State Attorneys General Enter the DEI Fray

In the wake of President Trump’s sweeping executive orders targeting diversity, equity, and inclusion (DEI) initiatives and the Department of Justice’s (DOJ) aggressive stance on DEI enforcement, the landscape for DEI is rapidly changing in 2025.

While most attention has been focused on those executive orders and memos, state attorneys general (state AGs) are now emerging as major players against DEI.

Case in point: on February 11, 2025, the State of Missouri filed a lawsuit against the Starbucks Corporation, alleging that the coffee chain used DEI policies to discriminate against employees based on race and sex, in violation of federal and state laws. Missouri, represented by Attorney General Andrew Bailey, claims that by using discriminatory race and sex-based practices in hiring, firing, and advancing employees, Starbucks hired less qualified employees, leading to slower service and higher prices for Missouri’s consumers. 

The lawsuit makes good on the threat by state AGs to bring actions against companies with progressive DEI programs. And they have been aggressive so far in 2025. 11 state AGs sent a letter to financial institutions on January 23 demanding information about DEI programs, and 19 state AGs sent a letter to Costco on January 30 admonishing the company for its DEI programs. Operating in parallel with the Trump administration’s federal-government-wide effort to “deter” and investigate DEI programs—including DOJ’s plan to look for opportunities to bring criminal charges—the state AGs are elevating the challenges and risks facing companies across sectors.

The Missouri action against Starbucks is thus a helpful window into the challenges facing DEI programs in the United States. 

The lawsuit zeros in with allegations that Starbucks sets specific racial and sex-based quotas, including for members of the board, and ties executive compensation to achieving these diversity goals. The complaint also alleges that Starbucks maintains discriminatory programs like training and mentorship programs for BIPOC and other minority groups, excluding white men from certain opportunities. The company is also accused of segregating employees into networks based on race, sex, and other characteristics, providing additional job benefits to members of these networks. The state alleges violations of federal laws, including Title VII of the Civil Rights Act of 1964 and 42 U.S.C. § 1981, as well as the Missouri Human Rights Act (MHRA). 

Put simply, Missouri is targeting initiatives and programs common across American companies, including employee resource groups, efforts to diminish bias in opportunity for minorities, and goals for executives. And importantly, to make its allegations, Missouri draws heavily from public reports and web content, including the company’s annual reports, proxy statements, and civil rights assessments.  

Given the current focus on DEI, and the availability of similar public information from many companies, Missouri’s lawsuit is unlikely to be an outlier. 

DEI is shaping up to be the next NetZero, and companies should expect action from federal agencies, state AGs, private plaintiffs and activists, and Congress. These developments are challenging on their own merits, but especially so for companies facing competing or divergent disclosure and DEI regimes in Europe and elsewhere.

Each company will need to decide for itself how to respond to these evolving dynamics, taking into account its legal exposure, distinct company culture and appetite for change, and its appetite for risk. 

Freshfields’ cross-disciplinary, cross-border team is helping clients evaluate these rapidly evolving issues, respond to investigative demands, and navigate divergent regulatory regimes around the globe.