Reflecting on the litigation over the FTC’s non-compete rule, it struck me that the Supreme Court’s decision in Corner Post is a huge win for the government masquerading as a loss. A key sentence in the opinion should put the last nail in the coffin of universal remedies. If I’m right about this prediction, Corner Post’s implications for nationwide relief will vastly outweigh the significance of its statute-of-limitations holding.

Ignore for the moment the million-dollar question that Corner Post reserved in footnote 2: whether the APA allows a district court to vacate an agency’s rule universally. I’ll start with why the holding isn’t a big deal. Corner Post held that the six-year statute of limitations to challenge a rule in an affirmative APA suit runs from the date the plaintiff was first injured, rather than from the date the rule was issued. As a result, a rule is vulnerable to an APA challenge indefinitely, because new plaintiffs can come into existence at any time. Indeed, new entities can be formed for the purpose of challenging older rules.

But even before Corner Post, everyone knew that there is no statute of limitations to challenge a rule as a defense in an enforcement action. The SG’s brief conceded as much. So why should anyone care about Corner Post’s holding? The main reason is that, in an affirmative APA suit, the plaintiff gets to choose the forum, which often dictates the outcome. A second reason is described in Justice Kavanaugh’s concurrence: unregulated entities aren’t subject to enforcement actions and, for an unregulated entity, an affirmative APA suit is an easier way to challenge a rule than a petition for new rulemaking.

Although Corner Post’s holding thus has real-world impact, that impact will be minimized if the relief entered by a district court judge is plaintiff-specific. An agency can opt to take such a loss instead of appealing it. The agency can keep enforcing the rule against other entities. And—coming now to an important point—private entities and individuals who like the rule can continue to rely on it, both in their business affairs and in private litigation.

Consider the FTC’s non-compete rule, which generally provides that it is an unfair method of competition (and thus a violation of the FTC Act) to include or enforce non-compete clauses. Many employers supported the rule, as illustrated by this comment on behalf of more than 400 small business owners and this comment from the small business Nolasco Medical Group. However, three APA suits were filed to challenge the rule. A judge in Pennsylvania denied preliminary relief after concluding that the challenge was unlikely to succeed on the merits. A judge in Florida entered a preliminary injunction but limited the relief to the plaintiff, a Florida real-estate company.

If nothing else had happened, a company like Nolasco—which is a small medical practice—would be free enter into contracts with doctors who also work for for-profit hospitals. If such a hospital sued Nolasco or a doctor to enforce a non-compete clause, Nolasco and the doctor could raise the FTC rule as a defense and litigate the rule’s validity in that context. Or, if a hospital threatened to enforce a non-compete clause, Nolasco and the doctor could sue the hospital and seek a declaration that the non-compete clause is unenforceable because of the FTC rule. Again, the rule’s validity could be addressed in the private litigation.

What actually happened is this: in the third APA suit, a judge in Texas entered a judgment vacating the non-compete rule universally. In other words, the judge adjudicated the rights and obligations of millions of employers and tens of millions of employees who were nonparties. 

Did the Texas judge have the power to do that? The key sentence in the Corner Post opinion shows that the answer is no. Quoting its unanimous 1996 decision in Richards v. Jefferson County, the Court explained that its “plaintiff-centric” reading of the statute of limitations “respects our ‘deep-rooted historic tradition that everyone should have his own day in court.’” Richards, in turn, held that this principle is grounded in the constitutional requirement of due process, which does not allow a court’s judgment to bind nonparties absent a properly certified class or other representative action. 

That due process principle should put the last nail in the coffin of universal vacatur and other universal remedies. The Supreme Court’s decision made clear that Corner Post remains free to challenge the Federal Reserve Board’s rule despite an earlier unsuccessful challenge brought by trade associations. By the same token, employers and employees who are not parties to the Texas case should be free to defend the FTC rule in private litigation. 

I say last nail because there should be plenty of nails in the coffin of universal remedies already. I previously argued that the major questions doctrine provides compelling reasons to interpret the APA’s general language to require party-specific relief. And I more recently argued that the same result flows from the traditional equitable principles that the Supreme Court invoked in Starbucks v. McKinney and from the Article III constraints that it invoked in FDA v. Alliance for Hippocratic Medicine and Murthy v. Missouri.

The litigation over the non-compete rule also illustrates why relief entered on an associational standing theory should be limited to those members of the organization that agreed to be bound by the judgment (as I previously argued). After the American Hospital Association filed this amicus brief in the Texas case arguing that the FTC rule is invalid, an AHA member—the premier medical center NYU Langone Health—filed this amicus brief defending the FTC rule. Simply put, there is no empirical basis to assume that by joining an association, a member implicitly authorizes the group to file lawsuits on its behalf. The Supreme Court should jettison that fiction and require a plaintiff association to produce, early in litigation, a list identifying those members that agreed to be bound.

Alisa Klein is an Associate Professor at Wilmington University School of Law who formerly worked as a career appellate litigator for the Department of Justice.