Federal Judge Halts key parts of Trump's Anti-DEI executive orders

OutSolve has invited John C. Fox, Esq. as a guest blogger providing legal insights on EEO and compliance issues. The views expressed in his posts are his and do not reflect the viewpoint of OutSolve or its employees.

What's Happening: A Chaotic Legal Landscape

It's like trying to watch seven baseball games at once, flipping between channels in a frenzy. New developments are coming from every direction: left, right and center. The best approach for now? Stay alert, stay cautious and avoid making any rushed decisions you might regret later.

The Action: Baltimore Federal District Judge Adam B. Abelson, Biden appointee with 6 months tenure, issued a preliminary injunction enjoining the Trump Administration from enforcing three specific portions of two Trump Executive Orders: Executive Order 11451 (Jan 20, 2025) "Ending Radical and Wasteful Government DEI Programs and Preferencing" and EO 14173 (Jan 21, 2025) "Ending Illegal Discrimination and Restoring Merit-Based Opportunity."

THE CASE: The case is National Association of Diversity Officers in Higher Education, et al. (Plaintiffs) v. Donald J. Trump (in his official capacity as President of the United States) et al. (Defendants), Case No. 1:25-cv-00333-ABA in the United States District Court for the District of Maryland.

Note: A preliminary injunction is an order issued before trial on the merits of a Complaint. The order typically, as here, issues on the strength of only the plaintiffs’ (the parties who sue) written complaint filed with the court, the Memoranda of Law of the opposing parties, and the oral argument before the court. If the court determines that the plaintiffs are likely to win their case and that stopping the defendant's action would prevent "irreparable harm" before the trial, it may issue an order temporarily blocking those actions. This decision is made to prevent potential damage while the full trial (which could take months) plays out. As of now, no trial date has been set.

The era of legal complaints about the actions of a Republican president being filed in “Blue State” courthouses before Blue State Judges is now upon us in the same way the country just left the era of complaints about the actions of a Democrat President being filed in “Red State” courthouses before Red State Judges. So, do not look during the next four years for conservatives running to Texas to get their injunctions against a Democrat president. Rather, look to the Blue States (especially Maryland, New York, Illinois, and California) for liberal litigants looking to tackle President Trump and bring his conservative policies down. (Turnabout is considered fair play in this sport).

Who Are the Plaintiffs

The Plaintiffs are a coalition of two non-profit associations in higher education (diversity officers and unionized university professors), a restaurant workers non-profit training association, and the Mayor and the City of Baltimore. All of the plaintiffs are primarily concerned about two things:

1. The president’s threat to stop all “equity-related” federal grants and contracts to which they are signatory.
2. To stop prosecutions they fear the federal government may soon bring against them, alleging that they used grant and contract monies to unlawfully discriminate in the pursuit of their various federally funded programs.

None of the plaintiffs sought to challenge that portion of Executive Order 14173 (Jan 21, 2025) revoking President Johnson’s 1965 Executive Order 11246 (Affirmative Action for federal contractors and subcontractors). The Executive Order 11246 revocation issue is thus not involved in this case (or any other complaint yet filed).

All three of the preliminarily enjoined provisions of the two challenged Trump executive orders potentially directly affect the private sector.

What Three Actions Did the Judge Stop for The Moment?

1. The “Termination Provision” [from the Jan 20 EO 14151 at section 2(b)(i)]: directs federal grant and contracting agencies/entities to within 60 days of the Order “terminate…all equity-related “grants and/or contracts; and
2. The “Certification Provision” [from the Jan 21 EO 14173 at section 3(b)(iv)]: directs the head of each federal agency subject to the President’s Executive Order to require going forward that each federal contractor and/or grant recipient agree (“certify”) that “its compliance with all applicable federal anti-discrimination laws is material to the government’s payment decisions…” In other words, the federal procurement agency would then have license to stop payment and/or claw back payments if the grantee/contractor were later found to have violated a federal non-discrimination law(s); and
3. The “Enforcement Threat Provision” [from the Jan 21 EO 14173 at section 4(b)(iii)]: directs the Attorney General of the United States (within 120 days of the Order = May 21, 2025) to submit a report to the White House “containing recommendations for enforcing federal civil rights laws and taking other appropriate measures to encourage the private sector to end illegal discrimination and preferences, including DEI.” The requested report must also include a “proposed strategic enforcement plan identifying … (iii) A plan of specific steps or measures to deter DEI programs or principles (whether specifically denominated “DEI” or otherwise) that constitute illegal discrimination or preferences.”

