As reported by Bloomberg and other media outlets, in a July 3 decision, federal Judge Ada Brown issued a limited, temporary injunction blocking the Federal Trade Commission’s final rule banning non-compete agreements. Judge Brown serves in the U.S. District Court for the Northern District of Texas, where a lawsuit challenging the rule was filed in early May.
The decision is limited in the sense that the injunction applies only to enforcement of the rule against the specific organizations named as plaintiffs in the lawsuit, rather than temporarily enjoining the final rule from taking affect nationwide. And it is temporary in the sense that it applies only until the Court makes a final decision about the legality of the rule. However, the decision appears to signal that Judge Brown is likely to invalidate the rule when that final decision is made, because it notes, in part, that the plaintiffs are likely to succeed in their argument that the FTC lacks substantive rulemaking authority with respect to the issues at hand. The Court intends to issue a final decision on the merits of the case by August 30, five days prior to the September 4 effective date of the FTC rule.
