What Happens when Federal District Courts Conflict?

Non-competes: A tale of two lawsuits. 


Yesterday, in case no. 24-CV-01743, a US District Court for the Eastern District of Pennsylvania denied a motion for preliminary injunction thereby paving the way for the FTC's ban on noncompetes. In a nutshell, the court believes that the FTC's rule banning noncompetes is enforceable. 

So noncompetes are done, right? Not so fast. 

Remember that on July 3rd, 2024, in case no 24-CV-00986, a US District Court for the Northern District of Texas reached the exact opposite conclusion. Instead, that court issued the injunction that prevents the rule from going into effect. In a nutshell, the court believes that the FTC's rule banning noncompetes is unenforceable. 

Sidebar, does it surprise you the learn that the judge in the Texas case was appointed by Trump & the judge in the Pennsylvania case was appointed by Biden? 

So what happens when federal district courts disagree? We're about to find out. Now it's important to note that the appellate courts, in this case the 3rd Circuit & the 5th Circuit have not examined the FTC's final rule or these two cases. Nor have they examined how the removal of Chevron Deference will impact their thinking. What is clear, is that we are just getting started.

I have no doubt that more litigation against the FTC's rule will happen across the country. These lawsuits will find their way to the appellate courts. Those courts will issue opinions that will bind only the states within their jurisdiction. We could actually see noncompetes legal in some states at the federal level & illegal in others. This would be a truly wild outcome.

Unless SCOTUS opines, we can expect a very fragmented labor market as it relates to noncompetes. If SCOTUS eventually does take the case, it will be among the most important labor decisions in our lifetimes. Until then, 30 million working Americans will be in limbo.

Where will I be next?

I will be at Freightwaves' F3: Future of Freight Festival, Nov. 19th-21st in Chattanooga!

This program is brought to you by DAT Freight & Analytics. Since 1978, DAT has helped truckers & brokers discover more available loads. Whether you're heading home or looking for your next adventure, DAT has the data! New users of DAT can save 10% off for the first 12 months by following the links below.

For Truckers, DAT One Pro gives you access to tri-haul & 15-day rate as opposed to 30-day rate. For Brokers, DAT One Select gives you access to Market Conditions, Exact Match alarms & more. Even under the best circumstances, moving freight was never easy.