On August 20, 2024, Judge Ada Brown of the United States District Court for the Northern District of Texas set aside and barred the nationwide implementation and enforcement of the FTC’s Final Noncompete Rule.
As indicated in our previous blog post, Judge Brown granted a preliminary injunction against the enforcement of the FTC’s Final Noncompete Rule. However, the decision was limited to the parties to the lawsuit. The Court deferred broader relief of its decision to August 30.
In the August 20th decision, Judge Brown held that the FTC’s "Rule shall not be enforced or otherwise take effect on its effective date of September 4, 2024." The Court held that while the FTC had some authority to promulgate rules to preclude unfair methods of competition, the "FTC lacks the authority to create substantive rules through this method."
The Court noted that the "lack of a penalty" found within the FTC’s Act supports the conclusion that it "encompasses only housekeeping rules, not substantive rulemaking power." Also, the Court explained that after reviewing the FTC Act's text and structure, it determined that the "FTC lack[ed] substantive rule-making authority with respect to unfair methods of competition." Therefore, the Court concluded that the FTC exceeded its statutory authority in promulgating the Noncompete Rule.
In addition, the Court found that the Final Noncompete Rule is arbitrary and capricious because it is "unreasonably overbroad without a reasonable explanation. The...
WASHINGTON, D.C., DC, UNITED STATES, May 6, 2026 /EINPresswire.com/ -- Brown, LLC, a nationally recognized whistleblower law firm and leader in False Claims Act (FCA) litigation, today announced t...