From: Matthew
P. Harrington <matthew.p.harrington@umontreal.ca>
Sent: Tuesday 4
June 2024 11:37
To: Obligations
Subject: US Court
of Appeals on Race Discrimination in Contract
While not strictly a private law case, the US Court of Appeals for
the 11th Circuit yesterday rendered an opinion in American Alliance for
Equal Rights v Fearless Fund, No. 23-13138 (11th Cir 2024).
The case involved a contest held by a non-profit to assist
women-owned Black businesses. The Fund offers $20,000, technological
assistance, and "mentorship" to
The contest is open, by its own terms, only to black females who
are . . . legal U.S. residents. In exchange for winning the grant, the
Fund obtains the right to discuss or otherwise disclose the ideas in the
contestant s entry or otherwise use th[ose] ideas without any additional
compensation, as well as the right to use the contestant s name, image, and
likeness for public relations, advertising, promotional purposes, and in
other media.
A group of businesses which are not owned by Black women sued to
enjoin the contest on the grounds that it violated the Civil Rights Act of
1866. That act declares that [a]ll persons within the jurisdiction of the
United States shall have the same right in every State and Territory to make
and enforce contracts . . . as is enjoyed by white citizens. 42 U.S.C.
1981(a).
The Fund argued that the contest was not a contract. The
Court made quick work of that assertion noting, first, that the entry form was
specifically labelled a "contract" and, secondly, that Rule 3 of the
contest rules provided as follows: BY ENTERING THIS CONTEST, YOU AGREE TO
THESE OFFICIAL RULES, WHICH ARE A CONTRACT.
The Court did not rest its decision on the name the parties gave
the document, however, but in a single breezy little paragraph, it analysed the
transaction and gave a textbook answer:
It is (literally) hornbook law that a contract is an agreement to
do, or refrain from doing, a particular thing, upon sufficient consideration.
17A Am. Jur. 2d Contracts 1; see also 17 C.J.S. Contracts 1 (defining a
contract as an agreement between competent parties that is supported by
consideration, mutual consent, and mutual obligation). That definition fits
Fearless s contest to a T. Under both the original and the amended (i.e.,
post-suit) rules, a winning entrant obtains $20,000 and valuable mentorship
and, in return, grants Fearless permission to use its idea, name, image, and
likeness for promotional purposes and agrees to indemnify Fearless to arbitrate
any disputes that might arise. By any measure, that is a bargained for exchange
supported by good and sufficient consideration. It is, in other words, a
contract.
After analysing the standing question and a question concerning
free speech, the Court granted the injunction.
The case is interesting for several reasons:
- It's a nice
example of the "Is a contest a contract?" question.
- Under the Federal
Rules of Civil Procedure, injunctions are granted only where there is a
likelihood of success on the merits --- NOT American Cyanimid's
"serious question to be tried" standard. The
court's analysis is rather short here, simply applying the plain words of
the statute against the wording of the contract. The court's analysis of
this test and the irreparable harm, balance of convenience are also
straightforward.
- For public law
purposes, the case is a significant step toward ending affirmative action
or race-based preferences in the commercial realm. In other words, it's
the next step after Students for Fair Admissions v Harvard. Look
for these cases to be brought against law firms or business that restrict
internships, summer jobs, or hiring on the basis of race.
All in all, however, a nice little case for an intro to law
course. It's got straightforward facts on an issue that students will find
interesting. It offers a bit of contract law, a simple example of injunction
practise and standards, and shows the way courts use statutes and case law in
reasoning. And, it does it all in 20 pages, double-spaced.
The opinion is here:
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Matthew P. Harrington
Professeur titulaire
Facult de droit
Universit de Montr al
3101 chemin de la Tour
Montr al, Qu bec H3T 1J7
514.343.6105
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