Legal Battle Over Hello Alice Grant May Set Reverse Discrimination Precedent

A long-running legal challenge against a diversity, equity, and inclusion (DEI) initiative by Hello Alice, a small business support platform, could set a precedent for how companies defend themselves against claims of reverse discrimination. The lawsuit, led by conservative group America First Legal (AFL), alleged that Hello Alice violated Section 1981 of the Civil Rights Act by offering a $25,000 grant exclusively to Black-owned commercial vehicle businesses. The case, brought on behalf of Nathan Roberts, a white business owner who did not apply for the grant, has been a focal point in the growing legal debate around corporate DEI efforts [1].

The legal battle began when AFL, cofounded by Stephen Miller, a key figure in Donald Trump’s administration, filed a class-action lawsuit against Hello Alice and its parent company, Circular Board, as well as Progressive, the insurance company that sponsored the grant. The plaintiffs argued that the grant was discriminatory and violated a 1866 civil rights law designed to prevent racial bias in contracts. Hello Alice’s co-founder, Elizabeth Gore, initially dismissed the email from AFL as spam but soon found herself entangled in a two-year legal struggle [1].

The case briefly ended in Hello Alice’s favor in 2024, when a federal judge in the Northern District of Ohio dismissed the lawsuit, ruling that Roberts lacked standing to sue because he did not apply for the grant. However, AFL appealed the decision, and the case was recently heard by the Sixth Circuit Court of Appeals in Cincinnati. There, the legal arguments largely centered on procedural and technical issues rather than broader debates about the legality or ethics of DEI initiatives [1].

Neal Katyal, the attorney representing Hello Alice, noted that the court’s questions focused on specific procedural concerns, such as whether Hello Alice’s terms and conditions allowed Roberts to apply. This suggests that companies may be able to avoid costly legal challenges by relying on procedural defenses, much as they have done in employment-related discrimination cases [1].

The outcome of this case could have significant implications for businesses that offer DEI programs, particularly in the current political climate. In 2023, the Supreme Court banned race-conscious college admissions, and President Trump has taken steps to limit DEI practices in companies with federal contracts. These developments have led some businesses to roll back DEI initiatives out of fear of legal repercussions. However, the Hello Alice lawsuit may signal that such initiatives can be protected if structured carefully [1].

Kenji Yoshino, a constitutional law professor at NYU, supports the idea of shifting from cohort-based DEI programs to content-based ones. He suggests that companies can maintain their commitment to diversity while avoiding legal challenges by opening programs to all applicants without altering their original goals. This approach, he argues, allows businesses to sidestep the legal issues raised by the SFFA decision without abandoning their DEI objectives [1].

Despite the legal challenges, Hello Alice has continued to expand its services and has issued $60 million in small business grants since its founding. The company has helped over 1.6 million small businesses, including those owned by veterans and women in the care economy, who may face barriers to traditional financing [1].

The cost of the legal battle has been substantial, exceeding $1 million, and the case has drawn support from both sides of the political spectrum. Gore noted that even in conservative-leaning areas, many business owners supported her decision to fight the lawsuit, recognizing the importance of allowing private companies to deploy their resources as they see fit [1].

As the Sixth Circuit prepares its ruling, the legal community is watching closely. If the court sides with Hello Alice, it could provide a legal shield for other companies facing similar claims. Conversely, a ruling in favor of AFL could force businesses to reconsider their DEI strategies. For now, the case remains a test of how procedural defenses can shape the future of corporate inclusion initiatives [1].

Source: [1] [Title: A long-running anti-DEI lawsuit could help companies defend themselves from reverse-racism claims](https://fortune.com/2025/08/05/reverse-discrimination-lawsuit-grants-hello-alice/)