Judge Ada Brown of U.S. District Court for the Northern District of Texas issued an order on Tuesday, August 20, 2024, ruling that the FTC Rule establishing a noncompete ban (“the Rule”) is arbitrary and capricious, and issuing a nationwide injunction against its enforcement.  Operative language of the opinion is sweeping, concluding that “(i) the FTC promulgated the Non-Compete Rule in excess of its statutory authority, and (ii) the Rule is arbitrary and capricious, the Court must ‘hold unlawful’ and ‘set aside’ the FTC’s Rule.”  The decision to set aside the Rule has a nationwide effect, prohibiting the FTC’s enforcement on its upcoming September 4, 2024 effective date. 

Of course, no notices to employees affected by the rule need go out while the injunction is in place.  We will continue to monitor and provide updates!

The case is Ryan LLC et al. v. Federal Trade Commission, case number 3:24-cv-00986 (N.D.Tx).