Nationwide CTA Injunction Back In Place

December 27, 2024 – On Dec. 26, a merits panel of the Fifth Circuit vacated a motions panel’s Dec. 23 grant of the government’s motion to stay the district court’s nationwide preliminary injunction of the Corporate Transparency Act (CTA), pending expedited briefing of the merits. The upshot is that the CTA currently remains enjoined on a nationwide basis.

Given this development, the government may seek en banc review in the Fifth Circuit, although the unusual decision to reverse by the merits panel suggests the Fifth Circuit at large may be inclined to affirm the district court’s view of the merits in granting the preliminary injunction. Thus, it is more likely that the government will file immediately to the Supreme Court for an emergency stay pending petition for certiorari, and, to preempt an adverse Fifth Circuit decision on the merits, it may also petition for certiorari under Rule 11 while the merits case is pending.

The Eleventh Circuit panel decision in NSBA v. Yellen, which was argued on Sep. 26, by Thomas Lee, special counsel at Hughes Hubbard, is fully briefed, and a decision is expected imminently, likely before FinCEN’s revised deadline of Jan. 13, 2025, for all non-exempt reporting companies. Regardless of how the Eleventh Circuit decides the case, the losing party will likely petition for certiorari at the Supreme Court once the decision issues. And given the posture of the Fifth Circuit case and other appeals in the First, Fourth, Sixth and Ninth Circuits; the Supreme Court may grant the petition in the Eleventh Circuit case in part because it implicates a permanent, not a nationwide preliminary injunction, and therefore a better vehicle for addressing the merits issues.

To summarize, clients should prepare to file by the Jan. 13, 2025, deadline but should stay tuned for more litigation updates in the next two weeks.