Today, TechFreedom filed an amicus brief urging the Eleventh Circuit to uphold an order blocking the Federal Trade Commission from enforcing its rule against employee noncompete agreements. The FTC declared such agreements an “unfair method of competition” under Section 5 of the FTC Act of 1914. But to justify its blanket rule, the FTC had to invoke Section 6 of the Act, which empowers the agency merely to conduct investigations and compile reports.

“The FTC lacks the authority to issue competition rules,” said Corbin K. Barthold, Director of Appellate Litigation at TechFreedom. “Section 6 creates no rulemaking authority under Section 5. In fact, the two sections started out in Congress as two distinct bills. Although they were eventually stitched together, the FTC’s reading of the statute remains implausible. The FTC assumes that an isolated line related to housekeeping rules for Section 6 investigations drastically expands the agency’s Section 5 enforcement authority. That makes no sense.”

“The FTC is ‘discovering’ authority through a cynical and ahistorical reading of the FTC Act,” Barthold continued. “Statutes are read to mean what they meant at the time of adoption. To get its way now, the FTC must claim that, in 1914, Congress waged a simultaneous assault on the Constitution’s Article I nondelegation rule; on the Constitution’s Article II removal power; and on a longstanding convention of statutory drafting, under which Congress always tied substantive rulemaking authority to explicit penalty provisions. There is no evidence that Congress sought this triple revolution.”

The case is Properties of the Villages, Inc. v. Federal Trade Commission, No. 24-13102  (11th Cir.).

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TechFreedom is a nonprofit, nonpartisan technology policy think tank. We work to chart a path forward for policymakers towards a bright future where technology enhances freedom, and freedom enhances technology.

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