Key Takeaways:
- Litigants have begun testing the reach of SFFA to other aspects of organizations' operations, well beyond college admissions.
- Scholarship and grant programs, procurement policies, and employment decisions have faced challenges within higher education and beyond.
- Higher education institutions and other organizations should audit their policies and programs to assess if and where race-based decision making is involved.
It has been over a year since the Supreme Court issued its decision striking down Harvard's and the University of North Carolina's admissions policies in Students for Fair Admissions ("SFFA") v. Harvard College and SFFA v. University of North Carolina (together referenced herein as "SFFA"). The Court's holding in SFFA addressed only university admissions programs, but as many anticipated, the decision's impact has not been so limited. With the incoming second Trump administration and a new Congress beginning its term, legislative and regulatory changes in this space are sure to follow. In advance of this transition, we are taking stock of SFFA's reach now, based on activity in the courts since the June 2023 ruling. We offer the following observations.
1. School admissions: The Supreme Court has declined two opportunities to expand its SFFA holding.
Following the Supreme Court's decision in SFFA, many higher education institutions focused their admissions efforts on race-neutral factors to achieve their diversity goals. In SFFA, the Supreme Court explained that institutions could "define their missions as they see fit," and Justices' concurring opinions signaled that institutions could use race-neutral factors to achieve diversity goals, so long as those race-neutral factors are not a proxy for race. In 2024, two challenges made by coalitions of parents to high school admissions policies made their way to the Supreme Court, and the Court declined to intervene.
Thomas Jefferson High School. On February 20, 2024, the Supreme Court denied a certiorari petition to review a Fourth Circuit decision approving Thomas Jefferson High School's admissions policy. The high school's admissions policy allocated a certain number of seats to public middle schools in the area and used certain factors, including "Experience Factors," to evaluate students within each middle school. These Experience Factors included race-neutral criteria, such as an applicant's special education status, status as an English-language learner, and attendance at a historically underrepresented public middle school. The Fourth Circuit held that the admissions program comports with the Equal Protection Clause because it did not disparately impact Asian American students, nor was there evidence of discriminatory intent, both of which were needed for such a claim.1 Although the Supreme Court declined to hear an appeal of the matter, Justices Alito and Thomas dissented. The two Justices saw the policy as intentional discrimination and were concerned that the high school's policy would become a "model . . . to potential replicators as a blueprint for evading SFFA."
Boston Exam Schools. On December 9, 2024, the Supreme Court declined to hear an appeal from Boston Parent Coalition for Academic Excellence Corp., an association of parents and students arguing that Boston's exam school admission policy was unconstitutional. In Boston, three exam-based public schools changed their admissions criteria to allocate seats based on not only exam scores but also zip code. While creating the new admissions program, officials stated their goal of "[w]ork[ing] towards an admissions process that will support student enrollment at each of the exam schools such that it better reflects the racial, socioeconomic and geographic diversity of all students (K–12) in the city of Boston." The Coalition challenged the policy. The First Circuit upheld the policy and concluded that, despite SFFA, "[t]here is nothing constitutionally impermissible about a school district including racial diversity as a consideration and goal in the enactment of a facially neutral plan."2 The Court denied the plaintiff's request for certiorari.
Notably, the challenged policy was only in place for one year, after which it was replaced. Justices Alito and Thomas dissented from the denial, arguing the Court should have taken the case because the policy amounted to "racial balancing by another name and is undoubtedly unconstitutional." Thus, the First Circuit's decision continues to be the final statement on the matter.
2. Private diversity-related grants, scholarships, and fellowships have come under fire.
Legal challenges have certainly not been limited to admissions policies. Grants, scholarships, and fellowships that take race into account have been frequently targeted this past year. Outside of the courts, one organization, the Equal Protection Project of the Legal Insurrection Foundation, has filed more than 25 complaints with the Office for Civil Rights in the Department of Education ("OCR") alleging that universities' "diversity" scholarship, fellowship, and other programs impermissibly restrict eligibility to students based on race, color and national origin. The OCR has not publicly commented on these complaints.
