Fireworks Are Coming Before Independence Day | Polsinelli
Mark your calendars for July 3—the date we will likely learn whether a Texas Court will enjoin the FTC Rule banning non-competes from taking effect on September 4. This week, Judge Ada Brown, the presiding judge in Ryan, LLC v. The Federal Trade Commission, issued a series of Orders that require all briefing on the request to stay/enjoin the FTC Rule to be completed by June 12. The Court will then announce by June 13 whether it will make a decision based on the parties’ briefing or conduct a hearing, which would take place on June 17. Under either scenario, the Court has committed to issuing a decision by no later than July 3 on the request to stay/enjoin the FTC Rule from going into effect.
To recap, to date, three lawsuits have been filed challenging the legality of the FTC’s Final Rule banning non-competes. The initial two cases—Ryan and a separate lawsuit filed by the U.S. Chamber of Commerce—were filed in Texas. This past week, the Judge in the U.S. Chamber lawsuit issued a stay of that case to prevent parallel litigation of overlapping claims and issues under the first-to-file doctrine, which gives priority to the first lawsuit filed—i.e., Ryan. This effectively stops the U.S. Chamber lawsuit from proceeding further. The U.S. Chamber has since filed an unopposed motion to intervene/join in the Ryan lawsuit, which the Court granted today (May 9). In turn, the U.S. Chamber will continue to play an active role in challenging the legality of the FTC Rule in cooperation with Ryan, LLC in the first-filed lawsuit and Ryan is poised to be the first of many judicial opinions that will address the legality of the FTC Rule and will serve as a bellwether on this important issue.
Your Polsinelli Restrictive Covenant and Trade Secret Group will continue to monitor these cases and will keep you updated with any major litigation developments.
