On August 15, 2024, a federal judge in the Middle District of Florida (“the Court”) granted a request to temporarily block the Federal Trade Commission’s (“FTC”) worker non-compete rule (“Final Rule“) as applied to the plaintiff, Properties of the Villages, Inc. (“POV”). Similar to the plaintiffs in the Ryan, LLC lawsuit in Texas and the ATS Tree Services, LLC lawsuit in Philadelphia, POV requested a preliminary injunction blocking the Final Rule. It is important to note that POV was only seeking a ruling on its own behalf and was not requesting a nationwide injunction or ban on the Final Rule.
In a somewhat unique procedural move, the judge read his decision from the bench while on the record and attached the transcript to the Court’s order granting POV’s requested injunction. The judge explained that “in the interest of giving the parties a quick answer, as opposed to waiting for a written opinion, which as you all know takes substantially longer, and given the compressed time frames that the Court was dealing with in this case, I’ve decided to read my decision from the bench…which will be captured in the transcript. . . .”
With the benefit of prior rulings from the Ryan, LLC lawsuit and the ATS Tree Services, LLC lawsuit, plus a host of other cases from the U.S. Supreme Court (notably, the Loper Bright decision) and various federal courts of appeals, the Court addressed—and largely rejected—several of the arguments presented by POV.
Ultimately, however, the Court did agree with POV’s argument that an injunction was warranted for POV because the Final Rule “cannot stand because it is subject to the major questions doctrine.” The Court helpfully described the principle behind the “major questions doctrine” as follows: “When an agency [like the FTC] claims to have the powers to issue rules of extraordinary…economic and political significance, it must point to clear congressional authorization for the power it claims.”
The Court went on to conclude that the FTC impermissibly overstepped its rule-making authority by issuing such a broad and expansive Final Rule without congressional authorization:
Borrowing from Justice Barrett’s concurring opinion in Biden v. Nebraska, if a parent gives a babysitter a credit card and says, ‘Make sure the kids have fun while we’re out,’ the parent might expect that the babysitter would take the kids out for ice cream, but would not expect the babysitter to take the kids on an overnight trip to Las Vegas. Likewise here: [w]ithout clear Congressional permission, the final rule, the FTC’s equivalent of a trip to Las Vegas, is unauthorized.
The current tally reflects the FTC’s Final Rule being invalidated by two federal courts and upheld by one. Focus should now shift back to the Ryan, LLC case pending in Texas, where a ruling on a full evidentiary record is expected on or before August 30. Importantly, part of the relief now requested by the plaintiffs in the Ryan, LLC lawsuit—with supporting legal authority—is a nationwide set aside (vacatur) remedy. Thus, if the Texas court agrees with the plaintiffs’ arguments, nationwide “relief” from the Final Rule remains a possibility.
Practical Takeaways
- Stay Informed: Between now and August 30, continue checking our website for regular updates, as the Ryan, LLC case could potentially provide nationwide “relief” from the Final Rule.
- Work Closely with Counsel: Whether your organization is a for-profit or nonprofit entity, a strategic communications strategy will help avoid confusion in a rapidly evolving (and misunderstood) legal landscape.
- Limits on FTC Jurisdiction: Don’t lose sight that the FTC lacks jurisdiction over nonprofit entities.
If you have any questions on issues discussed in or related to this post, please contact:
- John Bowen at (317) 429-3629 or jbowen@hallrender.com;
- Dana Stutzman at (317) 977-1425 or dstutzman@hallrender.com; or
- Your primary Hall Render contact.
Hall Render blog posts and articles are intended for informational purposes only. For ethical reasons, Hall Render attorneys cannot give legal advice outside of an attorney-client relationship.
