Key U.S. District Court Ruling: Plaintiff’s Challenge to DEI Program Under Section 1981 Fails When She Lacked Standing Because She Did Not Apply

At a Glance

• The America First Legal Foundation, which filed suit on behalf of the plaintiff, included this action on its website as one of its “featured actions” in the “DEI” space. This case is similar to many other challenges to DEI programs in that the lawsuit was being brought by a plaintiff who has not applied to the program at issue.
• All told, the court found that the plaintiff did not have standing to bring a claim derived from an allegedly discriminatory policy from which she had yet to be subjected. The plaintiff has appealed to the Fifth Circuit.
• As these cases continue to unfold — at the trial level and on appeal — organizations should be prepared to assert standing defenses when it becomes clear that a plaintiff did not take these affirmative steps.

In our October 2023 alert on Defending Litigation Attacks on DEI Programs: A Status Update, we advised to “stay tuned” regarding a pending motion to dismiss filed by Amazon in response to a class action complaint challenging its delivery service partners (DSP) program on the basis that Black, Latinx and Native American business owners who are ultimately accepted as Amazon DSPs after a robust application process are eligible to receive a $10,000 stipend. The complaint alleged the opportunity for this stipend violated 42 U.S.C. § 1981 by discriminating against whites and Asian Americans. The America First Legal Foundation, which filed suit on behalf of the plaintiff, included this action on its website as one of its “featured actions” in the “DEI” space. For her part, the white plaintiff did not complete an application for the DSP program after allegedly learning that she would not be eligible for the stipend but alleged that she would immediately apply for it once Amazon revoked its alleged racially discriminatory policy.

This case is similar to many other challenges to DEI programs in that the lawsuit was being brought by a plaintiff who has not applied to the program at issue.

Last Thursday, April 25, 2024, the U.S. District Court for the Eastern District of Texas granted Amazon’s motion to dismiss the complaint, finding that the plaintiff lacked Article III standing to pursue her § 1981 claim. In reaching this result, the court found that none of the five injuries the plaintiff alleged were concrete, particularized, and actual or imminent, and thus, the court lacked subject matter jurisdiction over the plaintiff’s claim.¹

First, the court found that the plaintiff’s contention that she must pay $10,000 more to start a DSP business because she is white did not establish an imminent injury “because an unpredictable chain of hypothetical events stands in the way,” especially in light of the “lengthy, competitive, and highly selective” DSP selection process.

Combining the plaintiff’s second and fourth purported injuries, the court held that the plaintiff did not allege concrete injuries because she offered no evidence to demonstrate that applying to the “DSP program would have been in vain due to discriminatory practices in the application process itself” or that “her application is less credible than applications submitted by Black, Latino, and Native American applicants.”

As for the Plaintiff’s third alleged injury — that she suffered from a competitive disadvantage because the DSP program is “drawing in minority applicants who would otherwise sit out or pursue other career opportunities” — the court determined that this alleged injury also was “hypothetical and conjectural in nature” because the plaintiff “has chosen not to apply to the DSP program and, thus, cannot currently suffer from a competitive disadvantage.”

Finally, regarding the plaintiff’s claim that she was allegedly injured because she could not “apply to the DSP program or have her company become an Amazon [DSP] without subjecting herself to racial discrimination,” the court held that this purported injury too “flows from a hypothetical chain of possibilities that might never come to pass” when the plaintiff “may never receive a contractual offer from Amazon to become a DSP owner and, therefore, may never be denied a contractual benefit due to her race.”

Conclusion

All told, the court found that the plaintiff did not have standing to bring a claim derived from an allegedly discriminatory policy from which she had yet to be subjected. The plaintiff, however, filed a notice of appeal on Friday, April 26, 2024, and this issue of standing is now headed to the U.S. Court of Appeals for the Fifth Circuit. Even so, as this case demonstrates, plaintiffs bringing challenges to organizational DEI programs face standing concerns when they do not apply for or otherwise attempt to participate in those programs. As these cases continue to unfold — at the trial level and on appeal — organizations should be prepared to assert standing defenses when it becomes clear that a plaintiff did not take these affirmative steps.