Federal judge partially blocks U.S. ban on noncompetes

[granzymes]

The question before the Court in this case was whether the FTC has the power to issue substantive rules related to unfair methods of competition. The Court concludes[0] that the FTC does not have that power, and that Section 6(g) of the FTC Act permits the FTC only to issue "housekeeping" rules related to agency organization, procedure, or practice.

That follows from three main statutory and historical clues:

1) Section 6(g) contains no penalty provision—which indicates a lack of substantive force. Other grants of substantive rulemaking specify what happens if regulated entities don't follow the rule.

2) The location of Section 6(g) is suspect. It's the seventh in a list of twelve almost entirely investigative powers, and starts with a grant of organizational power to "from time to time classify corporations". This is hardly where you would expect to find sweeping substantive rulemaking power if Congress had in fact chosen to grant it.

3) The FTC has not historically seen itself as possessing the power to issue substantive rules on unfair methods of competition. Courts are skeptical of agencies discovering latent powers decades later.

Overall, this is exactly what commentators expected to happen. Banning noncompetes may well be good policy, but it's up to the legislature (whether Congress or in individual states) to enact that policy. In addition, nothing in this decision prevents the FTC from using its adjudicatory powers to go after individual examples of noncompetes which it believes are unfair methods of competition.

[0] https://storage.courtlistener.com/recap/gov.uscourts.txnd.38...

[kogus]

Thank you for a thoughtful summary of what really happened. So many people are focused on outcomes that they would destroy the plumbing of government to get where they want to be.

[delfinom]

I honestly believe the FTC action was a corporate lobbied event. Why? There were various states where campaigns were ongoing to ban noncompetes. The FTC ruling basically derailed them.

[BadHumans]

I predicted this as soon as they announced the ban on noncompetes. If you want this to happen then vote for politicians that have an interest in keeping corporations in check and get a bill passed in Congress. Otherwise, it will just get overturned.

[6510]

I expected this to be boring but I almost choked on my coffee here

> ....enabling its competitors to poach valuable employees, whose knowledge and training would go out the door.

Thats the funniest thing I read all week.

[6510]

It is an attempt to erase our culture, way of life, and our honor. We need the means to ensure the preservation of society and protect our race. Southerners must stop apologizing for slavery and reject the idea that it was a necessary evil!

If we stop sending small children into coal mines the economy shall collapse!

[blackeyeblitzar]

> "While this order is preliminary, the Court intends to rule on the ultimate merits of this action on or before August 30, 2024," she wrote.

> In its complaint, Ryan LLC accused the FTC of overstepping its statutory authority in declaring all noncompetes unfair and anticompetitive.

> Judge Brown agreed, writing, "The FTC lacks substantive rulemaking authority with respect to unfair methods of competition."

> Through a statement Wednesday evening, the FTC said its authority is supported by both statute and precedent.

I’m not entirely against this outcome. Things that have big impact or are controversial or are visible enough to warrant public discussion should just be acted on by congressional legislation rather than assumed executive authority.

That said I think noncompetes and similar restrictions on employees are too broad and go too far in practice. They are essentially anti competitive. Still, the main problem for competition is the size and capital of incumbent mega corporations, and not JUST their noncompetes. The FTC needs to do something about that.

[jandrese]

IMHO we already have good evidence about the harm to corporations we can expect to see by banning non-competes. California banned them in 1941 and everybody can see how no big business, especially tech businesses, want to be in California.

[downrightmike]

Pretty screwed up that a single judge can block an entire agency

[zeroonetwothree]

It only applies to the plaintiffs in the case.

[monero-xmr]

I don’t like noncompetes but I don’t like unelected officials making economy-wide decisions even more.

Congress can do their job and pass laws. I’m tired of law making delegated to faceless bureaucrats.

[ceejayoz]

> Congress can do their job and pass laws.

They did. They wrote a law that established the FTC and tasked it with regulating these things.

> I’m tired of law making delegated to faceless bureaucrats.

They're not faceless, but a group of nine (well, six) unelected bureaucrats are currently making a whole bunch of law.

[locopati]

why? the bureaucrats understand the domain and the context. have you seen the US Congress? this is just a way for the moneyed people and their lackies to gum up the works and make life worse for the majority while siphoning even more money to the moneyed.

[standardUser]

If we stop electing so many far-right, burn-it-all-down, my-opponents-are-my-sworn enemy, conspiracy-prone politicians we might actually get useful legislation and could stop relying on the elderly and untouchable judicial branch.

[daft_pink]

The current FTC has a terrible track record and all their things are being struck down :(

[sitkack]

Managing from below because congress is too worried about looking bad by making a decision.

[hindsightbias]

https://www.ftc.gov/news-events/news/press-releases/2024/04/...

[slaymaker1907]

Can we just dissolve the U.S. District Court for the Northern District of Texas? They continually harm the entire country with their nonsense.

Almost every “crazy” decision you’ve heard about in recent years comes from this one district.

[dano]

https://news.bloomberglaw.com/us-law-week/shopping-for-the-j...

[lsllc]

Dupe, posted earlier today:

https://news.ycombinator.com/item?id=40870515

[hindsightbias]

> Judge Ada Brown of the U.S. District Court for the Northern District of Texas

The shape of everything to come.

I wonder when those in the techworld will hear that little klaxon ringing in their head.

“She is the first African-American woman federal judge nominated by President Donald Trump”

https://en.wikipedia.org/wiki/Ada_Brown_(judge)

[jbm]

> Brown was unanimously rated well-qualified by the American Bar Association.[23]

If the experts are fine with her, on what basis should we normies be concerned?

[specialist]

From TFA:

In its complaint, Ryan LLC accused the FTC of overstepping its statutory authority in declaring all noncompetes unfair and anticompetitive.

Judge Brown agreed, writing, "The FTC lacks substantive rulemaking authority with respect to unfair methods of competition."

They're certainly not wasting any time; the bloody corpse of The Chevron Doctrine is still warm.

This is the new reality. Every single decision, rule, finding, regulation, fee / fine, and press release will now be litigated by the courts.

The Roberts Court's campaign for judicial primacy has usurped all the power of the (executive branch's) administrative state.

Because of course federal policy is best determined by life time appointees (beholden to their plantation class patrons) and not the anti-corporate democracy loving common citizenry.

Prove me wrong.

[AlbertCory]

> federal policy is best determined by life time appointees

Prove you wrong? For sure. It's best determined by elected officials. Second best is judges. In last place we have bureaucrats never elected by anyone nor even appointed by someone who was.

[sitkack]

Looks like the FTC is not overstepping its bounds.

https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim...

Congress said unfair competition is outlawed. The FTC can determine what unfair competition means and enforce it.

[zeroonetwothree]

How is that different than before? At least now they’ve stopped doing nationwide injunctions, that’s actually a big improvement! (Though maybe you won’t agree when the next president has a policy that you don’t agree with)