Contracts, Labor & Employment Law After SFFA

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Sam Fendler:  Hello, everyone, and welcome to this Federalist Society virtual event. My name is Sam Fendler, and I’m an assistant director of practice groups with The Federalist Society. Today, we’re excited to host “Contracts, Labor & Employment Law After SFFA.” We’re joined today by Professor George La Noue, Bronwyn Roberts, and Jason Schwartz.

 

Our moderator today is Tammy McCutchen. Tammy is a leading authority on federal and state wage hour laws and prevailing wage laws. She is the former administrator of the U.S. Department of Labor’s Wage and Hour Division, a position to which she was appointed by President Bush and confirmed by the Senate. Tammy is also a member of The Federalist Society’s Labor and Employment Law Practice Group, and we thank her for her service there. 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’ll do our best to answer as many questions as we can. Finally, I’ll note that, as always, all expressions of opinion today are those of our guest speakers and not The Federalist Society. With that, thank you all for joining us today, and, Tammy, the floor is yours.

 

Hon. Tammy Dee McCutchen:  Thank you and thank you all for joining our discussion about the impact that the Supreme Court’s decisions in Students for Fair Admissions will have beyond the context of college admissions programs. As you know, briefly, in SFFA, decided last June, the Court found that both Harvard and the University of North Carolina’s affirmative action programs in admissions violated the Fourteenth Amendment’s equal protection clause, applicable to Harvard, a private university by way of the Title VI. The Court’s language was quite broad. Here’s a quote. “In eliminating racial discrimination means eliminating all of it.”

 

Focusing on demographic data and admissions percentages, the Court found that Harvard and UNC programs were illegal. But they also stated that “Nothing in this opinion should be construed as prohibiting universities from considering an applicant’s discussion of how race affected his or her life, be it through discrimination, inspiration, or otherwise, as long as each student is treated based on his or her experiences as an individual.” An individualized, qualitative analysis, however, appears to survive rather than a group quantitative analysis.

 

So we contemplate how far reaching this decision may be today, particularly how the SFFA decision will be applied in three areas. First, public procurement process where cities, states, and federal governments continue to give preferences and contracting opportunities to minority and women owned businesses. Second, will SFFA impact diversity, equity, and inclusion programs in the private sector? The nation’s largest management side labor employment law firm recently posted a podcast entitled “Why does DEI have to die?” Is that true? Will any changes be made to corporate hiring, training, or mentoring programs?

 

And third, affirmative action for federal government contractors. Now, there’s an Executive Order number 11246 originally signed in 1965 by President Johnson that requires government contractors to take affirmative action in hiring minorities and women. Now, although the EEO does not define the term “affirmative action,” regulations from the DOL’s Office of Federal Contract Compliance Programs requires contractors to prepare affirmative action plans that analyzes female and minority applicant availability based on census data and compare availability percentages to the percentage of women and minorities in the contractor’s workforce and then set placement goals when minorities or women are underrepresented. We hope to have a discussion today of whether that type of program can survive.

 

We’re going to hear as Sam mentioned from our three panelists. We’re going to start with Professor George La Noue to open our discussion on public procurement preference. He is professor emeritus of political science and public policy at the University of Maryland Baltimore County. He has served as a trial expert in 20 cases involving public procurement preferences. For 30 years, he was the director of the Project on Civil Rights and Public Contracts at UMBC, which recently contributed 289 public contracting disparity studies to the Library of Congress. I’m going to have to see if I can find those and read them.

 

He has been a consultant in nine governments and trial experts in 30 cases where the validity of disparity studies was an issue. Educated at Hanover College and a master’s degree from Yale, I look forward to hearing from the professor on the current and future state of public procurement preferences. Now, our other two speakers I will introduce separately as we move to the private sector, but for now, professor, the floor is yours.

 

George R. La Noue:  Thank you. It’s a real pleasure to be part of this banquet of ideas after SFFA, which is a very rich subject indeed. After any so-called landmark decision, there’s always a question of what its scope is, and as we know from statements from the higher education establishment, they very much would like to restrict its impact. But I’m here to talk about its impact on public and private procurement and economic preferences.

 

And my conclusion is since 2021 the law has been trending against these kinds of preferences and that SFFA’s rule that you can only use racial considerations to remedy constitutional or statutory violations, plus Justice Gorsuch’s reminding us that Title VI impacts private entities that receive public funds which involves not only almost all major universities but many private companies as well. But before we get to that I would like to just very briefly rehearse the background of the trends in the courts about the use of race in economic benefits. The day after President Biden was inaugurated, he signed an all-government equity order, and then since then he’s signed another one, which requires every government agency to consider equity in making its policy decisions. And as the vice president defined it, equity means we all end up in the same place.

 

Well, the first test of that order was when the Agricultural Department in 2021 announced a program that it would forgive loans to all minority farmers but not to white, women, or male owned farms. This is a big program. Billions of dollars were just to be wiped off the books. That resulted in lawsuits in three different district courts around the country. And USD lost every one of them, and the important thing is that DOJ did not appeal.

