Yesterday, a third court weighed in on the FTC’s proposed ban on non-competes, set to go into effect on September 4, 2024. Judge Corrigan of the United States District Court for the Middle District of Florida granted the plaintiff Properties of the Villages, Inc.’s (“POV”) motion to stay the effective date of the rule and preliminarily enjoin its enforcement. Due to the looming effective date, the court opted to deliver its opinion orally in lieu of a written opinion.
Ultimately, the court found that POV has a substantial likelihood of success on the merits of its argument that the FTC’s final rule violates the major questions doctrine. The court stated that “… common sense, informed by constitutional structure, tells us that Congress normally intends to make major policy decisions itself, not leave those decisions to agencies.” (ECF 59 at PageID # 485.) Relying largely on the FTC’s own economic assessment of the rule, the court found that the “transfer of value from employers to employees, from some competitors to other competitors, from existing companies to new companies, and other ancillary effects, will have a huge economic impact.” (Id., #487.) Based on the economic impact, political significance, and “hugely consequential expansion of regulatory authority,” the court held that the rule presents a “major question as defined by the Supreme Court.” (Id., #488.)
Similar to the Ryan case pending in the Northern District of Texas, the ruling in the POV case is limited to just POV. That is because POV only sought relief for itself and not a nationwide injunction.
For those keeping score, it is now two courts to one finding against the FTC at the preliminary injunction stage (the Eastern District of Pennsylvania being the lone vote for the FTC). The future of the FTC’s rule is quickly coming to a head as Judge Brown’s decision on the merits in the Ryan, LLC v. FTC case is due by August 30. While Judge Brown declined to enter a nationwide injunction, Fifth Circuit precedent suggests that Judge Brown is likely to enter an order vacating the rule, which will apply universally. Regardless of how Judge Brown rules or the relief entered, an appeal is almost certainly the next step.
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