US District Judge Strikes Down the FTC Ban on Non-Compete Agreements: The Latest Challenge to FTC Ban

We have been closely following the Federal Trade Commission’s efforts to ban noncompete agreements and the business community’s opposition to the ban. Links to previous updates:

• July 9: The FTC's Ban on Non-Competes is More Vulnerable to Attack Following the US Supreme Court's Reversal of the Chevron Defense Doctrine
• April 23: FTC Issues Final Rule Banning Non-Compete Agreements
• January 18: FTC Proposes Rule Banning Non-Compete Clauses and Alabama's Non-Compete Law

Yesterday, in Ryan LLC v. FTC, United States District Judge Ada Brown struck down the FTC’s ban on noncompete agreements finding the ban was “unreasonably overbroad”. The FTC argued its authority to regulate unfair competition justified its ban on noncompete agreements. Judge Brown disagreed stating: “The role of an administrative agency is to do as told by Congress, not to do what the agency thinks it should do.”

Judge Brown’s ruling sets up an almost certain appeal by the FTC to the United States 5th Circuit Court of Appeals. As we have noted in prior posts, if appellate courts reverse Judge Brown’s ruling and uphold the FTC’s ban on noncompete agreements, the ban will have wide-ranging effects on many industries throughout the United States. We will continue to closely monitor and comment on this ongoing legal challenge.

 M. Jansen Voss has developed a diverse defense litigation and appellate practice in both state and federal courts in Alabama and Mississippi. He represents a wide range of businesses, governmental entities, and individuals in complex personal injury and wrongful death lawsuits, as well as business disputes and breach of contract matters. He represents restaurants, bars, breweries, and hotels in Dram Shop lawsuits and assists clients with regulatory and licensing matters before the Alabama Beverage Control Board.

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