By Fred Satterwhite and Joanna Colosimo
On March 14, 2025, the United States Court of Appeals for the Fourth Circuit granted the government's Motion for a Stay Pending Appeal in the lawsuit concerning two Executive Orders aimed at ending diversity, equity, and inclusion (DEI) programs within federal grant and contract processes.
The plaintiffs, including the Mayor and City Council of Baltimore, Maryland, and three national associations, challenged the constitutionality of three provisions of the Orders under the First and Fifth Amendments. The district court found these provisions unconstitutional and issued a nationwide injunction barring enforcement against both the plaintiffs and similarly situated non-parties.
After the government appealed, the district court clarified that its preliminary injunction applies to and binds various federal executive branch agencies, departments, and commissions. The government sought a stay of this injunction or requested that it be limited only to the plaintiffs and named defendants.
Upon reviewing the record, the district court's opinion, and the parties' briefing, the Court of Appeals agreed that the government satisfied the factors for a stay under Nken v. Holder (a Supreme Court decision in 2009 where the Court held that the traditional factors govern a court of appeals’ authority). Consequently, the court granted the government's motion for a stay of the preliminary injunction. An expedited briefing schedule will be set after consultation with the parties.
It is important to note that some of the appeals court judges, though they lifted the enjoinment, did assert support for DEI programs. According to Fourth Circuit Chief Judge Albert Diaz, “...despite the vitriol now being heaped on DEI, people of good faith who work to promote diversity, equity, and inclusion deserve praise, not opprobrium.”
What Does This Mean for Federal Contractors and Grantees?
Federal contractors and grant recipients should note that the preliminary injunction has been lifted until the arguments play out in court. The administration may resume enforcement of EO 14173 and EO 14151 for the time being. Organizations should be thoughtful about how they want to approach aspects of any “illegal DEI” certification requirements if requested by the federal government.
DCI will continue to monitor the developments in this and other relevant cases. Changes in status will be tracked on our Executive and Federal Activity Update page.
