Federal Court Declines to Block DEI Executive Orders, Rejecting Due Process and First Amendment Arguments

Seyfarth Synopsis: On May 2, 2025, a federal district court in Washington, DC declined to issue a preliminary injunction blocking provisions of recent Executive Orders (EO 14151, EO 14168, and EO 14173) which are focused on unlawful DEI programs. The ruling in National Urban League et al., v. Trump is the third district court opinion ruling on DEI-related challenges to executive orders signed on January 20 and January 21. However, unlike the two district courts that previously addressed similar arguments, the National Urban League Court rejected all of the Plaintiffs’ claims – some on standing grounds and others on the likelihood of success on the merits. With multiple challenges to DEI-related Executive Orders pending across the country and potentially conflicting rulings emerging, federal contractors and grant recipients face continued uncertainty.

In its May 2, 2025 ruling denying Plaintiffs’ motion for a preliminary injunction, the Court in National Urban League v. Trump, 1:25-cv-00471, (D.D.C.) ruled on Plaintiffs’ challenges to provisions relating to DEI programs and “gender ideology” in three Executive Orders: EO 14151, “Ending Radical and Wasteful Government DEI Programs and Preferencing” (signed January 20), EO 14168, “Defending Women From Gender Ideology Extremism and Restoring Biological Truth to the Federal Government” (signed January 20), and EO 14173, “Ending Illegal Discrimination and Restoring Merit-Based Opportunity” (signed January 21).

In rejecting all of Plaintiffs’ claims, however, the National Urban League Court reached a different conclusion than the two district courts that previously addressed similar arguments.

As we previously wrote, in National Association of Diversity Officers in Higher Education v. Trump (“NADOHE”), pending in the District of Maryland, the district court initially issued a nationwide preliminary injunction on February 21, 2025. However, on March 14, 2025, a three-judge panel of the Fourth Circuit unanimously granted the government's emergency request to stay that injunction pending appeal. The stay issued by the Fourth Circuit restored the government’s ability to enforce three key provisions of the executive orders that had been enjoined by the district court. Briefing before the Fourth Circuit is ongoing.[1]

In Chicago Women in Trades v. Trump (“CWIT”), pending in the Northern District of Illinois, the court issued a preliminary injunction on April 14, 2025 that restricts the Department of Labor – and only the Department of Labor – from requiring any federal contractor or grantee to make certifications relating to their DEI programs under the Executive Orders. As further explained in our prior alert, the preliminary injunction also prohibits the Department of Labor from terminating specific federal grants to the named plaintiff. The CWIT court declined to issue a broader injunction.[2]

In this broader context,[3] Judge Timothy J. Kelly’s May 2, 2025 ruling in the National Urban League case diverged from the district court opinions in NADOHE and CWIT, because Judge Kelly rejected all of Plaintiffs’ claims.

The Court Found Plaintiffs Had Standing to Challenge Only Some of the Provisions

As a threshold matter, the Court in National Urban League found that the Plaintiffs lacked standing to challenge four provisions of the executive orders that the Court characterized as primarily intra-governmental directives that did not directly regulate Plaintiffs’ conduct or threaten their funding.  In its reasoning on these issues, the Court characterized Plaintiffs as “at most ‘concerned bystanders’ to internal Executive Branch processes.” These provisions included what the Court characterized as the “List Provision” (which requires agencies to provide lists to OMB of grantees who received federal funding for DEI or environmental justice programs), the “Report Provision” (which directs the Attorney General to create a report with recommendations on enforcing civil rights laws), the “Government Mandates Provision” (which directs the termination of certain internal government DEI mandates), and the “Contract Terms Provision” (which directs the OMB Director to remove DEI references from federal contracts).

This portion of the decision was a notable departure from the opinion in NADOHE which found that those plaintiffs did have standing to challenge the Report Provision (which the NADOHE court called the “Enforcement Threat Provision“) because plaintiffs sufficiently demonstrated an objectively reasonable chilling effect on their speech.

Despite those standing issues, the Court in National Urban League found that Plaintiffs did have standing to challenge the “Certification Provision,” which requires contractors and grantees to certify both that they “do not operate any programs promoting DEI that violate any applicable Federal anti-discrimination laws” and that “compliance in all respects with all applicable Federal anti-discrimination laws is material to the government’s payment decisions” for False Claims Act purposes. The Court also found that Plaintiffs had standing to challenge the “Equity Termination Provision,” which directs agencies to terminate equity-related grants and contracts, as well as provisions relating to promoting “gender ideology.”

The Court Rejected Plaintiffs’ Facial Challenge But Reserved Judgment on Future “As Applied” Challenges

A significant portion of the Court’s analysis focused on whether the National Urban League Plaintiffs had brought facial or as-applied constitutional challenges. The Court characterized the Plaintiffs as bringing facial constitutional challenges to the executive orders, instead of bringing “as applied” claims.  In other words, Plaintiffs’ claim broadly challenged the Executive Orders as “unconstitutional in all its applications.” The Court characterized facial challenges as “hard to win” because of the rigorous standard required to prevail, and held that the Plaintiffs had not met this high standard with respect to any of the challenged provisions. However, the Court also indicated that it was “reserv[ing] judgment on the merits of any as-applied challenges to specific enforcement actions” that the government might initiate.

