Nuziard v. MBDA: What is the Future of Equal Protection Litigation?

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Emily Manning:  Hello, everyone, and welcome to this Federalist Society virtual event. My name is Emily Manning, and I’m an Associate Director of Practice Groups with The Federalist Society. Today, we’re excited to host a discussion titled “Nuziard v. MBDA: What is the future of Equal Protection Litigation?” We’re joined today by Daniel Lennington, Deputy Counsel at the Wisconsin Institute for Law and Liberty, and our moderator today is Will Trachman, General Counsel at the Mountain States Legal Foundation. If you’d like to learn more about today’s speakers, their full bios can be viewed on our website fedsoc.org.

 

      After our speakers give their opening remarks, we will turn to you, the audience, for questions. If you have a question, please enter it into the Q&A function at the bottom of your Zoom window, and we will do our best to answer as many as we can. Finally, I’ll note that, as always, all expressions of opinion today are those of our guest speakers, not The Federalist Society. With that, thank you for joining us today, and, Will, the floor is yours.

 

William Trachman:  Thanks so much, Emily. Well, we’re really happy to have Dan Lennington here from the Wisconsin Institute for Law and Liberty, which is abbreviated WILL, not to be confused with my first name. There is, at the bottom of your screen, a Q&A box, so we will be taking Q&A toward the end of the show. So if you have a question and you think of one and you want to just drop it in that box, go ahead as soon as you think of it, and we will tackle those at the end of Dan’s remarks. With that, let’s just jump right into it.

 

      Dan, it’s so great to have you here. Congrats on your recent victory in this case. Do you want to give us, in broad strokes, what the case was about and what the ruling in your favor said?

 

Daniel Lennington:  Yes. I will just let you know, at the beginning, that this is part of our Equality Under the Law Project, which is a nationwide litigation project that we started in 2021 with the mission of advocating and litigating for a colorblind America. Some of our early victories -- and there’s actually an earlier webinar about this, which is Vitolo v. Guzman, which is a Sixth Circuit case that is related to this. It held that the Biden administration could not prioritize 28.6 billion dollars in COVID relief funds. We were also involved in the farmer loan forgiveness program and obtained the first nationwide injunction against the now repealed four-billion-dollar federal program designed to give loan forgiveness to farmers who were of certain racial backgrounds.

 

      So today, we’re going to discuss Nuziard v. MBDA. This was a lawsuit filed in 2023, challenging the Minority Business Development Agency. We filed this lawsuit in the Northern District of Texas. MBDA is, technically, the newest federal agency. It was made permanent by the Bipartisan Infrastructure Act in November 2021. In its previous incarnation, this was an executive agency, and it was an executive office that went back to 1969. Historically, MBDA was rather small, and its powers really ebbed and flowed with each administration. Actually, in the Trump administration, there was a proposal to eliminate it altogether.

 

      The Infrastructure Act turned MBDA into a permanent federal agency with about a 550-million-dollar budget over 5 years, although last year’s budget was 70 million dollars. It has offices in, I think, 33 states and Puerto Rico. These offices are called business centers, and they help small businesses with lending, consulting, grants, expansion, training, federal contracts—basically all tools that a small business would need to grow and thrive.

 

      Basically, the goal of MBDA is to help small businesses grow and expand, but as you can imagine, the reason we’re here today is because the agency was created only to help minority business owners or MBEs: Minority Business Enterprises. So Nuziard v. MBDA is actually about the legal mechanism that favors certain races over other races. This mechanism is typically referred to as the presumption. This presumption -- it presumes that certain races are automatically “disadvantaged” and, therefore, worthy of assistance.

 

      And so, this is how it works -- and this is important because, as I’ll say later, this presumption works in many other different agencies, too. Federal law says the MBDA is only supposed to help “minority business enterprises” or MBEs. An MBE must be 51 percent owned and operated by a “socially disadvantaged individual”—SDI. This term “socially disadvantaged individual” means that an individual who has been subjected to racial or ethnic prejudice or cultural bias because of their identity or membership in a group. But only certain races are “presumed” to be disadvantaged and, therefore, worthy of assistance by MBDA.

 

      If your race is not on this list, you can petition the government, and you can go through some sort of process to be recognized as disadvantaged. But races who are on the list get the benefit of being presumed automatically as disadvantaged. So here’s the categories: Black or African American, Hispanic or Latino, American Indian or Alaska Native, Asian, Native Hawaiian, and Pacific Islander, plus what Judge Pittman called, in this case, a “bizarre amalgam of other groups.” Here are the other groups: Eskimos, Aleuts, Hasidic Jews—not any type of Jews, only Hasidic Jews—Asian Pacific Americans, and Asian Indians—Asians who are from the country of India.