 

In that same year, the government announced the Restaurant Relief Program, which was a COVID relief program. And it prioritized restaurants and other food establishments owned by minorities and women in getting these relief funds. The problem was that the amount allocated—and my memory is 15 billion—was not enough to satisfy the huge demand. Restaurants were hurt very badly during the COVID era.

 

So the issue was if the priority was for women and minority owned restaurants, would there be any left for restaurants owned by white males? And that was decided in a case called Vitolo v. Guzman in the Sixth Circuit. And the Sixth Circuit announced some very important precedents that have influenced district courts around the country.

 

The court said that a government has a compelling interest in remedying past discrimination only when three criteria are met. First, the policy must target a specific episode of past discrimination. Second, there must be evidence of intentional discrimination in the past. Statistical disparities don’t cut it, though they may be used as evidence to establish intentional discrimination. And third, the government must have a hand in the past discrimination it now seeks to remedy. Again, the Department of Justice did not appeal.

 

So in 2021, then, the government lost big preference cases, not procurement but economic benefit cases, and did not appeal. In 2023, the Minority Business Defense Administration established service centers around the country, and those service centers refused to provide any assistance to white owners, male or female. In a case called MBDA v. Nuziard, the government lost in a Texas district court on the grounds that that kind of discrimination had no compelling interest and wasn’t narrowly tailored. And then also in -- and Nuziard cites both Vitolo and SFFA.

 

And then on August 23 in a case called Ultima v. United States Department of Agriculture, the historic 35-year-old AA program came under attack, which provided a presumption of social and economic disadvantages for minority businesses. And the court found that that concept of the presumption of social and economic disadvantage for all minority businesses was invalid. And so in Ultima, the court struck it down, and the Small Business Administration then on August 23 filed a notice of compliance. So they’re not going to appeal that either. So the consequence is that in a number of cases in various federal and one appeal court around the country the idea that preferences should be given in economic benefits on the basis of race or sex has met with almost unanimous condemnation.

 

Now, what I want to talk about next are the preferential procurement programs, which are different than economic benefit programs. And the first question is how many are there in the states, localities, and in the private sector. If you ask AI, which I did, how many there are, AI doesn’t know. It says there are 47 states plus the District of Columbia and Puerto Rico that have certification processes, but how many actual MWBE public or private programs I think no one knows.

 

What is a little surprising is that in the landmark City of Richmond v. Croson which SFFA cites three times the concept of strict scrutiny with compelling interest and narrow tailoring became the standard. So how did all these programs survey that kind of a standard? The short answer—and I’ll try to be brief—is Justice O’Connor permitted the concept of disparity study. I won’t read the whole quote, though if somebody wants it later.

 

There were some 600 disparity studies done at a cost of roughly $300 million, and these studies essentially found whatever the governments that commissioned them wanted to find. And if they found a disparity using what I consider to be very flawed methodologies, then the governments went ahead and enacted various kinds of procurement preference programs, sometimes goals with onerous conditions, sometimes absolute set asides or quotas.

 

Now, what is happening is that all of these programs or many of these programs are now very vulnerable. A number of conservative litigating agencies, the Center for Individual Rights, Pacific Legal Foundation, Wisconsin Institute for Law and Liberty, have taken up challenges against them and now consider the implications that SFFA for these programs. In virtually none of the disparity studies has there been any identification of a constitutional or statutory violation on a part of the government. Why? Because that’s not the point of the disparity studies.

 

The point of the disparity studies is simply to find a statistical disparity without identifying who created it because if the disparity study said, well, the reason there’s a disparity is because your procurement officers a biased or some of your procurement procedures are biased, well, the narrowly tailored remedy would change that and perhaps create some compensation for firms that were harmed by it. But that’s not the goal. The goal is to have a broad-based beneficiary program for all minority or women owned contractors. So there’s not an identification of any Constitution or statutory violation. And I think that’s fatal.

 

I think that none of those studies are going to survey, not just because they’re methodologically flawed, which was kind of expensive to prove, but because they simply don’t meet the SFFA test or for that matter the Vitolo test that you actually identify who committed the discrimination and whether there was a constitutional or statutory violation. So I’ll stop there. Please feel free to ask me any other questions, but the bottom line is I think the whole use of race and sex in procurement by both public and private entities is now very vulnerable and is likely not to survive.

 

 

Hon. Tammy Dee McCutchen:  Wow. Thank you very much. We talked before we came online, folks, but I actually as a very, very young attorney wrote one of those disparity studies. And the professor was the expert to try to invalidate it, and he succeeded in doing so. And I’m not going to tell you how many years ago that was but small world.

