Hello Alice files motion to dismiss case alleging racial discrimination

Small business resource platform Hello Alice has filed a motion to dismiss a class-action lawsuit claiming a grant program offered in partnership with Progressive Insurance Company unlawfully discriminated against business owners based on race.

The partnership program between Hello Alice and Progressive offered $25,000 in grants to 10 Black-owned small businesses to be put toward the purchase of a commercial vehicle for each business.

The lawsuit against Hello Alice states that plaintiff, Ohio resident Nathan Roberts, who owns Ohio-based trucking dispatch company Freedom Truck Dispatch, experienced reverse-discrimination and that he was treated differently because of his race.

“This (case) could impact your coffee shop, your child care center or your accountant and it’s really important to understand that this case is seeping through the main streets of America,” Hello Alice co-founder Elizabeth Gore said Thursday. “You take legal precedent and suddenly billions of dollars are stripped from what I think are the lifeblood of our communities.”

Gore said small businesses receive a majority of their funding, aside from customer purchases, from grants — either from the federal, state or business to business level — and through supplier diversity contracts with businesses owned by veterans, women or other socially disadvantaged groups.

“These lawsuits are trying to stop both of those economic capabilities,” she said. “The outcome of our lawsuit will set precedent (on the grant side) for the private sector to not be able to do gifting and grants to small businesses, which is billions of dollars that can be at stake.”

The motion, filed Wednesday morning in U.S. District Court for the Northern District of Ohio Eastern Division by Circular Board Inc., claimed the lawsuit is “wrong in every relevant respect” and raises four points.

In response to the claim of reverse discrimination, attorneys for Hello Alice argue that the grant program had other eligibility requirements unrelated to race, such as maximum number of employees and maximum annual revenue figures.

The motion claims Roberts did not disclose in the lawsuit whether he or his business met these other requirements, meaning he has not “alleged that the Black owned business requirement caused (him) any injury.”

The second point says the law being cited in the class-action lawsuit only applies to race discrimination in the making and enforcing of contracts. The motion said Roberts cannot claim that any race-based consideration was unlawful because the grant program was “a promise to make a gift” and did not become a contract.

The third point made is that the First Amendment does not allow Roberts to use the courts to sway Hello Alice or Progressive to change the terms of its grant program, which would violate the organization’s right to freedom of expression.

The final point says the grant program is a valid affirmative action program under U.S. Supreme Court precedent and the law the plaintiffs have sued under is not applicable to “a voluntary, private-sector affirmative action program where there is an existing manifest racial imbalance,” according to a motion overview.

Gore said this case should not be confused with the U.S. Supreme Court decision in August to end affirmative action in higher education.

“We think this case is meritless and sets the nation, and small businesses, back,” Hello Alice executives Gore, Carolyn Rodz and Kelsey Ruger said in a joint statement shared with The Press Democrat.

Hello Alice has served 1.4 million small-business owners, Gore said, and has administered over $40 million in grants to entrepreneurs.

She added that counter to the original lawsuit, Hello Alice created a campaign called Elevate The American dream to celebrate small businesses across the country making an impact.

Entrepreneurs of all backgrounds can be nominated on the campaign’s website for a chance to receive $1,000 in funding, mentorship and media coverage, along with other benefits. Gore said 50 businesses will be chosen.

The class action lawsuit was filed in August by America First Legal, Mitchell Law PLLC and Ashbrook Byrne Kresge LLC, naming Progressive Preferred Insurance Company, Progressive Casualty Insurance Company and Circular Board Inc. — the company that operates Hello Alice — as defendants.

Roberts, who is white and holds a commercial policy from Progressive, stated he “did not realize the grant was available only for Black-owned small businesses” when he began filling out the application until he reached the part that emphasized the grants were for Black-owned businesses.

He forwarded the email about the program to America First Legal. The conservative nonprofit is headed by Stephen Miller, who said the organization would use "our legal system to defend our society and our families from any unlawful actions by the left." America First Legal has filed lawsuits challenging attempts to remedy racial disparities and targeting policies, supportive of transgender rights.

Miller is widely considered the architect of President Donald Trump’s crackdown on undocumented immigrants when Miller served as senior adviser to the president. The foundation reported contributions and grants of nearly $6.8 million in 2021, the most recent year for which a Form 990 tax filing is publicly available.

Gore, originally from Texas, is married to Sonoma County Supervisor James Gore. The couple lives in Healdsburg.

She and Rodz started their online platform Hello Alice in 2017 to give small-business owners better access and a better idea of available resources — such as funding, networks and grant opportunities.

America First Legal vice president and general counsel Gene Hamilton said in a statement on the America First Legal’s website that the grant program is “offensive to the American ideal.”

“All Americans deserve to be free from racial discrimination, yet major corporations across the United States inject racial considerations into every aspect of their business operations, employment practices and so much more.” he said in the statement. “We will fight to vindicate his rights and the rights of all similarly situated Americans.”

In the past few months, America First Legal has sued the North Face apparel company, alleging one its sponsored athletes falsely accused a competitor of making a racist comment; sued Salesforce Inc. over the company’s racial equity-focused hiring practices; and served the Target Corporation with a formal demand to open its books regarding its “radical LGBT political agenda,” among many other legal actions.

The foundation’s board in 2021 was all white, and all male.

Also representing the plaintiffs is Jonathan F. Mitchell. He’s the creator of Senate Bill 8, a near-total ban on abortion in Texas, and the legal strategist behind similar efforts in other states. Mitchell has also worked to roll back same-sex marriage rights, gut the Affordable Care Act, and ban books dealing with race and LGBTQ+ issues.

Reporter Phil Barber contributed to this report.

This is a developing story. Check back for updates.

Clarification: The lawsuit named Circular Board LLC as the company that operates Hello Alice. The correct corporate name is Circular Board Inc.

You can reach Staff Writer Sara Edwards at 707-521-5487 or sara.edwards@pressdemocrat. com. On Twitter @sedwards380.