 

      Before I get too far into this discussion, I want to say that this is important to know that SDI—socially disadvantaged individual—is a legal term that’s used, by my count, in 47 other separate federal programs—47 other separate programs. This is just one of them. So this use of socially disadvantaged individuals is pervasive. The USDA—U.S. Department of Agriculture—is the biggest offender. They have dozens of this -- use of this term. Small Business Administration, obviously, Department of Transportation, NASA, Department of Defense, Treasury, HHS Commerce, Energy, FCC, EPA, they all use socially disadvantaged individual preference to grant racial preferences to people. These other programs, for the most part, haven’t been challenged at all. There is a case pending against U.S. Department of Agriculture, but other than the MBDA and in the previous cases, most of these are really unchallenged.

 

      So we filed Nuziard v. MBDA on behalf of three small business owners in March of 2023—just over a year ago. Matt Piper is an architect from Northeast Wisconsin, Christian Bruckner is a federal contractor from Tampa, Florida, and Greg Nuziard owns health and wellness clinics in the Fort Worth, Texas area. All three of these individuals were denied services from MBDA because they’re white.

 

      Now I want to offer a couple thoughts on strategy as I go through this presentation. At the filing stage, in my opinion, it’s important to carefully consider who your plaintiff is. Suing on behalf of multiple plaintiffs, multiple individuals, or even an association when challenging a nationwide race-based program gives you a lot of advantages. First of all, it gives you a choice of venue—which can be very important—it strengthens your claim for nationwide injunctive relief—another very important factor—and it also protects you in the event that the court finds one or more of your plaintiffs doesn’t have standing, which actually happened in this case. One of our plaintiffs was found not to have established standing. So multiple plaintiffs or an association of plaintiffs is very important. I’d be happy to talk with anybody offline if they want to talk about how to find plaintiffs or how to bring them together and some more of the nuts and bolts of this litigation strategy.

 

      After we filed in March 2023, we immediately moved for a preliminary injunction, and on June 5, 2023, the Court granted that motion. This is another really important litigation strategy I want to emphasize: filing early for a preliminary injunction in these types of cases puts immense pressure on the government to meet strict scrutiny, and it locks them in as to their arguments. The burden to justify these programs is on the government, and as we’re going to see, they’re almost always going to lose if you put your case together properly. Also, if you lose a PI, unfortunately, you can always immediately appeal. So that’s another great advantage of filing early for a PI.

 

William Trachman:  Dan, just to --

 

Daniel Lennington:  Yeah. Go ahead.

 

William Trachman:  -- just to stop you. So you read the list of the members of which racial groups are benefited by this program. You left out Caucasian. So the three plaintiffs that you have -- you had to find people who were actually injured by this program. And is there a legal difference between the fact that they have to go through an extra process and the others don’t? Because I suppose the government might say, “Well, whites are eligible for the program, they just have to go through a few extra hurdles.” What is the legal difference there?

 

Daniel Lennington:  Yeah. The legal difference is that those individuals on the list, they automatically get the presumption, and you can go through the process, but it’s an additional burden, and it’s an additional work on your part that the other groups don’t have to get. So you are treated differently because of your race because they don’t have to go through the process, and you do. And so, that’s the legal -- and I’m going to talk, in a second here, about standing, which, I think, is the most important factor here.

 

      As the case proceeded through discovery, we did some modest written discovery, and the government took depositions of our three plaintiffs. We decided, as a strategic matter, not to take any depositions, not to hire experts, not to depose the defendant’s experts. Our view, in these types of cases, is that they can be litigated and won rather inexpensively because of the strict scrutiny standard. In my view, public interest litigators should really carefully consider whether they really need to engage in expensive discovery and expert work before committing to a case like this. And I think that this case proves that a light and nimble litigation strategy can win.

 

      The summary judgment decision was entered last month, March 5, and I want to go through each of the elements of that real -- in brief order here. But first, I want to start with standing, and that’s one thing that I think is always the most important issue for a plaintiff in an equality lawsuit. Standing is what the government’s going to attack most vigorously, and here’s some important things to remember about standing in an equality lawsuit.

 

      First, the harms and injuries to the plaintiff are typically twofold: there’s two types of injuries. One is the harm to your dignity, which is also called a stigmatic harm—so harm to dignity, harm to stigma. This is the fact that you were treated differently because of your race. That, in and of itself, is a harm. Second are more concrete harms like financial loss or loss of opportunities or some harm to your business. That’s more concrete. So you have a harm to dignity, harm to your business—those are two types of harms.

 

      But apart from that, a plaintiff challenging a race-based program has got to show that they are, at least, able and ready to apply to have standing. That’s the phrase “able and ready.” Sometimes you’ll see “qualified, able, and ready.” But there’s an important part about this “able and ready” test. First, a plaintiff does not actually have to apply to a race-based program to have standing. This rule comes from what’s called the futility doctrine, and it says, for example, a Hispanic man doesn’t have to apply for a job if the employer hangs a sign that says, “Hispanics need not apply.” You don’t have to actually apply.

