Background
On February 3, 2025, the National Association of Diversity Officers in Higher Education, the American Association of University Professors, Restaurant Opportunities Centers United, and the Mayor and City Council of Baltimore filed a lawsuit in the U.S. District Court for the District of Maryland against President Donald Trump, the U.S. Attorney General, and a number of other agencies and agency heads in their official capacities, arguing that certain provisions of the two DEI-related executive orders issued on January 20 and 21, 2025, were unconstitutional and an overreach of presidential authority. They also argued that the orders have a chilling effect on free speech.
Specifically, plaintiffs challenged:
- A provision in the January 20 order directing all executive agencies to “terminate … ‘equity-related’ grants or contracts” (the Termination Provision)
- A provision in the January 21 order directing all executive agencies to “include in every contract or grant award” a certification, enforceable through the False Claims Act, that the contractor or grantee “does not operate any programs promoting DEI that violate any applicable Federal anti-discrimination laws” (the Certification Provision)
- A provision in the January 21 order directing the U.S. Attorney General to take “appropriate measures to encourage the private sector to end illegal discrimination and preferences, including DEI,” to “deter” such “programs or principles,” and to “identify . . . potential civil compliance investigations” to accomplish such “deter[rence]” (the Enforcement Threat Provision)
The plaintiffs assert that the challenged provisions violate the First Amendment (free speech), the Fifth Amendment (due process vagueness), and separation of powers (including the spending clause of the Constitution).
In his February 21, 2025 memorandum opinion, Judge Abelson granted plaintiffs’ motion for a preliminary injunction blocking the challenged provisions of the executive orders at issue, based on plaintiffs’ First and Fifth Amendment claims, finding that it was unnecessary for the court to determine whether plaintiffs have also shown a likelihood of success on the merits on their separation of powers claims.
The court found the Termination and Enforcement Threat Provisions to be unconstitutionally vague on their face, noting that the executive orders “fail to define any of the operative terms,” such as “DEI,” “equity-related,” “promoting DEI,” “illegal DEI,” “illegal DEI and DEIA2 policies,” or “illegal discrimination or preferences,” or the types of programs or policies the administration considers “illegal.”
The court agreed with plaintiffs that the vagueness of the Termination Provision could invite “arbitrary and discriminatory enforcement over billions of dollars in government funding,” and “offers insufficient notice to current grantees about whether and how they can adapt their conduct to avoid termination of their grants or contracts.”
The court determined that the vagueness of the Enforcement Threat Provision “leaves the private sector at a loss for whether the administration will deem a particular policy, program, discussion, announcement, etc. to be among the ‘preferences, mandates, policies, programs, and activities’ the administration now deems ‘illegal.’”
The court also found that the Certification and Enforcement Threat Provisions likely violate the First Amendment right to free speech, in that they are “content- and viewpoint-based restrictions that chill speech as to anyone the government might conceivably choose to accuse of engaging in speech about ‘equity’ or ‘diversity’ or ‘DEI,’ or the other topics the executive orders cite.”
While the court recognized the government’s right to impose certain restrictions on federal funding, the court found that plaintiffs were likely to succeed on their claim that the Certification Provision violates the First Amendment “because on its face it constitutes a content-based restriction on the speech rights of federal contractors and grantees, and further because such restriction expands to all of those contractors’ and grantees work, whether funded by the government or not.”
The court found that the Enforcement Threat Provision likely violates the First Amendment because it “threatens to initiate enforcement actions against plaintiffs (in the form of civil compliance investigations) for engaging in protected speech.” The court noted that the government’s threat is not just targeted towards enforcement of federal law, but rather, “the provision expressly targets, and threatens, the expression of views supportive of equity, diversity and inclusion—a ‘particular view[] taken by speakers.’”
The injunction prohibits the defendants and other persons who are in active concert or participation with the defendants from:
- Pausing, freezing, impeding, blocking, canceling, or terminating any awards, contracts or obligations (Current Obligations), or changing the terms of any Current Obligations, on the basis of the Termination Provision
- Requiring any grantee or contractor to make any “certification” or other representation pursuant to the Certification Provision
- Bringing any False Claims Act enforcement action, or other enforcement action, pursuant to the Enforcement Threat Provision, including but not limited to any False Claims Act enforcement action premised on any certification made pursuant to the Certification Provision
The preliminary injunction applies not only to the plaintiffs in the case but also to similarly situated federal contractors, grantees, and private sector entities. However, the preliminary injunction is also limited to the defendants in the case—the Department of Health and Human Services, the Department of Education, the Department of Labor, the Department of the Interior, the Department of Commerce, the Department of Agriculture, the Department of Energy, the Department of Transportation, the Department of Justice, the National Science Foundation, and the Office of Management and Budget. It does not cover the Equal Employment Opportunity Commission or President Trump. It does, however, cover “other persons who are in active concert or participation with” the defendant agencies.
The court held that, for prudential and separation-of-powers reasons, it would not enjoin the Attorney General from preparing the report required by the January 21 executive order, or from engaging in investigation.
The ruling comes just days after similar challenges to the two DEI-related executive orders were filed in the U.S. District Court for the District of Columbia and the U.S. District Court for the Northern District of California.
The government has already filed a notice of appeal with the U.S. Court of Appeals for the Fourth Circuit.
Takeaways
While the ruling represents an initial win for DEI and DEIA proponents—and may offer some temporary relief to federal contractors and private companies trying to navigate the impact of the DEI-related executive orders on their businesses—defendants have already filed a notice of appeal and may seek a stay of the district court’s injunction while the appeal is pending. It is, therefore, possible that the preliminary injunction could be lifted soon.
Accordingly, companies should continue to take stock of their DEI policies and programs to determine their potential exposure to legal or administrative challenges or investigations.
Companies doing business with the U.S. government should also be on the lookout for communications from contracting officers and prime contractors seeking contract modifications related to the new obligations and certifications regarding DEI and anti-discrimination described in the executive orders. The Attorney General has indicated federal contractor compliance with these new certifications will be a False Claims Act enforcement priority for the Department of Justice.
