Federal Judge Red Cards Lina Khan and the FTC

July 3, 2024

Judge Ada Brown, a federal judge in North Texas, on Wednesday slapped a preliminary injunction halting the Federal Trade Commission from enforcing a sweeping, nationwide ban on noncompete agreements.

Judge Brown wrote: “The court concludes the text and the structure of the FTC Act reveal the FTC lacks substantive rulemaking authority with respect to unfair methods of competition. The court concludes the commission has exceeded its statutory authority in promulgating the noncompete rule, and thus plaintiffs are likely to succeed on the merits.”

Love them or hate them, noncompetes have long been under the purview of state laws. Khan’s order on April 23 pre-empted the laws of almost every state and their deliberations with a uniform, national order that, thanks to Judge Brown, was clearly not based on any real statutory authority. While the judge’s hold is temporary, she tipped her hand on what the ultimate judgment will be. A ruling will be in place by Aug. 30.

I’ve long said that the judiciary is the sturdy bulwark that is keeping Khan’s ambitions in check. We cannot, however, count on the courts to stand strong forever. Khan and her progressive allies are doing everything they can to inculcate a new generation of law students with her views on progressive antitrust and the administrative rule by fiat. Let us hope the next generation of judges include more than a few Ada Brown’s among them.