Texas Federal Court Sets Aside FTC’s Non-Compete Rule, Halting It From Taking Effect on September 4, 2024
On August 20, 2024, in Ryan LLC v. Federal Trade Commission , No. 3:24-cv-00986-E (N.D. Tex.), the United States District Court for the Northern District of Texas granted summary judgment to the p laintiffs and ordered the Federal Trade Commission’s (“FTC”) non-compete rule (the “Rule”) to be set aside with respect to all employers nationally and that it shall not be enforced or take effect on September 4, 2024. The FTC may immediately appeal the court’s decision to the Fifth Circuit. Repeating the same reasoning it reached in granting a preliminary injunction on July 3, 2024, the court held that: ( 1) the FTC exceeded its statutory authority in issuing the Rule; and (2) the Rule was arbitrary and capricious under the Administrative Procedures Act (“APA”). The court found that Section 6(g) of the FTC Act, which the FTC relied on to issue the Rule, does not grant it authority to issue substantive rules, but is instead a “housekeeping statute,” which only a...