On October 4, 2024, Plaintiff ATS Tree Services, LLC (“ATS”) voluntarily dismissed its claims against the FTC challenging the agency’s Non-Compete Rule. See ATS Tree Services, LLC v. Fed. Trade Comm’n, et al., No. 2:24-CV-01743-KBH (E.D. Pa. July 23, 2024). The dismissal ends the case before a decision on the merits, preventing the FTC from obtaining a favorable ruling on the Non-Compete Rule in the Third Circuit.
One day prior, on October 3, 2024, the Eastern District of Pennsylvania denied ATS’ motion to stay the proceedings. ATS argued that a stay was warranted because the nationwide injunction issued by the Ryan Court left no Rule in place to litigate. ATS sought a stay until the deadline for the FTC to appeal the Ryan judgment passed, or until the Fifth Circuit issued a decision if an appeal was filed. The FTC opposed ATS’ Motion, arguing that the Ryan Court’s non-binding judgment did not prevent the Eastern District of Pennsylvania from adjudicating the issues before it and issuing its own ruling.
The Eastern District of Pennsylvania reasoned that both can be true. The Court acknowledged that the Ryan ruling meant there was no Rule left to litigate at present. However, the Court also recognized that the potential for an appeal of the Ryan judgment created uncertainty about the Rule’s future, stating, “[t]he fact that the Rule is currently enjoined does not mean that it is forever gone.” The Court determined it still had a responsibility to decide the issues before it and denied the motion to stay.
The Court then clarified ATS’ options: “[i]f ATS is satisfied with the outcome in Ryan and believes it sufficiently addresses their claims, it is not obligated to continue litigating this case. However, if it does not wish to withdraw, then this Court will move the case forward as is its duty.” ATS responded by dismissing its claims without prejudice less than a day after the Court denied the stay. The matter now shifts to the Fifth Circuit, where the Northern District of Texas issued a judgment on the merits setting aside the Rule pending a possible appeal, and the Eleventh Circuit, where the FTC has appealed the Middle District of Florida’s injunction blocking enforcement of the Rule against that case’s plaintiff.