As we previously reported, a federal judge issued a nationwide preliminary injunction prohibiting the federal government from enforcing certain portions of President Trump’s Executive Order 14173, “Ending Illegal Discrimination and Restoring Merit-Based Opportunity.”

The preliminary injunction prevented the government from, among other things, requiring federal contractors and grantees “to agree that . . . compliance in all respects with all applicable Federal anti-discrimination laws is material to the government’s payment decisions” for purposes of the False Claims Act and “to certify that [the contractor or grantee] does not operate any program promoting DEI that violates any applicable Federal anti-discrimination laws.”

A federal district judge ruled that this provision probably violated the free speech protections of the First Amendment and prohibited the government from enforcing it.

The government appealed this decision to the U.S. Court of Appeals for the Fourth Circuit and requested that the preliminary injunction be lifted during the pendency of the appeal. Alternatively, the government sought to narrow the scope of the injunction to apply only to the named plaintiffs (three associations and Baltimore, Maryland) and to the named defendants (some, but not all federal agencies). 

A three-judge panel of the Fourth Circuit found that the government satisfied the standards to stay the preliminary injunction and accordingly paused the district court’s injunction. These standards, set forth by the U.S. Supreme Court in 2009, include the following:

• whether the stay applicant has made a strong showing that he is likely to succeed on the merits;
• whether the applicant will be irreparably injured absent a stay;
• whether issuance of the stay will substantially injure the other parties interested in the proceeding; and
• where the public interest lies.

The Fourth Circuit panel did not explain why it concluded that the standard was met in this case.

Notably, Chief Judge Albert Diaz, an Obama appointee, concurred in the decision to stay the preliminary injunction but expressed doubt about the enforceability of the Executive Order. He said 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”:

[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. For when this country embraces true diversity, it acknowledges and respects the social identity of its people. When it fosters true equity, it opens opportunities and ensures a level playing field for all. And when its policies are truly inclusive, it creates an environment and culture where everyone is respected and valued. What could be more American than that?

Under the most basic tenets of the First Amendment, there should be room for open discussion and principled debate about DEI programs, and whether its corresponding values should guide admissions, hiring, scholarship, funding, or workplace and educational practices. And all Americans should be able to freely consider how to continue empowering historically disadvantaged groups, while not “[r]educ[ing]” the individuals within those groups “to an assigned racial [or sex-based] identity.”

The court has ordered an expedited briefing schedule, which typically indicates that the matter will be fast-tracked for a decision. 

In the meantime, the government has no restrictions on implementing the provision requiring contractors to certify that they do not have illegal DEI programs in place. Thus, contractors and subcontractors should closely monitor all new or modified agreements with the government and with prime contractors for this provision and take appropriate measures before entering into such agreements.