 

So let’s move on to the private sector, and we will hear from Bronwyn Roberts from the Cooley Law Firm and Jason Schwartz from Gibson Dunn. Now, both are very seasoned management side employment lawyers. Ms. Roberts counsels businesses on employment matters, including the preparation of human resource policies and employee hiring and recruiting, among other areas. She also provides corporate training on various employment issues, and this I found very interesting in your bio, Ms. Roberts. She advises the governor of Massachusetts and the Massachusetts Commission Against Discrimination on employment policy matters. I wonder if we can get her to share any policy advice that she’s given the state of Massachusetts about SFFA. Now, her bachelor’s degree is from Tufts and her law degree is from Suffolk.

 

Now, Mr. Schwartz chairs the labor and employment practice group at Gibson Dunn, one of the top labor and employment practice groups in the country. He with other attorneys from Gibson Dunn has formed a workplace DEI taskforce, which is designed to help clients develop creative practical and lawful approaches to accomplish their DEI objectives following the Supreme Court’s decision in SFFA. Now, I recommend those. They’ve had two publications so far. I read them both. I recommend them to you all for news on -- a great source for news on litigation, data, and trends post SFFA. Now, his law degree is from Georgetown, and his bachelor’s is from George Washington. He’s a D.C. insider -- I’m sorry, you’re in the beltway. You’re in the swamp there, Jason.

 

So thank you and, Ms. Schwartz, we’re going to start with you. I’m sorry, Ms. Roberts, we’re going to start with you. And I’ll ask you this question. Does DEI have to die? What survives in the corporate private employer context after SFFA?

 

Bronwyn L. Roberts:  Thank you so much and to I guess quote a competitor law firm, no, DEI does not have to die. It’s important to remember that Students for Fair Admission, that was a case about the equal protection clause of the Fourteenth Amendment, as well as Title VI of the Civil Rights Act. In the context where I practice in employment discrimination cases, we’re really talking about a different body of law. We’re talking about Title VII of the Civil Rights Act.

 

The EEOC in the summer answered that question very quickly to the extent that it’s important to know what the EEOC’s perspective is. But Chairwoman Charlotte Burrows came out and said this summer that it remains lawful for employees to implement diversity, equity, inclusion, and accessibility programs that seek to ensure workers of all backgrounds are afforded equal opportunity in the workplace. I’m not saying that we aren’t as employment lawyers reviewing the Students for Fair Admission case closely and trying to glean implications that are applicable to employment law. But other than sharing the name affirmative action in the employment context, it really is different in higher education.

 

As a reminder, Title VII of the Civil Rights Act employers are already expressly forbidden from using race, ethnicity, gender, or any other protected characteristic in personnel decisions with a couple of limited exceptions. Those exceptions include corrective actions to correct “manifest imbalances,” and in that case they must be narrowly tailored and temporary in scope. And then the other area is mandatory quotas for recruitment for federal contractors. So strictly speaking, there has been no change to employment law with respect to Title VII.

 

The cases about DE and I initiatives and affirmative action employment employers can presumably use race, ethnicity, and gender in employment if they’ve established this manifest imbalance of an underrepresented group within their workforce. And in that case, they can voluntarily institute affirmative action. But they have to be able to establish, one, that there’s this manifest imbalance involving an underrepresented group, narrowly tailored and not unnecessarily impinging upon the rights of others. And it has to be temporary.

 

So that doesn’t mean that challenges aren’t on the horizon here. We have seen -- my law firm included has received letters. A lot of law firms have received letters from Senator Cotton from Arkansas warning of impending litigation. In those letters, Senator Cotton wrote that employers should take to heart the Supreme Court’s recent declaration that eliminating racial discrimination means eliminating all of it. And in that Senator Cotton has alleged that certain law firms and major corporations should -- they’ve encouraged DEI practices that may be unlawful.

 

There are other challenges on the horizon. The case against Perkins Coie and Morrison Foerster alleging that diversity fellowships in law firms, particularly summer internships, a stipend to law students -- there’s an allegation that that could be a violation of Section 1981 of the Civil Rights Act. In addition, there’s impending action from the state attorneys general. In July, certain CEOs in the Fortune 100 companies received letters reminding them to refrain from discriminating on the basis of race, whether under the label of diversity, equity, and inclusion or otherwise. To me, this suggests future use of enforcement powers related to DEI efforts.

 

So I think I probably at this point should turn it over to Mr. Schwartz because I know that he practices in the same area and probably has some add-ons and things that I have not considered that I’d like to hear.

 

Hon. Tammy Dee McCutchen:  And before we do that, you mentioned the minority fellowships that some law firms have. And I’d also like to hear both of you talk about there’s a lot of types of programs. It’s not just paid fellowships. It’s mentorships designed for women and minorities, affinity groups -- and there are not affinity groups for the -- sorry, Jason, no affinity group for you. And of course training opportunities in law firms, assignments to the juicy cases, and when I was practicing, I represented a very, very large client who had a bonus program which included getting a higher bonus if you had the right percentage of diversity hires. I told them that’s illegal under Title VII, and their response was huh, rather have the reverse discrimination lawsuit. That’s good press for us. So I’d like to hear you, Jason, respond to that, those types of things.

