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On May 3, 2024, the United States District Court for the Eastern
District of Texas entered an Order staying the proceedings in
Chamber of Commerce v. FTC by granting the FTC’s motion to
apply the first-to-file doctrine, in which a district court should
generally order “stay, transfer, or dismissal” of a
second-filed action that substantially overlaps with a pending,
first-filed action—in this case, Ryan, LLC v. FTC.
The Court’s Order found that the first-to-file rule required
the Eastern District’s deference to the Northern District’s
action in Ryan because the two cases’ procedural postures were
roughly the same, “the substantial overlap between the cases
and the comity factors support consolidation, and Ryan is the
first-filed case.”
Although the Court found a transfer or consolidation of the two
pending cases would avoid duplication of judicial effort,
potentially inconsistent judgments, and piecemeal litigation, it
nonetheless questioned its authority to do so. Therefore, the
Eastern District elected to stay proceedings in the Chambers case
to allow the Chamber of Commerce to seek either intervention or
addition as parties in the Ryan case, which we expect to occur.
As a result, the remaining unexpired deadlines in the
Court’s briefing schedule are lifted, and the proceedings are
currently stayed. The Order also requires the Chamber of Commerce
to notify the Court if its claims are accepted in Ryan, or
denied.
The Northern District of Texas, meanwhile, entered an Order on
May 2, 2024, requiring the FTC respond by 5:00 p.m. CT on May 7th
to the Ryan Plaintiff’s emergency motion for an expedited
briefing schedule for its request for a preliminary injunction and
stay of the Non-Compete Rule. The FTC had previously requested 21
days to respond to Plaintiff’s motion to expedite briefing. The
Ryan Plaintiff also recently amended its pleadings to elaborate on
its arbitrary-and-capricious claim and seek an order vacating the
Non-Compete Rule under the Administrative Procedure Act (APA),
which would apply a vacatur of the Non-Compete Rule to parties and
non-parties alike, if granted.
As it currently stands, we should see the FTC’s response to
the Ryan Plaintiff’s motion by Tuesday, May 7, 2024, in
addition to the Chamber of Commerce’s efforts to join the Ryan
suit, with the Court’s schedule on Plaintiff’s request for
a preliminary injunction to shortly follow.
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