In the immortal words of Kenny Rogers (you thought I was going to say Shakespeare, didn’t you?), “You gotta know when to fold ’em.” And ATS has now folded ’em. So, people can breathe a sigh of relief — the FTC’s noncompete rule is pretty much gone with little chance of being revived.
As discussed in prior blog posts, after the federal court in Texas set aside the FTC’s noncompete rule in Ryan, LLC v. FTC, I was concerned that the continued pursuit of the ATS Tree Services case in Pennsylvania would needlessly revive the nationwide confusion that existed before the Ryan court’s decision. Because of that, I had urged ATS to voluntarily dismiss its case before it was too late.
Instead, ATS filed a motion seeking a stay of the case.
As I previously said, I thought the outcome of such a motion was obvious, and that it was therefore a tactical mistake — which was only confirmed by the fact that the FTC opposed the motion, while it did not oppose a similar motion in the Properties of the Villages case in Florida.
Yesterday (October 3), I had a very nice call with counsel for ATS, and I am pleased to see that, today, following the court’s denial of the motion to stay, ATS chose to fold.
Although I had checked the docket early this morning, at some point later in the day today, the court updated the docket to reflect that it issued the predicted order, denying the motion to stay.
As the court explained:
The fact that the Rule is currently enjoined does not mean that it is forever gone. Both parties acknowledge that the FTC may appeal the Court’s decision in Ryan to the Fifth Circuit, an option that remains available to the FTC and creates some uncertainty as to the finality of the Rule. However, the Court does not have a crystal ball to predict what may happen regarding the Rule, nor will the Court make its decisions based on speculation on that issue. What is clear is that this Court does have a responsibility in deciding the issue as to this Plaintiff.
One need not have a crystal ball, however, to know that the Fifth Circuit is highly unlikely to vacate the Ryan court’s decision.
Nevertheless, the court was “persuaded by the FTC’s argument that granting the stay would give Plaintiff ‘two bites at the apple,’ by allowing Plaintiff to benefit from the Ryan injunction while preserving its ability to relitigate the issue in this case if the FTC appeals that case and is successful on appeal.” Of course, isn’t that precisely what the FTC was trying to get: two bites at the apple to get a court to validate its rule? (Really it’s three bites at the apple that the FTC seeks, given that it’s appealing the injunction in the Properties of the Villages case in Florida, but who’s counting?)
Well, the last laugh belongs to ATS, which, promptly after the denial of the motion to stay, filed a notice of dismissal, dropping the case.
Better late than never.
And fortunately, no harm, no foul.
(Lots of aphorisms today!)
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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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*Thank you to Ben Fink for being the first to send the decision to me and to Erik Weibust for coming in a close second, and hat tip to Fisher Phillips’ Jonathan Crook for finding out about the decision before Erika Hahn or I did.