In a 63-page opinion, issued in a case brought by the City of Baltimore and other interested advocacy groups challenging the EOs, the district court ruled that the plaintiffs were likely to succeed in establishing that the termination provision, the certification provision, and a portion of the enforcement provision violate the Constitution. Specifically, the court found that the termination provision was unconstitutionally vague, and that the FCA certification and enforcement provisions constituted a violation of free speech. Critically, the district court’s order temporarily blocks the administration from terminating any federal contracts or grants related to DEI, and it also blocks the mandate for federal contractors and grant recipients to certify compliance with the prohibition on promoting DEI. Complicating the administration’s plan to use DOJ to target private sector entities, the court’s ruling may be followed by other federal district courts ruling on the same, and the administration will almost certainly appeal this decision.

So what now?

Despite the temporary relief from the enforcement aspects of these EOs, the decision does not necessarily prevent DOJ, agencies, or state attorneys general from independently pursuing legal claims or investigations targeting DEI initiatives or programming, and enforcement agencies can still investigate or take action against violations of Title VII or other civil rights laws on bases other than “illegal DEI.” And critically, the question remains whether the Trump administration will comply with the court’s order, considering that earlier this month, the White House defied a Rhode Island district court's order to halt a spending freeze on certain federal grant and loan programs.

Federal contractors and grant recipients should continue to work with their legal counsel to conduct privileged assessments of their DEI programming and policies as this litigation proceeds. Reed Smith’s Government Contracts and Grants team will monitor developments and provide clients with the strategic counsel necessary to stay compliant and mitigate risk.

Client Alert 2025-062