Court Upholds Contractual Preferences for BIPOC Groups

For those of us committed to reparative finance and “DEI” programs, most of the recent news has been discouraging. However, thanks to the law firm Faegre Drinker, I came across this interesting recent case (Correll vs Amazon) in California based on the same law that was used to attack the Fearless Fund and others (referred to here as Section 1981). In this case, the plaintiff sued Amazon asserting that Amazon’s racial incentives for sellers created a competitive disadvantage for him as a prospective White seller. The plaintiff asserted that this competitive disadvantage deterred him from entering into a contract with Amazon, and that this deterrence was illegal discrimination under Section 1981.

The court held that a violation of Section 1981 occurs only when a person is prevented from entering into a contract. Citing precedent from several other circuits, the court opined that deterrence alone is not a violation. The court specifically contrasted this with discrimination law in the employment context, in which it could be sufficient to show deterrence.

I found this opinion hopeful because it suggests that, at the very least, organizations should be able to continue to advance programs that explicitly prioritize funding very BIPOC-led organizations or that offer preferred terms for such organizations. I continue to believe it should remain legal under Section 1981 to exclusively finance BIPOC-led organizations. But, if exclusive support is precluded in the future, it seems there is at least well established law to support funding preferences.