4th Circuit decision also highlights the divide in approaches to DEI programs and practices
In an important development in the Trump Administration's campaign to extinguish DEI practices from the private sector, the U.S. Court of Appeals for the 4th Circuit has stayed the district court's preliminary injunction in NADOHE v. Trump, 2025 WL 573764 (D. Md. Feb. 21, 2025), as modified, 2025 WL 750690 (D. Md. Mar. 10, 2025), a decision we previously addressed that had barred enforcement of two presidential executive orders aimed at prohibiting federal grant and contract recipients from maintaining an undefined range of DEI initiatives.
The stay means federal agencies may enforce the orders' directives. But as we previewed before, the risks to federal grantees and contractors remain largely unchanged. Existing law already prohibits DEI programming that amounts to unlawful discrimination, and the president's two executive orders—as construed by the 4th Circuit to avoid impinging on protected speech—only direct federal agencies to terminate or withhold federal grants and contracts that violate those longstanding rules. As discussed below, this is a good time for federal grantees and contractors to audit their DEI practices for compliance with existing law, and to take steps to deter and preserve their defenses to pretextual enforcement.
Taking a broader view, the 4th Circuit's decision provides insight into how courts may use interpretive tools to bring the Trump Administration's anti-DEI policies into compliance with the Constitution without enjoining those policies, and reveals the sharply divided approaches to DEI practices across government and within the judiciary.
Case Background
In NADOHE, several national associations along with the Mayor and City Council of Baltimore challenged the constitutionality of two Trump Administration executive orders that sought to restrict federal contractors' and grant recipients' DEI practices. The plaintiffs argued the orders were vague and facially overbroad restrictions of speech that violated the First and Fifth Amendments, and they moved for a preliminary injunction to prevent their enforcement. A Maryland federal district court agreed, holding the orders were indeed unconstitutionally vague and overbroad regulations of speech, and issued a nationwide injunction preventing their enforcement. Specifically, the district court's injunction stated that the federal government "shall not . . . pause, freeze, impede, block, cancel, or terminate any awards, contracts or obligations" pursuant to these directives during the pendency of the litigation.
The federal government appealed, and moved the 4th Circuit to stay the district court's injunction, arguing the orders clearly and narrowly direct the enforcement of existing laws against unlawful conduct, and do not violate constitutional rights to protected speech.
Three Judges, Three Perspectives
In a two-page decision without any substantive analysis, the 4th Circuit motions panel granted the government's request for a stay. Each judge then offered a brief concurring opinion.
Chief Judge Diaz, an Obama appointee, acknowledged that "how the administration enforces these executive orders … may well implicate cognizable First and Fifth Amendment concerns" since the orders fail to "define[] DEI or its component terms" and thus may regulate protected expression, but he did not find the "vagueness principles" on which the district court relied "outcome determinative" at "this preliminary stage" and thus concluded the government had carried its burden for a stay. The Chief Judge still expressed concern over the government's portrayal of DEI initiatives as harmful, advocating for open discussion and debate about their value.
Judge Harris, also an Obama appointee, agreed with the government that the executive orders "are of distinctly limited scope." Reasoning that the directives should be narrowly read to "apply only to conduct that violates existing federal anti-discrimination law" and only to "direct[] the termination of grants … subject to applicable legal limits," she construed the orders not to facially interfere with a grantee's or contractor's protected speech. But Judge Harris issued an important caveat that implied future as-applied challenges might be successful: "[w]hat the Orders say on their face and how they are enforced are two different things," she wrote, meaning that "enforcement actions that go beyond the Orders' narrow scope may well raise serious First Amendment and Due Process concerns, for the reasons cogently explained by the district court."
