Invoking the First Amendment to defend initiatives aimed at boosting workplace diversity, equity, and inclusion (DEI) has the potential to set a precedent that may ultimately undermine other civil rights objectives.

Federal Appeals Court Ruling

In a recent legal development, the US Court of Appeals for the Eleventh Circuit rejected the First Amendment defense put forth by Fearless Fund Management LLC in a lawsuit challenging its grant contest for Black women entrepreneurs. The court ruled that the fund’s actions violated Section 1981 of the 1866 Civil Rights Act, which prohibits race discrimination in contracts, and fell outside the protections afforded by the First Amendment.

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Implications for Workplace Diversity Efforts

Despite the setback for DEI proponents, employment attorneys noted a potential upside for diversity efforts in workplaces. Lauren Parris Watts, a partner at Seyfarth Shaw LLP, emphasized the slippery slope of using the First Amendment as a defense for exclusionary programs. She warned that such a defense could be exploited by racist or anti-LGBTQ+ groups to justify discrimination.

The Creative Argument for First Amendment Defense

Ishan Bhabha, co-chair of Jenner & Block LLP’s DEI protection task force, expressed concern about the broader implications of upholding a First Amendment defense in this context. He pointed out that such defenses are typically reserved for expressive conduct closely tied to specific organizational actions, similar to symbolic speech.

Fearless Fund’s Position

Fearless Fund argued that its grant contest was a form of charitable giving protected as expressive conduct under the First Amendment, aimed at highlighting the significance of Black-women-owned businesses. However, the court rejected this argument, likening the grant process to discriminatory hiring practices.

Balancing Free Speech and Civil Rights

Defending diversity initiatives on First Amendment grounds is complex, as it involves balancing free speech with anti-discrimination laws. Derick Dailey of Crowell & Moring LLP highlighted this tension, noting the intricate interplay between these legal principles.

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Textualism and Legal Interpretations

The Fearless Fund case, like other challenges to DEI efforts, hinges on the interpretation of Reconstruction-era laws designed to dismantle racial barriers. Advocates argue that such initiatives are remedial measures to address systemic racial disparities. A textualist interpretation by the Supreme Court, focusing on the original meaning of Section 1981, could potentially support the legality of such grant programs.

Adjusting DEI Strategies

As courts scrutinize DEI initiatives more closely, employers must develop legally sound policies. Recent rulings, such as the Tenth Circuit’s dismissal of a lawsuit against Colorado’s DEI training program and the Fourth Circuit’s affirmation of a biased verdict in favor of a White male employee, underscore the importance of adhering to anti-discrimination laws.

Future of DEI Efforts

Investors and companies committed to DEI may need to refine their strategies to withstand legal challenges. This could involve removing explicit references to racial minorities from eligibility criteria while focusing on supporting diversity. However, the ongoing legal challenges may hinder corporate America’s efforts to promote inclusivity.

Parris Watts expressed concern that cases like the Fearless Fund ruling could deter corporations from supporting DEI initiatives, ultimately affecting the progress made in fostering diverse and inclusive work environments.

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The American Alliance for Equal Rights, spearheaded by prominent anti-affirmative action activist Edward Blum, has withdrawn its lawsuit against the renowned U.S. law firm Winston & Strawn. The legal action, filed in federal court in Houston, Texas, contested the firm’s fellowship program aimed at fostering diversity. The withdrawal follows Winston & Strawn’s modification of the program’s application criteria.

Lawsuit Background and Previous Cases

This marks the conclusion of the third lawsuit initiated by Blum’s group against law firms, accusing them of excluding specific individuals, including white students, from their diversity fellowship programs based on race. Earlier cases targeted Morrison & Foerster and Perkins Coie, which adjusted their application criteria, prompting Blum to drop the lawsuits. Several other law firms also changed their programs in response to letters from Blum’s organization.

Susman Godfrey Joins the List

The latest firm to modify its criteria is Houston-based Susman Godfrey. Blum announced on Wednesday that the firm had altered the terms of its diversity fellowship program and a prize awarded to law students of color. The American Alliance for Equal Rights, as stated by Blum, is dedicated to challenging race-based policies in corporations, law firms, institutions, and government agencies.

Firm Responses and Commitments

Winston & Strawn, a Chicago-founded firm boasting nearly 1,000 lawyers, affirmed its unwavering commitment to diversity, equity, and inclusion in the legal profession. This commitment comes despite the modification in the fellowship program’s criteria, eliminating the requirement for applicants to belong to “a disadvantaged and/or historically underrepresented group in the legal profession.”

Susman Godfrey, a 190-lawyer firm based in Houston, has not commented on the alteration of its diversity fellowship program.

The Issue of Diversity in Law Firms

The lawsuits revolve around paid fellowships designed to support recruiting people of color, addressing a long-standing struggle among major law firms to enhance diversity in their partnership ranks. According to the National Association for Law Placement, last year, people of color constituted only 11.4% of all partners in major U.S. law firms.

Legal Landscape and Affirmative Action Ruling

Edward Blum’s group initiated legal action following a landmark ruling in June, where the U.S. Supreme Court’s conservative majority rejected race-conscious policies in college admissions. The verdict, impacting institutions like Harvard and the University of North Carolina, questioned using such approaches to increase minority student enrollment.

Section 1981 and the Lawsuit

The October lawsuit against Winston & Strawn invoked Section 1981 of the 1866 Civil Rights Act, enacted after the Civil War to protect formerly enslaved Black people from racial bias. The suit alleged violations of this law by challenging Winston & Strawn’s 1L LCLD Scholars Program.

In a joint filing, both parties pointed to updated criteria on Winston’s website, eliminating the requirement tied to racial background. Race will no longer be a factor in the application process, except as contemplated by the U.S. Supreme Court in its affirmative action ruling.

The case, officially titled American Alliance for Equal Rights v. Winston & Strawn LLP, is filed in the U.S. District Court, Southern District of Texas, with case number 4:23-cv-04113.

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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.

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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