 

      Second, you don’t have to show that would have been awarded the benefit, such as the grant or the financial benefit or the service. This rule comes from Grutter and Gratz and Bakke, where—those cases—the Supreme Court held that applicant for college doesn’t actually have to show that he or she would have been admitted. So “able and ready” is just another way of saying that you’re qualified, that you legitimately desire the benefit. For example, if a program is for black business owners, you, as a white plaintiff would need to show that you are a business owner who wants and needs some help, and, at the very least, you could have applied—you’re otherwise qualified. You’re not excluded by some non-discriminatory factor, such as owning a business.

 

      Also, although you don’t have to apply and you don’t have to prove that you would have received the benefit, courts generally require that you take some steps towards applying. This would include things like researching the program online, visiting websites, inquiring via phone, inquiring via email, inquiring in person. Again, you don’t have to apply, but it does help. All these efforts should be included in a verified complaint on the front end.

 

      So here, Judge Pittman found standing for Bruckner and Nuziard—two of the three plaintiffs—because they both inquired about help from MBDA and were told that they could not receive help because of their race. Bruckner sent emails to the MBDA and was told, “We don’t help people of your race.” And Nuziard actually showed up in person, and the woman at the front desk told him he couldn’t get help because of his race. So these are, clearly, fantastic standing factors. To have your client actually rejected face-to-face by the defendant is a fantastic fact. Piper could have established standing, but at the time he sued, Wisconsin’s MBDA office wasn’t open yet. So that’s the reason why the judge found that he didn’t establish standing yet on the front end.

 

      So for standing, my recommendation is that plaintiffs really need to do more than just see a race-based program on a website. You need to do more than just see it—go to the website. This is what Judge Pittman wrote in the decision: “It would invite a surge of needless litigation if courts held that a website visit alone could confer standing, even if unaccompanied by an application or any other objective indicia of interest.” So you need some objective interest -- evidence of interest. Judge Pittman wrote that a plaintiff must show “an intent to obtain the relevant benefit.” 

 

      So here’s my recommendation. If you’re a plaintiff’s attorney, and you have a client, they need to inquire, they need to collect information, they need to email and call and confirm that there actually is a racial criteria. You need to think about whether you can meet the other non-racial criteria also. Though not required, you should consider applying and being rejected. You don’t have to, though. Being able and ready means that you must take some affirmative steps, and this will be different in every case.

 

      Here’s how Judge Pittman boiled it down on standing: “The court need only ask if Nuziard and Bruckner were able and ready to apply for the benefits”—they were—“and if any race-blind criteria come from the MBDA”—they don’t. So one of the things Judge Pittman was really critical of is the defendant attempting to conjure up, what he called, “after-the-fact criteria” that would doom the plaintiff—like your business isn’t big enough, your business is too new, your business is too small, your business is too old. Basically, everything about your business they try to come up with a reason, “Well, we really wouldn’t help you anyway.” And it turned out that those, actually, were not in the statute we were challenging. They were after the fact, post hoc qualifications that we have seen in other cases that defendants try to do.

 

      So the heart of the decision is the racial presumptions and whether they’re unconstitutional. So after Judge Pittman found that we had standing, he moved on to the constitutionality of the MBDA statute. So, of course, there’s a racial classification here, which means strict scrutiny applies. Strict scrutiny means there must be a compelling government interest that is narrowly tailored to serve that interest. This burden is on the defendant, which is why I love doing these cases—the defendant’s got the burden, not the plaintiff.

 

      In SFFA, the Court said that there’s basically two types of compelling interests. Thankfully, diversity is not one of them, so diversity is out the window. Quelling prison riots is a compelling interest. That’s obviously rare, and hopefully, none of you have to litigate a case about quelling a prison riot. The main compelling interest, though, is “remedying a specific identified instance of past discrimination that violated the constitution or a statute.” So the Court in SFFA used the terms “specific” and “identified.” That means that societal discrimination is not a compelling interest. This idea that there’s just racial disparities out there is not an interest. It has to be specific, identified, and if it violates the Constitution or a statute, I would argue, intentional, and an episode that you can put your finger on.

 

      Here’s one of my criticisms of this decision and I think something that if you’re going to cite this case, you’re going to have to deal with. Judge Pittman apparently disagreed with Vitolo v. Guzman, which was the case about the restaurant revitalization fund that I mentioned earlier. That was a decision by Judge Thapar in the Sixth Circuit. It’s been cited quite a bit in these types of cases. In Vitolo v. Guzman, Judge Thapar wrote that a compelling government interest is “a specific instance of intentional discrimination that the government had a hand in”— specific instance, intentional discrimination, the government had a hand in it. Judge Thapar wrote that government participation was absolutely necessary to establish a compelling government interest. He said, “If the government cannot show that it actively or passively participated in this past discrimination, then race-based remedial measures violate the equal protection principle.”

