The Pulse: Federal Judge Orders Minority-Business Agency Opened to All Races

DEI

As part of NMSDC’s ongoing efforts to promote DEI and push back against efforts threatening supplier diversity and other DEI programs, we are highlighting the latest DEI news, legal developments, and court filings. This March edition of the Pulse is below.

Picture of man in a blue suit holding a table that has DEI projecting from it.

DEI in the News

America First Legal, a Trump-Aligned Group, is Spoiling for a Fight
The New York Times March 21

They May Not Agree on How to Define DEI, but That’s No Problem for Kansas Lawmakers Attacking It
AP News March 21

Alabama Governor Signs Law Banning Diversity Programs in Schools
Reuters March 20

House Republicans Want to Punish Medical Schools with DEI Programs
MSNBC March 20

Law Student Sues Chicago Bears Over “Legal Diversity Fellow” Role
JD Supra March 20

GOP State Attorneys Resist Biden’s Proposed Diversity Rules for Apprenticeship Programs
AP News March 20

Alabama Republicans Pass Expansive Legislation Targeting D.E.I.
The New York Times March 19

Critics Are Wrong About DEI at Harvard, But There’s Plenty of Room to Improve
The Harvard Crimson March 19

Anti-DEI lawsuits threaten nonprofits, philanthropies
Nonprofit Quarterly March 19

GOP Kentucky House Votes to Defund Diversity, Equity, and Inclusion Offices at Public Universities
ABC News March 15

Pfizer Ruling Threatens Legal Tactic Behind Diversity Challenges
Bloomberg Law March 15

DEI Under Scrutiny, Part VIII: Eleventh Circuit Strikes Down Florida Ban on Workplace DEI Training Under First Amendment
The National Law Review March 15

National Civil Rights and Latino Organizations Join Fight to Protect Program to Increase Diversity at Smithsonian Museum
Lawyers’ Committee for Civil Rights March 15

154 Fortune 500 Companies Released Diversity Data Last Year. Here’s What They Reveal About the State of DEI
Fortune March 13

Fifth Third’s Carla Cobb Recognized as Top 10 Supplier Diversity Leader for Commitment to Growing Small Businesses and Making Community Impact
CSRwire March 13

NMSDC Disappointed in Texas District Court Ruling, Reiterates Strong Support for Minority Business Development
GlobeNewswire March 11

Firms from KKR to Coors Flag DEI as Business, Legal Risk
Bloomberg Law March 11

White Male Novant VP’s Bias Win Upheld in Diversity-Firing Suit
Bloomberg Law March 11

Wake Up Call: Diverse Big Law Firm Hiring Took a Big Hit in 2023
Bloomberg Law March 8

A Colonel Promoted Diversity. So a GOP Senator is Blocking his Promotion
The Washington Post March 7

Biggest US Law Firms Hired Fewer Diverse Candidates Amid DEI Backlash
Financial Times March 7

Workplace DEI Programs Have a Path Forward in the Face of Backlash
Bloomberg Law March 7

Iowa Poised to End Gender Parity Rule for Governing Bodies as Diversity Policies Targeted Nationwide
CBS News March 7

U.S. Judge Bars Federal Minority Business Agency from Considering Race
Reuters March 6

Johns Hopkins Medicine Chief Diversity Officer Steps Down After Viral Backlash Over ‘Privilege’ Definition
The Baltimore Sun March 6

Corporate America’s Diversity Backtrack Has a Silver Lining
Fortune March 6

Federal Judge Orders Minority-Business Agency Opened to All Races
The Washington Post March 6

Business is Booming for DEI lawyers as Corporate America asks “What’s Legal?”
Bloomberg Law March 5

Black Professional Women are Struggling to Find Their Way in a Job World Where they have Few Workplace Peers and Diversity is Under Attack
Fortune March 4

Florida’s Anti-DEI Push Axes ‘Bias Elimination’ Lawyer Training
Bloomberg Law Feb. 29

“There’s too much nepotism in this organization” and Other Complaints from a New DEI Survey
Inc. Magazine Feb. 28

Diversity Heads and Corporate Attorneys Clash over DEI Legal Risks
Fortune Feb. 28

