Let’s get right to the bottom line, and work from there.
1️⃣ What Did Judge Ada Brown Order 🧐
Judge Brown issued a preliminary injunction stopping enforcement of the FTC’s Non-Compete Ban, BUT the injunction is limited. Specifically, the injunction only applies to enforcement against the plaintiffs in the case. That’s it! The Memorandum Opinion is attached.
2️⃣ What Does Judge Brown’s Order Mean For Everyone Else?
As it stands right now, the FTC’s Non-Compete Ban is still alive for the entire country (minus the two entitled listed above) albeit on life-support. The Non-Compete Ban is scheduled to take effect on September 4, 2024. However, keep in mind that the current injunction is a PRELIMINARY injunction. That means it’s temporary. Judge Brown ordered that she is going to rule on the overall merits of the case on or before August 30. That’s important!
3️⃣ Why Is The August 30 Ruling On the Merits Important❓
When judge Brown rules on August 30, she’s going to decide whether to convert the current temporary injunction into a permanent injunction. It is likely that, at a minimum, she will issue permanent injunction as to the entities I listed above. It’s also likely that she will expand the injunction to cover her district (Northern District of Texas). Judge Brown expressed reluctance about issuing a nationwide injunction. So, come August 30, the most likely outcome is that there is another limited permanent injunction. Of course, Judge Brown could surprise everyone and issue a nationwide permanent injunction, but based on her current order that would be a major shift.
4️⃣ How Did We Get Here?
Judge Brown ruled that that plaintiffs in the case were likely to succeed on the merits, will suffer irreparable harm without the issuance of injunctive relief, and the balance of harms and public interest weigh in favor of granting injunctive relief. In short, the court ruled, among other things, that the FTC “exceeded its statutory authority in promulgating the non-compete rule, and thus plaintiffs are likely to succeed on the merits”
BOTTOM LINE … Again 😉
The FTC Non-Compete ban remains scheduled to take effect on September 4. There is another case pending in the Eastern District of Pennsylvania. The judge in the Pennsylvania case is going to consider a similar injunctive relief request. That judge could issue a nationwide ban, issued a limited injunction like we have in the Texas case, or deny the relief all together.
So, after all of that we’re still playing a waiting game to see how everything plays out.
Stay tuned for more updates and have a great Fourth of July 🇺🇸!