SCOTUS ruling on nationwide injunctions could have lasting implications

A recent Supreme Court ruling pertaining to birthright citizenship could also shut down a key strategy for financial services to block unwelcome federal rules.

The 6-3 ruling in the Trump vs. CASA case saw the SCOTUS side with the Trump administration in a case involving an executive order that seeks to eliminate birthright citizenship.

The high court was not asked to rule on the details of the executive order, but rather the constitutionality of a lower-court injunction preventing the order from being enforced.

In the ruling, written by Justice Amy Coney Barrett, the justices argued that universal injunctions "likely exceed the equitable authority that Congress has granted to federal courts."

A universal injunction is a court order that prohibits the government from enforcing a law, regulation or policy against anyone, not just the plaintiffs in a case. It applies nationwide regardless of the issuing court's jurisdiction.

Universal injunctions have been used to great effect by opponents of both Republican and Democratic administrations in the past. Particularly involving rules that affect insurance and financial services.

For example, on March 30, 2023, Judge Reed O’Connor of the Northern District of Texas issued an injunction blocking a requirement that non‑grandfathered health plans must cover preventive services such as HIV PrEP and various screenings.

That ruling came about four years after Judge Wendy Beetlestone of the Eastern District of Pennsylvania issued an injunction blocking enforcement of rules expanding religious/moral exemptions allowing employers to opt out of Obamacare’s contraceptive coverage mandate.

According to one source cited by the SCOTUS, 75 percent of all universal injunctions occurred during the past 25 years, noted Ashley L. Taylor, Jr., partner at the law firm Troutman Pepper Locke.

“What’s been increasingly common is for groups of states of one political persuasion to sue presidents of the other political persuasion,” Taylor added. “Although the Court does not end that practice, any injunctions would run only to those states.”

Fiduciary rule injunction

The SCOTUS ruling is not absolute. It does not apply to actions brought under the Administrative Procedure Act, a crucial carve-out that leaves in place nationwide stays issued by Texas courts delaying the Biden administration's Retirement Security Rule.

“Nothing we say today resolves the distinct question whether the Administrative Procedure Act authorizes federal courts to vacate federal agency action,” the SCOTUS ruling states.

Several industry trade groups – the American Council of Life Insurers, the National Association of Insurance and Financial Advisors, Finseca, the Insured Retirement Institute and the National Association for Fixed Annuities – argued that the Department of Labor exceeded its authority with the RSR.

In a 2024 lawsuit that led to the nationwide stay from two Texas courts, the trade groups claim the DOL’s rule redefines “investment advice fiduciary” to include one-time rollovers and sales interactions, moving beyond Congress’s intent.

With Donald Trump’s return to office, it is expected that the RSR will eventually disappear. For now, that would pause the DOL’s lengthy attempt to bring most sales of financial products under a fiduciary umbrella.

“We are aware of the Supreme Court decision. Our counsel is reviewing the potential impact, if any, on the fiduciary rule case,” the five trade associations said in a joint statement. “It is noteworthy that the Supreme Court explicitly said its decision doesn’t address cases, like our fiduciary-only rule litigation, brought under the Administrative Procedures Act.”

More litigation?

Rather than dampen the litigious instincts of many trade groups, states and other aggrieved parties, the SCOTUS decision could increase the number of lawsuits filed, explained Zachary Busey, shareholder with the law firm Baker Donelson.

With the national injunction option going away, any group or company or person who wants the benefit of stopping an action must file their own lawsuit, he noted.

“Where one lawsuit was filed now, we'll have 50,” Busey said. “They'll be filed all around the country, and it will have to filter up to the Supreme Court to settle what will be undeniable lower-court splits at the end of the day.”

The SCOTUS decision means plaintiffs could shift their focus from seeking injunctive relief to filing class-action lawsuits. The Federal Rule of Civil Procedure 23, known colloquially as Rule 23, refers to a legal process for certifying a class action lawsuit in federal court. Busey said it is likely to be the next sticking point for the court.

“The Supreme Court has started to take a focus on Rule 23 and exactly what or who can be part of a class and whether individuals without damage can be included in the class,” Busey said. “I think this decision will accelerate the court’s substantive review of Rule 23 at some point here in the near future.”

© Entire contents copyright 2025 by InsuranceNewsNet.com Inc. All rights reserved. No part of this article may be reprinted without the expressed written consent from InsuranceNewsNet.com.

InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at [email protected]. Follow him on Twitter @INNJohnH.