 

Jason C. Schwartz:  Sure. Yeah, absolutely. So thanks for the opportunity to talk about this. I think these are about the most interesting issues that employment lawyers are dealing with right now. A quick plug, as Tammy said, we have a newsletter we’re putting out every two weeks if anybody’s interested. It’s just kind of a factual recitation of trends in lawsuits, and it doesn’t have an advocacy position. It’s just reporting on what’s happening, which is an enormous amount of activity.

 

I think the law in this area is very confused right now with a lot of contradictory trends. So what do I mean by that? I mean, it’s a lawyer’s paradise because nobody knows the answers to these questions. I’ll tell you what I think the answers are. I think the greatest example of that is on the day of the decision you have the statement that Bronwyn was referring to where Charlotte Burrows, the chair of the EEOC, said don’t worry about this decision. It has nothing to do with employers, and DEI programs remain perfectly lawful.

 

And then you have the statement from Andrea Lucas, our former colleague who is also a commissioner of the EEOC, who essentially says the same thing but the opposite side of the coin. In other words, Andrea says this decision did not affect employment law because all of these DEI programs were unlawful already. Obviously, I’m exaggerating a bit, but essentially you have Charlotte Burrows and Andrea Lucas both saying the same thing but also both saying the exact opposite thing. And so if you are a corporation trying to figure out what the heck is lawful, what can you do, what can’t you do, you’re confused, understandably.

 

Then you have the dueling letters from the attorneys general. You’ve got the Republican attorneys general letter sent to the CEOs of the Fortune 100 that essentially says most of your DEI programs are unlawful, and by the way, at least some of us on this letter have enforcement authority under our state equal employment statutes. And we’re going to do something about it. And then, you have a letter that comes shortly thereafter from a bunch of Democratic attorneys general who say not only are the Republicans wrong -- your programs are not unlawful -- if you discontinue them, then you might be engaged in unlawful employment discrimination and we’re going to come after you.

 

So if you’re a nationwide employer, what to make of this? And then one that I thought was particularly interesting following that, the Colorado attorney general issued a, quote/unquote, legal opinion. And it’s basically a very high-level overview that says lawful DEI programs are lawful. Okay. That’s true, but which ones are lawful and which ones aren’t?

 

You then have kind of the current environment, which we profile a lot of this in our newsletter, where you have all these different fronts on which this is being litigated. So you have the shareholder lawsuits. The public policy group is filing a lot of those -- the group that filed the lawsuit against Starbucks. The American Civil Rights Project in Texas is also doing shareholder lawsuits and demand letters. America First Legal is at least sending letters. I haven’t seen a shareholder lawsuit from them yet, but it’s possible they filed one and I haven’t seen it.

 

My personal view is that the shareholder litigation is mostly a PR stunt and that that’s not the legal vehicle where these issues will get decided. It’s hard to read much into it, but there’s the decision from the district court judge in the Starbucks case. It’s a fun read. He writes very colorfully and basically says this is a public policy issue. It’s not a legal issue in the context of a shareholder lawsuit, and so this doesn’t belong here in court. I tend to agree. That’s just my personal view that I don’t think shareholder lawsuits are a viable means for testing these issues.

 

But what you are seeing in addition to that are suits under Title VI and Section 1981, a huge uptick in those. And we track this in our newsletter. In the few months since that SFFA decision, there have been a huge number of these suits filed under both 1981 and Title VII. There’s also a series of letters that America First Legal has done that they’ve done a lot of publicity around that they’ve written to the EEOC. Their stated objective in the letter is for an EEOC commissioner to file a commissioner’s charge. As you all probably know, those are not public unless and until the EEOC takes some litigation action on them, so we don’t know whether commissioner charges have been filed as a result of those letters. But you could imagine that the current EEOC is not likely to authorize litigation on any of those charges, but that’s another thing that’s out there.

 

And then of course -- and I’m not going to talk about this specifically because we’re involved, but we are representing the Fearless Fund in the lawsuit that Ed Blum’s group AAER has brought against them. And that lawsuit raises a lot of similar issues. So if you’re an employer, what the heck do you do?

 

To answer some of Tammy’s questions, I think the current state of the law, and obviously very much in flux with all of these challenges sort of brewing -- the current state of the law is if you’re going to have a diversity program. First of all, I think there are many diversity programs that don’t raise these legal issues, programs that are open to all, programs that are educational in nature. Most of the affinity group programing is typically open to anyone who’s interested, whether you are a member of the demographic group or not.

 

And so those are things that I think are very much at the kind of low end of the risk spectrum in terms of legal claims. But then you get into programs that are more conscious of race or gender. Some of them do not quite rise to the level of an employment action.