 

      Judge Pittman, on the other hand, without specifically noting his disagreement, said, “So government participation isn’t always necessary. If the government didn’t participate—did not participate in the discrimination that it seeks to cure—the government must identify the discrimination with ‘pinpoint accuracy,’” which I don’t disagree with. “This isn’t necessary, however, if the government participated in the discrimination,” which I do disagree with.

 

      So let me sum up Judge Pittman’s rule on compelling government interest like this. The government can either, one, remedy discreet and specific instances of private, intentional discrimination identified with pinpoint accuracy. So they have put their finger on the who, what, when, where, how, and why of a private actor discriminating based on race. They can remedy that discrimination in the private market. It’s got to be identified with pinpoint accuracy, though.

 

      Or, two, the government can remedy more generalized “problems”—this is a word he used -- “problems of discrimination,” which could be identified through things like disparity studies that show that the government participated in the disparity—make it worse, for example. 

 

      So this is a really important part of the opinion. It starts on page 49. I’d really recommend people look at it. We have quite a bit of confusion regarding Judge Pittman’s formulation of the government participation test. At times, he seems to suggest that discrimination identified does not need to be specific, intentional, or identified. He broadly uses terms like “problems” and points to disparity studies that don’t control for non-discriminatory factors. It’s hard to square this language with SFFA and Vitolo, and we think that, perhaps, this was accidental, or maybe Judge Pittman was overreading certain parts of Croson. Judge Pittman relied extensively on Section Two of Croson, which was, actually, not part of the Court’s opinion. It did not garner five votes. It was not the main opinion. So that’s something to look at. 

 

      Whatever Judge Pittman’s formulation means, it’s very clear from the controlling case law that disparity studies alone plus government participation isn’t enough to establish compelling interest, but as we’ll see, Judge Pittman appears to think that that is a way to establish compelling government interest.

 

      So MBDA, in defense, said that they have two compelling interests. They say they’re seeking to remedy discrimination in the credit market and in the contracting market. So applying his test, Judge Pittman rejected the first claim of remedying discrimination in the credit markets—this is like banking/lending industry. He said there was no compelling interest of remedying discrimination in the credit market because the MBDA provided no evidence of a specific incident that could be remedied by the government and no evidence of government participation.

 

      But the judge accepted MBDA’s claim that it could remedy discrimination in the contracting market. He found that there was no specified instances of past discrimination by private parties, but there is evidence of “historic discrimination in which the government participated” that was connected to contracting. And he said that disparity studies raised the inference of government-linked discrimination. The court concluded like this: “Remedying past discrimination in government contracting is a compelling government interest.”

 

      So with this part of the opinion, we obviously disagree. The reason we disagree is that none of the government’s disparity studies controlled for the non-discriminatory factors, which are the size of the firm, years of experience, certification, bonding limits, insurance, access to lending, licenses, location, geography, type of work performed, or any other dozens of other non-discriminatory factors that do explain disparities in contracting and disparities in every other part of American life. You can just read -- just pick up a book by Thomas Sowell, and he’ll give you a list of the non-discriminatory factors that explain racial disparities in America. The biggest contractors in America are not owned by minorities. This fact alone does cause racial disparities, but is it because of intentional discrimination? No.

 

      At bottom, remedying discrimination in government contracting is, in fact, a compelling interest if the government can’t actually prove the who, what, when, where, why, and how of the discrimination and control for non-discriminatory factors. They did none of that here.

 

      So, next, we’ll move on to narrow tailoring, and this is -- in my view, this is really the whole enchilada of the quality litigation, and I’ll explain that in a second here. The compelling government interest is really just academic, at this point, because there’s no evidence that the MBDA is narrowly tailored. First of all, even if you accept that government contracting is a compelling interest, what exactly does MBDA do to remedy that alleged discrimination? Only one small part of MBDA’s mission is to connect minorities to government contracting.

 

      What about all the other things that MBDA does? The other parts of their mission are not narrowly tailored: giving out grants or connecting businesses to banks or providing training or having mentorships or running conferences in Miami. None of that has anything to do with government contracting. So how can MBDA be narrowly tailored to remedy government contracting discrimination if it’s doing things that have nothing to do with government contracting? So that’s why they’re going to lose on the first end -- the first point. 

 

      But the biggest problem is, of course, the racial categories. And I want to emphasize this is where I think that all racial programs are going to end up failing eventually—is with racial categories. And we saw this in SFFA. Only certain minorities are helped while others are excluded. That’s really the headline. When a program like this lists racial categories, they’re going to be excluding a lot of people who shouldn’t be excluded, and they’re going to be including a lot of people who shouldn't be included.

