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Businesses Adapt Diversity Programs to Navigate Legal Challenges
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Conservative Group Drops Lawsuit After Changes to Diversity Criteria

To fend off legal challenges, companies with racial diversity and inclusion programs have been revising their eligibility criteria. This approach recently proved effective when the American Alliance for Equal Rights, led by conservative activist Edward Blum, dropped its discrimination lawsuit against Morrison & Foerster LLP. The law firm removed the term “underrepresented groups” from its diversity program criteria. Similar changes have been made by firms facing legal action, including Gibson, Dunn & Crutcher LLP and Perkins Coie LLP.

Pfizer Inc. also adopted this strategy when facing a discrimination lawsuit from the activist group Do No Harm. The company revised its Breakthrough Fellowship criteria, allowing applicants to apply “regardless of whether” they belong to specific minority groups. During oral arguments on October 3rd, federal appeals court judges in New York suggested that the lawsuit against Pfizer might become moot due to these language changes.


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Navigating Legal Challenges for Corporate DEI Programs

Companies have been seeking ways to protect their diversity, equity, and inclusion (DEI) programs from lawsuits under Title VII of the Civil Rights Act of 1964 and Section 1981 of the 1866 Civil Rights Act. This has become particularly crucial since the U.S. Supreme Court decided to strike down affirmative action in college admissions. Employment attorneys and professors believe this ruling has opened the door to additional litigation, focusing on discrimination against non-marginalized groups, including White men.

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Ann McGinley, an employment law professor at the William S. Boyd School of Law at the University of Nevada, Las Vegas, stated, “It’s a very odd place to be, to be in corporate America and trying to do something that they think is the right thing, and yet being worried about whether that’s legal or not.”

Changing Eligibility Language

Following legal challenges, Morrison & Foerster modified the language of its Keith Wetmore Fellowship for Excellence, Diversity, and Inclusion. The program previously specified that it was for first-year law students “who are members of historically underrepresented groups in the legal industry.” It now seeks students with a “demonstrated commitment to diversity and inclusion in the legal profession.”

The lawsuit against the firm was dropped, with the understanding that Morrison & Foerster would not revert to its previous eligibility language and would not require fellowship applicants to disclose their race. This stipulation was made in the U.S. District Court for the Southern District of Florida.

Eric T. McCrath, chair of Morrison & Foerster, expressed satisfaction with the decision, stating, “We are pleased by the AAER’s decision not to pursue a meritless case.”

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Strategic Implications for Companies Facing Legal Challenges

Attorney Adam Herzog of Katz Banks Kumin LLP suggested that Morrison Foerster and Perkins Coie were specifically targeted due to their explicit eligibility criteria naming certain groups. Such specific language is uncommon, as eligibility requirements usually refer to broader categories like “historically underrepresented groups.”

Modifying their DEI programs’ language may allow Perkins Coie and Pfizer to have the cases against them dismissed. The American Alliance for Equal Rights had sought a permanent injunction requiring these firms to establish “strictly race-neutral” eligibility requirements for their programs.

Companies facing similar allegations will likely follow suit by making language changes and arguing that the complaint is now moot because there is “no longer an injury that a lawsuit can remedy,” according to Herzog.

Judge Dennis Jacobs of the U.S. Court of Appeals for the Second Circuit pointed out during oral arguments in the Pfizer case that nothing is now preventing non-minority members of Do No Harm from applying to the fellowship following the company’s wording change. Judge Beth Robinson described arguing for mootness based on language changes as the “logical play” for Pfizer in the litigation.

Nevertheless, this argument has yet to be tested in court, and McGinley expressed skepticism, stating, “I would be very surprised that a court would find that to be moot because they could turn around and change it.”

As of now, representatives for Pfizer have not responded to requests for comment regarding the language changes and the ongoing lawsuit.

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