American Alliance for Equal Rights (“AAER”) sued Fearless Fund Management LLC (“Fearless”) (a black women-run company) for alleged violation of Section 1981 of the Civil Rights Act of 1866. After the Northern District of Georgia denied a preliminary injunction to enjoin Fearless from awarding grants solely to women of color entrepreneurs, AAER immediately appealed this decision to the 11th Circuit U.S. Court of Appeals. AAER’s appeal was successful and the 11^th Circuit granted AAER’s request for a preliminary injunction.

On September 27, 2023, Judge Thomas W. Thrash of the U.S. District Court for the Northern District of Georgia denied AAER’s motion for preliminary injunction. AAER argued a preliminary injunction was necessary because its members were harmed since they are ineligible to apply for Fearless’ grants due to their race. Judge Thrash disagreed and determined that the First Amendment issue was dispositive. He stated that “because the First Amendment may bar AAER’s claim, the Court cannot conclude that AAER has carried its heavy burden of showing a clear likelihood of success on the merits at this stage.”

Applying a practical approach to his analysis, District Court Judge Thrash cited the case, Claybrooks v. American Broadcasting Companies (898 F. Supp. 2d 986 (M.D. Tenn. 2012), which held that a group of minority plaintiffs’ Section 1981 challenge to ABC’s disproportionate casting of minority applicants on “The Bachelor” television show would force ABC to employ race-neutral criteria in their casting decisions in order to showcase a more progressive message, which would be in violation of the First Amendment. If the law cannot compel a television station to cast diverse actors, it cannot compel a nonprofit organization to give grants to individuals outside of the organization’s mission. As a result, Judge Thrash concluded that Section 1981 did not allow AAER’s injunctive relief prohibiting Fearless’ chosen speech and expression.

AAER immediately appealed the District Court’s Order to the U.S. Court of Appeals for the 11th Circuit. The 11th Circuit disagreed with Fearless and determined that it did not provide “expressive services” or otherwise engage in “pure speech” subject to First Amendment protection. The 11th Circuit held that “although the First Amendment protects the defendants’ right to promote beliefs about race, it does not give the defendants the right to exclude persons from a contractual regime based on their race.” As a result, the 11th Circuit determined that AAER has established that Fearless’ “racially exclusionary program … is substantially likely to violate” Section 1981 of the Civil Rights Act and granted the preliminary injunction. The 11th Circuit enjoined Fearless from closing its application window or picking a winner for the “Fearless Strivers Grant Contest” until further order of the Court. No further immediate court hearing is currently scheduled.