In a press release that was issued last Thursday, September 5, the FTC took the definitive step of formally withdrawing its appeals in the Ryan and Villages cases, where the District courts had pointedly refused to uphold the FTC's Noncompete Rule, and instead voluntarily agreed to vacate the Rule.
Following are some of the highlighs from the press release:
Federal Trade Commission Files to Accede to Vacatur of Non-Compete Clause Rule
Today the Federal Trade Commission took steps to dismiss its appeals in Ryan, LLC v. FTC, No. 24-10951 (5th Cir.), and Properties of the Villages v. FTC, No. 24-13102 (11th Cir.), and to accede to the vacatur of the Non-Compete Clause Rule.
At the time the Biden FTC issued the Rule, current Chairman Andrew N. Ferguson and Commissioner Melissa Holyoak dissented on the grounds that the FTC lacked the statutory authority to issue the Rule. The district court found that the FTC does lack the authority, and prohibited enforcement of the Rule.
The Commission voted 3-1 to dismiss the appeal and accede to the vacatur. Chairman Andrew N. Ferguson issued a statement joined by Commissioner Melissa Holyoak. Commissioner Mark R. Meador issued a concurring statement. Commissioner Rebecca Slaughter issued a dissenting statement.
In terms of how this vote went down - which was directly on party lines - none of that is remotely surprising. An interesting caveat however, is that just yesterday, the United States Supreme Court issued a stay of the District and lower Appellate Court's ruling that President Trump exceeded his authority in terminating Commissioner Slaughter from her term at the FTC, which means, as a practical matter, that for the time being, she is not at the FTC.
Putting it mildly, the majority's statement acceding to the vacatur of the Noncompete Rule, as well as the lone dissent by (former?) Commissioner Slaughter, are heavily partisan and politicized.
Chairman Ferguson Doesn't Hold Back
Here are some of the highlights from Chairman Andrew Fergusion's statement:
Today, the Federal Trade Commission withdrew its notice of appeal in Ryan, LLC v. FTC, No. 24-10951 (5th Cir. 2025).1 In doing so, it acceded to the vacatur of the Commission’s NonCompete Clause Rule. That Rule purported to ban almost all contracts in which an employee agreed not to work for his or her employer’s competitor after his or her employment. It did so prospectively and retrospectively, extinguishing thirty million existing private contracts. It preempted the laws of all fifty States, and actively displaced hundreds of existing laws across fortysix States. It redistributed nearly a half trillion dollars of wealth within the general economy. And it purported to render categorically unlawful a species of contract that has been lawful since the eighteenth century by reimagining a single clause tucked away in an ancillary provision of a century-old statute. Little more need be said about the legal viability of the Rule. The Rule’s illegality was patently obvious. Commissioner Holyoak and I warned our Democrat colleagues at great length that the Rule was unlawful six ways from Sunday; that the Rule would never survive judicial review; and that the resources sunk into the Rule’s promulgation and defense would be wasted.
We were ignored. The allure of press junkets and the praise of congressional Democrats was irresistible. And, as predicted, the courts swiftly invalidated the Rule. Let us be clear: plaudits from the liberal media and other Democrat partisans are all this Rule generated. Perhaps that was the point. The Rule did not protect a single American worker, nor did it bring any relief to a single worker who is stuck in a job because of a noncompete agreement. And that is a shame. As I have said, noncompete agreements can be pernicious. They can be, and sometimes are, abused to the effect of severely inhibiting workers’ ability to make a living. That is why English law categorically prohibited them until the eighteenth century. That is why all fifty States regulate them extensively, and why some outright ban them. And that is why Congress, through the FTC Act and the Sherman Act, gave us the authority to step in when they are onerous enough to become unlawful. The Commission should have been doing everything it could to find unlawful noncompete agreements and eliminate them.
Commissioner Slaughter's Dissent
Not surprisingly, the Democratic response was equally, if not more, partisan:
Despite claiming to support American workers, President Trump has, at every turn, thrown workers under the bus to ingratiate himself with corporations and their billionaire CEOs. Another example comes today as the Trump-Vance FTC decides to throw in the towel on years of work by the agency to protect workers from draconian noncompete agreements that lower wages, trap workers in abusive jobs, and even inhibit new business formation. The FTC received 26,000 comments on the rulemaking to ban noncompetes proposed under Chair Khan; 25,000 of those comments supported a categorical ban.1 Corporations sued to overturn the rule, and different courts came to different conclusions, but the FTC was still fighting to protect workers. Today, sadly, the FTC’s Republican majority decided to throw in the towel. In place of a rule to protect nearly all American workers from abusive noncompetes, the majority offers a oneoff settlement and a request for information (as though the record of tens of thousands of comments does not exist). Perhaps the agency is hoping that, by dismissing the Commission’s appeals and refusing to continue defending the rule in court, no one will notice that the FTC is choosing the side of controlling bosses over American workers. But every worker trapped by a noncompete who would be liberated by this rule—and that is millions of workers in America— knows the truth.
Commissioner Slaughter went on to decry the FTC's decision to abandon its appeals in the Ryan and Villages cases, stating
I dissent, and strongly object, to the dismissal of the appeals and acceding to the decision of the Northern District of Texas. The most important problem here is the substance—the duly promulgated rule, and the millions of American workers and businesses it protects, deserve vigorous defense in court.
Observations and Next Steps
As wisely observed by my colleague (and noncompete guru) Russell Beck, the opposition to abandoning the Ryan appeal makes little sense: after all, given the substantial holes in the Noncompete Rule laid out by the District Court, it was highly likely that the appeal was doomed, and, if anything, would have made it more challenging, not less, to enforce the Rule.
Does that mean that the FTC has also made a policy decision to withdraw from penalizing noncompetes that clearly overreach?
Hardly.
As Chairman Ferguson noted, where noncompetes are truly pernicious, the FTC is dutybound to step in. And that is exactly what I expect will happen for the foreseeable future in the noncompete space.
