Federal Court Issues Nationwide Preliminary Injunction Blocking Enforcement of Key Provisions of DEI Executive Orders

Seyfarth Synopsis: On Friday, February 21, 2025, a federal district court in Maryland issued a preliminary injunction blocking enforcement of several key provisions of  the January 2025 executive orders targeting DEI programs. The nationwide injunction blocks the federal government from requiring federal contractors and grantees to certify they do not operate DEI programs that violate federal anti-discrimination laws, and from bringing enforcement actions, including False Claims Act claims, premised on these certifications. The order allows other enforcement provisions, such as the Attorney General’s preparation of a report identifying potential civil compliance investigations of major organizations, to continue.

On January 21, 2025 Judge Adam B. Abelson of the U.S. District Court for the District of Maryland issued a preliminary injunction in National Association of Diversity Officers in Higher Education, et al. v. Trump, Case No. 1:25-cv-00333-ABA (D. Md. Feb. 21, 2025) which challenged portions of Executive Order 14151, Ending Radical and Wasteful Government DEI programs (signed on January 20) and Executive Order 14173, Ending Illegal Discrimination and Restoring Merit-Based Opportunity (signed on January 21). We previously wrote separate Management Alerts about both the January 20 and January 21 Executive Orders.

The Court’s 63-page opinion found that the plaintiffs demonstrated a likelihood of success on their claims that certain provisions of the Orders violate constitutional protections of free speech and due process. The Court’s injunction applies nationwide and protects not just the named plaintiffs but all similarly situated parties from enforcement of the challenged provisions.[1]

Key Provisions Enjoined

The Court’s order enjoins enforcement of three specific provisions of the Executive Orders:

First, the Court blocked the “Termination Provision” from EO 14151 that directed federal agencies to “terminate... all... ‘equity-related' grants or contracts” within 60 days. The Court found this provision to be unconstitutionally vague under the Fifth Amendment’s Due Process Clause, emphasizing that the Executive Order failed to provide fair notice of what constitutes an “equity-related” grant or contract and invites arbitrary enforcement by agency officials who must make subjective determinations about which grants have sufficient connection to “equity” to warrant termination.

Second, the Court enjoined the “Certification Provision” from EO 14173 which required two certifications in every federal contract and grant award: (1) that the contractor or grantee agrees that “its compliance in all respects with all applicable Federal anti-discrimination laws is material to the government’s payment decisions” for False Claims Act purposes, and (2) that the contractor or grantee certifies that “it does not operate any programs promoting DEI that violate any applicable Federal anti-discrimination laws.”

The Court held these requirements likely violated the First Amendment because they imposed content-based restrictions targeting protected speech about diversity, equity and inclusion. The Court emphasized in its analysis that the certifications impermissibly extend beyond federally funded activities to regulate all of a contractor’s or grantee’s operations. The Court also concluded that by threatening False Claims Act liability, the requirements effectively compel organizations to self-censor their DEI-related speech and activities to avoid potential enforcement.

The Court’s opinion directly addresses one fundamental issue that federal contractors, grant recipients and other employers have been wrestling with since the issuance of the executive orders: What, precisely, will the government contend constitutes an “illegal DEI” program, and what, precisely, does the government expect businesses to do to satisfy these requirements? The Court finds, “[N]either the J20 nor the J21 Order gives guidance on what the new administration considers to constitute ‘illegal DEI discrimination and preferences,’ or ‘[p]romoting ‘diversity,’’ or ‘illegal DEI and DEIA policies,’ or what types of ‘DEI programs or principles’ the new administration considers ‘illegal’ and is seeking to ‘deter.’”  As a result, the Court held, “Because even the government does not know what constitutes DEI-related speech that violates federal anti-discrimination laws, Plaintiffs have easily shown a likelihood that they will prevail…”

Third, the Court partially blocked the “Enforcement Threat Provision” from EO 14173, which started by directing “all federal agencies, with the Attorney General's assistance” to take “appropriate measures” to end “illegal discrimination and preferences, including DEI” in the private sector and to develop a plan to “deter DEI programs or principles” through potential civil compliance investigations of major organizations. While the Court’s injunction allows the Attorney General to continue preparing the enforcement report and conducting investigations, the injunction blocks the government from bringing enforcement actions against private sector organizations based on this provision. The Court found the provision likely violates both the First Amendment as an unconstitutional viewpoint-based restriction targeting speech supportive of DEI, and the Fifth Amendment due to its vagueness about what constitutes “illegal DEI.”

Immediate Impact on Federal Contractors and Grant Recipients

For federal contractors and grant recipients contemplating how their current DEI programs and operations might be affected by the executive orders and new certifications, the Court’s February 21 preliminary injunction has immediate implications.

First, as discussed in the Court’s opinion, federal contractors and grant recipients were already being presented with certification requirements from agencies. The Court’s preliminary injunction is clear that it blocks federal agencies from requiring contractors or grantees to certify either their broad compliance with anti-discrimination laws for False Claims Act purposes, or that they do not operate any programs promoting DEI that violate those laws. Contractors and grant recipients who are being presented with these certification requirements should immediately consult with counsel about how to respond given the preliminary injunction’s nationwide scope.

Second, while the opinion blocks federal agencies from bringing enforcement actions based specifically on the Executive Orders’ new DEI-related provisions, it does not block the agencies’ underlying statutory enforcement authority. Federal agencies retain their ability to bring enforcement actions targeting employer DEI programs under existing civil rights laws like Title VII, Section 1981, and other federal anti-discrimination statutes.

The Court specifically denied Plaintiffs’ request to bar the federal government from investigating DEI practices in the private sector that may violate federal anti-discrimination laws. It also denied Plaintiffs’ request that the Attorney General be enjoined from preparing a strategic enforcement plan that identifies sectors of concern, the most egregious DEI practitioners in each sector, deterrence steps for DEI programs that are discriminatory, and potential litigation and regulatory actions including identifying companies that may be appropriate targets for potential civil compliance investigations. The Court based its decision on “prudential and separation-of-powers reasons.”

Likewise, the Court does not prevent private litigants from bringing challenges to DEI programs under existing anti-discrimination laws. We are already seeing an increase in private litigation challenging various DEI initiatives, including discrimination lawsuits that claim employment decisions were unlawfully motivated by DEI initiatives, shareholder derivative lawsuits asserting claims based on “backlash” from corporate DEI initiatives, challenges to supplier diversity programs, and challenges to corporate-sponsored scholarship programs based in part on race. We expect this wave of private litigation to continue.

Given the intense public and political attention currently focused on DEI initiatives, as well as the breadth of the Court’s constitutional findings and injunction, we expect the government to seek expedited review by the Fourth Circuit, and that this issue will eventually be presented to the Supreme Court.

Seyfarth will continue to monitor these developments and provide updates as developments occur. For more information on how these changes may affect your workplace policies and compliance obligations, please contact any of the authors, a member of Seyfarth’s People Analytics team, or any Seyfarth attorney with whom you regularly work.

 

[1] The Court specifically found that a broader, nationwide injunction was appropriate given that the challenged provisions represent “categorical policies” of the federal government that would require the same analysis for others in similar positions. The court emphasized that when constitutional violations are found on the face of Executive Orders rather than just in their application to specific plaintiffs, nationwide relief is warranted.