Despite misplaced optimism, the ATS Tree Service v FTC court denied ATS’s preliminary injunction motion to stay the FTC’s noncompete rule ..read more

Updated July 18, 2024 at 1:15 ET (see below in red). Lots happening in the ATS Tree Services, LLC v. FTC case challenging the FTC’s noncompete rule. In case you forgot, preliminary injunctions are an extraordinary remedy On Tuesday, July 16, the FTC filed a notice of supplemental authority, attaching a July 15 decision from the 3rd Circuit Court of Appeals in Delaware State Sportsmen’s Ass’n v. Delaware Department of Homeland Security. That case involved the appeal of the denial of a preliminary injunction prohibiting implementation of new state gun laws in Delaware. The opening line of the 3r ..read more

There has been a lot of activity in Ryan, LLC v. FTC since the court issued its preliminary injunction staying the noncompete rule as to the plaintiffs, but not much has actually happened. In short, plaintiffs moved to expand the scope of relief in the court’s preliminary injunction, which the court denied. And the court set a briefing schedule for summary judgment. Each is detailed below, as are some suggestions for companies and workers to consider now. Plaintiffs’ motion for reconsideration The plaintiffs moved for reconsideration of the limitations on the scope of relief afforded by t ..read more

With everyone’s attention focused on the preliminary injunction ruling in Ryan, LLC v. FTC and the preliminary injunction hearing in ATS Tree Services, LLC v. FTC, few noticed that another challenge to the FTC’s noncompete rule was filed recently. The new challenge is a case filed on June 21, 2024 in the United States District Court for the Middle District in Florida: Properties of the Villages, Inc. v. FTC. On July 2, 2024, the plaintiff filed a motion to stay the effective date and preliminary injunction. Not surprisingly, the challenges are similar to those in the other cases, focusing on t ..read more

On Tuesday, July 9, 2024, the FTC Commissioners appeared before the House Committee on Energy and Commerce for an oversight hearing concerning the FTC’s fiscal year 2025 budget. Though the focus was obviously on the FTC’s budget (including its constraints and request for an increase), not surprisingly, the FTC’s most recent litigation loss (the preliminary injunction ruling in Ryan, LLC v. FTC finding that the FTC’s noncompete ban is unlawful) was the topic of some of the discussion. Here are the highlights: In the almost three-hour hearing, the FTC’s noncompete rule came up, directly or ..read more

Yesterday, Judge Hodge conducted a hearing on ATS Tree Services’ motion to stay operation of the FTC’s noncompete rule and to enjoin its enforcement in the ATS Tree Services, LLC v. FTC case. Context Remember that last week (July 3), the court in Ryan, LLC v. FTC issued a preliminary injunction holding that the FTC’s noncompete rule is unlawful, but keeping the relief limited to the plaintiffs. Although I expect the judge in that case to issue broader relief on August 30 (when the court issues its final decision), that result is far from certain. In the meantime, companies are now in a co ..read more

When noncompetes are entered at commencement of employment, consideration is typically satisfied by the job. No surprise, there are outliers where something more is required (e.g., Illinois and Massachusetts), even if it just the passage of time (see Maine, requiring at least one year of employment). The more common divergence among the states involves whether something more than “mere” continuation of employment is required as consideration for a noncompete or other restrictive covenant entered into during the course of employment. Though the majority of states permit continued ..read more

If your company is not a member of the U.S. Chamber of Commerce yet, you may want to join immediately. As I noted when it happened on July 3, and has been all over the news since, the judge (Judge Ada Brown) in the Ryan LLC v. FTC case issued a scathing rebuke of the FTC’s noncompete ban, ruling that the ban is likely unlawful. However, the court limited its injunctive relief to benefit only the parties before it. Although the U.S. Chamber of Commerce and other associations are parties, the court declined to extend the preliminary injunction order to benefit the members of the U.S. Chamber of ..read more

As you may remember, on June 17, Rhode Island Governor Dan McKee signed a law creating an exemption from Rhode Island’s noncompete law for advanced practice registered nurses. Then, three days later (June 20), the Legislature sent two bills to ban all noncompetes to the Governor, who did the only sane thing and vetoed them. In vetoing the proposed complete noncompete ban, Governor McKee issued a statement to both the House and the Senate on June 26 explaining his rationale as follows: In accordance with the provision of article IX, section 14 of the Constitution of the State of Rhode I ..read more

Judge Ada Brown issued her long-awaited ruling today on the FTC’s noncompete ban in Ryan LLC v. FTC. In a scathing rebuke of the FTC’s claim of rulemaking authority and the reasoning behind the rule, the court concluded that the FTC’s ban is likely unlawful. However, the court limited its injunctive relief to benefit only the parties before it — not even the members of the U.S. Chamber of Commerce or other plaintiff associations. And the court refused to make its ruling apply nationwide. The result is that while the court determined that the rule is likely unlawful, the FTC is still free ..read more