 

      At the federal level—and this is true at the state level, too, in a lot of programs—if you’re from North Africa or the Middle East or North Asia, you’re not included, you are not a minority, you are not socially disadvantaged. Just imagine north of Africa, from Morocco to Egypt, those people are considered white according to the federal government. The Middle East, from Syria down to Yemen up to Iran and Iraq, also those are not minorities according to the federal government—they’re white. If you go up to the former Soviet Socialist Republics—Tajikistan, Kazakhstan, Afghanistan—not minority. They’re white people, according to the federal government. Even up in Mongolia. Mongolia’s traditionally North Asia and not part of the Southeast Asia, which is the definition of Asian. So the government has no answer for why they exclude these people.

 

      In SFFA, at the oral argument, one justice asked, “Can you explain the racial categories that the University of North Carolina has?” And the attorney from North Carolina said, “I do not know the answer to that question.” That is the heart of the program -- is including certain racial groups and excluding others, and the government, at the oral argument, at the Supreme Court, at the big dance, can’t even answer, “Why are you including people and excluding people?” So this is -- if they can’t answer it then, they’re not going to be able to answer it ever.

 

      So when a government or even a private program uses racial categories like black, Hispanic, Native American, Asian, these are going to be presumptively invalid. Here’s what the Supreme Court calls them: arbitrary, undefined, over-inclusive, under-inclusive, incoherent, irrational, stereotypes. Nothing in MBDA’s history provides a rationale for including people from China, Japan, Pakistan, and India but excluding those from Afghanistan, Iran, Iraq, and Libia. So that’s where you get the over-inclusive and under-inclusive nature of these categories. You’re excluding people from, say, Syria or Palestine, Gaza—excluding someone from Gaza—but as the judge said in -- Judge Pittman wrote, “But you’re including Oprah Winfrey. So Oprah Winfrey”—he says this in opinion -- “Oprah Winfrey is socially disadvantaged because she’s African American, but someone who is a refugee from Gaza right now is not socially disadvantaged.” That makes no sense to me, and I don’t think it makes sense to anybody. And the government has no answer for this.

 

      So that’s where a lot of my energy is focused right now -- are in the racial categories. There’s books -- David Bernstein has a really good book about this. There’s really good articles to read about the racial categories, and they’re all arbitrary.

 

      So another important thing is the twin commands. So SFFA has what they called the twin commands. They say that race may never be used as a negative and may never operate as a stereotype. Here, race is a negative because the plaintiffs were placed on unequal footing with minority businesses—their race was used against them. And race operates as a stereotype because the program says that all members of certain racial groups are disadvantaged. Obviously, it’s not true that all Americans or all Japanese Americans or all Cuban Americans are all disadvantaged. That’s just a stereotype just to say that. As I said, Judge Pittman wrote—this is a quote from him—“Oprah Winfrey is presumptively disadvantaged while plaintiffs and even more disadvantaged Americans are not.” In other words, race just can’t be a proxy for disadvantage. That’s a stereotype.

 

      Also, it’s not narrowly tailored for the same reason that the Harvard Affirmative Action Plan was not—it’s a never-ending program. At some point, it must end. There’s no evidence that this is ever going to end. That’s what doomed North Carolina and Harvard, and that’s what doomed MBDA, too. Also, the judge went through other factors, such as the government didn’t consider any alternatives, it wasn’t flexible, and it injured third parties. So the government lost the case on narrow tailoring.

 

      So the remedy -- what’s the remedy here? The court declared the MBDA statute unconstitutional—gave us a declaratory judgment. We also asked for vacatur under the Administrative Procedures Act. This is a really interesting section of the opinion for people who are interested in admin law. The way these racial presumptions are carried out is that they’re actually rules that were passed by the MBDA. The plaintiffs -- we had asked the court to set aside regulations under 5 USC § 706—so 706 is a hot topic right now. What it means to “set aside a rule,” relying on the statute and the Fifth Circuit, we said that these unconstitutional regulations should be set aside. The court said, “The Fifth Circuit and others endorse plaintiffs’ view.” And then he said, curiously, “Without throwing its hat in the ring of this nationwide debate, whether you can set aside regulations on a nationwide basis, the court declines to categorically adopt plaintiff’s view here. It does so out of equitable determination, not because it disagrees with the Fifth Circuit’s standard practice.”

 

      So the judge basically said, “I don’t want to get into this debate about nationwide injunctions and the APA and setting aside rules. I’m going to give you everything you want. I’m going to give you an injunction,”—a constitutional injunction—to basically say, “These are unconstitutional regulations, and I’m going to just enjoin them as a matter of a permanent injunction, and I’m not going to use the APA’s language about setting aside.” 

 

      So the judge said that this should be a nationwide injunction. He said that plaintiff’s stigmatic injury will not be redressed if the court only enjoins three business centers from applying the MBDA’s racial presumptions. He said, “In such situations, plaintiffs would be keenly aware that their race counts against them everywhere else in the nation except those three municipalities. A stigma with three localized exceptions is still a stigma, lest a broader injunction requires complete relief.” So, in other words, a narrow injunction, only applied to where these plaintiffs live, doesn’t cure the stigma or the harm to dignity, which is that the federal government is saying, “You are not equal because of your race.”

