Judge Ada Brown of the U.S. District Court for the Northern District of Texas has just sent a message to Lina Khan that the Federal Trade Commission went a step too far in initiating a ban on noncompete agreements.
It was expected, following a July 3 block placed on some of the stipulations spelled out in the FTC decision reached in April in a controversial passage fueled by the Biden Administration.
Now, a full challenge to the khan-signed rule change prohibiting a long-standing practice used by radio and television broadcasting companies appears to be in motion. The rule is scheduled to become law on September 4.
In a decision reached on August 20, Brown formally ruled against the FTC, putting employers’ needs to prevent workers from enjoying rival companies front-and-center.
“The role of an administrative agency is to do as told by Congress, not to do what the agency thinks it should do,” Brown concluded. With the July 3 stay, Brown had said, “The FTC lacks substantive rulemaking authority with respect to unfair methods of competition.”
The FTC could appeal Brown’s decision and is deciding whether to do so.
Dallas-based tax services firm Ryan LLC filed its lawsuit just hours after the April 23 ban of the non-compete clause by the FTC. As Khan sees it, this final rule is engineered to “promote competition” and is designed to protect “the fundamental freedom of workers to change jobs, increasing innovation, and fostering new business formation.”
Ryan LLC assailed the FTC for going beyond its statutory authority by ruling that every non-compete agreement was anti-competitive and lacked fairness.
The Texas case is important, as a FTC win in a Pennsylvania federal court against a Keystone State tree-care company focused solely on whether the rule could be implemented while litigation was underway in that legal jurisdiction.
To view Judge Ada Brown’s ruling in full, please click here:
https://storage.courtlistener.com/recap/gov.uscourts.txnd.389064/gov.uscourts.txnd.389064.211.0_2.pdf
