U.S. and State Attorneys General Indicate Readiness to Bring DEI Enforcement Actions

By Ryan J. Regula, Charlene A. Warner, and Lilly M. Harris

In the latest developments in the DEI policy chronicles, on the same day she was sworn into office, U.S. Attorney General Pam Bondi issued a memorandum entitled “Ending Illegal DEI and DEIA Discrimination and Preferences.”¹ Additionally, numerous state attorneys general have sent letters to various financial institutions and Costco warning that DEI policies are illegal and could lead to enforcement actions.

In Case You Missed It. On January 21, 2025, President Donald Trump enacted an Executive Order called Ending Illegal Discrimination and Restoring Merit-Based Opportunity.² Subsequently, a group of plaintiffs filed a lawsuit in which they argue the Executive Order is unconstitutional under a variety of legal theories.³ A federal district court in Maryland will hear oral arguments regarding the plaintiffs’ request for a temporary restraining order and preliminary injunction on February 19, 2025.⁴

U.S. AG Memorandum. On February 5, 2025, AG Bondi issued a memorandum promising that “the Department of Justice’s Civil Rights Division will investigate, eliminate, and penalize illegal DEI and DEIA preferences, mandates, policies, programs, and activities in the private sector and in educational institutions.” Notably, the memorandum does not prohibit “educational, cultural, or historical observances . . . that celebrate diversity, recognize historical contributions, and promote awareness without engaging in exclusion or discrimination.”

Citing the U.S. Supreme Court’s fairly recent affirmative action case⁵ and the Executive Order, the memorandum iterates the DOJ’s commitment to “enforcing all federal civil rights laws and ensuring equal protection under the law.” To that end, it directs the Civil Rights Division and the Office of Legal Policy to prepare a report by March 1, 2025, (1) addressing the “[k]ey sectors of concern within the [DOJ’s] jurisdiction”; (2) listing “[t]he most egregious and discriminatory DEI and DEIA practitioners in each sector of concern”; (3) providing a plan to “deter the use of DEI and DEIA programs or principles . . . including proposals for criminal investigations and for up to nine potential civil compliance investigations of entities”; (4) suggesting “[a]dditional potential litigation activities, . . . regulatory actions, and sub-regulatory guidance”; and (5) proposing any “[o]ther strategies to end illegal DEI and DEIA discrimination.”

Further, the memorandum states that the DOJ will collaborate with the Department of Education “to issue directions, and the Civil Rights Division will pursue actions, regarding the measures and practices required” for educational institutions that receive federal funds.

State AG Letters. In late January, a coalition of eleven state AGs sent a letter to various financial institutions “extending . . . an opportunity to avoid a lengthy enforcement action” based on the institutions’ alleged DEI policies. The letter reminds that state contracts “contain provisions requiring that contractors comply with federal, State, and local laws.” These laws prohibit race- and sex-based quotas in hiring employees, voting for board members, and selecting suppliers. The letter states that the AGs believe that the financial institutions may be engaging in illegal DEI policies, and requests each institution to answer questions related to their alleged DEI policies within forty-five days from the date of the letter.

Around the same time, a group of nineteen state AGs sent a letter to Costco urging it to “end all unlawful discrimination imposed by the company through diversity, equity, and inclusion” policies. The letter explains other companies are currently “under investigation for issues relating to DEI.” It requests that Costco notify the AGs that it “has repealed its DEI policies or explain why Costco has failed to do so” within thirty days of the date of the letter.

What’s Next. AG Bondi’s memorandum crystallizes what President Trump’s Executive Order had already signaled: DEI will almost certainly face enhanced scrutiny under the Trump Administration. This scrutiny will likely come in the form of criminal and civil investigations, and the DOJ may pursue enforcement under the False Claims Act and Title IX with penalties including treble damages based on the value of the government contract or the withdrawal of federal funds. Likewise, states seem poised to investigate private entities with DEI policies and bring enforcement actions when necessary.

As the legal risks continue to develop, government contractors, private sector employers, and educational institutions that receive federal funds should audit their contracts, written policies and materials, and practices to ensure legal compliance. Snell & Wilmer’s regulatory and compliance practice group is adept at helping businesses navigate the latest DEI, False Claims Act, and Title IX requirements including ensuring businesses remain current with concurrent state law requirements. In the meantime, Snell & Wilmer will continue to monitor legal developments related to Executive Orders.

*Any opinions expressed are those of the authors and not the firm or their colleagues.