Why corporate America is watching a high-stakes affirmative action case

The Supreme Court heard a pair of cases challenging affirmative action in university admissions on Monday, weighing in on an issue that has sparked the interest of major U.S. corporations.

The decision — likely to come sometime this summer — could overhaul decades of case law allowing colleges and universities to consider race in admissions. Affirmative action supporters say that doing away with the policy would make businesses and the military less diverse because it would alter the make-up of the pool of college-trained workers in the U.S. from which they can recruit.

Dozens of major corporations filed an amicus brief in the case contending diversity helps their businesses, improving decision-making within teams by fostering "creativity, communication, and accuracy." Moreover, the brief said, employees who attended diverse educational institutions tend to interact more effectively with clients and customers from different backgrounds.

"Reflecting those performance benefits, American businesses have invested substantially in diversity, equity, and inclusion initiatives that are designed, in part, to promote internal racial and ethnic diversity," according to the brief, signed by Apple (AAPL), General Motors (GM), and Starbucks (SBUX), among dozens of others in various industries.

Demonstrators gather in support of affirmative action as the U.S. Supreme Court is set to consider whether colleges may continue to use race as a factor in student admissions in two cases, at the U.S. Supreme Court building in Washington, U.S. October 31, 2022. REUTERS/Jonathan Ernst
Demonstrators gather in support of affirmative action as the U.S. Supreme Court is set to consider whether colleges may continue to use race as a factor in student admissions in two cases, at the U.S. Supreme Court building in Washington, U.S. October 31, 2022. REUTERS/Jonathan Ernst (Jonathan Ernst / reuters)

Students for Fair Admissions, a group created by conservative activist Edward Blum, is challenging the affirmative action policies at Harvard University and University of North Carolina.

The group argues that UNC’s consideration of race in admissions violates the 14th Amendment’s equal protection clause, which bars government entities and public universities from discriminating based on race. The group argues that Harvard, a private university, violates Title VI of the Civil Rights Act, which bars race-based discrimination by organizations that take federal funds.

“[N]o one has a legitimate interest in treating people differently based on skin color,” the group wrote in its petition to the Supreme Court.

Students for Fair Admissions asked the Supreme Court to overturn its 2003 decision, Grutter v. Bollinger, which held the University of Michigan's Law School could consider race as a factor in admissions if the practice was narrowly tailored “to further a compelling interest in obtaining the educational benefits that flow from a diverse student body."

In her opinion in the case, Justice Sandra Day O'Connor predicted that in 25 years affirmative action would no longer be necessary to make colleges more diverse.

"How will we know when the time has come?" Justice Brett Kavanaugh asked during the UNC case, referring to O'Connor's prediction.

The court's newest member, Associate Justice Ketanji Brown Jackson, emphasized the difficulty of achieving a race neutral admissions process. Even if the court held that questioning applicants about race is unconstitutional, race could nonetheless be introduced as a factor through other aspects of the application process, such as in essays.

"Isn't the question, then, what North Carolina is doing with [race] information, because presumably just knowing that you have people from different races applying to your school is not an equal protection violation, is it?" Brown Jackson asked.

Alexis Keenan is a legal reporter for Yahoo Finance. Follow Alexis on Twitter @alexiskweed.

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