FTC’s noncompete order partially blocked by Texas judge

Brief description of the dive:

• A federal judge in Texas on Wednesday granted a tax services company’s motion the Federal Trade Commission’s preliminary injunction seeking a nationwide ban regarding non-competition agreements in employment contracts and suspended the entry into force of the act for the plaintiffs.
• Judge Ada E. Brown of the United States District Court for the Northern District of Texas ruled that the FTC violated the Administrative Procedure Act and exceeded its statutory authority by issuing the ban, which she said had a “substantial likelihood” of being found to be arbitrary and capricious.
• Brown said the order is limited in scope to the plaintiffs and plaintiff-intervenors named in the lawsuit; it is not a nationwide order. She added that the court will rule on the agency’s reasonableness by Aug. 30, 2024.

Diving Insight:

The FTC voted along party lines approve the ban in April, which was followed by several lawsuits against the agency. In addition to RyanThe U.S. Chamber of Commerce also sued the FTC shortly after the ban was announced, but the judge stayed this lawsuit last month because Ryan was submitted first.

This is an evolving story.