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U.S. District Court for the Eastern District of Texas
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Regulatory Agencies Are in Overdrive. We Will See Them in Court. A Significant Win in Fight against FTC MicromanagementCase Updates
District court dismisses challenge to FTC Noncompete Rule without prejudice after U.S. Chamber and coalition plaintiffs intervene in separate challenge to Rule
May 30, 2024
U.S. Chamber files coalition lawsuit challenging the Federal Trade Commission’s Noncompete Rule, which bans noncompete agreements nationwide
April 24, 2024
The Chamber filed a coalition lawsuit against the Federal Trade Commission (FTC) after the agency voted to ban employer noncompete agreements. The FTC’s action sets a dangerous precedent for government micromanagement and will harm employees, employers, and the economy.
Why it matters: The Chamber continues fighting back against government micromanagement.The FTC contends that by using regulation they can simply declare common business practices to be “unfair methods of competition” and thus illegal. This is despite the fact that noncompete agreements have been around longer than the 110-year-old FTC and until now no one has suggested that they are illegal.
Challenging the FTC in court is about more than noncompete agreements. It is about stopping an astonishing power grab by the FTC.
If the FTC can regulate noncompete agreements, then they can decide to regulate or even ban any other business practice. All without a vote from Congress.
Be smart: Noncompete agreements can be useful for businesses and employees. They protect investments in research and development and promote workforce training.
Our take: “Since its inception over 100 years ago, the FTC has never been granted the constitutional and statutory authority to write its own competition rules. Noncompete agreements are either upheld or dismissed under well-established state laws governing their use,” said U.S. Chamber President and CEO Suzanne P. Clark. “Yet, today, three unelected commissioners have unilaterally decided they have the authority to declare what’s a legitimate business decision and what’s not by moving to ban noncompete agreements in all sectors of the economy.”
Big picture: Businesses face a regulatory onslaught as federal agencies pursue aggressive policy changes through regulation, preventing them from innovating, growing, and hiring. They need clear rules so they can focus on serving their customers and supporting their communities instead of navigating a maze of extraneous rules and regulations.
Jeffrey B. Wall and Judson O. Littleton of Sullivan & Cromwell LLP and Michael E. Jones and Shaun W. Hassett of Potter Minton served as outside counsel.
U.S. Chamber files motion for stay of effective date and for preliminary injunction
April 24, 2024