 

So to Tammy’s question about mentoring and leadership training programs and things of that nature, one of the arguments that a management side lawyer would typically have made about challenges to those kinds of things is they’re not an adverse employment action, so they don’t rise to the level that you can sue about them under Title VII or Section 1981. Now, big asterisk to that right now, there’s a case being argued this month in the Supreme Court called Muldrow v. City of St. Louis that is going to examine at least the narrow question of whether a lateral transfer is actionable under Title VII. Muldrow, by the way, the facts are fun if any of you are fans of The Wire. It was a lateral transfer of a police sergeant. So if you remember when McNulty got in trouble and they put him on the boat detail in Baltimore Harbor -- professor, you might be familiar with that with your connection to Baltimore. That’s basically what Muldrow is about.

 

But if depending upon how the Supreme Court decides it and whether the language is broader, many people view Muldrow as a test case for whether the bar for adverse employment actions is going to be lowered. If you want a preview of where this might go, read the Fifth Circuit’s en banc decision in Hamilton and in particular the concurrence by Judge Ho. That case was about whether assigning sheriff deputies to weekend shifts was a tangible employment action that could be sued over. The issue there was male deputies were allowed to take the weekend off but female deputies were not because they always wanted to have a female deputy available at the jail.

 

And the issue that the Fifth Circuit dealt with is, well, okay, is working the weekend -- is that enough to be actionable? Is that an adverse employment action? And they say yes. And in Judge Ho’s concurrence, he goes on to explain why this has implications for DEI programs, including things like a lunch program that’s only open to women or something like that. So Muldrow will be on a broader stage same type of questions.

 

The other issue is are these kinds of race or gender conscious program permissible as voluntary affirmative action programs, something that Bronwyn alluded to? There are a series of decisions that flow from the ‘70s and ‘80s Supreme Court cases, Johnson and Weber, that recognize that there is a sort of exception, if you will, to Title VII in 1981 that allows for voluntary affirmative action to address demonstrated disparities that are attributable to past discrimination. It goes to a lot of the issues the professor was talking about about what sort of evidence would establish such a disparity—a manifest imbalance, quote/unquote, in the language of those cases—and what would be needed to establish that exception.

 

That’s very much being heavily litigated right now because it is often the rational for many of these programs is to address a lack of women in leadership positions in a certain industry or a lack of Black or Latinx employees in a certain type of job. And so these programs are designed to remediate those issues and designed to fit within the exception. Whether a given program fits within it I think is being actively litigated.

 

And then the other question that may or may not reach the Supreme Court is whether those exceptions will survive SFFA. If you read Johnson and Weber, the mode of analysis in those cases is very dissimilar from the textualist analysis that the current Supreme Court majority would engage in. There’s nowhere in the text of the statute that recognizes a voluntary AAP exception. So I think that’s an open question is when and if that gets litigated, what are the boundaries of that exception, do you fit within it, and whether it survives. Again, without expressing a view one way or the other, I think that’s something that is possible that will be addressed as these cases percolate.

 

The other two issues -- so the first two issues that I think are super interesting as you examine these programs are is it a tangible employment action, the mentoring, the training, and so forth, and is it a voluntary affirmative action program? The other two things that I think are percolating right now that are also super interesting are the standing of any particular person to sue. Can anybody just come along? And a lot of the AAER cases I think are raising these issues on behalf of the organization’s anonymous members. Can they really do that, or do they have to come forward with somebody who actually had an opportunity to participate in the program but for their gender or race, etc.? I think that’s going to be the subject of a lot of litigation.

 

And then the other issue, which I actually think is the most fascinating just sort of academically of all of this, is the First Amendment overlay. So you have a very strong series of decisions from the Supreme Court, including most recently 303 Creative, the suggests that at least in some contexts the First Amendment may override discrimination prohibitions. How does that play out in this context, for example, in socially conscious investments or in charitable programs like, again, the case that I’m involved in, the Fearless Fund? How will the two of those things intersect?

 

There’s obviously some point at which the First Amendment does not protect discriminatory conduct, if you will. And there are a bunch of Supreme Court cases about that, mostly in the context of school segregation. But there are other contexts, including commercial ones, where the First Amendment does protect, 303 Creative being the foremost example of that but also the Citizens United cases about spending money being protected. Or there’s a super interesting case about a parade in Boston where the organization didn’t want certain floats in the parade, and that was expressive activity. So I think all of this is a big jumble in a soup pot that’s boiling right now.

 

Where it comes out, I have no idea. We’ve been advising a lot of employers on this right now, and I think what employers are doing is all across the risk spectrum. In other words, there are some that I think have swung the pendulum all the way back because they’re very risk averse and they don’t want to be sued over any of this. There are some that are kind of in the middle and some that are changing their programs in ways suggested by SFFA.

