On February 21, 2025, a federal district court in Maryland issued a nationwide injunction, temporarily preventing enforcement of three key provisions of President Trump’s executive orders targeting DEI programs. Specifically, the court in, National Association of Diversity Officers in Higher Education et al. v. Trump et al., Dkt. No. 1:25-cv-00333 (D. Md. Feb. 21, 2025) (“NADOHE v. Trump”), found the following provisions were unconstitutional under the First and Fifth Amendments of the U.S. Constitution:
- The requirement that federal contractors and grantees certify that they do not operate “illegal” DEI programs and comply with federal discrimination laws for purposes of False Claims Act (“FCA”);
- A provision directing the Attorney General to target what this administration believes to be “illegal” DEI programs in the private sector; and
- The requirement that federal agencies terminate “equity-related grants or contracts.”
The court, however, did not enjoin the Attorney General from pursuing enforcement actions against individual companies for their DEI programs or continuing to prepare the report required by executive order identifying certain organizations for civil compliance investigations related to their DEI programs.
Although the injunction temporarily halts enforcement of the above provisions, the Trump administration almost certainly will appeal the court’s order. Whether an appellate court will uphold the injunction remains to be seen. In the meantime, companies should continue to conduct privileged risk audits of their DEI programs given that the risk of challenge to corporate DEI programs remains high from the federal government, certain state attorney generals, and anti-DEI organizations.
Background
As we recently reported, President Trump issued several significant executive orders targeting DEI programs, including the following orders:
Executive Order 14173, “Ending Illegal Discrimination and Restoring Merit-Based Opportunity,” (the “EO 14173”), requires, among other things:
- Federal contractors and grantees to: (1) certify they do not operate any DEI programs that violate federal anti-discrimination laws; and (2) agree that they are in compliance “in all respects with all applicable Federal anti-discrimination laws” and that the certification is material for purposes of the FCA (the “Certification Requirement”); and
- The Attorney General to create a strategic enforcement plan identifying specific targets in the private sector that this administration believes operate DEI programs that violate federal anti discrimination laws (the “Enforcement Requirement”).
Executive Order 14151, “Ending Radical and Wasteful Government DEI Programs and Preferencing,” (“EO 14151”), which requires, among other things, federal agencies to terminate all “equity-related” government contracts and grants and terminate all “illegal DEI” activities in the federal government (the “Termination Requirement”).
On February 3, 2025, the National Association of Diversity Officers in Higher Education, the American Association of University Professors, the Restaurant Opportunities Centers United, and the mayor and city council of Baltimore, Maryland filed a lawsuit in the federal district court in Maryland, seeking to enjoin the Certification, Enforcement, and Termination Requirements in EO 14173 and EO 14151 for violating the First and Fifth Amendments of the U.S. Constitution.
The NADOHE v. Trump Decision
In NADOHE v. Trump, the court found that the plaintiffs were likely to show the challenged provisions of the Certification, Enforcement, and Termination Requirements in EO 14173 and EO 14151 violated the Fifth Amendment because, among other things, those provisions failed to:
define any of the operative terms, such as “DEI,” “equity-related,” “promoting DEI,” “illegal DEI,” “illegal DEI and DEIA policies,” or “illegal discrimination or preferences,” . . . — let alone identify the types of programs or policies the administration considers “illegal.”
Opinion at 2. The court also found that the Termination Requirement in EO 14151 left federal contractors and grantees “with no idea” whether their contracts, grants, work, or speech were “equity-related.” Id. Similarly, the court reasoned that the private sector was “at a loss,” for when this administration might deem a DEI program “illegal” because it failed to define any operative terms, such as “DEI,” “illegal DEI,” or “illegal discrimination or preferences.” Id.
