A federal judge dismissed the U.S. Justice Department's lawsuit against California's transgender-inclusive school sports policies on Monday, ruling with prejudice that the federal government could not strip the state of $44.3 billion in education funding over rules it never clearly warned California would violate Title IX. The decision hands a major win to state education officials who had spent more than a year fighting the case in federal court.
U.S. District Judge Cynthia Valenzuela found that California lacked clear notice that categorically excluding transgender athletes was required as a condition of accepting federal funds, according to the Los Angeles Times. Under Spending Clause doctrine, the federal government cannot retroactively penalize a state for policies it never explicitly conditioned funding on, a distinction that proved fatal to the Justice Department's case, per the Civil Rights Litigation Clearinghouse. Valenzuela also determined that Title IX does not require California to exclude transgender girls from girls' teams and sex-separated facilities, the Times reported.
The ruling leaned heavily on the U.S. Supreme Court's June 30 decision in West Virginia v. B.P.J. and Little v. Hecox, which found that states may restrict school sports based on biological sex but never mandated that they do so. Valenzuela said that ruling did not find California's more inclusive policies illegal or require the state to change them, and the high court's decision did not resolve whether Title IX permits transgender girls to compete on girls' teams, the Times noted. Legal analysis from McGuireWoods confirms the Supreme Court's ruling was permissive rather than mandatory, leaving states free to maintain trans-inclusive standards if they choose.
How the Case Reached a California Courtroom
The Justice Department's lawsuit, filed in July 2025 in the U.S. District Court for the Central District of California, alleged that the California Department of Education and the California Interscholastic Federation violated Title IX by allowing transgender athletes to compete according to their gender identity. The suit identified five transgender athletes statewide and was brought by Assistant Attorney General Harmeet Dhillon, who leads the Justice Department's Civil Rights Division, along with Bill Essayli, who leads the U.S. Attorney's Office in Los Angeles, the Times reported. The case was originally assigned to Judge Fred W. Slaughter before he recused himself, resulting in its reassignment to Valenzuela, according to the Civil Rights Litigation Clearinghouse.
Before filing suit, Dhillon sent California public school districts a formal warning letter in June 2025 demanding they certify in writing that they would not enforce CIF Bylaw 300.D, the state's gender-identity participation guideline first adopted in February 2013. State Superintendent Tony Thurmond publicly advised districts not to comply, according to Spotlight Schools. California's inclusive stance traces back further still: Governor Jerry Brown signed Assembly Bill 1266 in 2013, making California the first state in the nation to statutorily require public schools to let students participate in sports matching their gender identity.
CIF's Compromise Rules and a Track Star at the Center
Amid mounting federal pressure, CIF introduced a pilot entry and podium policy for the 2025 track and field state championships that expanded qualification slots for cisgender athletes displaced by transgender competitors. Under the updated rules, a transgender athlete's event qualification cannot take a spot away from a cisgender competitor, and any transgender athlete who wins a podium position must share it with the next-best cisgender athlete, per the Times.
Those rules were forged largely around the case of AB Hernandez, who competed in three qualifying events at the CIF state track championship in May 2026 and again shared her wins with cisgender competitors, the Times reported. Hernandez won multiple medals under the podium-sharing arrangement in 2025 as well. Former President Donald Trump had demanded in 2025 that California officials bar Hernandez from competing at the state meet altogether, according to the Times.
Defense Strategy and Reaction From Both Sides
California Attorney General Rob Bonta's office represented state agencies in court and pointed to an April 2026 Eighth Circuit ruling in Female Athletes United v. Ellison, which affirmed the denial of an injunction against trans-inclusive state sports policies, as supplemental authority for the state's position, according to The Oaklandside. The California Department of Education and CIF each said they could not comment on the litigation, the Times reported.
Rainbow Families Action said the Trump administration's campaign against transgender children had hit another roadblock, and the group hailed the court decision alongside other LGBTQ+ rights organizations that praised Valenzuela's ruling, per the Times. Lily Norcross, a 17-year-old transgender track and field athlete at Arroyo Grande High School, has been a visible presence in the debate. Her father, Trevor Norcross, told the Times that girls in California can focus on athletic competition without worrying about culture wars or invasive body inspections, adding that it is time to get back to supporting and enjoying girls' and women's sports instead of trying to tear them down.
A Justice Department spokesperson said the agency is evaluating its options for appeal and remains committed to enforcing the Trump administration's agenda preventing boys from playing in girls' sports, according to the Times. The lawsuit was one piece of a broader federal campaign against transgender-inclusive policies in education and health care, which has also included a July 2026 ultimatum to Kansas City schools over student gender records and an August 2026 Ninth Circuit ruling reviving subpoenas against telehealth provider QueerDoc, which Hoodline covered in its report on the DOJ subpoena against QueerDoc.
Local Fallout Across California School Districts
The fight over interscholastic athletic policy has rippled through local school boards well beyond the courtroom. The Capistrano Unified School District board passed a resolution in May 2025 supporting biological-sex restrictions in sports, and disputes over the policy prompted high school teams to forfeit matches in late 2024, according to Sports Illustrated. Similar tensions have surfaced elsewhere in the state, including at the Balboa Park Velodrome, where a ban on transgender athletes in women's races drew local uproar earlier this year. Monday's dismissal does not resolve those local disputes, but it does remove, for now, the threat of a federal funding cutoff that had loomed over every California school district since the case began.
