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Monday, Jan 06, 2025
Outside the box.
PayPal Confronts Lawsuit Accusing Racial Discrimination in Investment Initiative
An Asian American businesswoman claims that PayPal has excluded Asian applicants from a $535 million funding program aimed at minorities.
Nisha Desai, an Asian American businesswoman and founder of Andav Capital, has initiated a federal lawsuit against PayPal, alleging that the company's $535 million investment initiative unlawfully favored Black and Hispanic-owned enterprises over Asian applicants.
Filed in the Manhattan federal court, the lawsuit accuses PayPal of racial discrimination in violation of various civil rights laws.
The Claims
Desai argues that PayPal's program, introduced in June 2020 to combat economic inequality and support minority-owned businesses, rejected her New York-based venture capital firm for funding due to her Asian background.
After applying for over six weeks, Desai claims that PayPal ceased communication with her while allocating $100 million to 19 venture capital firms led by Black and Hispanic entrepreneurs.
The complaint asserts that 'to PayPal and its executives, Asian Americans might be minorities, but they’re the wrong kind.' Desai further alleges that PayPal informed other Asian businesswomen that they were ineligible for funding due to their ethnicity.
Legal Basis and Demands
The lawsuit references violations of:
- Section 1981 of the Civil Rights Act of 1866, which prohibits racial discrimination in contracts.
- Title VI of the Civil Rights Act of 1964, which prohibits racial discrimination by recipients of federal funds.
- New York state and city human rights laws, which ban discrimination based on race and ethnicity.
Desai seeks unspecified damages and a judicial order to stop PayPal from considering race and ethnicity in its investment program.
PayPal’s Reaction
PayPal has declined to comment on the lawsuit, stating it does not discuss ongoing legal matters.
The company’s initiative, launched during a period of heightened awareness of racial inequality in 2020, was intended to support Black and other minority-owned businesses through investments and partnerships.
Context and Wider Consequences
The lawsuit highlights a growing trend among certain conservative groups to challenge corporate diversity, equity, and inclusion (DEI) initiatives.
Desai's legal team, Consovoy McCarthy, is known for championing conservative causes and previously represented the advocacy group Do No Harm in a similar lawsuit against Pfizer over its fellowship program for underrepresented groups.
That case was dismissed because there was no harmed individual identified.
Desai’s lawsuit emerges amid increasing legal scrutiny of corporate DEI programs, with some critics contending that these initiatives may unlawfully exclude certain groups.
Proponents of DEI argue that these programs are crucial for addressing systemic inequalities.
Case Particulars
The case, Andav Capital et al v PayPal Holdings Inc et al, is being heard in the U.S. District Court for the Southern District of New York under case number 25-00033.
The decision could have substantial implications for how companies design and implement programs intended to promote racial and economic equity.
Filed in the Manhattan federal court, the lawsuit accuses PayPal of racial discrimination in violation of various civil rights laws.
The Claims
Desai argues that PayPal's program, introduced in June 2020 to combat economic inequality and support minority-owned businesses, rejected her New York-based venture capital firm for funding due to her Asian background.
After applying for over six weeks, Desai claims that PayPal ceased communication with her while allocating $100 million to 19 venture capital firms led by Black and Hispanic entrepreneurs.
The complaint asserts that 'to PayPal and its executives, Asian Americans might be minorities, but they’re the wrong kind.' Desai further alleges that PayPal informed other Asian businesswomen that they were ineligible for funding due to their ethnicity.
Legal Basis and Demands
The lawsuit references violations of:
- Section 1981 of the Civil Rights Act of 1866, which prohibits racial discrimination in contracts.
- Title VI of the Civil Rights Act of 1964, which prohibits racial discrimination by recipients of federal funds.
- New York state and city human rights laws, which ban discrimination based on race and ethnicity.
Desai seeks unspecified damages and a judicial order to stop PayPal from considering race and ethnicity in its investment program.
PayPal’s Reaction
PayPal has declined to comment on the lawsuit, stating it does not discuss ongoing legal matters.
The company’s initiative, launched during a period of heightened awareness of racial inequality in 2020, was intended to support Black and other minority-owned businesses through investments and partnerships.
Context and Wider Consequences
The lawsuit highlights a growing trend among certain conservative groups to challenge corporate diversity, equity, and inclusion (DEI) initiatives.
Desai's legal team, Consovoy McCarthy, is known for championing conservative causes and previously represented the advocacy group Do No Harm in a similar lawsuit against Pfizer over its fellowship program for underrepresented groups.
That case was dismissed because there was no harmed individual identified.
Desai’s lawsuit emerges amid increasing legal scrutiny of corporate DEI programs, with some critics contending that these initiatives may unlawfully exclude certain groups.
Proponents of DEI argue that these programs are crucial for addressing systemic inequalities.
Case Particulars
The case, Andav Capital et al v PayPal Holdings Inc et al, is being heard in the U.S. District Court for the Southern District of New York under case number 25-00033.
The decision could have substantial implications for how companies design and implement programs intended to promote racial and economic equity.
