After granting a partial injunction on July 3 that blocked enforcement of the Federal Trade Commission’s final rule banning noncompete agreements for some employers, Judge Ada Brown of US District Court for the Northern District of Texas on Thursday denied a motion to expand the scope of her ruling.
Under the judge’s July 3 decision, plaintiff-intervenors in a lawsuit against the FTC — Ryan LLC, the US Chamber of Commerce, the Business Roundtable, the Texas Association of Business and the Longview Chamber of Commerce — as employers, will not be held to the rule as of Sept. 4, when it is set to go into effect.
The Chamber and Ryan filed a motion Wednesday requesting that the judge expand the injunction to apply more broadly. They argued that “enjoining the FTC’s unlawful regulation or staying its effective date under the Administrative Procedure Act need not be ‘party restricted’ and that the Fifth Circuit and US Supreme Court have repeatedly stayed agency rules without party limitation,” according to attorneys at Seyfarth Shaw.
“In a bevy of citations, the plaintiffs note that the Fifth Circuit, and other courts, typically set aside unlawful agency action on a nationwide basis rather than assessing individual equities on a party by party basis,” the lawyers added.
Without further explanation, in denying the plaintiffs’ motion, the judge concluded that “Plaintiff and Plaintiff-Intervenors have not shown themselves entitled to the respective relief requested.”
For now, for plaintiff association members and all other employers, the rule is set to take effect on Sept. 4. Brown said previously, however, that she plans to make a final ruling in the case by Aug. 30, which may change the rule’s applicability to other employers.