 

So in shorthand I would call this the essay approach. Chief Justice Roberts said we can’t consider race as sort of a stereotype, but if somebody writes about how their race, gender, whatever has impacted their particular life experience, skills, abilities, perspective, that’s relevant. So some employers are using that approach, and then some are very much on the aggressive end of the spectrum saying we’re going to defend our race conscious programs as voluntary affirmative action or under the First Amendment or as not an adverse employment action or what have you. All of that I think is a legitimate subject at the moment of debate. There’s no real clear law that answers that one way or the other.

 

So anyway, that was a whole lot of talking. Let me pause there but I think this is super interesting. And I think the law is very much in flux without any really clear answers to these questions today.

 

Hon. Tammy Dee McCutchen:  Wow. It is all super interesting, and I see the professor has some questions. And I have some too. So let’s -- go ahead, George.

 

George R. La Noue:  I want to ask this of my two employment law specialists. One of the current controversies is whether public universities can require applicants for jobs or for promotion to affirm DEI, even in circumstances where DEI is very ambiguous in its definition. That’s a compelled speech issue. How do you think that might come out?

 

Bronwyn L. Roberts:  Well, I think that the colleges have changed and followed the guidance from Students for Fair Admissions to ask students to describe like demonstrated resilience and excellence in their path, with an invitation therefor to speak about their own particular diversity but not a requirement that they do so.

 

George R. La Noue:  But the universities are requiring an affirmation of the DEI program, not as applied to a particular candidate.

 

Bronwyn L. Roberts:  Okay. So maybe I’m not too familiar, but you’re saying that the universities are asking their own students to affirm --

 

George R. La Noue:  No, faculty.

 

Bronwyn L. Roberts:  Oh, their own faculty to affirm commitment to DE and I. Well, there is a similar challenge in the employment front where a woman has sued for discrimination because she refused to participate in a DE and I program, and she’s suing for retaliation. Now, query whether she’s even in a protected class such that she has standing to -- or she can state a claim for discrimination. But I think that that same analysis would be in play, like whether you can require a faculty member to sign on to that I think that the faculty member’s going to say that he or she is in a protected class and that he or she’s objecting to it because the policy is not race and gender neutral. But I think that that might be a stretch. I’m not sure if you’d be able to state a claim for that. Jason, what do you think?

 

Jason C. Schwartz:  Yeah. My view would be it kind of depends what they are being asked to sign onto. If it’s a statement that they ascribe to the university’s belief in equal treatment and equal opportunity, obviously much harder, I think, for somebody who refuses to do that to say that’s some violation of their rights. But I think, professor, you make a good point that if the statement is something that is maybe more overtly political and it’s a state university and the employee is saying, well, if you want me to sign onto this, you basically mandating my First Amendment speech that I have to say what you agree with and not what I agree with, maybe.

 

It’s an interesting question. As you might imagine, at least for me as a management side labor and employment lawyer in the private sector, I don’t typically represent public universities in employment matters. They have state lawyers who do that, so I have to confess that’s not right in my sweet spot. But I think that’s probably going to be the issue is what is the content of the statement that the professor is being asked to sign onto. Is it a statement of equal treatment of students and colleagues and so forth, or is it a statement that has some more political content that they could say, well, hey, that’s not something that I believe in?

 

It’s interesting because if you compare it to the private context, I recently had occasion just for some unrelated reason to be looking at the statement of belief at a private religious institution, and of course they don’t have the First Amendment issues. And their requirement was that anybody who’s going to teach here has to actually sign on and agree that these are my beliefs. And there you have the religious overlay on Title VII where you could make a good argument that it’s essentially the ministerial exception. If you’re going to teach at a religious institution, you are performing a ministerial function, and so it’s not unreasonable for them to say you got to believe what they believe because that’s what you’re being paid to teach.

 

Hon. Tammy Dee McCutchen:  I cannot believe it’s already 1:45. This has been such a fantastic discussion. I do want to spend five minutes on our last third area and ask for each of your comments. And as I mentioned at the beginning, this is the federal government contractors.

 

So if you want to have a federal government contract, you have to have an affirmative action plan that compares the available -- the demographics of the available applicants according to census data with the demographics of your workforce. And if you’re underrepresented, you have to adopt placement goals -- not quotas. They’re not called quotas; they’re called placement goals. But if you do not meet those goals, you are in danger of actually losing your federal government contract.

 

So I’d like each of you -- and I know this is outside a little bit of your expertise. But is this type of program -- will it survive after Students for Fair Admissions? Or should it be challenged? Is it survivable? What is the future for required affirmative action for federal government contractors? Jason, why don’t you start?

 

Jason C. Schwartz:  Sure. So first of all, to answer your direct question, I think there is likely to be a challenge to Executive Order 11246, which is the one that requires government contractors to develop affirmative action plans and be subject to audit by the OFCCP. I do think that there’s a decent likelihood of a legal challenge to that. Just based on the current environment, there are a quite a number of groups that are looking for programs to challenge.