Why "The Enforcement Threat Provision" Matters:

This is also the section of the president’s executive order that directs each agency to identify “up to nine potential civil compliance investigations of publicly traded corporations, large nonprofit corporations or associations, foundations with assets of 500 million dollars or more, state and local bar and medical associations, and institutions of higher education with endowments over 1 billion dollars.”

Private employers or institutions could potentially be in harm’s way if they:

• Have signed federal grants and/or contracts which seek the development and/or implementation of unlawful preferential employment policies or practices adversely affecting a protected group and which the federal procurement agency or institution soon might summarily cancel or not renew; and/or
• Will be signing federal contracts and grants and will need to “certify” compliance with all federal nondiscrimination laws (including Title VII, Civil Rights Act of 1866 (42 USC Section 1981), the Equal Pay Act, GINA, USERRA, The Pregnancy Workers Fairness Act, ADA, ADEA, Section 503 of the Rehabilitation Act of 1973 (federal contractors/subcontractors), and Title IX of the Educational Amendments Act of 1972, etc.).
• Created and implemented unlawful preferential employment policies or practices adversely affecting a protected group and show up on the Attorney General’s “Enforcement Threat” List.

Apart from the coming new federal contract and/or grant certifications which submit the signatory to a potential cessation of progress payments under the contract or grant and potential claw back of past payments under the grant or contract, there are potential criminal and civil penalties assessable pursuant to 18 USC Section 1001 against the individual who certified the federal contract or grant if s/he “knowingly and willfully”:

• “falsifies, conceals, or covers up by any trick, scheme, or device a material fact;
• makes any materially false, fictitious, or fraudulent statement or representation;
• makes or uses any false writing or document knowing the same to contain any materially false, fictitious, or fraudulent statement or entry…;”

What Should My Business Do

Here are some immediate actions you can take. If you are optimistic the Plaintiffs will win their lawsuit when the case comes to trial and upon appeal, then do nothing.

My practical suggestion (not legal advice) is that your company or institution immediately commence a preventative maintenance “DEI Scrub” to position yourself to enable you or one of your colleagues to be able to confidently certify compliance with all federal nondiscrimination laws when it comes time to sign the next federal contract or grant. The “DEI Scrub” will also help you fend off claimed liability and remedies if the Attorney General or EEOC sue your company/institution for alleged unlawful employment discrimination.

It would be useful to also obtain a certification from a third party “DEI Scrubber” (lawyer highly knowledgeable about federal employment nondiscrimination laws) that s/he reviewed all applicable corporate/institutional policies and practices affecting the terms and conditions of employment to determine whether they unlawfully discriminated against one or more protected group members. It would be wise to obtain that opinion, at least initially, under attorney-client privilege and subject to the attorney work product doctrine. The client may later waive “privilege” if all is well, or potentially problematic employment policies or practices were corrected (leading to a fresh lawyer certification the company or institution may then present to any marauding federal investigators.)

What’s Next?

The Trump Administration is now faced with a Hobson’s choice in this litigation where they can:

• Wait for trial, which Judge Abelson will be in no hurry to schedule
• Seek an immediate appeal to the United States Court of Appeals for the Fourth Circuit sitting in Richmond, Virginia.

However, the once staid Fourth Circuit Court of Appeals, long a stronghold for conservative interests, is now composed of 10 judges either Barack Obama or Joe Biden appointed out of its 15 active appellate judges (10/15 = 2/3rds). The Fourth Circuit is no longer the “slam dunk” it once was for conservative interests. However, the Trump Administration will view this case as a good stepping stone to the U.S. Supreme Court (SCOTUS).

If the Fourth Circuit were to rule against President Trump, the ruling would help establish a potential “split of opinion in the circuit courts,” a powerful motivating factor for the SCOTUS to exercise its discretion to hear and decide a case(s) involving these issues.

