On July 23, 2024, U.S. District Judge Kelley B. Hodge from the Eastern District of Pennsylvania issued a decision and denial of a preliminary injunction, which would have stayed enforcement of the non-compete ban (the “Rule”) promulgated by the Federal Trade Commission (“FTC”). Plaintiff ATS Tree Services, LLC sought to stay enforcement of the Rule only with respect to itself.
Judge Hodge denied the preliminary injunction because she found, among other things, that the FTC had authority to issue the Rule and that ATS had not shown irreparable harm by enforcement of the Rule or likelihood of success on the merits.
The Pennsylvania decision conflicts with an order from the Northern District of Texas which granted a preliminary injunction in favor of the plaintiff (Ryan, LLC) and plaintiff-intervenors (the U.S. Chamber of Commerce, Business Roundtable, Texas Association of Business, and Longview Chamber of Commerce) determining that the Rule exceeded the FTC’s authority. In that case, which we previously reported, the court stated that it will issue a final merits determination by August 30, 2024, which may include a nationwide injunction, just a few days before the Rule’s anticipated September 4, 2024 effective date. However, the outcome is uncertain, including as to whether the determination on the merits will be limited to Ryan and the plaintiff-intervenors or whether it will enjoin the Rule.
There is also a pending case in the U.S. District Court for the Middle District of Florida brought by Properties of the Villages, Inc. seeking a preliminary injunction to enjoin the Rule. As with the ATS case in Pennsylvania, the relief sought only pertains to the plaintiff, not a nationwide injunction.
We will continue to monitor these cases, including appeals that are expected to follow.
Of course, timing is an issue given the proximity of the Texas court’s August 30th determination to the effective date. If you have any questions about how to prepare, please contact David Baron, Anne C. Patin or your relationship partner at the Firm.
