We’ve all been in a position where we make an ask of someone—whether it be a significant other, a colleague, a potential client—and you don’t hear back from them.  Maybe you ask if they want to attend a concert, write a blog article with you (not speaking from experience of course), or be on a panel.  You prep, you make your ask, and then you wait.  And wait.  And wait.  Hours become days become weeks.  Still no answer.  Maybe they missed your message, you think.  Maybe they’re checking their schedule and will get back to you.  Maybe they were just so overwhelmed by your generous ask that they forgot to say yes!

Or maybe the answer is just no.  After all, if they don’t say yes . . .well, you know how it goes.

Thanks to the Fifth Circuit, we now have a recent reminder that courts can also say no without actually saying no.  And if they do, parties need to protect themselves and their interests.

At first glance, Clarke, et al. v. Commodity Futures Trading Commission[1] seems to be among the most niche of cases, applicable to only a small subset of practitioners.  After all, it’s not every day that parties challenge an administrative decision by the CFTC over the issuance and later recission of a no-action letter promulgated pursuant to the Commodity Exchange Act (CEA) that determines whether a “designated contract market or swap execution facility” must register under the CEA.

But a second glance reveals a problem all too common in litigation: what do you do when you’ve brought suit, filed your motions, a deadline is approaching, and yet the trial court just hasn’t made a decision?

Clarke’s facts are niche but important to set the stage before we answer that question.  The PredictIt Market—the market affected by the CFTC’s letter—is an online marketplace that lets people trade on the predicted outcomes of political events.  In 2014, the CFTC issued a no-action letter regarding PredictIt, allowing it to operate with registering.  Eight years later, in August 2022, the CFTC rescinded that letter.  In the rescission, the CFTC set a deadline for PredictIt to effectively cease all operations: Feb. 15, 2023.

Facing this looming deadline, several parties behind PredictIt filed suit in September 2022 asking for, among other things, injunctive relief.  Within weeks, they also filed a motion for preliminary injunction.  The stage was thus set: with four months and two weeks to spare, the parties had successfully t’d-up the preliminary relief issue for the court to decide.

Yet the court did not decide it.  No one knows why the court did not take up the issue but frankly, the why is irrelevant.  What matters is simply that it did not.  Because the court did not decide the issue, the parties did not have an injunction to protect them from the CFTC’s deadline (if the relief was granted) nor a denial from which they could seek further relief.  What could they do?

What they did was wait (almost four months) and then, as the deadline was on their doorstep, move for mandamus relief from the Fifth Circuit.  And they got it—the Fifth Circuit issued an injunction pending appeal on January 26, 2023, just weeks before the deadline. 

The CFTC opposed the motion on appeal, arguing the Fifth Circuit lacked jurisdiction to issue it because there was no appealable order.  The Fifth Circuit rejected that argument, reiterating that an appellate court can review a district court’s decision—or in this case non-decision—that doesn’t explicitly deny a request for a preliminary injunction but has the practical effect of doing so and which will cause irreparable harm absent an immediate appeal.

After the injunction pending appeal was granted, the underlying issue was briefed and argued to the Fifth Circuit and the parties behind PredictIt prevailed.  At the end of the day, they got their injunction and they got their win.

The Bottom Line:

This story has a happy ending (for everyone except the CFTC).  It would therefore be tempting to overlook the valuable lessons inside and focus on the outcome.  But the valuable lesson is worth the inspection: if the parties behind PredictIt hadn’t decided to force the issue with the Fifth Circuit, the CFTC’s deadline would likely have come and gone and PredictIt would’ve been out of business.  It is only because they took the affirmative step of asking the Fifth Circuit for relief while their motion was still pending—even though there was no order to appeal—that they even had the opportunity to prevail and keep PredictIt alive.  If they had waited until after the deadline and still prevailed, it likely would’ve been a pyrrhic victory—who knows the damage to PredictIt if it was forced to shut down for even a day, much less the pendency of a federal lawsuit.

That is the nature of preliminary relief, and often the stakes when asking for it.  So, to all litigators and in-house counsel: when requesting preliminary relief, be respectful of the court.  Give it time.  We all would like our motions to be decided immediately but the practical reality of managing a 21st century docket means that some decisions, even those involving preliminary relief, will not be immediate. 

But at the same time, know that there is a limit; there are ways to insure you have a chance to get your relief.  And remember that, because an avenue to ‘force’ the issue is available, the burden is on you to make sure the clock doesn’t run out.  If that looming deadline is approaching, whether months or days away, make sure to protect yourself.  Get a decision from somewhere.

[1] https://cases.justia.com/federal/appellate-courts/ca5/22-51124/22-51124-2023-07-21.pdf?ts=1689982262