 

William Trachman:  That’s a really important point, Dan, because with all the controversy about nationwide injunctions, there’s a temptation to say, “Well, let’s have a narrow ruling. And so, these people are from Wisconsin or Texas, and so, we’ll just enjoin these subsidies as to those states.” But, of course, that doesn't actually solve anything because that just means that a lot of people who are in other states will benefit because of their race, and we have a whole country here. So can you maybe emphasize that point in terms of how it’s different than the hesitancy to embrace nationwide injunctions more broadly? For instance, like, the president does something, and someone moves for a nationwide injunction everywhere in the country.

 

Daniel Lennington:  Yeah. There’s a couple of different things going on here. One, this -- Judge Pittman rightly points out that he was reluctant to issue a nationwide preliminary injunction because he said the plaintiffs had not actually had a chance yet to prove their case through discovery and through summary judgment. So I think he rightly says that if there’s going to be nationwide relief, there’s a much, much tougher burden at the PI stage. You’ve got to find some sort of, like, national policy. And I think in the Fifth Circuit they say, for example, immigration policy is supposed to be nationwide, and so, you can’t have a patchwork of nationwide immigration policies. So a nationwide injunction on immigration matters should be nationwide.

 

      But here he said -- at our PI stage, says, “Look. I can give you guys the relief while the case is pending for you as individuals, while I figure out this larger issue about whether the whole thing should come down.” So that’s one issue: is the nationwide injunction at the PI or at the final stage? And then the other issue is, really, who are the plaintiffs? And so, our plaintiffs -- we did have, as I said, plaintiffs from three different states. We did put into evidence that not only did they contact the MBDA centers in their own state, we had them reach out and look at Colorado and New Mexico and Oklahoma and Minnesota, and we had -- and Georgia and Alabama. We had them put into the record lots of evidence about -- “Yeah. Even though I went to the Fort Worth -- Dallas/Fort Worth office, I went, and I checked Louisiana, and I checked Oklahoma,” and so, it gives you this nationwide flavor.

 

      I wish we could have had 10 or 12 plaintiffs like we did in our farmers case, but we just couldn't put it together in time. So that just -- if you want nationwide relief, put together an association or put together a large group of plaintiffs. That’s really the best way to do it.

 

William Trachman:  What about the remedy for stuff that’s already gone out the door? I mean, a lot of money has already been flowing. Is there any way to address that either through relief to your clients or clawing back money that’s gone to people based on their race?

 

Daniel Lennington:  Yeah. I don’t think so. That’s really difficult because you can’t typically get a money judgment against the government unless there’s some specific statute that’s waiving sovereign immunity, which is why -- so, for example, in the restaurant revitalization fund, it was a 28.6-billion-dollar fund to help restaurants with COVID relief. Judge Thapar didn’t issue the injunction until, I think, already 14 billion had gone out the door. And so, that meant that there were many people who were not going to be able to get their COVID grant because the money was going to run out once they hit 28.6, which they eventually did. And we had lots of people contact us, say, “Can you sue for money damages?” And we said, “Sorry. You can’t really get money damages from the federal government unless you meet one of the very strict exceptions. And so, yeah. I think once things go out the door -- that’s the real important part about acting very quickly in cases like this.

 

William Trachman:  Well, I want to invite everyone who’s on the webinar today to go ahead and drop a question into the Q&A box. I’ve got my own questions, but, Dan, I want to open the floor. Give me your take on where we go next. And what are your broad thoughts on equality litigation going forward?

 

Daniel Lennington:  Yeah. I have a lot of thoughts. So, first of all, one of the big headlines here is that Students for Fair Admission -- it applies outside the context of just college admissions. To the extent you’re hearing people say, “Well, SFFA only applies to affirmative action programs,” that’s not true. Racial categories are almost always going to lose. A Student for Fair Admission, their twin commands: race can never be a negative or operate as a stereotype -- those things are fatal independent of any other strict scrutiny factor. And, as I said, you can win a case without engaging in extensive discovery.

 

      And so, I think this model that we’ve developed can be applied to a whole host of other types of programs. We have a lawsuit going on against the U.S. Department of Transportation right now, against the Disadvantaged Business Enterprise Program, which is very similar, and that’s the largest and oldest affirmative action program in the country. There’s obviously these 47 other federal programs that use socially disadvantaged individuals. Almost every state has a supplier diversity program, which -- in Wisconsin, for example, 100 million dollars a year goes out to businesses that supply goods and services to the state of Wisconsin. So supplier diversity programs in almost every state are based on race, and those are really subject to attack right now.

