A federal judge has tossed out a case brought by the Stephen Miller-backed America First Legal against a small Texas company as part of what the nonprofit calls its effort to “dismantle the DEI industrial complex.” America First Legal quickly filed notice with the court saying it would appeal the judge’s ruling. 

In August, America First Legal sued Hello Alice, an online platform for entrepreneurs, over the firm’s administration of ten $25,000 grants limited to Black-owned businesses, in partnership with the insurance giant Progressive. The case has garnered attention because it could dramatically limit the business world’s use of so-called diversity, equity, and inclusion programs that have gained traction in recent years. 

In legal filings, America First Legal, aka AFL, has argued that the grants amounted to illegal racial discrimination in violation of federal civil rights law. Hello Alice, meanwhile, has argued that the program was a First Amendment-protected corrective to exactly the sort of disparities in the startup landscape the company was founded in 2015 to address.  

The judge, Patricia A. Gaughan of the U.S. District Court for the Northern District of Ohio, ruled on far narrower, more prosaic grounds. AFL brought the case on behalf of Nathan Roberts, a white Ohioan who objected to being ineligible for the contested grants. Gaughan found that Roberts lacked the necessary standing in the suit, in part because he had not argued that he would have received one of the grants under race-neutral criteria. 

“Plaintiffs fail to allege any injury in fact that would support their standing to seek either retrospective or prospective relief,” wrote Gaughan. Gaughan also noted that because the Progressive-backed grant program had wrapped, Roberts was not eligible for future remedies. 

Progressive, for its part, noted in its own court filings that it “does not plan to sponsor grants in the future that include race- or other demographic-based eligibility criteria.”

Hello Alice is calling the ruling a major win. 

“We fought this, of course, for Hello Alice,” said the company’s cofounder and president, Elizabeth Gore, in an interview. “But the biggest relief is that it could have set an incredibly dangerous precedent—of course for people of color, but in telling a private company what you can or can’t do with your philanthropy and your dollars.”

A crisis was averted, Gore went on to argue, saying of cutting off funding sources to diverse entreprenuers, “It could have been a nightmare.”

AFL, for its part, isn’t backing down. “We have already filed our notice of appeal to vindicate our client’s rights at the Sixth Circuit,” said AFL vice president Gene Hamilton via email. “All racial discrimination is wrong and must end.”

The Hello Alice case is one of a spate of DEI-tied suits that AFL has brought of late against what it derides as “woke corporations,” including Amazon, CBS, and Facebook parent company Meta. 

Stacey Abrams, the former Democratic leader of the Georgia House of Representatives and 2022 gubernatorial candidate, posted on X about the case’s dismissal. “This ruling is a win for our nation’s economy + small businesses,” wrote Abrams. “Hello Alice has shown businesses the value of standing firm, and not backing down from DEI due to baseless attacks from those who seek to restrict access to the American Dream.”  

The suit attracted considerable legal firepower. America First Legal’s team brought on as co-counsel Jonathan Mitchell, the architect of Texas’s abortion ban. And Hello Alice hired former U.S. solicitor general Neal Katyal. Said Katyal in a press release, “The plaintiffs can try to appeal, but we are tremendously confident in our legal position, and are ready and willing to fight not just for Hello Alice, but the broader business community and ready to set an even broader precedent in the Court of Appeals.”

Gore says she’s ready to move forward. Asked if her company would again offer grants under similar race-based terms, she answered quickly: “Absolutely.”