May 8 (Reuters) - A progressive watchdog group says a

Texas federal judge should recuse himself from a lawsuit

challenging the U.S. Federal Trade Commission's ban on

noncompete agreements commonly signed by workers because he owns

stock in tech companies that would benefit if the rule is struck

down.

U.S. District Judge J. Campbell Barker in Tyler, Texas, owns

up to $500,000 of shares in Apple ( AAPL ), up to $100,000 in IBM ( IBM ) and a

smaller amount in Amazon.com ( AMZN ), according to financial disclosure

reports, all companies that have been involved in litigation

over their use of noncompete agreements.

Those investments are sufficient to disqualify Barker from

presiding over a challenge to the FTC rule filed last month by

the U.S. Chamber of Commerce, the nation's largest business

lobby, and other business groups, said Liz Zelnick of

Accountable.US, which conducts research on the relationships

between government and special interest groups.

"If Judge Barker should decide millions of Americans are not

free to seek better pay and working conditions, big businesses

that abuse the noncompete practice stand to gain and so would

their wealthy investors like Barker," she said.

Barker, an appointee of Republican former President Donald

Trump, and the Chamber did not respond to requests for comment.

An FTC spokeswoman declined to comment.

Barker also owns stock in a number of energy, retail and

pharmaceutical companies, among other investments, according to

disclosure reports.

Tech companies like Apple ( AAPL ) and Amazon ( AMZN ) have a particular

interest in using noncompete agreements that prohibit employees

from joining their employers' rivals or launch competing

businesses to protect valuable trade secrets, and the size of

Barker's investments mean he has too much at stake to

impartially handle the case, said Zelnick, who oversees

Accountable.US's work on economic issues.

But the companies in which Barker invests are not parties to

the lawsuit, and it is not clear that the judge's interests

would be so affected by the outcome of the case that recusal is

warranted, said Stephen Gillers, a professor at NYU School of

Law and expert on legal ethics.

"I don't think we can say that the inability to use

noncompete clauses will so reduce the companies' profits and

then their stock prices so as to substantially reduce the value

of the judge's stock," Gillers said.

In March, U.S. District Judge Reed O'Connor in Fort Worth,

Texas, recused himself from the Chamber's separate lawsuit over

a federal agency's rule capping credit card late fees after

Accountable.US raised concerns about the judge's investments.

O'Connor, who did not explain his recusal, owns substantial

amounts of stock in credit card companies, according to

financial disclosures. Judges are required to report the

approximate value of stock holdings and not precise amounts.

The FTC rule, which was approved by the agency last month,

would ban virtually all agreements signed by workers not to join

their employers' rivals or launch competing businesses.

The agency and supporters of the ban say noncompete

agreements violate U.S. antitrust laws and suppress wages. But

business groups counter that the agreements are crucial for

protecting trade secrets and investments in recruiting and

training workers.

At least three lawsuits challenging the rule, including the

one by the Chamber, allege that the FTC lacks the legal

authority to ban practices that it deems unfair methods of

competition.

Barker last week stayed the Chamber's lawsuit pending the

outcome of a nearly identical challenge to the rule filed by tax

service firm Ryan in Waco, Texas federal court.

The case is Chamber of Commerce of the United States of

America v. Federal Trade Commission, U.S. District Court for the

Eastern District of Texas, No. 6:24-cv-00148.

For the business groups: Jeff Wall of Sullivan & Cromwell;

Michael Jones of Potter Minton; Tyler Badgley and Jordan Von

Bokern of the U.S. Chamber Litigation Center

For the FTC: Rachael Westmoreland of the U.S. Department of

Justice

Read more:

US bans worker 'noncompete' agreements as business groups

vow to sue

US Chamber of Commerce sues FTC for ban on noncompete

agreements

US ban on worker noncompetes faces uphill legal battle

US judge pauses Chamber's legal challenge to FTC noncompete

ban

Judge recuses from CFPB credit card fee rule case; conflicts

raised

(Reporting by Daniel Wiessner in Albany, New York)