Nationwide Injunctions’ Business Impact Should Be Part of Debate

Lawsuits seeking nationwide relief from government regulation are on the rise, growing from 12 during President Barack Obama’s eight years in office to an unprecedented 64 during President Donald Trump’s four-year administration. Halfway through President Joe Biden’s first term, courts had issued 14 nationwide injunctions.

As the frequency of nationwide injunctions has increased, so has the intensity of debate surrounding them. But the value of universal relief in the commercial context has largely been missing from the conversation. Nationwide injunctions’ benefits to businesses are an important consideration that shouldn’t be overlooked in the debate over their utility.

A nationwide injunction, also known as a universal injunction, prohibits a government agency from enforcing a rule against anyone, anywhere in the country. These broad rulings typically are issued in high-profile, politically charged litigation, such as lawsuits challenging vaccine mandates.

US Supreme Court justices and others have criticized nationwide injunctions as an abuse of judicial power that exceeds constitutional limits. Some argue that nationwide injunctions risk politicization and delegitimization of the courts if used to achieve broad-scale policy outcomes.

A recent example is Justice Neil Gorsuch’s query during oral argument in FDA v. Alliance for Hippocratic Medicine on whether “a handful of individuals who’ve asserted a conscience objection [to the FDA’s approval of the abortion pill Mifepristone]” should be able to enjoin the effect of the Food and Drug Administration’s decision across the entire country.

Another criticism is that nationwide injunctions can be the product of judge shopping. Alliance for Hippocratic Medicine fits that bill. It was filed in a single-judge division where the judge is known for his anti-abortion views. He delivered the plaintiffs’ desired result—a nationwide injunction of the FDA’s approval of the abortion pill.

The US Judicial Conference in March adopted a policy that aims to prevent such judge shopping. The policy requires random case assignment within a judicial district, rather than a division, in all civil actions seeking declaratory or injunctive relief vis-à-vis state or federal action.

With nationwide injunctions under fire, it’s important to recognize their value to businesses. Nationwide relief can achieve uniformity of regulation that confers predictability to regulated entities and fosters a level playing field among competitors. Recent litigation challenging rules from the Consumer Financial Protection Bureau and Federal Trade Commission illustrates these advantages.

The CFPB in 2023 issued a rule that dramatically expanded data collection requirements for certain financial institutions making small business loans. Many credit unions and smaller lending institutions commented that compliance would exponentially increase their expenses, and several lenders filed suit after the final rule was issued.

The US District Court for the Southern District of Texas entered a preliminary injunction staying enforcement of the new rule, but just for the plaintiffs in that case. Similar lawsuits then popped up around the country. In October 2023, the Southern District of Texas expanded the scope of the preliminary injunction to apply nationwide and thereby stayed enforcement of the CFPB rule vis-à-vis all lenders, pending the Supreme Court’s ruling on the constitutionality of CFPB’s funding structure in a different case.

The October ruling in Texas Bankers Association v. CFPB granted nationwide relief based on the statutory command of equal application of lending laws. The order sought to avoid patchwork rulings by different courts and patchwork enforcement by the agency.

The nationwide injunction in Texas Bankers Association means that the data collection rule is enjoined as to all banks, credit unions, fintechs, and other lenders within the agency’s purview. If the court hadn’t issued nationwide relief, each affected lender would need to bring an individual lawsuit. Some courts may have denied relief, resulting in unequal treatment of competitors in the lending industry. The nationwide injunction ensures all regulated parties are treated equally.

The FTC’s ban in August on employment noncompete agreements was enjoined nationwide by the US District Court for the Northern District of Texas. The court had previously granted a preliminary injunction limited to the plaintiffs. With permanent nationwide relief (as long as it survives appellate review), employers need not account for a federal ban on noncompete clauses in any of their employment agreements, regardless where in the country they hire.

This is valuable because protecting proprietary information is a vital function of noncompete agreements. If the FTC’s ban weren’t enjoined in some jurisdictions, businesses there would be at a competitive disadvantage, as they would have fewer protections than businesses operating where the ban was enjoined.

The advantages of nationwide injunctions for the businesses challenging the CFPB and FTC rules—uniformity of regulation and a level playing field—are likely implicated in many of the challenges to agency action brought by business plaintiffs. Yet the value of nationwide relief to businesses has been largely absent from the debate over the appropriate breadth of injunctive relief. That should change, because nationwide injunctions can be good for business.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law and Bloomberg Tax, or its owners.

Author Information

Caroline L. Wolverton is senior counsel at Akin and former senior trial counsel in the Federal Programs Branch of the Department of Justice, Civil Division.

Arielle Amegashie is an associate in Akin’s litigation practice, advising clients on a range of complex litigation and investigations matters.

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