DEI scores a court win
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A federal judge in Ohio last week dismissed a closely watched case filed by America First Legal, the anti-diversity, equity and inclusion group founded by former Trump White House senior adviser Stephen Miller.
Why it matters: The decision seems like a victory for corporate DEI initiatives, but Miller and his allies still appear to be winning the broader war against these programs.
Catch up fast: America First's client, Nathan Roberts, a white man who owns a trucking business in Ohio, filed the suit last year over a small business grant program focused on Black trucking entrepreneurs, sponsored by Progressive Insurance and administered by a fintech called Hello Alice.
- Roberts said in the suit he would have qualified for the grant but was blocked because he's white. He asserted that violated a Civil War-era law that prohibits racial discrimination in the making and enforcing of contracts. (The law was meant to ensure former enslaved people's economic rights.)
- America First, the American Alliance for Equal Rights (the group that helped overturn affirmative action in universities), and an organization called Do No Harm have filed several suits under this law — including ones against Pfizer and Morgan Stanley, as well as a few big law firms.
State of play: The Ohio judge didn't rule on the merits of this argument, instead deciding that Roberts doesn't have standing — the right to challenge the actions of the defendants — to file his lawsuit.
- The plaintiff's request for relief in this case ... "amounts to nothing more than a generalized grievance," writes Judge Patricia Gaughan.
- The standing issue has hindered other lawsuits like this, including one dismissed last year against Pfizer.
The big picture: Court victories could provide reassurance to companies that are sticking with their DEI efforts in the face of all these lawsuits.
- But many aren't. Even with courtroom success, there's been a chilling effect. Companies are changing DEI programs to avoid targeting any specific racial or demographic group.
- Case in point: Last week's decision notes that Progressive has changed the way its grant program works — the company will no longer use any race-based criteria.
What they're saying: Hello Alice, which manages the grant program for Progressive, said it couldn't comment on the company's specific policies. "We are crafting our grant programs to be even more inclusive than ever," the company's president, Elizabeth Gore, said in an emailed statement.
- Hello Alice's lawyer, the former acting solicitor general Neal Katyal, portrayed the decision as a win.
- It "beats back a meritless lawsuit and makes clear that the federal courts will not hear weak challenges such as these," he said in a statement. "The dismissal of this case is significant because the lawsuit would make it more difficult for diverse small businesses to compete in today's economy."
What's next: America First has filed a notice of appeal on "the judge's incorrect decision," the group's general counsel, Gene Hamilton, told Axios in an email.