Why This Case Doesn’t Favor Plaintiffs

As any employment lawyer who has tried a few cases knows, employment cases are very similar to 1950’s Westerns featuring “Black Hat” and “White Hat” skirmishes. The lawyer who can paint his/her client as noble and concerned and doing the right thing tends to win. The equities count in employment discrimination trials because noble ideals and people are involved: real human beings. The plaintiffs in the Baltimore case, however, are proceeding primarily for financial reasons (they want their federal money).

In addition, their motives are not noble: they fear being found out by federal investigators to be unlawful discriminators if they are such. Indeed, the tables are turned in this case: it is usually corporate defendants who hear from federal prosecutors at the OFCCP, for example, that companies or institutions that unlawfully discriminate in employment should not receive federal financial payments. Indeed, the claim is usually also made that federal contractors and grantees have a “higher” duty, in fact, to behave as “model employers.” The argument is that if they are taking federal taxpayer dollars, the contract/grant recipient should be beyond reproach if it is to avail itself of that privilege.

Moreover, if the plaintiffs’ employment policies and practices were lawful, they would not mind defending their actions for all the world to see. Federal prosecutors (and many federal courts) routinely scoff at corporate suggestions that the cost of defending oneself is burdensome and unfair. The prosecutorial refrain is that the cost of defense is just the cost of doing business with the federal government. A trifle. Expect it. Now that the shoe is on the other foot, that tired refrain may not feel so good to the plaintiffs in this case.

Finally, I do not like the Plaintiffs’ case on the merits at all. The two challenged Trump Executive Orders AND the several implementing directives and memos of selected federal agency heads implementing the two orders that the Plaintiffs have appended to their pleadings are crisp and clear: they take aim at ONLY “unlawful” employment “policies and practices” and not all decisions affecting or implementing “DEI” programs and initiatives. (The Trump Administration, however, has surprisingly done itself a tremendous disservice in the popular press by making it appear that the Administration is hell bent to uncritically condemn all corporate and private sector DEI programs and thus “throw the baby out with the bathwater” as it did as to federal DEI programs. But the two at-issue executive orders are more narrowly focused on only “unlawful” employment decisions violating one or more federal nondiscrimination law/laws.)

In addition, Judge Abelson did himself no favor for any coming appeal by uncritically adopting the two main arguments of the plaintiffs in support of their complaint that they did not know whether their federal contracts and grants caused their institutions to undertake unlawfully discriminatory policies and practices. However, private sector corporations and institutions face that problem daily and solve it daily. They solve it by reviewing their employment policies and practices, and decisions implementing them, to determine their lawfulness.

The federal agency head directives and memos implementing the two orders all direct internal federal agency review of only those policies and practices that adversely and unlawfully affect the terms and conditions of employment. Indeed, the language of the agency head implementing directives and memos mirror and regurgitate Title VII law descriptions of what to analyze in discrimination cases. Discrimination law is clear: it directs review of employment “decisions” an employer or institution has made, regardless of how those decisions are labeled, what they are called, or how they are packaged.

Plaintiffs’ and the court’s view that the Trump Executive Orders are deficient because they did not define what illegal “DEI” means, or which DEI programs and initiatives are unlawful, entirely misunderstands federal nondiscrimination law. Federal nondiscrimination law points the regulated community and regulators to examine employment “decisions” and apply discrimination law definitions and prohibitions the various federal discrimination law statutes provide to determine the lawfulness of those employer/institution practices (what one does) and policies (what is written and implemented). Throwing up one’s hands and complaining “it is just so overwhelming and confusing, I just don’t know where to look or how to analyze our policies and practices,” is never a safe harbor for employers, or federal contractors or grant recipients.

Conclusion

We are still in the early stages of uncertainty as the Trump Administration and the courts begin to sort things out. This will take some time: at least 12 to 18 months. Patience will be the order of the day. The conclusion is to relax, take your finger off the decision-making trigger, sit back, and wait and watch to see how things eventually sort out. As with stocks, playing the short game based on what happened yesterday, as opposed to taking the long and more measured view, is very risky. Slow and steady wins in challenging times.