Washington, D.C. — The American Economic Liberties Project filed an amicus brief this week with the U.S. Court of Appeals for the Fifth Circuit in the ongoing case, Ryan, LLC v. Federal Trade Commission, defending the Federal Trade Commission’s Noncompete Clause rule and challenging the district court’s sweeping use of universal vacatur to resolve challenges to the Administrative Procedure Act (APA) — which causes enforcement of the rule to be enjoined nationally.

“When lower courts unilaterally block administrative rules on a nationwide basis, they defy the fundamental underpinnings of democratic accountability, create regulatory instability, and deny millions of Americans their day in court,” said Lee Hepner, Sr. Legal Counsel for the American Economic Liberties Project. “Judicial activism is threatening the ability of politically accountable branches of government to make policy. In this case, that means denying millions of workers and small businesses the benefits of a more fair economy. The Fifth Circuit should correct course on its adoption of nationwide relief as a default remedy or risk being overturned by a highly skeptical Supreme Court.”

The FTC issued its Noncompete Clause rule in May 2024 under its “unfair methods of competition” rulemaking authority granted by Section 6(g) of the FTC Act — based on years of legal and scholarly advocacy and immense input and support from the public, including over 26,000 public comments submitted to the agency. The rule immediately faced legal challenges from corporate actors in three federal district courts. While a Pennsylvania court upheld the rule, and a Florida court issued a narrow ruling affecting only the plaintiff in that case, Judge Ada Brown of the Northern District of Texas vacated the rule nationwide.

While Economic Liberties supports the Non-Compete Clause Rule and the statutory underpinnings of the FTC’s authority to issue that rule, the amicus brief focuses on the narrow issue of whether a federal district court has authority to universally vacate agency rules as a default remedy. The brief argues that:

• Universal vacatur should not be the default remedy when narrower relief would adequately address a party’s complaint, as demonstrated by the Florida ruling on the same Noncompete Clause Rule in Properties of the Villages. 
• Recent Supreme Court decisions, including Starbucks, Alliance, Corner Post and Murthy, emphasize judicial restraint and cannot be reconciled with the Fifth Circuit’s adoption of universal vacatur as a default remedy.
• Universal vacatur deprives non-parties, including supportive small businesses, of their ability to benefit from the rule.
• Reading the APA as authorizing courts to block agency rulings nationwide undermines the democratic rulemaking process by sidestepping Congressionally authorized means of broader dispute resolution, including joinder and class action lawsuits.
• While the Supreme Court has not expressly decided whether vacatur, much less universal vacatur, is an available remedy in APA cases, an emerging plurality – if not majority – of the Court has opined (largely in non-binding concurring opinions) that courts do not have such authority.
• The judiciary improperly assumes the role of policymaker when vacating rules nationally and, unlike Congress or Executive Branch agencies, faces no accountability for doing so.

Various courts have vacated at least 15 Biden-era rules and as well as many rules adopted by the first Trump administration. This trend not only disrupts the balance of power between branches of government but also impedes the orderly development of law through lower courts and appellate review. Universal vacatur is not merely a legal issue but a question of governance. Who should have authority to act on behalf of the public, and how should that authority be exercised? As judicial rulings increasingly supplant the public rulemaking the process, the role of courts in policymaking grows dangerously outsized.

Finally, Economic Liberties expresses its gratitude to Columbia Law Professor Dennis Fan for his consultation and contributions to the brief filed today.

Read the full amicus brief here.

Read Corporations v. The People to learn more.

Learn more about Economic Liberties here.

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The American Economic Liberties Project works to ensure America’s system of commerce is structured to advance, rather than undermine, economic liberty, fair commerce, and a secure, inclusive democracy. Economic Liberties believes true economic liberty means entrepreneurs and businesses large and small succeed on the merits of their ideas and hard work; commerce empowers consumers, workers, farmers, and engineers instead of subjecting them to discrimination and abuse from financiers and monopolists; foreign trade arrangements support domestic security and democracy; and wealth is broadly distributed to support equitable political power.