Outside of higher education, litigants have brought an influx of cases challenging private entities' grants, scholarships, fellowships, and other similar programs using 42 U.S.C. § 1981, which prohibits race discrimination in all private and public contracting.3 Section 1981 has not historically been used to challenge affirmative action programs outside of the employment context. After SFFA, however, litigants have been testing this strategy across the country. While most of these Section 1981 lawsuits have settled or been dismissed based on procedural or jurisdictional grounds,4 two cases did reach the merits:
- In June 2024, the Eleventh Circuit enjoined a grant contest held by Fearless Fund, a venture capital fund, on the basis that the contest—which was limited to businesses at least "51% black women-owned"—discriminated on the basis of race.5 The court stated that the contest "create[d] an absolute bar to the advancement of non-black business owners" because it was only open to Black business owners.
- Similarly, one month later, the U.S. District Court for the Northern District of Texas enjoined a nonprofit's grant program allegedly open only to businesses by individuals identifying as "Latinx, Black, Asian, Women, LGBTQIA+, Military Veteran, or located in a Low or Moderate Income area."6 Given these restrictions, the court held the program likely violated Section 1981 because it discriminated on the basis of race.
There is an open question as to whether Section 1981 permits race-conscious grants, scholarships, and fellowships in limited circumstances. In the Title VII context, there is a judicially recognized "affirmative action" permitting employers to implement limited affirmative action programs to remedy past discrimination.7 Many courts have likewise applied this exception to private employers under Section 19818. In 2006, the Ninth Circuit extended this doctrine beyond employer programs to a Section 1981 claim challenging a private high school's admissions program, holding that the admissions program qualified under the exception.9 Other courts have not addressed whether to extend the doctrine. In the Fearless Fund case addressed above, the Eleventh Circuit concluded that the grant program would not meet the requirements of an "affirmative action" program even if the exception applied. It therefore remains unsettled whether courts will extend the affirmative action program defense to all Section 1981 claims, especially in light of SFFA.
3. SFFA has been held to apply where funding and procurement programs take race or ethnicity into account.
Since SFFA, litigants have brought challenges against certain federal funding and procurement programs under equal protection principles. The programs at issue generally awarded funding or contracts to "disadvantaged" groups, and incorporated the presumption that that certain races and ethnicities were included in this group. The few courts that have addressed the merits of these programs have all struck them down based at least in part on this presumption:
- In March 2024, the U.S. District Court for the Northern District of Texas held the Department of Commerce's Minority Business Development Agency's funding program was unlawful and granted a permanent injunction against enforcing the provision.10 The program provided funding to "socially or economically disadvantaged individuals," and individuals belonging to certain racial and ethnic groups were presumed to be included in this group. The court held that this program violated the equal protection guarantees of the Fifth Amendment, largely relying on SFFA's reasoning—and specifically noting that while "SFFA concerned college admissions, nothing in the decision indicates the Court's holding should be constrained to that context." The court concluded that the agency's presumption that certain racial and ethnic groups are "socially or economically disadvantaged" was stereotyping and also necessarily used race "as a negative."
- Last September, the Eastern District of Kentucky issued a preliminary injunction, holding that the U.S. Department of Transportation's Disadvantaged Business Enterprise program, which ensures a certain portion of the agency's funds are expended on contracts with disadvantaged business enterprises—which minority- and women-owned businesses are presumed to be—was likely to violate equal protection principles.11 The court also cited SFFA throughout its reasoning.
- In 2023, the Small Business Administration (SBA) was also barred from using a race-based presumption in their 8(a) Business Development Program.12 Specifically, individuals were eligible for the program if they were "socially disadvantaged," and Black Americans, Hispanic Americans, Native Americans, Asian Pacific Americans, Subcontinent Asian Americans were presumed to be in this group. In striking down the program, this court, too, cited SFFA in its decision. Following the decision, the SBA revised its program to require applicants to submit a "social disadvantage narrative," likely guided by SFFA's approval of such narratives in the admissions context.
One additional recent case did not reach the merits but warrants mentioning: In August 2024, plaintiffs filed a complaint in federal court in North Dakota against the Department of Education, challenging the Department's use of race in defining who is eligible to receive financial assistance under the Ronald E. McNair Postbaccalaureate Achievement Program. On December 31, 2024, the district court dismissed the case, finding that the plaintiffs did not have standing to sue the Department of Education. Notably, however, the district court remarked in dicta that "given recent United States Supreme Court decisions, including [SFFA], it seems likely the racial eligibility criteria" contemplated by the McNair program "fails to satisfy strict scrutiny." 13
4. SFFA and employment litigation: Still developing.
As we have previously explained, Justice Gorsuch's concurrence in SFFA essentially invited Title VII challenges on the basis of SFFA by noting the similarities between Title VII and Title VI. Litigants have heeded the call.
