Client Alert: FTC’s Non-Compete Ban Fails First Judicial Challenge
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On July 3, 2024, Judge Ada Brown preliminarily enjoined enforcement of the FTC’s Non-Compete Ban in Ryan, LLC v. Federal Trade Commission (N.D. Tex.). Judge Brown reasoned that the ban was not authorized by the text, structure, or history behind Section 6(g) of the FTC Act, the provision the agency had primarily relied upon as a basis for the ban. She also reasoned that the rule was arbitrary and capricious in light of the FTC’s failure to consider sufficient alternatives before imposing a categorical ban. Judge Brown limited the injunction to the plaintiffs that brought the challenge, declining to extend the injunctive relief nationwide, but intends to issue a ruling on the merits by August 30, four days before the Non-Compete Ban is set to become effective.
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