On April 23, 2024, the Federal Trade Commission (“FTC”) approved a final rule banning most non-compete agreements between employers and their workers (the “Final Rule”). However, in the afternoon of Tuesday, August 20, 2024, Judge Ada E. Brown of the United States District Court for the Northern District of Texas, followed her July preliminary injunction against the rule with a substantive ruling granting summary judgment in favor of the plaintiffs challenging the Final Rule and against the FTC (“Memorandum Opinion and Order”), explaining that “the Court concludes the text and the structure of the FTC Act reveal the FTC lacks substantive rulemaking authority with respect to unfair methods of competition, under Section 6(g). See generally 15 U.S.C. § 46(g); 15 U.S.C. § 57a. Thus, when considering the text, Section 6(g) specifically, the Court concludes the Commission has exceeded its statutory authority in promulgating the Non-Compete [Final] Rule.” Memorandum Opinion and Order at 22.
Moreover, in a rebuke of the underlying premise for the Final Rule, the Court further found that the Final Rule itself “is based on inconsistent and flawed empirical evidence, fails to consider the positive benefits of non-compete agreements, and disregards the substantial body of evidence supporting these agreements.” Id. at 24 (footnote omitted).
In reaching its decision, the Court specifically held that the Final Rule was an unlawful agency action as follows:
In sum, the Court concludes...
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