Facts

In response to the COVID-19 pandemic, the President signed into law the Coronavirus Aid, Relief and Economic Security Act (CARES Act). The CARES Act created a Coronavirus Relief Fund through which the federal government distributed funds to state and local governments to be used for expenses related to COVID-19. In response to early evidence that federal Payroll Protection Program funds were not reaching Black-owned businesses, the Oregon Emergency Board allocated $62 million of the State's Coronavirus Relief Fund moneys for the purpose of creating the Oregon Cares Fund for Black Relief and Resiliency (Fund) to assist those who could demonstrate employment, economic, or business interruption due to COVID-19, and who self-identified in their applications to the Fund as Black-owned business, Black organizations or Black individuals. The Fund moneys were granted to The Contingent, an Oregon-based non-profit with pre-existing state contract relationships, to administer. The Contingent subcontracted with the Black United Fund of Oregon to help process Fund applications. The Fund closed to additional applicants on December 9, 2020 because it was oversubscribed, and ended by its terms on December 30, 2020. Before the Fund closed and ended, Great Northern Resources, Inc., filed a class action lawsuit against the State of Oregon, Oregon Department of Administrative Services, and Katy Coba, in her Official Capacity as State Chief Operating Officer and Director of the Oregon Department of Administrative Services, along with The Contingent and Black United Fund, challenging the constitutionality of defendants' use of race-based criteria in distributing the fund.

PLAINTIFF'S CONTENTIONS: Plaintiff contended that individuals, businesses, and nonprofits that submitted applications to the Oregon Cares Fund for Black Relief and Resiliency, and did not indicate that they were Black, a Black-owned business, or are a Black-focused organization, were denied funding automatically. Plaintiff contended defendants violated the Equal Protection Clause by denying applicants' funding solely on the basis of their race and by distributing government benefits on the basis of race. In November and December 2020, plaintiff filed two motions for temporary restraining orders, both of which were denied.

DEFENDANTS' CONTENTIONS: Defendants denied plaintiff's contentions and any alleged wrongdoing. Defendants further contended that the Fund withstood strict scrutiny because the race-conscious approach was necessary to further a compelling government interest and was of limited duration.

Result

The court preliminarily approved a class-action settlement whereby (1) all Black-identifying applicants meeting the COVID-19 loss requirements of the Fund will be paid through the original Fund allocation, and (2) all Fund applicants who did not indicate Black self-identification, and who do not opt out of the settlement, will have their applications processed on a race-neutral basis and will be paid using moneys separate from the Fund if such applicants meet race-neutral Fund criteria. Approximately $5.3 million was disbursed immediately to Black-identifying Fund applicants pursuant to the settlement agreement and court order.

Other Information

JUDGE: Hon. Karin J. Immergut.