On July 23, 2024, the Eastern District of Pennsylvania in ATS Tree Services, LLC v. Federal Trade Commission denied the plaintiff's motion to enjoin and stay the FTC's final rule banning noncompetes.
Unlike the Northern District of Texas' July 3, 2024, ruling in Ryan LLC v. Federal Trade Commission, the Pennsylvania court rejected plaintiff's merits arguments that the FTC lacks the rulemaking authority necessary to implement the noncompete ban.
Due to the contradicting reasoning and rulings between the Ryan and ATS decisions, both decisions may be appealed. The Ryan court has stated its intention to issue a ruling prior to Aug. 30, and at that time the Ryan court might (a) simply provide relief for the plaintiff as it did initially, (b) vacate the rule (which would invalidate it nationwide) or (c) issue a nationwide injunction.
But as of now, per an earlier GT Alert, the FTC's final rule has not been enjoined and is set to take effect Sept. 4, 2024.
As a result, employers should review their current restrictive covenants and have a plan in advance of Sept. 4.
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