Viewing the challenged provisions through a First Amendment lens, the court further found that the Certification and Enforcement Requirements in EO 14173 unconstitutionally restricted speech and amounted to “viewpoint discrimination.” Id. at 3. Despite recognizing the President’s vast constitutional powers, the court said the “President does not ‘stand exempt from the general provisions of the Constitution.’” Id.
In a 63-page decision, the court offered the following specific rationales in support of the court’s holding that the challenged provisions were unconstitutional.
- Certification Requirement: The Certification Requirement violated the First Amendment because it restricted free speech rights for federal contractors and grantees by leveraging the threat of the FCA and funding to regulate speech. The court stated:
[T]he express language of the Certification Provision demands that federal contractors and grantees essentially certify that there is no “DEI” (whatever the executive branch decides that means) in any aspect of their functioning, regardless of whether the DEI-related activities occur outside the scope of the federal funding.
Id. at 45-46. The court further explained that the government’s restraint on speech was underscored by the fact that, during oral argument, the government was unable to articulate any definition of what illegal DEI-related speech is or clarify what that term meant as used in the Certification Requirement. Id. at 46-47.
- Enforcement Requirement: The court characterized the Enforcement Requirement as “textbook viewpoint-based discrimination,” thereby violating the First Amendment because it threatened enforcement actions against private sector companies for engaging in undefined DEI programs. Id. at 50. To support this holding, the court cited, among other Trump administration actions, the Attorney General’s February 5, 2025, memorandum, stating that the DOJ should “pay particular attention to ending references to DEI or DEIA . . . including references to ‘unconscious bias,’ ‘cultural sensitivity,’ [and] ‘inclusive leadership[.]’” Id. at 51. The court also found the Enforcement Requirement was unconstitutionally vague under the Due Process Clause because it failed to provide any guidance on what the “new administration considers ‘illegal DEI discrimination and preferences,’ ‘[p]romoting diversity,’ ‘illegal DEI and DEIA policies,’ or what types of ‘DEI programs or principles’ the new administration considers ‘illegal’ and is seeking to ‘deter.’” Id. at 54.
- Termination Requirement: The court found the Termination Requirement unconstitutionally vague under the Fifth Amendment because: (1) the term “equity related grants or contracts” invites arbitrary and discriminatory enforcement; and (2) the vague terms provide insufficient notice on how to adapt conduct to avoid termination of grants and contracts. Id. 38-39.
Based on the above holdings, the court issued a nationwide preliminary injunction that applies to all companies, including all federal contractors and grantees.
Practical Implications of the NADOHE v. Trump Decision
For now, the court’s decision pauses the federal government’s efforts to target DEI programs and DEI-related contracts and grants. One of the most significant implications of this decision is that, at this time, federal contractors and grantees do not have to comply with the Certification Requirement. As we previously reported, some federal agencies (and in some cases, prime and upper-tier subcontractors) have been asking federal contractors and grantees to certify they do not operate any “illegal” DEI programs or comply in all respects with all federal anti-discrimination laws. Contractors and grantees continuing to receive these requests should consult experienced counsel on how to respond to such requests.
Although the court’s decision provides temporary relief, the risk of DEI enforcement remains at an all-time high for the following reasons in addition to the Trump administration’s inevitable appeal of the NADOHE v. Trump decision.
- The court’s order does not prevent the Trump administration from pursuing individual enforcement actions related to companies that it believes operate “illegal” DEI programs, including enforcement actions by the DOJ, the Equal Employment Opportunity Commission, or other federal agencies that enforce federal anti-discrimination laws.
- The Attorney General will likely continue creating the strategic enforcement plan to identify private sector enforcement targets and might be ready to press forward if the court’s decision is overturned on appeal.
- The court’s decision is not binding on private litigation challenging corporate DEI programs, including litigation and enforcement actions actively being pursued by some Republican state attorney generals and anti-DEI organizations.
Accordingly, companies should consider taking the action steps discussed in our prior alerts (here and here), including auditing their DEI programs under privilege for potential risks while not overcorrecting.
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