Challenging Executive Order on DEI, States Say It Gets FCA Materiality Wrong
On June 10, 2026, nineteen states and the District of Columbia filed suit challenging President Trump’s Executive Order No. 14398, which seeks to eliminate diversity, equity, and inclusion (DEI) initiatives among federal contractors and expressly links DEI-related conduct to potential False Claims Act (FCA) liability. The lawsuit, brought under the Administrative Procedure Act, targets the Order’s anti-DEI contracting provisions and the federal government’s efforts to implement them.
The states argue that the Executive Order’s attempt to designate compliance with its anti-DEI requirements as “material” to government payment decisions conflicts with the Supreme Court’s FCA materiality standard articulated in Universal Health Services v. Escobar. The complaint also challenges the Order on broader administrative law grounds, arguing that key terms are impermissibly vague and that agencies have failed to justify the Order’s underlying policy assumptions.
Read the full post for a closer look at the states’ materiality arguments and the potential implications for federal contractors facing increased FCA scrutiny of DEI-related practices.
When “The Devil Made Me Do It” Is Not a Defense: Lessons in AI Governance and Organizational Oversight from an SDNY Decision
As companies increasingly integrate generative and agentic AI into core business functions, a May 7, 2026 decision from the United States District Court for the Southern District of New York1 highlights several fundamental guardrails for corporate legal and compliance departments to consider. Although the case arose in the context of government decision-making, the opinion carries broader implications for any entity that embeds generative AI in its processes.
U.S. DOJ Issues Guidance on “Unlawful Discrimination” Related to DEI Programs for Recipients of Federal Funding
On July 30, 2025, the U.S. Department of Justice (DOJ) issued guidance on “unlawful discrimination” for recipients of federal funding and other entities subject to federal antidiscrimination laws, further underscoring Trump administration officials’ commitment to pursuing investigations and enforcement activity in this area.
U.S. DOJ Launches Initiative Leveraging False Claims Act to Target Diversity, Equity, and Inclusion Programs
In a May 19, 2025 memorandum, U.S. Department of Justice (DOJ) Deputy Attorney General Todd Blanche announced the Civil Rights Fraud Initiative, which aims to use the False Claims Act (FCA) to investigate and “pursue claims against any recipient of federal funds that knowingly violates federal civil rights laws” via “racist preferences, mandates, … and activities” — including diversity, equity, and inclusion (DEI) programs. (more…)
Federal Judge Pauses Enforcement of DEI Executive Order; FCA Risks Remain
On Friday, February 21, a federal district judge in Maryland issued a nationwide preliminary injunction prohibiting the U.S. Department of Justice (DOJ) and defendant federal agencies from enforcing portions of two presidential executive orders (EOs) targeting diversity, equity, and inclusion (DEI) programs at companies that do business with the federal government, including provisions tethering allegedly unlawful DEI programs to potential False Claims Act (FCA) liability.