 

This one, I think there will be unique questions of standing. The most logical challenger would be some government contractor who is facing an enforcement action by OFCCP, which as you point out can lead up to and including debarment as a government contractor, meaning you can’t do business with the United States government anymore. So somebody who has that at stake perhaps challenges the whole regime, that the Executive Order itself is unlawful or unconstitutional. Does that challenge succeed? Who knows. It’s all in my soup pot of contradictory legal trends.

 

I do think that there is a reasonable argument if somebody were to attack the Executive Order and say, look, this Executive Order is essentially requiring ridged quotas in the absence of a demonstration of specific historical discrimination, I think there is a reasonable counter to that which is that, no, what that mechanism is really about -- and of course the professor will know better than me about the validity of this method of analysis. But what it is really designed to do is to figure out, look, if you have available a certain number of women or minorities who are qualified, interested candidates where you are hiring and your workforce doesn’t reflect that and in fact is so far off of that that it is a statistically significant degree so it’s not due to chance, that maybe suggests that there’s a problem in your outreach, recruitment, hiring, etc.

 

Now, of course as management lawyers, we’re all prepared to respond and say none of that reflects discrimination. Here are all the other factors you’d have to consider in your regression analysis. Or if you’re looking at the population and not our applicant pool, that tells you nothing. Obviously, we would say all of those things, all of which are legitimate.

 

But from the OFCCP’s perspective, I think they would say it at least raises a question. And all we’re asking you to do is measure that availability versus your job occupants and if there’s a disparity to take lawful steps including making sure you’re doing the right outreach, making sure people are aware of your jobs, posting them in various places including like for veterans to make sure they’re available to veterans, make sure that they’re known to the disabled through various organizations. There’s nowhere where they say we are requiring you to make race, gender, or other sort of protect class conscious employment decisions.

 

I think all of that is reasonable and a reasonable response as well. So overall, their response would be nothing we’re telling you to do is designed to cause you to discriminate and in fact quite the opposite. We’re testing to see if there might be discrimination and asking you to take steps to ensure equal employment opportunity. I could argue both sides of that case.

 

Hon. Tammy Dee McCutchen:  I’m sure that’s what OFCCP will argue. So what I’m hearing is without a type of disparity study that Professor La Noue has talked about or the voluntary affirmative action programs that Ms. Roberts has talked about there cannot be any quotas. So my question will be when we see these challenges is whether or not courts will believe this idea that it’s just a goal and not a quota without these studies. And one thing also, Jason, that you mentioned -- and this is the last before we’ll turn it over for questions. I’m sorry we only have ten minutes left.

 

But, Ms. Roberts, I was wondering whether in all of this we’ve talked about the legality, but do you anticipate changes in attitudes and tolerance for these types of programs that employers walking away from them at least a bit because they fear all of this litigation that Mr. Schwartz has talked to us about?

 

Bronwyn L. Roberts:  Thank you so much. I am seeing both employers being more engaged on the issue and wanting to solve for it as well as fear, taking programs off their websites for legal review until they have some comfort that they are not putting themselves at risk by doing what they think is the right thing to do. So I think there’s a lot of engagement, a lot of curiosity about this. I think that employers are really understanding particularly with the mentorship programs and the fellowship programs that there’s a way of attracting the type of talent and diverse ideas that they want without tripping over some of the things that can cause potential for liability, really asking people if they identify with a particularly underrepresented group as opposed to being of that group. So it’s really a little bit of a Swiss cheese thing here, Ms. McCutchen. I’m seeing people wanting to do more and at the same time being cautious about doing that.

 

Hon. Tammy Dee McCutchen:  Great. With that, Sam, do we have some questions on the line?

 

Sam Fendler:  Let’s see. We have one question from the audience. This is about -- forgive my ignorance. This is not my expertise -- about the Mansfield certification. So the question is what is the panel’s views on whether Mansfield certification violates Students for Fair Admissions or not, and if so, should law firms avoid promoting or publicizing it?

 

Hon. Tammy Dee McCutchen:  I think we have to turn to our two law firm experts here. Jason or Ms. Roberts?

 

Bronwyn L. Roberts:  So I understand Mansfield certification to be making sure that the applicant pool or those that are being interviewed has a diverse group within it. I don’t do a lot of counseling in this area. I’ve done a bit of it, but there’s really a question to if you have an open rec for a position, what happens after a certain period of time when you can’t achieve a diverse pool of applicants? Do you move forward or not? And that becomes a bit of a problem. Jason, have you advised in this space?

