On 14 September 2026, Magistrate Judge Steve B. Chu of the U.S. District Court for the Southern District of California entered an order approving a minors’ compromise and settlement in S.E. v. Grey, Case No. 3:24-cv-01611-SBC. The order is the primary document for the cash terms and dismissal — not a press release.

Court-approved dollars and a vacated injunction close the case; the policy fight was already decided when the district rewrote notice-and-opt-out rules after Mahmoud.
Citizen impact: Parents who object on religious grounds to classroom gender-identity materials now have a concrete California district example: after a federal PI and the Supreme Court’s Mahmoud ruling, Encinitas changed course, paid $175,000, and the litigation ended with prejudice. Other boards still set their own policies — this order binds Encinitas via settlement terms, not every California district by injunction.

What the order says

The joint motion is granted. Gross settlement: $175,000, allocated as $10,000 each to minor plaintiffs S.E. and P.D. (into custodial 529 education accounts), $98,000 to Carlos and Jennifer Encinas, $30,000 to Tom and Rebecca Doe, plus attorney’s fees of $17,000 (First Liberty Institute) and $10,000 (National Center for Law & Policy). The May 19, 2025 preliminary injunction is vacated. The case is dismissed with prejudice; the court retains jurisdiction to enforce the settlement until payment is complete.

How the dispute started

Per the order’s factual background (drawn from the complaint): two fifth-graders at La Costa Heights Elementary were read My Shadow is Pink, shown a read-along video with kindergarten “buddies,” then instructed to ask each kindergartner to pick a colour representing gender identity and trace the buddy’s shadow. Parents sought notice and opt-out; district staff answered that the buddy programme was not a “health unit,” so no opt-out applied. Plaintiffs sued under Free Speech, Free Exercise, and Due Process theories. Judge M. James Lorenz granted a partial preliminary injunction on 12 May 2025 and entered the PI on 19 May 2025 requiring advance notice and opt-out when gender-identity topics covered in health instruction appear in buddy activities. Defendants appealed to the Ninth Circuit; that appeal was voluntarily dismissed in November 2025.

Mahmoud’s shadow

On 27 June 2025 the U.S. Supreme Court decided Mahmoud v. Taylor, holding that schools must provide notice and opt-outs when instructional materials substantially interfere with parents’ religious upbringing of their children. Counsel for the Encinitas families (NCLP / First Liberty) say the district thereafter revised its religious-beliefs policy to require advance notice and opt-out opportunities — then settled the damages case. The September 2026 order does not itself reprint the board policy text; it closes the federal litigation on the terms above.

Contested: Families and their counsel frame a coerced-speech and free-exercise win. District defenders historically framed inclusive mentoring and community climate. This piece reports the court order’s numbers and procedural history without inventing board-minute quotes we have not opened.

Bottom line

Do not call this a nationwide injunction. Do not invent psychological-damage findings the court expressly noted were disputed. The verified facts are: $175,000 approved, PI vacated, case dismissed with prejudice on 14 September 2026, after a May 2025 PI and post-Mahmoud policy shift.