Following the issuance of the Federal Trade Commission’s regulations essentially banning use of noncompetition agreements for most U.S. employers, many companies expected quick judicial relief from legal challenges filed following promulgation of the final rule. To date, that has not been the case, with parties to the various lawsuits involved in preliminary procedural jousting over the proper parties and venue for the legal challenges.  

The most prominent lawsuit was filed by the U.S. Chamber of Commerce in federal court in East Texas. The suit first faced objections from the FTC that it did not name the actual employers allegedly harmed by the new regulations. Last week, the federal judge overseeing the case dismissed it on the basis that an earlier lawsuit was filed in North Texas predating the Chamber action.

In the end, these procedural moves may not make much difference with respect to the eventual outcome of the litigation. Both lawsuits chose Texas as the venue for their challenges, following numerous other legal challenges seeking to undo Biden administration initiatives. The Chamber of Commerce intervened in the North Texas lawsuit and will have its opportunity to argue for injunctive relief before a different federal judge. That court should issue a decision regarding the injunction in advance of the scheduled effective date of the rule in September.

You can read our previous client alert about the FTC noncompete ban here.

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