Update on Post-SFFA Challenges to DEI Initiatives: Law Firm Fellowship Programs in the Crosshairs

At a Glance

• Since the U.S. Supreme Court’s decision in Students for Fair Admissions vs. Harvard, the American Alliance for Equal Rights has now sued two large law firms for alleged violations of Section 1981 of the Civil Rights Act of 1866.
• Despite the Alliance’s complaints referencing gender, LGTBQ+ status and/or disability, the claims are limited to Section 1981 which addresses only racial discrimination.

As previewed in our previous client alert,¹ certain groups have now pursued legal action contending that employers’ diversity, equity and inclusion (DEI) programs are subject to legal challenge based on the U.S. Supreme Court’s recent decision in Students for Fair Admissions vs. Harvard (SFFA). The American Alliance for Equal Rights (Alliance), an organization spearheaded by the same activists and lawyers as Students for Fair Admissions, has now sued two large law firms, Perkins Coie LLP (Perkins) and Morrison & Forester LLP (MoFo), for alleged violations of Section 1981 of the Civil Rights Act of 1866 (Section 1981),² stemming from their fellowship programs offered to law students. MoFo is also a target of Sen. Tom Cotton (along with 50 other law firms)³, and both Perkins and MoFo are targets of five Republican State Attorneys General⁴ (as are the other Am Law 100 firms), attacking law firms’ DEI efforts in the wake of SFFA. 

It appears the Alliance engaged in forum shopping to determine where it should bring suit. Despite Perkins being headquartered in Seattle, the case was brought against it in federal district court in Dallas. And though MoFo is based in San Francisco, the Alliance brought suit in federal district court in Miami. These district courts are located in the Fifth and Eleventh Circuit Courts of Appeals, respectively, which are historically more conservative than the Ninth Circuit that covers Seattle and San Francisco. 

Challenges to the law firms’ fellowship program criteria. According to the complaint, Perkins’ Diversity Fellowship Program seeks “[m]embership in a group historically underrepresented in the legal profession, including students of color, students who identify as LGBTQ+, and students with disabilities.”⁵ MoFo’s Keith Wetmore 1L Fellowship for Excellence, Diversity, and Inclusion has said it was intended for law students “who are members of historically underrepresented groups in the legal industry.”⁶ The Alliance’s principal, Ed Blum, said his group targeted Perkins and MoFo “because they were ‘crystal clear’ about the criteria for their diversity fellowships.” “There are dozens of other firms that have similar policies. But these were the most stark and the most revealing in public materials,” Blum said.

What does the Alliance want? Blum announced that the Alliance believes that law firms should “cast[] a wide net in order to find unique individuals as opposed to just focusing strictly on race and ethnicity,” adding “[t]here’s plenty of smart kids of all races who are graduating from less competitive law schools where you can find talent” and “[y]ou just have to go look for it.”⁷

The bar responds. The American Bar Association (ABA) responded disapprovingly to the actions of elected officials and the Alliance in the wake of the SFFA decision, stating it is “deeply troubled” by the efforts to challenge law firms’ diversity programs. “The legal profession needs to create a more diverse workforce,” ABA President Mary Smith said in the statement. Smith noted that 6% of lawyers are Hispanic despite making up 19% of the U.S. population, while only 5% of lawyers are Black, despite comprising 13% of the U.S. population. The ABA’s statement added that “[d]iversity also is good for business and something more clients are demanding.”⁸

Latest action. On August 29, 2023, the Alliance moved for expedited preliminary injunctions against MoFo and Perkins. The Alliance’s preliminary injunctions seek to prevent Perkins and MoFo from presently opening their fellowship application windows, selecting fellows, or otherwise operating their fellowships as currently structured. The respective motions ask the courts to decide by October 31, in light of the fellowship applications opening in November 2023 (both firms). The briefs in support of the motions are largely the same.

Who represents the Alliance? Consovoy McCarthy PLLC represents the Alliance in both actions and is the same firm that represented Students for Fair Admissions from the district court on up to the Supreme Court in SSFA.⁹

The claims. Despite the Alliance’s complaints referencing gender, LGTBQ+ status and/or disability, the claims are limited to Section 1981 which addresses only racial discrimination. Section 1981, which applies to private contracts, “protects the would-be contractor along with those who have already made contracts.” Domino’s Pizza, Inc. v. McDonald, 546 U.S. 470 (2006). One theory behind why the Alliance sued under only Section 1981 is that, unlike Title VII and the Americans with Disabilities Act, Section 1981 has no administrative exhaustion requirement before bringing suit.¹⁰ Further, because Section 1981 applies to the making and enforcement of all types of contracts, if the law proves a viable basis for racial preference claims in the employment setting then arguably it will apply to all contexts where there is an agreement at issue.¹¹

The Alliance’s arguments for preliminary injunction. In seeking a preliminary injunction, the Alliance must show that it is “likely to succeed on the merits, that [it] is likely to suffer irreparable harm in the absence of preliminary relief, that the balance of equities tips in [its] favor, and that an injunction is in the public interest.” Winter v. Nat. Res. Def. Council, Inc., 555 U.S. 7, 20 (2008).