The Future of DEI is Still Unwritten
The Aspen Institute Feb. 26

Edward Blum Sues Smithsonian Museum Director Over a Latino-Focused Internship Program
CNN Feb. 26

What Are Diversity Programs and Why Are They Being Challenged?
National Law Review Feb. 23

Alabama Senate OKs Bill Targeting College Diversity Efforts
AP News Feb. 23

Beyond DEI: Unpacking Utah’s Debate Over Campus Diversity Initiatives
Deseret News Feb. 22

DEI in the Courts

Chu, et al. v. Rosa
On Jan. 17, a coalition of education groups sued the Education Commissioner of New York, alleging that its free summer program discriminates on the basis of race and ethnicity. The Science and Technology Entry Program (STEP) permits students who are Black, Hispanic, Native American, and Alaskan Native to apply regardless of their family income level, but all other students, including Asian and white students, must demonstrate “economically disadvantaged status.” The plaintiffs sued under the Equal Protection Clause and requested preliminary and permanent injunctions against the enforcement of the eligibility criteria.

  • Latest Update: The defendant’s response to the complaint is due March 18.

Duvall v. Novant Health, Inc.
On March 12, the Fourth Circuit Court of Appeals reviewed a case where a white male marketing executive sued Novant Health, alleging wrongful termination due to his race and sex. The plaintiff presented evidence indicating Novant’s initiative to diversify its workforce, suggesting a discriminatory motive. A jury awarded the plaintiff $10 million in punitive damages, alongside other compensatory damages. Novant appealed, contesting the punitive damages.  The Fourth Circuit partly upheld and partly overturned the district court’s ruling. It upheld the jury’s decision regarding the termination but overturned the punitive damages ruling. While there was enough evidence for the jury to find discrimination in the termination, there wasn’t sufficient evidence to prove “malice or reckless indifference” by Novant, so the punitive damages were set aside.

Bresser v. The Chicago Bears Football Club, Inc.
On March 11, Bresser, a white male law student filed a complaint against the Chicago Bears. He alleges that the team discriminated against him based on his race and sex by rejecting his application for a “diversity legal fellow” position. Despite meeting the job qualifications, the Bears rejected his application after an employee viewed his LinkedIn profile, which included his photo. The complaint includes claims for race and sex discrimination under Title VII, Section 1981, and Illinois law, along with conspiracy claims under Sections 1985 and 1986.

  • Latest Update: The complaint does not appear to have been served yet, according to the docket.

Young v. Colorado Department of Corrections
On March 11, the Tenth Circuit upheld the dismissal of a white male former employee’s hostile work environment claims against the Colorado Department of Corrections. The plaintiff alleged that the department’s Equity, Diversity, and Inclusion (EDI) training materials created a hostile work environment by making statements implying all whites are racist and responsible for the oppression of people of color. The court affirmed the dismissal, stating the plaintiff failed to show that the EDI training, which occurred only once during his employment, constituted severe and pervasive harassment. However, the court acknowledged the plaintiff’s concerns about the content of the training, noting that race-based training programs can contribute to hostile workplaces when combined with ongoing stereotyping and expectations of discriminatory treatment.

Do No Harm v. Pfizer, Inc.
On March 6, the Second Circuit affirmed the district court’s dismissal of reverse discrimination claims brought by the medical advocacy association Do No Harm against Pfizer. Do No Harm alleged that Pfizer’s Breakthrough Fellowship Program discriminated against white and Asian applicants. However, the court ruled that Do No Harm lacked standing because it failed to name any affected members, as required by Supreme Court precedent. The court stated that naming affected members ensures genuine injury and prevents organizations from lodging hypothetical legal challenges.

Nuziard v. Minority Business Development Agency
On March 5, a district court in the Northern District of Texas ruled that the racial presumption used in allocating federal funds for minority business assistance violates the Fifth Amendment’s equal protection guarantee. Citing the precedent set by SFFA v. Harvard, the court held that the presumption of social or economic disadvantage by the Minority Business Development Agency did not withstand strict scrutiny. While acknowledging the agency’s interest in addressing discrimination in government contracting, the court found that its program lacked the necessary narrow tailoring to achieve this goal.

