Texas Court Strikes Down FTC Noncompete Rule

In an eagerly awaited decision, United States District Judge for the Northern District of Texas Ada Brown issued yesterday a nationwide injunction striking down the Federal Trade Commission's Noncompete Clause Rule, preventing it from taking effect on September 4 or thereafter. As we previously reported, the Federal Trade Commission announced in April 2024 its final rule banning most noncompete restrictions (the "Rule"), with an effective date of September 4. Several lawsuits challenging the Rule were filed shortly thereafter.

On July 3, Judge Brown issued a preliminary injunction in Ryan v. FTC, temporarily preventing the enforcement of the Rule solely with respect to the named plaintiffs in that case, and announced that she would issue a further decision in the case by August 30.