One organization, America First Legal, has filed dozens of complaints with the U.S. Equal Employment Opportunity Commission ("EEOC") requesting the EEOC investigate companies for violations of Title VII. Lawsuits against private employers have also been prompted by SFFA. In one case, the court has dismissed the suit. Soon after SFFA was decided, five current and former employees sued Gannett (the owner of USA Today and other newspapers throughout the country) in the Eastern District of Virginia alleging the company gave preferential treatment to non-white employees based on a "Reverse Race Discrimination Policy." Plaintiffs quoted SFFA in their complaint. The court dismissed the case, explaining, among other things, that a policy with a goal of increasing diversity by itself is insufficient to state a claim where the policy "[did] not call for any particular action nor [did] it call for the consideration of race to the exclusion of all other factors." 14
Within higher education, a white professor sued Penn State in the Eastern District of Pennsylvania for, among other things, creating a hostile work environment through its Diversity, Equity & Inclusion ("DE&I") work. The plaintiff specifically alleged discussions of "antiracism," "white supremacy," "white privilege," and other concepts relating to discussions of race on campus "repeatedly singl[ed] out and demeaned faculty members on the basis of race." The court denied Penn State's motion to dismiss. The judge noted that programs focused on issues "such as 'white privilege,' 'white fragility,' implicit bias, or critical race theory" do not generally violate Title VII, but the judge found that the way the plaintiff alleged his department specifically discussed race ("with a constant drumbeat of essentialist, deterministic and negative language") may cause liability under Title VII.
Courts have not yet ruled on the majority of pending challenges, but more clarity will likely come this year as these cases make their way through the courts.
Conclusion
As is no surprise, litigation challenging race-conscious policies has increased since SFFA. This landscape is rapidly developing as these cases make their way through the courts and will continue to develop in the coming months. Thus far, courts have shown a willingness to rely on SFFA outside of the admissions context and have closely scrutinized race-conscious programs implemented by universities, private companies, and the government alike.
Institutions should keep an eye out for certain program components that have proven to be particularly risky, including:
- Programs where eligibility requirements incorporate race or other identity characteristics. Particular focus should be given to programs that base eligibility on being part of a "disadvantaged" group and presume individuals from certain races or other identities are disadvantaged.
- Programs that lack a "logical endpoint." The notion of an "endpoint" was emphasized in SFFA and is also a significant factor in the affirmative action defense analysis. In Ultima Servs. Corp., referenced above, the court held that the SBA's program violated equal protection guarantees because, among other reasons, the program lacked any type of "logical endpoint.
- Programs that create an "absolute bar" to participation by a particular group. Programs for which only certain identity groups are eligible may be viewed as creating an "absolute bar" to the advancement of other groups, which is unlawful under case law long predating SFFA.
We further note that higher education has been and will likely continue to be subjected to significant scrutiny in 2025. We recommend colleges and universities audit the policies, procedures, and results of this past admissions cycle, and to think expansively about what other policies might warrant review (e.g., hiring and promotional practices; scholarship, grant, and fellowship programs; procurement processes; funding decisions for affinity groups and researchers). Our team can provide guidance as your organization works through this analysis.
For further discussion on this topic, you can find our preliminary thoughts on DE&I and the incoming administration here. We will also follow the new administration's positions on these issues and will provide additional client alerts as the law and backdrop of these matters change throughout this year.
Footnotes
Footnotes
1. Coal. for TJ v. Fairfax Cty. Sch. Bd., 68 F.4th 864, 879 (4th Cir. 2023).
2. Bos. Parent Coal. for Acad. Excellence Corp. v. Sch. Comm. for the City of Bos., 89 F.4th 46, 62 (1st Cir. 2023).
3. Section 1981 provides: "All persons within the jurisdiction of the United States shall have the same right in every State and Territory to make and enforce contracts, to sue, be parties, give evidence, and to the full and equal benefit of all laws and proceedings for the security of persons and property as is enjoyed by white citizens, and shall be subject to like punishment, pains, penalties, taxes, licenses, and exactions of every kind, and to no other."
