The Fourth Circuit Court of Appeals (“Fourth Circuit”) recently heard oral arguments in National Association of Diversity Officers in Higher Education v. Donald Trump (“NADOHE v. Trump”), a case challenging the constitutionality of certain aspects of President Trump’s anti-diversity, equity and inclusion (“DEI”) executive orders, including Executive Order 14151, Ending Radical and Wasteful Government DEI Programs and Preferencing, and Executive Order 14173, Ending Illegal Discrimination and Restoring Merit-Based Opportunity (collectively, the “EOs”). The Fourth Circuit previously granted the Trump administration’s motion to stay the Maryland District Court’s preliminary injunction that paused the EOs, as discussed in more detail here. Based on the judges’ comments during oral argument, the legal challenges to the anti-DEI EOs in NADOHE v. Trump face an uphill battle.

One aspect of the EOs being challenged by NADOHE is the “Certification Provision,” which would require federal contractors and grant recipients to certify that they do not operate “illegal DEI” programs and that compliance with federal anti-discrimination laws is material to the government’s payment decisions for purposes of the False Claims Act (“FCA”). This provision is particularly alarming for health care entities that receive federal funding because it exposes them to potential FCA liability should their DEI practices be deemed unlawful.

During NADOHE v. Trump oral arguments, the Fourth Circuit panel of judges appeared receptive to the Trump administration’s core argument that the EOs merely require compliance with existing anti-discrimination laws. The Trump administration’s attorneys further argued that the EOs are simply directives from the President to agencies and create no new legal obligations with which the plaintiffs (i.e., the parties challenging the EOs) would need to comply. Therefore, according to the Trump administration’s attorneys, the plaintiffs suffered no concrete “injury” to establish a valid basis to move forward with their legal challenge to the EOs.

NADOHE’s counsel, in turn, argued that the EOs are unconstitutionally vague and that reasonable agency interpretations of the EOs will chill speech protected by the First Amendment. The judges pushed back, suggesting that “as applied” challenges to individual grant terminations and other agency actions derived from the EOs would be more appropriate than this broad challenge to the EOs themselves. In other words, the judges suggested that NADOHE seemed more concerned with the “atmospheric impact” of the orders than with their actual language and directives.

Overall, the judges appeared more receptive to the Trump administration’s arguments and more skeptical of NADOHE’s position. Although it is difficult to predict the outcome of this case with a high degree of certainty based on the recent oral arguments, it seems likely that the Fourth Circuit will side with the Trump administration at this stage, which means the anti-DEI EOs are not expected to go away any time soon.

Practical Takeaways

  • Consider conducting an attorney-client privileged internal audit of your current DEI practices to ensure they are defensible under federal civil rights laws.
  • Consider updating the terminology used to describe programs designed to ensure inclusivity in order to avoid the appearance of impermissible discrimination.
  • Consider revising any public-facing company statements regarding DEI to ensure that such statements reflect lawful non-discrimination practices.
  • Educate and remind managers, supervisors and employees that those who express concerns about potential civil rights violations under DEI policies are protected from retaliation in the same manner as any employee expressing concerns about potentially anti-discriminatory practices.
  • Assess exposure and compliance posture now, before enforcement actions begin, and evaluate whether your counsel is sufficient to handle both DEI-related discrimination and FCA issues in this era of uncertainty.
  • Continue to check Hall Render’s website for updates to litigation and agency action related to DEI.

For more information, please contact:

Special thanks to Summer Associate Becca Foerder for her assistance in the preparation of this article.

Hall Render blog posts and articles are intended for informational purposes only. For ethical reasons, Hall Render attorneys cannot give legal advice outside of an attorney-client relationship.

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