• Fellowship programs likely violate Section 1981: The Alliance alleges that the fellowships expressly exclude certain applicants based on race, and therefore racial discrimination is blocking the creation of contractual relationships between the Alliance members and the law firms.
• The Alliance and its members will suffer irreparable harm without immediate relief: The alleged harm is the denial of equal treatment because the fellowships use “discriminatory classification” that impose a barrier on the Alliance members from having the opportunity to apply for or receive the fellowships.
• Balance of harms favors the Alliance: The Alliance claims that “the inability to compete on an equal footing, and the potential permanent loss of an opportunity to join a renowned fellowship” are substantial harms, while the law firms would not be substantially injured by a slight delay in selecting and hiring fellows, and in any event, the firms each “brought any harm it might suffer on itself by adopting a racially discriminatory program.”
• Public interest favors the Alliance: The Alliance asserts that it is in the public interest to bring the actions to carry out Congress’s will, especially because the firms have allegedly engaged in “racial discrimination,” which “is invidious in all contexts.” SFFA, 143 S. Ct. at 2166 (cleaned up).

Threshold issues. The Alliance will face several probable challenges to its standing to bring suit, meaning whether it even has the capacity to bring these cases against Perkins and MoFo.

1. Preliminary injunction may not be available for 1981 claims against private parties because of inability to show irreparable harm. In Moses v. Comcast Cable Communications Management, LLC, plaintiffs sought a preliminary injunction to stop Comcast from providing a grant program that was available to only people of color. The plaintiffs claimed that they met their burden of showing irreparable harm because — they argued without further proof — “unashamed, on-its-face race discrimination” was presumptively an inherent dignitary harm. The court rejected this presumption, however, because the suit did not involve a claim under the Constitution’s Equal Protection Clause or against the government. The court held that irreparable harm is neither inherent nor presumed in a statutory claim against a private company’s use of racial classifications, and therefore preliminary injunctive relief was unwarranted.¹² Other courts have similarly held that there is no presumption of irreparable injury in Section 1981 suits brought against private actors, and that compensatory damages are an effective remedy without the need for granting a preliminary injunction.¹³
2. Anonymity of member declarations could be problematic. Ostensibly fearing reprisal, all of the Alliance members’ declarations say: “I am signing this declaration under a pseudonym because I am a law student, and if my participation in this litigation becomes public, I fear reprisal from other students on campus, my professors, future employers, and the public. I also fear that [Morrison / Perkins] would hold my involvement against me when selecting fellows.”
   • Why this is important. In Do No Harm v. Pfizer, the United States District Court for the Southern District of New York held that “Plaintiff must name the members upon whose standing Defendant relies, and that the anonymous member declarations are not enough.”¹⁴
   • How the Alliance attempts to overcome identifying its members. The Alliance’s architect, Blum, submitted supporting declarations in support of the preliminary injunctions in both the MoFo and Perkins cases, explaining why the Alliance members submitted their declarations anonymously: “I have witnessed firsthand the retaliation that individuals can receive for bringing litigation challenging racial preferences. For example, I supported Abigail Fisher in her challenge to affirmative action in Fisher v. Univ. of Texas at Austin, 570 U.S. 297 (2013), and Fisher v. Univ. of Texas at Austin, 579 U.S. 365 (2016).”Note Students for Fair Admissions fought to maintain the anonymity of its members who were not implicated in associational standing, but not the members key to standing: “SFFA has already produced the documents relevant to establishing its associational standing (the only matter at issue). Specifically, SFFA has produced the names of (and relevant information about) the members on whose behalf this action is brought . . . .”¹⁵
3. Are the members “able and ready” to apply? To survive standing challenges, a plaintiff must show that he or she is “able and ready” to apply.¹⁶The Alliance could face challenges that its members are “able and ready” to apply to the law school fellowship programs based on the evidence proffered in support of the preliminary injunctions.
