Section 1981 is commonly used to refer to 42 U.S.C. § 1981, a derivative of section 1 of the 1866 Civil Rights Act. This federal law was enacted to protect Blacks and other formerly enslaved persons by prohibiting racial, color, and ethnic discrimination in contract formulation and enforcement. Under Section 1981, anyone subject to U.S. laws has the same rights, privileges, and benefits that are “enjoyed by white citizens.”
However, in 1976, the Supreme Court ruled in McDonald v. Sante Fe Trail Transportation that the provisions of the federal law also protect white people from racial discrimination to the same extent as it protects Blacks.
Now, the Edward Blum-run American Alliance for Equal Rights is leveraging this Supreme Court decision to challenge workplace diversity programs (D.E.I.) and minority-owned business funding.
Edward Blum, a conservative activist, had successfully challenged affirmative action in colleges. He is now targeting Fearless Fund, a venture capital fund that supports women of color-owned businesses. Fearless Fund’s grant program’s funding has been temporarily blocked by a federal appeals court based on the American Alliance for Equal Rights lawsuit against them.
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Fearless Fund’s attorney, who is also president & C.E.O. of The Global Black Economic Forum has commented on the lawsuit. He says it’s a “coordinated use of Section 1981 now that we did not see before.” “It’s a very clever game plan. They want to turn civil rights law upside down,” says Randolph McLaughlin, a Pace University professor, and civil rights lawyer Randolph McLaughlin.
Comcast v. National Association of African American-owned Media, the Supreme Court ruled in 2020 that plaintiffs who challenge racial discrimination under Section 1981 must prove that race wasn’t just a motivating factor but the primary reason the defendant denied them a contract opportunity. This makes the burden of proof in Section 1981 cases higher than Title VII of the 1964 Civil Rights Act, which Edward Blum could have relied on.
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Title VII of the 1964 Civil Rights Act protects individuals from racial, religious, color, gender, and national origin discrimination in employment. This law also makes it easier to prove racial discrimination because it only mandates the plaintiffs to prove race as a motivating factor. However, as Professor McLaughlin pointed out, Blum seems to know exactly what he’s doing.
If Blum were to bring his claim under Title VII of the 1964 Civil Rights Act, he would have needed to file a charge with the Equal Employment Opportunity Commission. This means that he may have to wait up to 180 days before he can file the lawsuit.
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Again, Title VII is limited to employers with at least 15 employees and allows plaintiffs to recoup compensatory and punitive damages of not more than $300,000. Section 1981 doesn’t have these restrictions.
Meanwhile, Fearless Fund’s legal counsel has argued that the First Amendment protects grants and donations, which carry separate meanings from contracts. “Think of every foundation out there that issues grants. 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?” he asked. We eagerly await the outcome of the lawsuit.
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