I have just confirmed that the United States District Court for the Eastern District of
Texas, Sherman Division, in Civil Action No. 4:24-CV-478, signed and filed a
Memorandum Opinion and Order today, December 3, 2024, which puts into place a
nationwide injunction. If you want a copy, please let me know.
Thank you to Kristina Simon, CPA, and Robert Clofine, ACTEC Fellow, for calling this
to my attention.
Part of the Court’s order reads as follows:
At page 77:
“The Court determines that the injunction should apply nationwide. Both the CTA and the
Reporting Rule apply nationwide, to “approximately 32.6 million existing reporting
companies.” See 87 Fed. Reg. at 59585. NFIB’s membership extends across the country.
And, as the Government states, the Court cannot provide Plaintiffs with meaningful relief
without, in effect, enjoining the CTA and Reporting Rule nationwide. The extent of the
constitutional violation Plaintiffs have shown is best served through a nationwide injunction.
See Califano, 442 U.S. at 705; Career Colls. & Schs. of Tex., 98 F.4th at 256. Given the
extent of the violation, the injunction should apply nationwide.
“Plaintiffs also urge the Court to enjoin the Reporting Rule under § 706 of the APA (Dkt. #6
at p. 28), which instructs courts to “hold unlawful and set aside agency action . . . found to
be . . .contrary to constitutional right[s].” 5 U.S.C. § 706(2)(B). Such vacatur is the “default
rule in this Circuit.” Cargill v. Garland, 57 F.4th 447, 472 (5th Cir. 2023).10 But § 706 is not
the proper vehicle to protect Plaintiffs from irreparable harm at this juncture. The Court has
determined that the CTA and Reporting Rule are likely unconstitutional for purposes of a
preliminary injunction. It has not made an affirmative finding that the CTA and Reporting
Rule are contrary to law or that they amount to a violation of the Constitution. Thus, the
Court determines that the Government should be enjoined from enforcing the Reporting
Rule and the January 1, 2025, compliance deadline under the Reporting Rule should be
stayed under § 705 of the APA.
***
At page 78:
CONCLUSION
“Plaintiffs have satisfied all prerequisites for a preliminary injunction. The Court has
authority to issue the injunction Plaintiffs seek under Federal Rule of Civil Procedure 65(d).
The CTA is likely unconstitutional as outside of Congress’s power. Because the Reporting
Rule implements the CTA, it is likely unconstitutional for the same reasons. The Court has
not addressed the issue of the CTA’s constitutionality as applied to these Plaintiffs or
Plaintiffs’ challenges under the First and Fourth Amendments. Having determined that
Plaintiffs have carried their burden, the Court GRANTS Plaintiff’s Motion for a Preliminary
Injunction. Therefore, the CTA, 31 U.S.C. § 5336 is hereby enjoined. Enforcement of the
Reporting Rule, 31 C.F.R. 1010.380 is also hereby enjoined, and the compliance deadline
is stayed under § 705 of the APA. Neither may be enforced, and reporting companies need
not comply with the CTA’s January 1, 2025, BOI reporting deadline pending further order of
the Court.
“Federal Rule of Civil Procedure 65(c) provides that “[t]he court may issue a preliminary
injunction . . . only if the movant gives security in an amount that the court considers proper
to pay the costs and damages sustained by any party found to have been wrongfully
enjoined or restrained.” FED. R. CIV. P. 65(c). The Fifth Circuit has held that district courts
have discretion to “require no security at all.” Kaepa, Inc. v. Achilles Corp., 76 F.3d 624, 628
(5th Cir. 1996). After considering the facts and circumstances of this case, the Court finds
that security is unnecessary and exercises its discretion to not require Plaintiffs to post
security.
“It is therefore ORDERED that Plaintiffs’ Motion for Preliminary Injunction (Dkt. #6) is
hereby GRANTED.”