   • Perfunctory declarations could be insufficient. In Do No Harm v. Pfizer, the district court rejected standing based on the assertion that member non-applicants could satisfy standing requirements by asserting that they would be “able and ready to apply when the discrimination stops.” The Do No Harm decision found that “perfunctory two-page anonymous declarations” failed to show that the members were ready and able to apply for the fellowship where their universities attended and majors or courses of study were unidentified, and where there were no details about career and educational goals, employment history or interests. The court explained that the declarants’ statements about being drawn to the fellowship’s scholarship for a fully funded MBA as a way to enrich professional experience and about gaining valuable management skills, failed to show “a committed interest and intent.” As to the fellowship’s requirement that applicants display “exceptional leadership potential,” the court found that the member declarants’ were “generalized recitals” without providing any particularity for the activities, leadership positions or volunteer programs they asserted involvement. Additionally, the court zeroed in on the members’ statements that they had joined Do No Harm because they “support its mission as well as this lawsuit,” which demonstrated a generalized grievance against Pfizer’s alleged affirmative action efforts rather than an actual desire to apply for the fellowship program.
   • The Alliance members’ declarations could be found perfunctory. The Alliance members’ declarations in the law firm cases — although reflecting that they are in law school programs — do not identify the undergraduate and law schools attended, the names of organizations in which they have been involved, particularity around the positions they have held with nonprofits, or how they have shown a commitment to diversity. These could represent the sort of “generalized recitals” rejected by the Do No Harm Court. Additionally, the Alliance members’ declarations state, “I became a member of the American Alliance for Equal Rights because I support its mission as well as this lawsuit,” which could evince mere generalized grievances against the law firms’ diversity efforts, rather than any actual desire to apply for the programs.
4. Failure to apply on futility grounds?Unlike the members in SFFA, who applied for admissions to Harvard and UNC and were rejected, the Alliance’s members here did not apply for the law firms’ fellowship programs. What could that do for standing? The members claim that applying for the law firm fellowship programs as currently fashioned would be futile, contending that they would apply if the law firms stopped racially discriminating. There could be some merit to this argument.
   • Is the selection criteria de facto exclusion of certain protected groups? In Do No Harm, Pfizer argued that the fellowship did not categorically ban any applicants from applying and that the fellowship materials state that Pfizer is an equal opportunity employer and note the company’s commitment to equal opportunity for all employees and applicants without regard to race. But the court disagreed with Pfizer’s position: “Perhaps the program’s goals of increasing the pipeline could potentially be achieved through the selection of candidates who are committed to and have demonstrated experience in diversity efforts, regardless of the candidate’s race,” the court explained, “[b]ut Defendant has not stated or put forth evidence of any alternative interpretation of the stated goal of the Fellowship to that posited by Plaintiff. Nor has Defendant discussed how candidates who are not Black / African American, Latino / Hispanic and Native Americans could meet the program’s stated goals.”¹⁷
   • Aftermath. During the pendency of the litigation, Pfizer modified the description of its fellowship. Instead of stating that applicants must “[m]eet the program’s goals of increasing the pipeline for Black/African American, Latino/Hispanic and Native Americans,” the revised fellowship eligibility criteria instructs that applicants must have a “[d]emonstrated commitment and ability to advance diversity, equity and inclusion for Black/African American, Latino/Hispanic and Native Americans at Pfizer, in particular growing the pipeline of Black/African American, Latino/Hispanic and Native Americans at Pfizer.”¹⁸ More directly, Pfizer updated the program’s standards to explicitly state that applicants “are eligible to apply for the Breakthrough Fellowship regardless of whether [they] are of Black/African American, Latino/Hispanic, or Native American descent.”¹⁹

     Similarly, since the lawsuit was filed, MoFo has changed the eligibility criteria for its fellowship program from students “who are members of historically underrepresented groups in the legal industry” to students “with a demonstrated commitment to diversity and inclusion in the legal profession.”²⁰ Perkins, meanwhile, has not changed the eligibility requirements for its diversity fellowship program.²¹

As we continue to see these types of legal challenges to DEI programs filed, organizations that may be potentially affected should consider a logical approach in response. Changes to eligibility criteria for employment and contracting diversity programs spurred by these lawsuits, as well as the SFFA decision, are part of a larger trend as organizations identify the specifics of their programs and policies that could be argued to be race-conscious and look for easy ways to tighten or alter those things that could be challenged or misunderstood.²² Recently, another law firm that has not been in the crosshairs of the Alliance but was a target of Sen. Cotton’s letter and the Republican State Attorneys General letter, Gibson, Dunn & Crutcher, modified the criteria for its diversity and inclusion scholarship from “students who identify with an underrepresented group” to students “who have demonstrated resilience and excellence on their path toward a career in law”.²³