The Court Rejected Plaintiffs’ Due Process Claims, Holding That The Executive Orders Provide Sufficient Clarity for Funding Decisions

The Court identified multiple flaws in Plaintiffs’ due process claims. First, the Court emphasized that vagueness challenges require Plaintiffs to show they were “deprived of a constitutionally-protected property or liberty interest.” When Plaintiffs argued they possessed a liberty interest in avoiding reputational harm from contract termination, the Court found this unpersuasive, explaining that the cancellation of contracts or grants is not comparable to the type of “stigmatizing suspension” that has been found in other contexts such as reputational risks on safety grounds in the airline industry.

Beyond this threshold deficiency, the Court held that the challenged provisions contained sufficiently clear language to satisfy constitutional standards for fair notice, rejecting plaintiffs' vagueness arguments. With respect to the Certification Provision specifically, the Court found the standard to be a “straightforward” question: is the counterparty violating federal antidiscrimination law?” The Court reasoned that this provision simply presented contractors and grant recipients with a “true-or-false determination,” and the difficulty in answering that question did not render the provision unconstitutionally vague.

The Court Rejected Plaintiffs’ First Amendment Claims, Holding That The Government May Choose What Activities To Fund

The Court also rejected Plaintiffs’ First Amendment challenges, relying heavily on the principle that the government “refus[ing] to fund protected activity, without more,” does not constitute penalizing the activity. The Court determined that the funding provisions did not “effectively prohibit” or restrict the recipients from engaging in any protected conduct outside the scope of their receipt of federal funds, and so the government’s refusal to fund certain activities did not impose a constitutionally problematic restriction on federal contractors or grant recipients.

The Court found that while the Certification Provision did cover conduct outside the scope of federal grants and funds, it was still constitutionally sound. The Court characterized the provision as a requirement that contractors certify they do not operate programs that violate laws they were already obligated to follow, and rejected Plaintiffs’ characterization that the provision “purports to make organizations that ‘promot[e] DEI’ ineligible for government contracts and grants.” Instead, the Court reasoned “all the provision requires is a certification that the grant recipient or contractual counterparty will not violate the federal antidiscrimination laws that they had to comply with long before” the issuance of the Executive Orders.

The Court specifically distinguished between DEI programs generally and those that might violate federal antidiscrimination laws, emphasizing that the executive orders on their face do not “purport to establish the illegality of all efforts to advance diversity, equity or inclusion.” The Court reasoned that if Plaintiffs were concerned about whether their programs fall within the scope of an illegal program, the proper avenue would be to challenge that interpretation in a specific enforcement action, rather than facially challenging the Certification Provision itself.

Finally, regarding the Certification Provision and First Amendment issues, the Court’s analysis of the False Claims Act may be encouraging for contractors and grantees contemplating the provision’s reach. The Court unambiguously clarified that “[t]he False Claims Act … does not create liability for good-faith but mistaken beliefs that DEI programs comply with federal law.” It further observed that under the FCA the focus is on the person’s “knowledge and subjective beliefs” which “helps to ensure that innocent mistakes made in the absence of binding interpretive guidance are not converted into FCA liability.”

Implications for Employers

The landscape surrounding federal contractor and grant recipient certifications continues to evolve rapidly. Federal contractors and grantees being presented with certification requirements should continue to consult with counsel about how to respond given this complex and shifting legal environment.

Employers should continue to pay attention to developments in litigation challenging the DEI provisions of the executive orders as courts grapple with the substantive and procedural issues.

Seyfarth Shaw will continue to monitor these developments and provide updates as they 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] After the Fourth Circuit’s stay, in a motion filed on March 21, 2025, the NADOHE plaintiffs asserted “new factual developments” regarding the government’s implementation of the executive orders warranted the filing of an amended complaint and a new preliminary injunction. On May 1, 2025, the NADOHE court denied the motion.

[2] Briefing is ongoing regarding the CWIT plaintiff’s April 18, 2025 motion seeking to expand the scope of the preliminary injunction to cover all five of the CWIT plaintiff's federally funded grants.

[3] Other federal district courts hearing challenges to provisions of various recent Executive Orders involving DEI practices include San Francisco AIDS Foundation et al. v. Trump et al., Case No. 25-cv-1824 (N.D. Cal.) (hearing on the plaintiffs’ motion for a preliminary injunction scheduled for May 22, 2025) and Shapiro et al. v. U.S. Department of the Interior et al., Case No. 25-cv-763 (E.D. Pa.) (injunctive relief not sought; government’s answer to the complaint due on June 16, 2025).

 

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