Federal Courts Divided Over FTC's Non-Compete Ban Final Rule

Only a few weeks after a Texas federal court granted a preliminary injunction, which stayed enforcement of the Federal Trade Commission's (FTC) Final Rule ("Rule") banning most non-compete agreements, a Pennsylvania federal court reached a dramatically different conclusion. In sharp contrast to the decision issued by the Texas court, it declined to enter an injunction and held the FTC likely has the legal authority to issue the Rule.

An appeal of the Pennsylvania court's decision to the Third Circuit Court of Appeals is expected. If the decision is upheld, then these virtually opposite decisions between the Pennsylvania and Texas courts set up a potential circuit split and showdown at the U.S. Supreme Court.