Further to our recent reports here and here, the US District Court for the Northern District of Texas held yesterday that the FTC lacked the authority to adopt its new Non-Compete Clause Rule (reported on here) and that the rule is arbitrary and capricious in violation of the APA. As a result, the rule cannot be enforced (against anyone) and the FTC’s new rule will not become effective September 4.
While the decision is subject to appeal, it comes on the heels of another case last week wherein a Florida federal court stayed enforcement of the rule as to the specific parties in litigation based on a determination that the FTC lacked authority to issue the rule.
See these posts from Sullivan & Cromwell and Gibson Dunn and stay tuned for further updates.
This post first appeared in the weekly Society Alert!