 

      Almost every major state university has got scholarships based on race. Those need to go. And then private businesses and non-profit corporations -- every week, I see about a dozen new ones crop up, and I post about them on X when I see them, but there’s so many I couldn’t possibly sue over all of them. And I don’t think every public interest litigator in America could sue over them all. So there’s a lot of work to be done, and if someone is a -- wants to get in this area, this is a really, really fertile area to get into right now. There’s so many potential targets.

 

William Trachman:  Excellent. Well, first question is: will there be an appeal by the government or are they not going to risk getting the Fifth Circuit?

 

Daniel Lennington:  Yeah. I’ve talked to the government. They appear to be not appealing. I think they have ten more days before they have to actually decide whether to appeal. And I think it’s right that they would -- that they could -- it would get worse for them if they appeal to the Fifth Circuit. I think the Fifth Circuit would probably take another view of Judge Pittman’s compelling government interest argument, and it could get much worse, especially when they have these -- our other case pending in Kentucky right now over the DBE. They’re worried about a precedent and -- from the Fifth Circuit right now, I think.

 

William Trachman:  And you mentioned that there’s 47 programs here. I assume this one is currently dead, then. I mean, they can’t proceed if it’s a nationwide injunction. Are those other 47 programs being reevaluated? Do you know anything -- or would it cause 47 lawsuits before they could actually get rid of those?

 

Daniel Lennington:  Yeah. I think Judge Pittman said something about the importance of nationwide injunctions is because in the New Deal, apparently, there were 1,600 lawsuits filed against one provision of the New Deal. And he said, “This is why it’s important,”—to have a nationwide injunction—but the fact that there’s other programs is not going to automatically impact them.

 

      I do see signals, though, that the federal government is reevaluating some of these programs. I have seen on websites -- for example, there’s an internship program at the Department of Energy for socially disadvantaged students, and in the statute, it includes racial presumptions. But when you go to their website, they have removed all the racial presumptions and said, “These are the eligibility criteria, and there’s no other eligibility criteria.” So I know that some agencies are removing racial presumption, but I can’t get a hint from the DOJ lawyers. They won’t tell me whether they’re directing these agencies to do it or not. So I have not figured that out yet.

 

William Trachman:  Next question is from George Lenew (sp), a scholar, and he asks, “So what is the current MBDA status? Is it open to all now? Is it shut down? Is there something in between that’s -- are the programs gone or some still alive?

 

Daniel Lennington:  All of MBDA’s programs are open to everybody now. It’s open to all. There’s no racial presumptions anymore. No one gets a benefit because of their race, and the statutes that employ the racial presumption and the regulations that have the racial presumption, those are permanently enjoined and cannot be used. So we have been engaged with the MBDA lawyers—DOJ lawyers—to make sure that certain parts of their website are taken down or rewritten. We got them, a couple weeks ago, to rewrite their mission statement. The mission statement was, “The mission of MBDA is to serve minority businesses,” and we called up and said, “You can’t say that anymore.”

 

      And so, it’s going to be a little bit of whack-a-mole, and I think that the attorneys in the Ultima case might have had this problem with the U.S. Department of Agriculture, is that once one thing happened, you had to really stay on them, and you had to point out problems because the government is big and unwieldy. So I think U.S. DOJ lawyers are -- obviously, they’re operating in good faith, but it will require us to go back to them and identify some certain things where there still is some racial criteria on certain websites.

 

William Trachman:  In your closing remarks, you mentioned that this is fertile ground for challenges going forward. There are other types of equality litigation going on. Famously, the Supreme Court denied cert a few months ago in the Coalition for TJ case, involving proxy discrimination. What is your take on whether there’s a mosaic of equality cases here or focus half on that half on this or what is your thought in terms of the bang for your buck element of this?

 

Daniel Lennington:  Yeah. I think that the -- I don’t want to disagree with our friends at some of the other places like Pacific Legal that go after the ones with the racial criteria, which are hidden, or there’s disparities, in that the disparities in the new admission policy proves that there’s actually discriminatory motive going on. I just think there’s so much litigation to do with express, intentional, overt race discrimination going on that that is where we should start, and we need a lot more cases. We need to go after -- like what’s going on with Fearless Fund—Ed Blum’s group. We need to go after these intentional discrimination programs first.

 

      I have a big concern about using the tactics of the other side against them. In the Arlington Heights cases, where we’re trying to expand that and say that, “Well, you’ve changed your admission policy and now, therefore, it has this disparate impact on this racial group, therefore that’s evidence of discrimination --” I don’t view any disparity study -- I have not seen a valid disparity study. I’ll just say it that way. I have not seen a disparity study that actually controls for all the non-discriminatory factors that actually proves that intentional discrimination is afoot somewhere. And so, I wouldn’t want to use the other side’s tactics.

