Dive Brief:
- A Texas federal judge on Wednesday granted a tax services firm’s motion for a preliminary injunction of the Federal Trade Commission’s nationwide ban on noncompete agreements in employment contracts and has stayed its effective date for the plaintiffs.
- Judge Ada E. Brown of the U.S. District Court for the Northern District of Texas held that FTC violated the Administrative Procedure Act and exceeded its statutory authority by issuing the ban, which she said has a “substantial likelihood” of being found arbitrary and capricious.
- Brown said the injunction is limited in scope to the plaintiffs and plaintiff-intervenors named in the suit; it is not a nationwide injunction. She added that the court would rule on the merits of the agency’s action on or before Aug. 30, 2024.
Dive Insight:
FTC voted along party lines to approve the ban in April, and several lawsuits against the agency followed. Aside from Ryan, the U.S. Chamber of Commerce also sued FTC shortly after it announced the ban, but a judge placed a hold on that suit last month because Ryan was the first filed.
This is a developing story.