 

Jason C. Schwartz:  Sorry, yeah. My understanding is that the criteria that they use -- and I don’t know all of the details of it, but my understanding is that the criteria that they use for this Mansfield certification is just designed to ensure that you’re providing equal consideration to everybody so that you advertise the jobs, that you make the criteria for promotion or leadership roles available to people, that there’s no quota or set aside or anything like that involved. It’s similar to a Rooney Rule type of situation where you want to make sure that people are being considered. There, too, I think it’s all in the implementation. If your view is we want to make sure that any diverse candidates in the pipeline are getting a fair opportunity, that’s easy to defend. If you’re saying we only have a limited number of spots and one of those spots is being designated for a certain demographic, much harder to defend unless of course you have a voluntary affirmative action program and so forth. But my understanding is that the current iteration of the Mansfield certification process is much more in line with the first, meaning designed to provide equal employment opportunity, doesn’t have quotas involved, doesn’t require employment decisions to be made on the basis of race or gender.

 

Hon. Tammy Dee McCutchen:  Great. Actually now I can see the questions, Sam, so I can go through this.

 

Sam Fendler:  Great.

 

Hon. Tammy Dee McCutchen:  We have a listener who wants I think probably Mr. Schwartz to provide further elaboration on the broader effect of 303 Creative and particularly sort of the compelled speech aspect of this in the context of DEI programs. And by the way, I will say I was compelled to attend a DEI training when I was a partner in a law firm and didn’t dare object to that. And I had to say things during that training which was very uncomfortable for me, so comment on that, Jason.

 

Jason C. Schwartz:  Sure. So first of all, I think in the context of private sector employment, the First Amendment rights are not going to be applicable to the employees. So the way I see the relevance of 303 Creative for private sector employers is actually as a basis for them to defend certain of their programs. So for example, if a private employer has some sort of spending program, whether it’s a charitable program or a socially conscious investment vehicle or something like that, I think it’s a pretty uncontroversial statement to say that in America spending money is speaking.

 

And the Supreme Court has repeatedly recognized that. And so where you put your charitable dollars or your investment dollars is a form of speech. And I said I wasn’t going to talk about it, but I guess I will. Just to this extent, this is all public. I’m not telling you anything that you couldn’t get yourself from the court record.

 

One of our arguments in the Fearless Fund case is this is a charitable endeavor and that the Fearless Fund -- the foundation, which is the part that’s being challenged in the lawsuit, is entitled to give its charitable donation to whoever it pleases and that that is a protected First Amendment exercise that goes to the founding of the country. You want to give your money, that sort of proud tradition of self-help of different immigrant or disadvantaged groups gathering charity amongst themselves and helping people in their community, that’s protected by the First Amendment, even if it would otherwise be subject to some statutory challenge. That’s where I see the 303 Creative argument.

 

There’s an Eleventh Circuit case. For those of you who are interested in this, I find this fascinating -- there’s an Eleventh Circuit case called Coral Ridge Ministries. And what that case is about is there was a charitable contribution program that Amazon had called Amazon Smile where some portion of your purchase would then go to a list of different charities. And Amazon said to Coral Ridge Ministries we’re not going to have you on the list of eligible charities to receive these Smile contributions.

 

Coral Ridge challenged and said essentially a public accommodation theory that this is religious discrimination against us in your place of public accommodation. The Eleventh Circuit sort of without addressing whether it is a public accommodation—so they don’t get into whether the statute applies or not—they say it doesn’t matter. Even if the statute did apply, Amazon’s choice of what charities go on that list is a protected First Amendment exercise that overrides the statutory nondiscrimination prohibition. They get to decide where they give their money because that is a form of protected speech.

 

I think that argument is now even stronger in light of 303 Creative, that that kind of charitable giving is totally and absolutely protected. 303 Creative, to me, is actually one step further, and it’s in a place where the law is a little more ambiguous, meaning 303 Creative was a website designer. So that person is engaged in a commercial activity, and even there the Supreme Court said, well, the website design is a form of creative expression. And so it’s protected by the First Amendment. You can’t force that person to speak in ways they’re not comfortable because the First Amendment protects them.

 

There is a line somewhere. We know that, that you can’t say, well, my First Amendment belief is that I only want to deal with persons of a certain race or gender or whatever in the course of my business or employment. Obviously, you can’t do that. You can’t do that in admission to a school. There are Supreme Court cases that say that. So where is that dividing line? I don’t think there’s a clear answer to that question, but I do think that the charitable giving is on the First Amendment protected side of that line. So hopefully that’s helpful.

 

Hon. Tammy Dee McCutchen:  I think we’ve provided a great update today and have hopefully raised a lot of questions in a lot of people’s minds. But I think we’ll be continuing to think about and talk about all of these issues for years to come probably. Sam, can you take us out? Thank you, everyone.

 

Sam Fendler:  Absolutely. Well, Tammy, thank you so much for your wonderful moderating today. On behalf of The Federalist Society, I want to thank our panelists, Bronwyn, Professor La Noue, Jason, thank you so much for being here. We really appreciate the benefit of your time and your expertise.

 

I also want to thank our audience for joining us. We greatly appreciate your participation. Please, check out our website, fedsoc.org, or you can follow us on all major social media platforms @fedsoc to stay up to date with upcoming announcements and future webinars. So thank you all once more for tuning in, and we are adjourned.