Federal Judge Rules FTC Lacked Authority To Issue Non-Compete Rule

On July 3, 2024, Judge Ada Brown of the US District Court for the Northern District of Texas issued a ruling in the litigation challenging the Federal Trade Commission's ("FTC") final rule (the "Rule") prohibiting the use of noncompetition restrictions in the workplace. Judge Brown granted a stay and preliminary injunction preventing the Rule from taking effect against the plaintiff and plaintiff-intervenors in the action while the litigation is pending. Judge Brown held that the plaintiff and plaintiff-intervenors were likely to succeed on the merits in their action to vacate the Rule because the FTC lacked authority to issue a non-compete ban and that the Rule was arbitrary and capricious. While the stay and preliminary injunction only applies to the plaintiff and plaintiff-intervenors, Judge Brown committed to issuing a final ruling on the merits of the action, including ruling on the plaintiff's request that the Rule be vacated in its entirety, by Aug. 30, 2024.