Judge Rushing, a Trump appointee, offered the most spirited defense of the executive orders. She made three points. First, she emphasized that all three panel judges "unanimously agree that the entire substance of the preliminary injunction must be stayed" because "the government is likely to succeed in demonstrating that the challenged provisions of the Executive Orders," construed narrowly, "do not violate the First or Fifth Amendments." Second, Judge Rushing weighed in on an ongoing debate at the Supreme Court about the legitimacy of nationwide injunctions, stating that the nationwide "scope of the preliminary injunction alone should raise red flags" since it "purported to enjoin nondefendants from taking action against nonplaintiffs." Third, Judge Rushing joined Judge Harris in pointing out that the plaintiffs' pre-enforcement facial challenge may be premature, though she would appear to go further and find that plaintiffs' claims do not present a justiciable controversy within the federal courts' Article III jurisdiction.
Key Takeaways for Federal Contractors and Grantees
Stay the course. The 4th Circuit's stay means federal agencies may enforce the directives in the challenged executive orders to the extent actually applied to unprotected discriminatory conduct as opposed to protected speech, and to the extent done in compliance with required procedures like those established in the Administrative Procedures Act. But as we previously explained, federal agencies already possessed authority under existing law to bring enforcement actions against illegal discrimination. Thus for the same reason we cautioned not to overstate the protection afforded by the district court's preliminary injunction, we would advise not to overstate the risk introduced by the 4th Circuit's stay. As a general matter, if a federal grantee or contractor maintained lawful DEI programming before January 20, 2025, that programming remains lawful—and not a basis for the federal government to terminate, pause, or withhold funding, contracts, and/or funding and contracting opportunities.
Preserve your defenses. Federal grant recipients and contractors with lawful DEI practices should nevertheless be prepared to guard against individual enforcement actions that, as Judge Harris warned, seek in fact to punish protected speech as opposed to unprotected illegal discrimination. This is a good time for grantees and contractors to confirm with counsel that their DEI practices align with federal anti-discrimination statutes, perhaps disclose that compliance to deter pretextual enforcement, and at the same time make clear that those lawful DEI practices reflect First Amendment-protected expressive choices intended to communicate company values and commitments.
Zooming Out
More broadly, the 4th Circuit's decision highlights the divide in approaches to DEI practices across government and even within the judiciary.
Chief Judge Diaz's concurring opinion is noteworthy in this respect. Despite voting to grant the stay, Chief Judge Diaz wrote that he was "compelled to write separately to address what seems to be (at least to some) a monster in America's closet—Diversity, Equity, and Inclusion initiatives." He went on: "[D]espite the vitriol now being heaped on DEI, people of good faith who work to promote diversity, equity, and inclusion deserve praise, not opprobrium." The Chief Judge then concluded his concurrence:
For almost 250 years, this nation's North Star has been the self-evident truth, "that all men are created equal." The Declaration of Independence para. 2 (U.S. 1776). Even when we have fallen short—badly at times—we have stood up, made amends, and moved forward. But a country does itself no favors by scrubbing the shameful moments of its past. Because while history may be static, its effects remain.
From boardrooms to courtrooms to operating rooms to classrooms, previously marginalized Americans are thriving in spaces long closed to them. And we are the better for it. Yet despite this success—or because of it—we owe it to ourselves to continue forging conversations that may help us achieve that "more perfect Union." U.S. Const. prbl.
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As with most monsters [i.e., DEI initiatives] in the closet, what lurks is but a mere shadow, for which the remedy is simply light.
It seems evident that, to the extent Judge Ableson's injunction symbolized such "remedy" or "light," Chief Judge Diaz, for the moment, was not ready to let it be shone.
In sharp contrast, Judge Rushing closed her concurrence with a direct rebuke of her colleagues' observations:
We must not lose sight of the boundaries of our constitutional role and the imperative of judicial impartiality. Any individual judge's view on whether certain Executive action is good policy is not only irrelevant to fulfilling our duty to adjudicate cases and controversies according to the law, it is an impermissible consideration. A judge's opinion that DEI programs "deserve praise, not opprobrium" should play absolutely no part in deciding this case.
The 4th Circuit is expected to set an expedited briefing schedule on these issues. We will continue to report significant developments as the case progresses.
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