A second bite at the apple? Plaintiffs ask to reconsider a nationwide injunction on the FTC noncompete rule

I’m a geek—I admit it. I get docket alerts whenever something happens in the FTC noncompete lawsuit pending in Texas, like last week when the judge blocked the Federal Trade Commission’s comprehensive ban on noncompetes—but only for the plaintiffs in the lawsuit. For now, your business must comply with the FTC’s Noncompete Rule.

Yesterday, however, I received another alert that the plaintiffs had asked the court to reconsider its earlier ruling and extend the ban nationwide. 

I don’t want to bury the lede here. Judges rarely grant motions for reconsideration. Why is that? Because a party filing that motion generally prevails only if the court overlooked facts or controlling law when issuing its initial ruling.

“Hey, judge! Admit you messed up.”

As a litigator, I’ve tried it a few times tactfully. And, each time, I got the back of the hand.

So why would the plaintiffs here have any better luck? Technically, the Federal Rules of Civil Procedure allow a court to reconsider and reverse an earlier decision for any reason it deems sufficient, even without new evidence or clarification of substantive law.

The plaintiffs argue that expanding the injunction from just the parties to the lawsuit to all businesses nationwide is appropriate under controlling law in the Fifth Circuit, which covers the Northern District of Texas, where the lawsuit is pending. Specifically, the Administrative Procedure Act authorizes a district court, like the one here, to “postpone the effective date of an agency action.”

Indeed, the Fifth Circuit has previously ruled that “the scope of relief” for successful APA claims, like the one here, “is not party restricted.” Of course, that doesn’t mean that a district judge must enter a nationwide injunction. However, the plaintiffs also point out that “another district court considering this very issue determined that nationwide relief would be necessary if plaintiff-intervenors’ claims challenging the Noncompete Rule were successful.” Further, in another unrelated APA challenge earlier this year, the Fifth Circuit concluded that its ruling would apply nationwide if the plaintiffs prevailed.

Ultimately, as this court has already recognized the ongoing harms to employer-members of the business associations representing their interests as plaintiff-intervenors in this lawsuit, and because Supreme Court and Fifth Circuit precedent support expanded relief, the plaintiff intervenors request that the court expand the scope of the preliminary relief to a nationwide injunction.

Even if the court does not grant the motion for reconsideration, it plans to rule on the merits of the lawsuit by the end of August, just before the FTC Rule takes effect in early September.