Breaking: U.S. District Court for the Northern District of Texas “Sets Aside” the FTC’s Non-Compete Ban—Barring Enforcement of the Final Rule Nationwide

On Tuesday, August 20, 2024, U.S. District Court Judge Ada E. Brown ruled that the FTC’s Final Rule banning non-compete agreements (the “Rule”), which was set to take effect on September 4, 2024, was “promulgated . . . in excess of [the FTC’s] statutory authority.”  Ryan LLC, v. Federal Trade Commission, 3:24-cv-00986-E (N.D. Tex. 2024). As a result, the Court held that, consistent with Administrative Procedure Act (“APA”) § 706(2)(A)-(C), the Rule would be “set aside.” Critically, the Court concluded, based on “a couple of recent cases,” that “setting aside agency action under § 706 has ‘nationwide effect,’ is ‘not party restricted,’ and ‘affects persons in all judicial districts equally.’” The full text of the opinion is here. The Court’s ruling comes on the Plaintiff’s Motion for Summary Judgment. Previously, the Court declined to grant a nationwide injunction. While there remains some uncertainty, with the Court’s August 20 ruling, businesses in Virginia should be less concerned about the Rule being enforced in Virginia—at least until an appellate court, or a court in the 4^th Circuit, says otherwise.