Florida Federal Court Enjoins FTC’s Non Competition Rule Against Plaintiff Only
On the 14th of August 2024, in Properties of the Villages, Inc. The United States District Court for the Middle District of Florida, in 5:24-cv-316-TJC-PRL enjoined the Federal Trade Commission (FTC) from enforcing the non-compete rule (“Rule”) against the Plaintiff in the action. The court’s ruling does not prevent the Rule taking effect as of September 4, 2024 for everyone else.
The decision, which was issued during oral arguments, found that Properties of the Villages, Inc. (“POV”) established a substantial probability of success on the facts because the Rule violates the doctrine of major questions. The court noted that under the major questions doctrine, an administrative agency must show that it has the authority to issue rules with extraordinary economic and political importance by pointing to “clear congressional approval” (Decis). The court found that the doctrine applies where, as here, the Rule affects a significant portion of the American economy and regulates an area that was previously under state law. It also finds it applicable when a rule “claims to have extraordinary economic and political significance” but cannot provide “clear congressional authorization.” (Decis. The court determined that the doctrine applied where, as in this case, the Rule affected a significant part of the American economy and regulated an area that was previously the domain of state laws. It also found that it applied when the Rule expanded the regulatory authority of the agency. (Id. (Id., pp. 17-19.) The court held that Section 6 (of the FTC Act), on which the FTC relies upon, did not demonstrate “clear Congressional approval” to issue the Rule. Plaintiff had therefore shown a probability of success. (Id. (Id., pp. 20-21.). The court also determined that the POV compliance costs were enough to establish irreparable damage. The court did not address the reasons for limiting the injunction to the plaintiff alone, but it is important to note that POV did NOT request nationwide relief.
Although the two courts reached the same conclusion in their preliminary injunction decisions, the reasoning of the court differs significantly from that in the Ryan LLC v. Federal Trade Commission No. 3:24-cv-00986-E (N.D. Tex.). The Ryan court will soon issue its summary judgment decision. This will be issued on or before August 30th, 2024. We will keep you informed of the latest developments.
