E.D.Tex.: Corporate Transparency Act enjoined, but 4A claim as yet unresolved

On the balance of equities, the Eastern District of Texas enjoins the Corporate Transparency Act going into effect January 1, 2025. “[T]he CTA requires a vast array of companies to disclose otherwise private stakeholder information to FinCEN. See 31 U.S.C. § 5336(b)(1). Congress compels these disclosures to control financial crime. Indeed, the CTA says as much.” The Fourth Amendment implications are discussed only in passing. Texas Top Cop Shop, Inc. v. Garland, 2024 U.S. Dist. LEXIS 218294 (E.D. Tex. Dec. 3, 2024)*:

Here, Plaintiffs claim that the CTA violates three fundamental rights. First, the right to be free from laws that Congress does not have authority to enact (Dkt. #6 at pp. 9-19). Second, Plaintiffs allege the CTA and Reporting Rule violate their rights under the First Amendment (Dkt. #6 at pp. 19-25). And third, Plaintiffs contend that the CTA and Reporting Rule violate their rights under the Fourth Amendment (Dkt. #6 at pp. 25-27). The invocation of these rights is not a “‘substitute for the presence of an imminent, non-speculative injury'” as the Government points out (Dkt. #18 at p. 19) (quoting Google, Inc., 822 F.3d at 228). But Plaintiffs must comply with the CTA and Reporting Rule by January 1, 2025. See 31 C.F.R. § 1010.380(a)(1)(iii). The Government does not protest that impending deadline. And if Plaintiffs must comply with an unconstitutional law, the bell has been rung. Absent injunctive relief, come January 2, 2025, Plaintiffs would have disclosed the information they seek to keep private under the First and Fourth Amendments and surrendered to a law that they contend exceeds Congress’s powers. That damage “cannot be undone by monetary relief.” See Deerfield Med. Ctr., 661 F.2d at 338. That harm is irreparable.

Because Plaintiffs have met their burden to show that they will suffer unrecoverable compliance costs absent emergency relief, they have met their burden to show that the CTA and Reporting Rule threaten substantial, imminent, non-speculative, and irreparable harm. See Rest. Law Ctr., 66 F.4th at 598; Texas v. EPA, 829 F.3d at 433. Independent of the specter of compliance costs on the horizon, Plaintiffs have met their burden to show the threat of irreparable harm because the CTA and Reporting Rule substantially threaten their constitutional rights. See Deerfield Md. Ctr., 661 F.2d at 338; Book People, Inc., 91 F.4th at 340.

Forbes: Court Blocks Corporate Transparency Act — A Win For Federalism? by Matthew F. Erskine; National Law Review: Federal Court Enjoins Enforcement of the CTA Nationwide; Reporting Companies “Need Not Comply” with January 1 Deadline by Seth W. Ashby, Neil E. Youngdahl