Texas Court Strikes Down FTC Rule Banning Non-Competes

Judge Ada Brown, of the U.S. District Court for the Northern District of Texas, struck down a Federal Trade Commission (FTC) rule on August 20 that would have banned nearly all non-compete agreements nationwide. In the opinion and order, Brown ruled that the FTC lacked the statutory authority to issue the non-compete rule, and that the rule is arbitrary and capricious under the Administrative Procedure Act.

As such, the Court held the rule to be unlawful and set it aside with nationwide effect. In a statement reported by various national media outlets, an FTC spokesperson expressed disappointment with the decision and noted that the Commission is seriously considering a potential appeal. We will provide additional analysis soon.