Honeyfund.com, Inc v. DeSantis
On March 4, the Eleventh Circuit affirmed the district court’s decision to preliminarily enjoin Florida’s “Stop WOKE Act.” The Act, among other provisions, barred employers from mandating employees’ participation in training that categorized certain groups as “privileged” or “oppressors.” Florida contended that the Act regulated conduct, not speech, and thus fell outside the scope of the First Amendment. However, the Eleventh Circuit disagreed, ruling that the law constituted both content and viewpoint discrimination and did not withstand strict scrutiny. Judge Britt C. Grant, writing for the court, emphasized that the Act’s purpose was to restrict speech, and stated that contentious viewpoints should be debated in the marketplace of ideas rather than regulated by legislation or litigation.

Beneker v. CBS Studios, Inc., et al.
On Feb. 29, America First Legal filed a lawsuit on behalf of Brian Beneker against CBS Studios for alleged violation of the Civil Rights Act of 1964. The plaintiff, Beneker, is a script coordinator and freelance scriptwriter who has been consistently writing episodes for a CBS television series. He alleged that he was “repeatedly denied a staff writer position” on the show despite positions being available. Beneker believes he was passed over for the position in favor of “nonwhite, LGBTQ, or female” candidates.

  • Latest Update: Mr. Beneker requests a declaratory judgment, permanent injunction, compensatory, and punitive damages, equitable relief including back pay, and reimbursement of reasonable costs and expenses, to address the alleged violation of anti-discrimination laws and provide an appropriate remedy for the harm caused by the defendants’ actions.

AAER v. Zamanillo
On Feb. 29 The American Alliance for Equals Rights (AAER) filed a lawsuit against the Smithsonian Institute’s Latino Museum Studies Program, alleging that it violates the U.S. Constitution by favoring Latino applicants over others. The complaint notes that the program has never hired an intern who identified as non-Latino and specifically targets Latina, Latino, and Latinx-identifying undergraduate students. AAER argues that this selective approach violates the Fifth Amendment’s “equal-protection guarantee” and demands an end to “discriminatory” practices.

Gerber v. Ohio Northern University
On June 30, 2023, a former law professor sued Ohio Northern University, alleging wrongful termination following an internal investigation that determined that he bullied and harassed other faculty members. On Jan. 23 represented by AFL, the plaintiff filed an amended complaint, claiming his termination of employment was retaliation for opposing the university’s DEI principles and race-conscious hiring, which he deemed illegal. The plaintiff alleged breach of contract, violation of Ohio civil rights laws, • and various torts including defamation and wrongful termination.

  • Latest Update: On Feb. 20,  the defendants filed answers and a joint motion for partial dismissal of the plaintiff’s second amended complaint. The defendants argued for dismissal of the wrongful termination claims because such claims only apply to at-will employees, and the plaintiff was a contract employee. The defendants also argued for the dismissal of all claims against the defendants in their individual capacities, including the “conclusory” tort claims.

Alexandre v. Amazon.com, Inc
White, Asian, and Native Hawaiian entrepreneurs, representing a potential group of previous and prospective applicants to Amazon’s “delivery service partner” (DSP) program, contested a DEI initiative that offers $10,000 grants to eligible delivery service providers who identify as “Black, Latinx, and Native American entrepreneurs.” The plaintiffs have accused Amazon of breaching California state civil rights statutes that forbid discrimination. On Dec. 6, 2023, Amazon filed a motion to dismiss the case.

  • Latest Update: On Feb. 16, the plaintiffs filed their opposition to Amazon’s motion to dismiss. They argue that they visited Amazon’s website with the intention of becoming an Amazon DSP but were deterred by the presence of Amazon’s DEI program, hence they did not proceed with their application. The plaintiffs also assert that Amazon’s public policy arguments should fail because the program is designed as “virtue-signaling to curry favor with certain races.”

