Federal Court Preliminarily Enjoins FTC’s Non-Compete Rule, but Declines to Grant Nationwide Preliminary Relief

On July 3, 2024, Judge Ada Brown of the U.S. District Court for the Northern District of Texas issued the first ruling in the three pending legal challenges to the Federal Trade Commission's Non-Compete Rule. In the 33-page decision, Judge Brown preliminarily enjoined the FTC from enforcing the Non-Compete Rule and stayed the Rule's effective date, but only as to the specific plaintiffs in the action. In doing so, the Court determined that the plaintiffs were likely to succeed on the merits of their claims that the FTC lacks statutory authority to promulgate the Non-Compete Rule and that the FTC's decision to ban non-compete agreements nationwide was arbitrary and capricious. Judge Brown stated that she expects to issue a final ruling on the merits on or before August 30, 2024, prior to the Rule's effective date of September 4.

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