’t have any race-based eligibility criteria. And they swore that they didn’t have any plans for such a race-based eligibility program in the future. Hypothetical future grant programs aren’t enough to confer standing to the Plaintiff either.
So the case was dismissed.
What’s Ahead for DEI Programs?
This is good news for DEI programs. But the fight isn’t over yet.
Was this a one-time win because the facts are so unique? That the grants are isolated and discrete? Or is this a sign of good things in the future for corporate DEI?
Only time will tell.
Corporate DEI Is On The Agenda
Having trouble keeping track of all these changes in 2024?
Springboard Legal’s Kimberly DeCarrera will be co-presenting a free webinar on June 13, 2024 with updates on employment laws. There’s been so much in 2024 we are going for a mid-year update!