Valencia AG, LLC v. New York State Off. of Cannabis Mgmt. et al.
A cannabis company owned by white men sued the New York State Office of Cannabis Management for alleged discrimination. They claim that New York’s Cannabis Law and its regulations favor minority-owned and women-owned businesses. Specifically, they challenge regulations promoting “social & economic equity” (“SEE”) applicants, arguing it violates the Equal Protection Clause and Section 1983. On Feb. 7, the plaintiff filed a motion for a temporary restraining order and preliminary injunction, seeking to prohibit the defendants from implementing the regulations, charging SEE applicants reduced fees, or preferentially granting SEE applicants’ applications.

  • Latest Update: On Feb.8, the court denied the plaintiff’s motion for a temporary restraining order because Valencia had not made a sufficient showing that it would experience irreparable harm without it, characterizing the motion as “plagued by a lack of personal knowledge.” The court will be scheduling a hearing on the plaintiff’s motion for preliminary injunction “in the coming days.”

Haltigan v. Drake
A white male psychologist sued UC Santa Cruz, arguing that requiring faculty candidates to submit statements on DEI principles violated his First Amendment rights. He claimed this demand acted as a loyalty oath, forcing him to alter his views to fit the university’s stance. The plaintiff sought a declaration that this requirement violated the First Amendment and an injunction against its enforcement. On Jan.12, the district court granted UC Santa Cruz’s motion to dismiss, allowing the plaintiff to amend his complaint.

  • Latest Update: On Feb. 2, the plaintiff filed a second amended complaint, adding additional allegations regarding his job search, his DEI statement, and why his application would have been pointless. The plaintiff brought the same claims and requested the same relief as in his first complaint.

Other DEI Developments

March 20 Governor Kay Ivey of Alabama signed SB129 into law, a bill that prohibits public schools and universities from maintaining or funding diversity, equity, and inclusion programs. The legislation also prohibits requiring students, employees, and contractors to participate in “training, orientation, or course work that advocates or requires assent to a divisive concept.” It also allowed state agencies, including local boards of education and public universities, to discipline or terminate the employment of any employee or contractor who “knowingly violates this act.” SB129 comes amid a nationwide, anti-DEI push led by conservative lawmakers. The bill will take effect in October.

March 19 Representative Greg Murphy (NC-3) introduced the Embracing Anti-Discrimination, Unbiased Curricula, and Advancing Truth in Education (EDUCATE) Act to ban race-conscious programs at medical schools and accrediting institutions. The EDUCATE Act would cut off federal funding to medical schools that have DEI programs, DEI offices, or any “functional equivalent.” This bill would also require accreditation agencies to eliminate DEI from their standards, while still allowing instruction about health issues tied to race or collecting data for research.

March 1 The University of Florida announced that it would be eliminating all positions related to diversity, equity, and inclusion following the new statewide rule established by The Florida Board of Governors. The regulation prohibits using state funds for DEI programs and defines DEI as “any program, campus activity, or policy that classifies individuals on the basis of race, color, sex, national origin, gender identity, or sexual orientation and promotes differential or preferential treatment of individuals on the basis of such classification.” Thirteen full-time positions were eliminated as well as fifteen administrative appointments. Prior to the rule, UF had $5 million in funds allocated to such programs

Feb. 25 The parties in American Alliance for Equal Rights (AAER) v. Hidden Star filed a joint stipulation of dismissal of all claims, and the court closed the case the next day. AAER agreed to dismiss the suit in exchange for clarification of grant eligibility-related language on Hidden Star’s website.

Feb. 22 The Equal Employment Opportunity Commission (EEOC) filed an amicus curiae brief in Roberts & Freedom Truck Dispatch v. Progressive Preferred Ins. Co., et al. The case challenges Progressive’s grant program for Black entrepreneurs under Section 1981. In a recent update, the EEOC clarified that courts base Section 1981 standards for private-sector affirmative action plans on Title VII standards. The EEOC, responsible for enforcing Title VII, argued that Section 1981 also permits voluntary affirmative action plans, akin to Title VII. Consequently, the EEOC advocated for assessing Section 1981 challenges to such plans using a reasonableness standard, similar to Title VII, rather than the strict scrutiny standard applied to affirmative action programs in post-secondary education, as seen in the SFFA decision.

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