DEI opponents using a 1866 Civil Rights law to challenge equity policies in the workplace

[Leroy N. Soetoro]

https://www.msn.com/en-us/money/companies/dei-opponents-using-a-1866-
civil-rights-law-to-challenge-equity-policies-in-the-workplace/ar-AA1mXnHd

NEW YORK — Opponents of workplace diversity programs are increasingly
banking on a section of the Civil Rights Act of 1866 to challenge equity
policies as well as funding to minority-owned businesses.

Section 1981 of the act was originally meant to protect formerly enslaved
people — or black people specifically — from economic exclusion.

But now the American Alliance for Equal Rights — a group run by Edward
Blum, the conservative activist who challenged affirmative action in
higher education and won — is citing the section to go after a venture
capital fund called the Fearless Fund, which invests in businesses owned
by women of color.

A federal appeals court temporarily blocked funding for Fearless Fund’s
grant program as the case proceeds.
Conservative activists have brought lawsuits using the 1981 section
against other companies and institutions, including insurance company
Progressive and pharmaceutical giant Pfizer.

The cases are being monitored carefully as the battle over racial
considerations shift to the workplace following the Supreme Court’s June
ruling ending affirmative action in college admissions.

While the 1981 statute had been used well before the latest affirmative
action ruling to prove reverse discrimination, Alphonso David, Fearless
Fund’s legal counsel who serves as president & CEO of The Global Black
Economic Forum, said that there’s a “coordinated use of Section 1981 now
that we did not see before.”

Conservative activist Edward Blum’s group American Alliance for Equal
Rights is using a section of the Civil Rights Act of 1866 to sue the
venture capital fund Fearless Fund. AP Photo/Jose Luis Magana
Here’s what’s happening and what the impact could be:

What is Section 1981?
The 1866 Civil Rights Act is a federal law prohibiting discrimination on
the basis of race, color, and ethnicity when making and enforcing
contracts.

Section 1981 specifically grants all individuals within the U.S.
jurisdiction the same rights and benefits as “enjoyed by white citizens”
regarding contractual relationships.

However, the Supreme Court’s 1976 McDonald v. Santa Fe Trail
Transportation decision broadened those protections, ruling Section 1981
prohibits racial discrimination in private employment against white people
as well as people of color.

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“It’s a very clever game plan,” said Randolph McLaughlin, a civil rights
attorney and law professor at Pace University, referring to the use of the
1866 law. “They want to turn civil rights law upside down.”

The standard of proof for the 1981 section is high. That’s because of the
Supreme Court’s 2020 decision in Comcast v. National Association of
African American-owned Media establishing that the plaintiff who sues for
racial discrimination under the section bears the burden of showing that
race was the central cause in denying a contract opportunity — as opposed
to merely a motivating factor.

Why not rely on Title VII instead?
Title VII of the 1964 Civil Rights Act protects employees and job
applicants from employment discrimination based on race, color, religion,
sex and national origin.

If the plaintiff opts to sue via Title VII, then he or she needs to file a
charge with the Equal Employment Opportunity Commission.

That’s a process that takes up to 180 days. After that, the plaintiff can
file a lawsuit. Choosing the 1981 route is much quicker.

Section 1981 is also broader than Title VII, which generally applies to
employers who have 15 or more employees, legal experts said.

Also under Title VII, a plaintiff can recoup only up to $300,000 in
compensatory and punitive damages total. Section 1981 has no limitation.

Title VII does have a lower standard of proof than Section 1981.
Plaintiffs only have to show race was a motivating factor, not a central
cause.

Alphonso David, Fearless Fund’s legal counsel, said there is a
“coordinated use of Section 1981 now that we did not see before.” AP
Photo/Frank Franklin II, File Why is the case against the Fearless Fund
potentially significant?
In its lawsuit, American Alliance For Equal Rights seeks relief by arguing
that the fund’s Fearless Strivers Grant Contest, which awards $20,000 to
black women who run businesses, violates Section 1981 by excluding some
people from the program because of their race.

Attorneys for the Fearless Fund have argued in court filings that the
grants are donations, not contracts, and are protected by the First
Amendment.

David, the Fearless Fund’s legal counsel, says that if these types of
grants are considered contracts, one can make the argument that grants
issued in many other forms and contexts could also be considered
contracts.

“Think of every foundation out there that issues grants,” David said.
“They issue grants to people of different demographic groups. They issue
grants only to women. They issue grants to survivors of earthquakes. Are
those all contracts?”

Angela Reddock-Wright, an employment and Title IX attorney and mediator
based in Los Angeles, believes it is “very possible” that the case could
end up at the Supreme Court.

“Ideally, the court would decline to hear this matter on the grounds that
Section 1981 was not intended to cover matters such as this, but this
court appears to operate under different rules and standards,” she said.

What impact have similar lawsuits had?
Some companies have already changed their criteria for their diversity
fellowship programs.

Law firms Morrison Foerster and Perkins Coie opened their diversity
fellowship programs to all applicants of all races in October, changes the
companies said were in the works before Blum filed lawsuits against them.

He subsequently dropped them. Previously, the programs for first year law
students had targeted students in historically underrepresented groups.

Morrison Foerster’s fellowship program now caters to students with
demonstrated commitments to equity and diversity.

Perkins Coie announced that it had opened its fellowship programs to all
applicants, regardless of their race, gender or LGBTQ identity.

In a statement, Perkins Coie said the changes arose as part of updates to
its diversity and inclusion policies following the Supreme Court’s ruling
on affirmative action.

Last February, Pfizer dropped race-based eligibility requirements for a
fellowship program designed for college students of black, Latino and
Native American descent.

A judge had dismissed a lawsuit filed by the conservative nonprofit Do No
Harm, which claimed Pfizer’s program violated Section 1981, but Do No Harm
is appealing the ruling.

“What would work in (companies’) favor is to lower their profile,” said
University of Virginia’s Distinguished Professor of Law George Rutherglen.
“Which means they do not explicitly consider race in making these
decisions. Look to other conditions and requirements that might achieve
the same objective.”


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