Recall, the Plaintiffs in the Texas federal court case challenging the FTC Non-Compete Rule filed a Motion for Reconsideration. Per the attached order, the judge denied the motion.
🤷🏻♂️ What did the plaintiffs want the judge to “reconsider?”
Originally, the plaintiffs asked the judge to stop implementation of the FTC Rule for the entire country. Judge Brown didn’t do that. Instead, she issued an injunction that only applies to the named plaintiffs in the lawsuit. So, the plaintiffs asked the judge to reconsider the scope of the injunction and issue a nationwide injunction.
In a very simple, one-page order, the judge effectively said “No way.” Motions for reconsideration are hard to win, so this isn’t a surprise.
The order is immediately appealable to the Fifth Circuit Court of Appeals. Even there is no appeal, any question as to the scope of injunctive relief will be resolved by the court’s final judgment on the merits, which the court will issue by August 30, 2024.
The parties’ briefings, whether filed in summary judgment or in an appeal, will undoubtedly re-visit this issue.
It bears noting that in their motion for reconsideration, plaintiffs asserted two arguments for expanded injunctive relief.
1️⃣ They argued that under Fifth Circuit and Supreme Court precedents, the scope of relief they seek is not party-restricted. Essentially, they argued that if the court finds the rule invalid, then the rule cannot be applied to any party.
2️⃣ , They argued that where an association such as the U.S. Chamber of Commerce brings suit as a representative of its members rather than to prevent injury to itself, it is entitled to a remedy that must extend, at minimum, to its full membership in order for it to be meaningful.
Where are we now?
The FTC Rule currently will go into effect on September 4, excluding the Plaintiffs in the Texas case. However, we still have a pending ruling in a similar case in a Pennsylvania court and the Texas judge’s forthcoming August 30 ruling to deal with. Meaning, there is no guarantee that the FTC Rule will survive.
Keep your 🍿 handy!