Black women-owned firm targeted by conservative activist for grant program: 'We are not scared'

The aftermath of the Supreme Court’s June ruling against affirmative action has opened the floodgates of litigation against businesses that focus on diversity.

Fearless Fund, an Atlanta-based venture capital firm, was sued last week for discrimination for considering only businesses owned by Black women for a grant program. The lawsuit came from the American Alliance for Equal Rights, an organization backed by Edward Blum, the conservative legal activist who was behind the lawsuits that eventually led to the ban on race-conscious college admissions.

At a press conference Thursday afternoon, Alphonso David, an attorney representing the Fearless Fund, called the case a “meritless lawsuit” being pursued by “right-wing” extremists. Arian Simone, an entrepreneur who is one of the group’s founders, said activism was part of her team’s mission, adding, “We are not scared.”

Co-counsel Ben Crump said the group had been sued first because its opponents thought it would make an easy target. He added that the scope of the battle is larger than one lawsuit.

“This is but another attempt to prevent the progress of women from having a seat at the table,” Crump said. “It’s not just about the Fearless Fund, it’s about marginalized people throughout America having a seat at the table.”

Blum has said more litigation targeting race-based policies and practices will come. The Supreme Court’s 6-3 conservative majority has historically looked favorably on his causes.

The lawsuit against Fearless Fund

Fearless Fund was founded in 2019 by Simone, the actress Keshia Knight Pulliam and the executive Ayana Parsons, and has a slew of big-name backers, from Bank of America and J.P. Morgan Chase to General Mills and Coca-Cola.

Since its inception, the firm has supported dozens of businesses owned by women of color, but the lawsuit is focused on the Fearless Strivers Grant Contest. The grant, issued in conjunction with Mastercard, is open to Black women who own small businesses and hands out awards of $20,000, along with digital tools and mentorship.

The lawsuit against the firm alleges that it is in violation of a section of the Civil Rights Act of 1866, which protects against racial bias in contracts. The American Alliance for Equal Rights alleges that 60 white and Asian American members of its group are harmed by the regulations of the grant contest.

In 2022, less than 1% of venture capital funding was granted to women of color, according to Q1 2022 PitchBook-NVCA Venture Monitor. Female founders overall received 2% of those funds.

“This lawsuit is simply misguided and wrong,” attorney Mylan Denerstein said at the press conference. “I think it's pretty simple. We look forward to demonstrating this simple fact, that it is not illegal to support economic opportunity for women of color.”

The fund had stayed silent since the lawsuit was filed but began its response Thursday with the press conference, an interview on "CBS This Morning" and a letter soliciting donations and support.

Liliana Garces, a professor of educational leadership and policy at the University of Texas at Austin, says that there are arguments that can prove the “lawsuit is frivolous” but that it will have to play out in court.

“I think what this lawsuit represents is an ongoing effort by Edward Blum to challenge policies that are trying to provide an advanced equal opportunity. It's just that now, those challenges are happening in the corporate sector,” Garces told Yahoo News.

Who is Edward Blum?

Blum is an investment broker who for years has sought out potential plaintiffs who match up with causes in order to pair them up with lawyers and funding for their cases. Before his successful case against affirmative action, he led the push to gut the Voting Rights Act in Shelby County v. Holder, a 2013 Supreme Court ruling decided along ideological lines that removed protections for race-based discrimination in voting.

“You cannot remedy past discrimination with new discrimination,” Blum told the New York Times in an interview last month after the affirmative action decision. “You cannot remedy the preferences that whites had in our nation’s life with different preferences for different ethnic groups. That cannot be how a multiracial, multiethnic nation maintains its social fabric.”

In that same interview, Blum said he didn’t believe in the concept of systemic racism, and he laid out possibilities of future challenges, noting that “internships, scholarships [and] certain research grants” were potential litigation targets in addition to employment.

What’s to come

Garces said lawsuits that aim to undermine equal opportunity will have “broad repercussions and consequences" but added that this was "just the beginning,” saying, “I think the corporate sector and all the DEI efforts within the business and corporate community are kind of the next level of attack that we're seeing.”

As Blum prepares his next lawsuits, the Fearless Fund founders have emphasized that they will not be deterred, citing the millions they’ve already distributed and noting a summit they are holding in Atlanta next weekend.

"We plan to continue to do the work we do for women of color,” Simone told CBS News.