4. See, e.g., Do No Harm v. Pfizer Inc., 96 F.4th 106, 108-110 (2d Cir. 2024) (dismissing Section 1981 challenge to Pfizer's Breakthrough Fellowship Program—providing employment and scholarship opportunities to those who meet program's goals "of increasing the pipeline for Black/African American, Latino/Hispanic and Native Americans"—based on lack of standing); Roberts v. Progressive Preferred Ins. Co., No. 1:23 CV 1597, 2024 U.S. Dist. LEXIS 91274, at *3-7 (N.D. Ohio May 21, 2024) (dismissing Section 1981 challenge against Progressive's grants to Black-owned small businesses based on lack of subject matter jurisdiction, pending appeal); Docket, AAER v. Perkins Coie LLP, No. 23-cv-1877 (N.D. Tex. filed Aug. 22, 2023) (showing settlement of Section 1981 challenge to law firm's "diversity fellowships," after law firm replaced fellowship program criteria); Docket, AAER v. Morrison & Foerster LLP, No. 23-cv-23189 (S.D. Fla. filed Aug. 22, 2023) (same); Docket, AAER v. Winston & Strawn LLP, No. 23-cv-4113 (S.D. Tex. filed Oct. 30, 2023) (same); AAER v. Hidden Star, Stipulation of Dismissal, No. 1:24-cv-00128-RP (W.D. Tex. Feb. 25, 2024) (settlement of case involving Hidden Star's grant program available "only to racial minorities and women" after company agreed to not use race or gender in grant program moving forward); Bresser v. The Chicago Bears, No. 1:24-cv-02034 (N.D. Ill. Filed Mar. 11, 2024) (settlement of case involving claim that team refused to hire plaintiff as a "legal diversity fellow" because he was not "a person of color and/or female").
5. Am. All. for Equal Rights v. Fearless Fund, 103 F.4th 765, 769-70 (11th Cir. 2024).
6. Am. All. For Equal Rights v. Founders First Cmty. Dev. Corp., No. 4:24-cv-00327-O, 2024 U.S. Dist. LEXIS 136220, at *2, 6-9 (N.D. Tex. July 31, 2024).
7. To qualify for this exception, the program must (i) be designed to correct a "manifest . . . imbalance"; (ii) "not unnecessarily trammel the interests of the [non-preferred class]" or "create an absolute bar to [their] advancement"; and (iii) do no more than is necessary to attain, rather than maintain, a balanced work force (generally viewed as a temporariness requirement). United Steelworkers v. Weber, 443 U.S. 193, 208 (1979); Johnson v. Transp. Agency, 480 U.S. 616, 631-640 (1987).
8. See, e.g., Schurr v. Resorts Int'l Hotel, Inc., 196 F.3d 486, 498-99 (3d Cir. 1999); Setser v. Novack Inv. Co., 657 F.2d 962, 966-67 (8th Cir. 1981).
9. Doe v. Kamehameha Sch./Bernice Pauahi Bishop Estate, 470 F.3d 827, 839 (9th Cir. 2006).
10. Nuziard v. Minority Bus. Dev. Agency, No. 4:23-cv-00278-P, 2024 U.S. Dist. LEXIS 38050, at *87-99 (N.D. Tex. Mar. 5, 2024)
11. Mid-Am. Milling Co., LLC v. U.S. Dep't of Transportation, 2024 U.S. Dist. LEXIS 171113, at *2, 27-29 (E.D. Ky. Sep. 23, 2024).
12. Ultima Servs. Corp. v. United States Dep't of Agric., 683 F. Supp. 3d 745, 765-769 (E.D. Tenn. 2023).
13. Order Denying Motion for Preliminary Injunction, Young Americans for Freedom v. U.S. Dep't of Education, No. 3:24-cv-00163-PDW-ARS, ECF No. 19 (D.N.D. Dec. 31, 2024).
14. Memorandum Opinion and Order, Steven Bradley v. Gannett Co. Inc., No. 1:23-cv-01100-RDA-WEF, ECF No. 55 (Aug. 20, 2024).
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
