The FTC is appealing one of its non-compete losses. Should employers be nervous?

Yesterday, the Federal Trade Commission filed a notice of appeal with the United States District Court for the Middle District of Florida, signifying that it will ask the Eleventh Circuit Court of Appeals to overturn a trial judge’s August 15 decision to enjoin enforcement of its sweeping noncompete ban.

Should this concern employers? I’ll give you three reasons why it shouldn’t.

Appealing preliminary injunctions isn’t easy.

When an appellate court reviews the appeal of a preliminary injunction, it asks only whether the district court abused its discretion in granting the preliminary injunction. In other words, it’s not a do-over. The appellate court reviews the district court’s findings of fact for clear error. However, the appellate court will take a fresh look at whether the lower court faithfully applied the law to the facts of the case.

This appeal will take a while.

A few weeks ago, the FTC told a federal judge in Pennsylvania that appealing and overturning a nationwide injunction that a federal judge in Texas entered last month of the Texas decision “would likely take months to fully brief and could take a year or longer until a final decision.”

While I’m not licensed to practice in either the Fifth or Eleventh Circuits, I imagine that appeals don’t move that much faster, if at all, in the latter than the former.

Therefore, it may be a year before the Eleventh Circuit rules.

This appeal doesn’t concern the nationwide injunction.

When the Eleventh Circuit rules, it will decide whether the lower court correctly enjoined the FTC from enforcing its noncompete rule only against the plaintiff, the Properties of the Villages, Inc. Indeed, the Florida federal judge who entered the injunction made crystal clear that his ruling was limited to the parties:

The Court will enter a preliminary injunction prohibiting enforcement of the final rule as to the Properties of the Villages, Inc. The injunction only applies to the Properties of the Villages; the Court is not — repeat not — entering a stay of the final rule generally, nor is the Court entering an injunction of nationwide application. It is strictly limited to the party that’s before the Court that brought the suit.

In other words, if the FTC prevails, it will be able to enforce its noncompete rule against the Properties of the Villages, Inc., and no one else by virtue of the Texas federal judge’s nationwide injunction.

Stinks for them.

Although the decision to appeal the Florida judge’s ruling may portend another appeal of the Texas judge’s nationwide injunction ruling. I’ll let you know if and when that happens.