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Preliminary Injunction Temporarily Halts Federal Trade Commission’s Noncompete Ban

On Wednesday, July 3, 2024, a Texas Federal Court issued a preliminary injunction against the FTC’s noncompete ban in the case brought by Ryan LLC and the U.S. Chamber of Commerce, preventing the rule from taking effect on September 4.  The decision, made by U.S. District Judge Ada Brown, stated that the plaintiffs were likely to succeed on the merits that the FTC lacks authority to promulgate the rule, which the Judge called “arbitrary and capricious”, and that that blocking the rule temporarily is in the public interest.  Although the injunction is preliminary, Judge Brown stated an intention to rule on the ultimate merits of the action on or before August 30, 2024.  While many expect the rule to be struck down at that time, the FTC would still have the ability to appeal the decision, with an FTC spokesperson stating that "we will keep fighting to free hardworking Americans from unlawful noncompetes, which reduce innovation, inhibit economic growth, trap workers, and undermine Americans’ economic liberty”.

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