Activist Judge Threatens Workers’ Economic Liberty

WASHINGTON - In an audacious decision, Judge Ada Brown of the Northern District of Texas yesterday deeply threatened the economic liberty of American workers. She did so by striking down a landmark new rule enacted by the Federal Trade Commission that would have banned non-compete clauses in employment contracts. 

Employers have used such clauses with increasing frequency in recent decades to prevent workers from leaving for greener pastures and binds them to their jobs. In a clash between powerful corporations and ordinary people, Judge Brown chose to protect the corporations. 

When Congress created the Federal Trade Commission in 1914, it clearly gave the FTC the broad authority to “prevent unfair methods of competition and unfair or deceptive acts or practices in or affecting commerce.” Congress also empowered the commission “to make rules and regulations for the purpose of carrying out” this mission. Yet Judge Brown maintains that the FTC does not have the authority to enact competition rules, and that it can only write “housekeeping” rules. 

Further, Judge Brown dismissed the ample evidence compiled by the FTC in support of the non-compete ban. In its final rule, the FTC laid out the extensive statistical evidence documenting the harms of non-compete clauses to workers, businesses, and the broader public. The FTC supplemented this record by drawing on the tens of thousands of comments submitted by ordinary Americans. The judge ignored this evidence to reach her preferred policy outcome: continued exploitation of workers by unscrupulous employers. 

By contrast, Judge Kelley Hodge of the Eastern District of Pennsylvania last month refused to put the rule on hold. She faithfully followed the text of the FTC Act and recognized that the non-compete ban is supported by substantial evidence. This issue is certainly headed for the Supreme Court. 

The Open Markets Institute led the public campaign for this rule by petitioning the FTC to prohibit non-compete clauses in March 2019. We will continue to fight to protect the FTC from attacks on its authority to protect the public from corporate misconduct, whether the attacks come from predatory corporations or activist judges who ignore the law.