DOJ Files an Appeal of The Nationwide Injunction Against CTA - What To Do?

On December 4, 2024 we posted STOP BOI Filings (for now) - Texas DC Issues Nationwide Injunction Against The CTA And Its Impending January 1, 2025 Filing Deadline, where we discussed that the Texas District Court Issued a nationwide injunction against the enforcement of the CTA and BLI reporting requirements in Top Cop Shop, Inc. et al. vs. Garland.

The government filed its notice of appeal of the decision of the U.S. District Court for the Eastern District of Texas in Texas Top Cop Shop Inc. v. Garland on December 5, 2024. 

Litigation is currently split between courts ruling on the act’s constitutionality. In March the U.S. District Court for the Northern District of Alabama granted summary judgment for the National Small Business Association in National Small Business United v. Yellen, turning aside arguments that the CTA could be viewed as a proper exercise of congressional authority under the commerce clause, Congress's taxing power, or Congress's power to oversee foreign affairs and national security.

More recently, the government has successfully defended the CTA in district court. In Community Associations Institute v. Yellen, the U.S. District Court for the Eastern District of Virginia on October 24 denied the group's injunctive and declaratory relief motion attempting to prevent enforcement of the CTA.

In Firestone v. Yellen, No. 3:24-cv-01034, the U.S. District Court for the District of Oregon in September denied a request for a preliminary injunction against the CTA from seven individuals challenging the constitutionality of the law. The court found that the plaintiffs were unlikely to prevail. Both of those cases are also on appeal to the Fourth and Ninth Circuits, respectively.

While The Recent Injunction Brings Hope To Some Hoping To Avoid This Reporting, It Creates Uncertainty For Everyone Else.

Some lawyers are suggesting that it is unclear whether this injunction will still be in effect by the reporting deadline of December 31, 2024. 

Therefore, Filing The Reports By Year-End,
Or At Least Being Ready To Do So, Appears To Be
Advisable In The Face Of Such Uncertainty.

Remember that this injunction it’s only a preliminary injunction and not a permanent one, which can be overruled and return the status quo prior to the ruling, requiring reporting by December 31, 2024.

On the other hand, many Americans are hoping for a favorable outcome from an eventual higher court ruling, striking down this law as unconstitutional. There are also those Americans who are hoping that the Trump Administration will prevent enforcement of the CTA and/or request Congress to remove it.

Until then remember there are hefty penalties of $500 per day up to $10,000, as well as criminal penalties, can apply for compliance failures. 

The preliminary injunction only delays enforcement of the CTA until a court issues a final ruling on the merits of the constitutionality of the CTA or an appeals court overturns the injunction. 

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