In the Ryan, LLC case in Texas, the judge has granted summary judgment to the parties challenging the FTC Noncompete ban. She has held that the rule is unlawful and must be set aside. Below is the key part of the decision. She did not limit her ruling to the parties in the case.
IV. PROPER REMEDY
Last, the Court must determine the appropriate remedy under the APA. The APA directs the reviewing court to:
(2) hold unlawful and set aside agency action, findings, and conclusions found to be–
(A) arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law;
(B) contrary to constitutional right, power, privilege, or immunity;
(C) in excess of statutory jurisdiction, authority, or limitations, or short of statutory right;
without observance of procedure required by law[.]
5 U.S.C. § 706(2)(A)–(C) (emphasis added in bold italics). “The text of the APA means what it says.” Loper Bright Enters., 144 S. Ct. at 2262. Having concluded that (i) the FTC promulgated the Non-Compete Rule in excess of its statutory authority, and (ii) the Rule is arbitrary and capricious, the Court must “hold unlawful” and “set aside” the FTC’s Rule as required under § 706(2). As to the FTC’s argument that relief should be limited to the named Plaintiffs—the APA does not contemplate party-specific relief. See generally 5 U.S.C. § 706(2). “As [the Fifth Circuit] put it in a couple of recent cases, setting aside agency action under § 706 has ‘nationwide effect,’ is ‘not party-restricted,’ and ‘affects persons in all judicial districts equally.’” Braidwood Mgmt., Inc. v. Becerra, 104 F.4th 930, 951 (5th Cir. 2024) (internal citations omitted). Thus, the Court hereby holds unlawful and sets aside the Rule. See 16 C.F.R. § 910.1–.6. The Rule shall not be enforced or otherwise take effect on its effective date of September 4, 2024, or thereafter. See 16 C.F.R. § 910.1–.6.
Benjamin Fink is known for his work in noncompete, trade secret and competition-related disputes. A shareholder at Berman Fink Van Horn, Ben concentrates his practice in business and employment litigation.
