Hello Alice emerges victorious after it was sued for awarding grants to Black-owned businesses

BY Preta Peace Namasaba June 11, 2024 2:35 PM EDT

Small businesses booster Hello Alice has emerged victorious after it was named in a class action lawsuit for specifically targeting Black-owned businesses for grants. A Federal District Court in Ohio ruled that the litigant did not have standing to assert a discrimination claim against the grant contest.

The complainant could seek neither retrospective relief under § 1981 of the Civil Rights Act because he had not alleged he would have received a grant had he been able to apply for one nor is he entitled to prospective relief because the defendants had dropped the race-based eligibility criteria from the following year’s grant program.

The court dismissed the case, allowing Hello Alice to continue on its mission to support small businesses.

“I feel relieved, I feel triumphant, I feel vindicated—all the words. It’s a scary time to be a business owner, particularly one who values women and people of color. I had optimism and knew we were on the right side of history,” said Hello Alice cofounder and president Elizabeth Gore.

A Latina-led fintech platform, Hello Alice helps small business owners start, grow, and succeed by connecting them with capital and other resources. It is particularly committed to providing equitable access to capital to underrepresented entrepreneurs like people of color and women. The platform works with corporate partners, such as Mastercard, to provide most of the funding.

In 2023, Hello Alice promoted a grant contest for Black-owned small businesses to purchase a commercial vehicle backed by Progressive Insurance. The program was offering 10 grants of $25,000 each. However, the platform was sued by an owner of a trucking dispatch company in Ohio who claimed that he had started the application process for a grant but stopped when he realized that the grants were only available to Black-owned businesses. According to the complaint, he was unaware that Progressive Insurance’s Driving Small Business Forward fund was exclusively for Black-owned businesses.

The plaintiff was represented by America First Legal Foundation, a group founded by former Donald Trump adviser Stephen Miller in a class action suit. The organization, whose goal is to fight back against diversity-based programs, has filed lawsuits against school districts and complaints against numerous companies. They contended that the grant program violated § 1981 of the Civil Rights Act of 1866 which prohibits discrimination based on race when making and enforcing contracts. The judge found that her court did not have subject-matter jurisdiction in the case and that the plaintiff was not able to show any injury, as there was no guarantee he would have received any grant from Progressive.

“This resolution marks a pivotal moment not only for our company but for the broader small business community in the United States. Facing a labor shortage, heightened interest rates, and inflation, this country needs its small business owners, and they, in return, need the capital and resources that programs like Hello Alice provide. We are thrilled for the judgment in favor of Hello Alice, as this represents one less threat to our nation’s small business community and economy,” Hello Alice cofounder and president Elizabeth Gore said in a statement.

Reverse-discrimination litigation has increasingly become popular in the fight against Diversity, Equity, and Inclusion (DEI) in corporate institutions. This can mainly be attributed to the 2023 Supreme Court decision in Students for Fair Admissions v. Harvard which ruled that colleges and universities could not expressly consider race in the admissions process. The ruling in the Hello Alice case sets a precedent on what a plaintiff must plead to establish standing to assert  § 1981 claim. It is a major win for the Black business community and efforts to advance a more equitable and resilient economy.