Two Appeals To Determine Fate of FTC’s Noncompete Ban

The United States Courts of Appeals for the Fifth and Eleventh Circuits will have their chance to weigh in on the FTC’s Noncompete Ban, which had been scheduled to go into effect on September 4, 2024, but was enjoined a couple of weeks before that date.

First, the Fifth Circuit.  The FTC Noncompete Ban was blocked on a nationwide basis on August 20, 2024, when the United States District Court for the Northern District of Texas issued a memorandum opinion and order in Ryan LLC v. Federal Trade Comm’n, Case No. 3:24-cv-00986-E, granting the plaintiff’s motion for summary judgment and setting aside the Ban.  On October 18, 2024, the FTC filed a Notice of Appeal of the opinion and order to the Fifth Circuit.  The FTC Noncompete Ban remains enjoined during the pendency of this appeal.

In addition to the Fifth Circuit appeal, the FTC is taking a second bite at the proverbial apple, in the Eleventh Circuit.  On August 15, 2024, in Properties of the Villages, Inc. v. Federal Trade Commission, Case No. 5:24-cv-316, the United States District Court for the Middle District of Florida granted the plaintiff’s motion for a preliminary injunction (although limited in scope only to the plaintiff), prohibiting the FTC from enforcing the Noncompete Ban.  This was similar to how the U.S. District Court in Texas had previously ruled, on Ryan LLC’s preliminary injunction motion.  On September 24, 2024, the FTC filed a Notice of Appeal of the Florida District Court’s preliminary injunction to the Eleventh Circuit.

The Fifth and Eleventh Circuits are seen as likely to uphold the rulings of the Texas and Florida District Courts and to continue their injunctions on the FTC’s Noncompete Ban.  In the unlikely event of a split between the decisions of the two Circuit Courts, the U.S. Supreme Court likely would have the opportunity to rule on the Noncompete Ban.

The upcoming U.S. Presidential election introduces another element of uncertainty to the mix, as it may result in a change in leadership at the FTC, which could even lead the FTC to abandon these two appeals and the Noncompete Ban altogether.

The story of the FTC Noncompete Ban thus is not yet over, but the odds remain small that the FTC’s proposed ban will ever come into effect.