 

      I would rather, first, go after the wide variety of intentional discrimination that’s going on right now—and every day, it's getting worse—rather than the type of litigation in the admissions context for these K-12 schools. I know that would -- that’s cold comfort, and that’s hard to say to these parents who are clearly victims of some sort of nefarious discrimination. But from a global 30,000-foot view, my view is I would rather work on the intentional discrimination cases first because I can do more of them, and I’m not going to have to do a trial, and I can have a much higher turnover rate with them and get more decisions. I think that, from my perspective, is what I would like to focus on.

 

William Trachman:  And we’ve got Eileen O’Connor in the Q&A box who links an article, saying that the government is considering whether to appeal this decision or not. Suppose they don’t appeal. Does that open up a fees application? Would you be -- I know you can’t get damages, but can you your attorney fees from the federal government for having prevailed in this case, and is that a deterrent factor for them going forward?

 

Daniel Lennington:  Yeah. We have filed a fee application. The court invited us to file a fee application out of the blue. We did file our fee application, and we did get a response from the government. And I think those are going to be really important in the future. There’s not a lot of great case law on EAJA—Equal Access to Justice Act—fees, and I’ll tell you why. I’ve been in the U.S. Department of Justice before. I was an Assistant U.S. Attorney, and I was told that we never wanted to lose one of these cases, and we never -- for goodness sake, we never wanted to appeal one of these cases. And so, the best thing to do was to settle and resolve them and keep them out of the courts.

 

      But this case is going to generate a decision from Judge Pittman on our fees. And we did ask for a certain amount of fees—all of our fees—and the government has to prove that they were substantially justified in their defense. And if they were not substantially justified in their defense—which was not -- is kind of a hard standard to meet when you lose a case this bad—we’re entitled to our fees, but you get a statutory maximum, and I think it’s -- $241.00 an hour was our maximum because there’s a cap in the statute. It’s like a hundred-and-some dollars adjusted for inflation. So it’s like 241. So we’re going to see what happens, and hopefully, there’s a -- we’ll get a favorable decision there.

 

William Trachman:  Next question. So, as you mentioned, these preference programs are all over the country. I know, just personally, that I think Denver—my hometown—has one. I think Colorado has one. So what sort of precedence does a Texas decision have for -- about the federal government have for these state and city level programs, and is there a chance that those will also be invalidated after the Students for Fair Admission case?

 

Daniel Lennington:  Yeah. I think that any of these decisions, even by district courts or, obviously, courts of appeal that are interpreting SFFA is really important because SFFA only said a compelling government interest is a specific instance of discrimination that violated the Constitution or a statute, and it didn’t put a lot of meat on the bones. But these other decisions will put meat on the bones, and they’ll say things like, “Yes. SFFA does apply outside the admissions context. Yes. You can lose a case just on the twin commands.” These are all really important. I mean, SFFA is fantastic because the defendants were public and private, so you’ve got a Title VI claim. SFFA is Title VI case law, and it’s equal protection case law. So that means it’s also § 1983 case law. So if you’ve got a government -- state or local government that’s doing some funny business with race, you can apply SFFA.

 

      So I think it’s really good to have more of these federal cases from U.S. district courts, and they will apply these same principles. There’s no reason why this decision would not apply to, say, what a city’s doing in Denver. It’s the same principle. Race can’t be a negative. Race can’t be a stereotype. Racial categories can’t be arbitrary. Your compelling interest has to be remedying a specific instance of identified intentional conduct that the government had a hand in. All these rules are independent. If you lose any one of the them, as a government, you lose the whole thing.

 

William Trachman:  Well, that’s all of the questions we have today. Why don’t you offer us any closing thoughts, and then tell us more -- or how we can learn more about the Wisconsin Institute for Law and Liberty and how people can find your terrific work.

 

Daniel Lennington:  Yep. So we are based in Milwaukee, Wisconsin, and we do nationwide work, though. We represent clients nationwide. We’ve represented over 50 clients in 18 different states since 2021. We represent them all pro bono. You can find out about us at will-law.org, and some of our -- we have some big cases coming up. And just yesterday, we argued for a nationwide injunction against the U.S. Department of Transportation’s Diverse Business Enterprise Program, which is how we build highways in America. Ten percent of all highway funds have to go to socially disadvantaged businesses. So we hope to apply this precedent to that large—very large—affirmative action program. And so, we’re always looking for more plaintiffs and love to partner with other attorneys and other firms, other public interest law firms, too. So please reach out to us, and we’d love to chat with you.

 

William Trachman:  Thanks so much, Dan. What a terrific, terrific event we’ve had today. Thank you to all of our guests and all of the people who submitted questions. Emily, I’ll turn it over to you to close us out.

 

Emily Manning:  Great. On behalf of The Federalist Society, thank you both for joining us for this great discussion today. Thank you also to our audience for joining us. We greatly appreciate your participation. Check out our website fedsoc.org, or follow us on all major social media platforms @fedsoc to stay up to date with announcements and upcoming webinars. Thank you, once more, for tuning in, and we are adjourned.