As you will recall, on August 14, 2024, the U.S. District Court for the Middle District of Florida heard oral argument on the Properties of the Villages’ motion to stay the effective date and for a preliminary injunction concerning the FTC’s noncompete rule. At the conclusion of the hearing, the Court issued the requested preliminary injunction.
That started an appellate clock, allowing the FTC 60 days to appeal.
But then on August 20, 2024, the U.S. District Court for the Northern District of Texas granted summary judgment, setting aside the FTC’s noncompete rule in Ryan, LLC v. FTC.
The wise thing would have been for the Properties of the Villages to withdraw the case right then. Unfortunately, they chose instead to stay the case (with a status report due today; I’ll post about it after I see it), creating the opportunity for, among other potential problems, an appeal by the FTC of the preliminary injunction.
Forty-one days in, that is precisely what has happened: the FTC has appealed the preliminary injunction to the 11th Circuit.
It is now out of the Properties of the Villages’ hands.
The good news is that the 11th Circuit is not likely to reverse the District Court – though it certainly could. Regardless, why give the FTC another bite at the apple?
ATS Tree Services’s window to drop its challenge to the noncompete rule is looming
In contrast to the mistake made by the Properties of the Villages, there is still time for ATS Tree Services to avoid the same mistake, with an almost-certainly worse outcome.
ATS’s summary judgment motion and brief are due in just nine days – on October 4.
Like the Properties of the Villages, ATS sought a stay of the case, though this time, the FTC opposed the motion. Ultimately, the court did not rule. Rather, based on a reference to a letter that is not on the court’s docket, it appears that ATS changed its request to simply seek additional time (to October 4) to file its summary judgment papers, which the court allowed.
I’ll say it again: ATS is destined to lose and should drop the case now
The judge in the case has already made it quite clear what her (preliminary) views on the merits of the case are. She not only went out of her way to address the merits (though she did not need to), but she wrote a very lengthy, carefully reasoned decision explaining why the court believes the FTC not only had the power to issue the rule, but exercised the power appropriately. I cannot imagine a world in which the judge will change her mind.
Proceeding with the case makes no sense for anyone but the FTC.
There is nothing to gain, and everything to lose.
Right now, ATS can rely on the Ryan decision. That decision applies to everyone. That means ATS can ignore the FTC’s noncompete rule.
The denial of the preliminary injunction in ATS does not change that. And dropping the case – while it still can – will simply render that denial a nullity and leave ATS benefiting from the setting aside of the rule by the Ryan decision.
In contrast, if ATS goes forward, it will inevitably lose again, this time in a final decision. Once it loses, it will also lose the ability to rely on the Ryan summary judgment decision, and will instead have to comply with the FTC noncompete rule.
Worse, it will leave almost everyone else in a quandary – essentially back to where they were before the Ryan summary judgment decision, though some will be worse off.
I have tried three times to get ATS to drop the case. All suggestions have been ignored.
If anyone has any sway with ATS or the Pacific Legal Foundation lawyers, now is the time to get them to drop the case before it’s too late.
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Firm resources:
We know how hard it is to keep up with the ever-changing requirements around the country. To help, we have created the following resources (available for free):
- 50-State Noncompete Law Chart, the first of its kind and regularly updated (downloadable PDF) (to be updated for the new exemptions in Illinois and Pennsylvania);
- Chart of Noncompete “Low-Wage” Thresholds and Criteria (downloadable);
- Notice requirements summary chart, providing details for each of the 8 states (plus D.C.) that has notice requirements related to noncompetes (downloadable PDF);
- 50-State and Federal Trade Secret Law Chart, providing a comparison of the trade secrets laws nationally to the Uniform Trade Secrets Act (downloadable PDF).
- “Changing Trade Secrets | Noncompete Laws” (dedicated blog page) now provides a current detailed summary of the changing landscape of trade secret laws and noncompete laws around the country, state by state and at the federal level;
- Trade secret and other legitimate business interest protection plan strategy and checklist; and
- Ten Minute Trade Secret Training Series, currently with three training videos and one “basics” video:
We hope you find all of these resources useful. More are coming.
And please note, we are grateful for all of the input we’ve received over the years. We welcome any suggestions for improvements that you may be willing to share.
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*A huge thank you to Erika Hahn for all of her extraordinary help in tracking and monitoring all of the bills around the country and helping me make sure that all of our resources are current and accurate – and for getting me the FTC’s Notice of Appeal first thing this morning!