On Tuesday, a federal court judge sided with a challenge to the Federal Trade Commission’s edict this past spring which set a ban on most non-compete agreements for employees. Judge Ada Brown of the U.S. District Court in the Northern District of Texas ruled in favor of the challengers in Ryan v. FTC.
The rule was the set to be place in effect on September 4, 2024. With Judge Brown’s ruling, that will not happen pending an appeal from the agency.
As it relates to the sport of mixed martial arts, the ruling would have prevented the use of non-competes in MMA contracts. The clause, which have been used in WWE and MMA contracts, prevents the contracted individual from moving on to another position for a certain amount of days.
Judge Brown, an appointee of Donald Trump, sided with a Dallas Tax Firm, Ryan, LLC which filed the challenge of the FTC ruling and the U.S. Chamber of Commerce and other business entities which intervened in the lawsuit taking the side of Ryan, LLC.
Judge Brown wrote that the FTC lacked “substantive rule-making authority.” In a NY Times article, an FTC spokesperson stated the FTC, “stands by our clear authority, supported by statute and precedent, to issue this rule.”
Last month, I was quoted in and article about the impact the ruling may have on MMA contracts. With the current Le-Zuffa case heading into trial in February 2025 and injunctive relief not on the table at the moment, one would suspect no huge changes to contracts at the moment. But, the Johnson-Zuffa case outlined issues with UFC contracts which may hear more about if and when the second UFC case comes to light. Barring a settlement in the UFC lawsuit addressing contracts (like it proposed in the failed $335 million settlement), amendments preventing non-competes in the MMA space will not be touched.
The reason why non-competes are of importance in contracts is the ability for employees (or in the case of MMA independent contractors) to be able to move to another employer without having to wait or sit out a period of time due to a non-compete. The FTC argues that workers lose money each year due to non-compete agreements.
MPO will continue to follow.
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