A group of North Texas car dealerships says the Federal Trade Commission is pursuing an unconstitutional administrative process to accuse three dealerships of unethical and discriminatory sales practices against Black and Hispanic customers, according to a lawsuit filed Friday.
The FTC filed an administrative complaint against Asbury Automotive Group — which owns three David McDavid dealerships in North Texas — and general manager Ali Benli in August for allegedly saddling customers with hidden fees for unwanted add-on products. Benli and the dealerships allegedly charged Black and Hispanic customers hundreds more on average for those same add-ons.
But in a lawsuit filed Oct. 4 in the U.S. Northern District of Texas, Asbury alleges the underlying administrative process is unconstitutional because, among other reasons, the FTC has refused to name the customers who were harmed by the practices or show evidence of any complaints made.
“The injury here simply arises from the fact that the Asbury Plaintiffs are being subjected to a constitutionally infirm proceeding,” the suit states. “Once the harm is done, it cannot be undone. Any subsequent judicial review of the Asbury Plaintiffs’ claims would come too late in the game to be meaningfully remedied.”
Asbury wants a federal judge to stop the administrative process from moving forward until the merits of the company’s new countersuit are decided. An FTC spokesperson said the commission currently has no comment on the suit.
The FTC issues administrative complaints when it has reason to believe the law is being violated and a proceeding is in the public interest. The FTC alleged wrongdoing at three David McDavid locations: the Ford location in Fort Worth, the Honda location in Frisco and the Honda location in Irving.
Ed Burbach, the lead attorney for Asbury Automotive, denied the allegations of deceitful and racially discriminatory practices by the dealerships. If the FTC moves forward with its claims, Burbach said the agency needs to provide proof of the methods and surveys it used to build its case.
"I think if they would have done it that, by now, if the allegations were as they claimed they are, any injured consumers — if anybody — would have been taken care of a long time ago," he said.
According to the lawsuit, the FTC brought the complaint after Asbury didn’t agree to a proposed consent order that would have prevented the dealerships from selling some protective car products supplied by third parties. The order also would have required Asbury to pay “an exorbitant payment” to stop the FTC from putting out a press release and filing the administrative claims, according to the lawsuit.
Asbury says the FTC’s actions violate the Constitution because the commission is attempting to settle issues of private rights in an administrative proceeding. The proceedings also violate the company’s right to a jury trial, Asbury alleges — the evidentiary hearing over the FTC’s allegations, scheduled for April 16, 2025, would be a non-jury trial.
Administrative Law Judge Dania Ayoubi can’t be removed from Asbury’s case unless the U.S. Merit Systems Protection Board establishes and determines good cause, and only the president has the power to remove commissioners from the FTC if there's “inefficiency, neglect of duty, or malfeasance in office.”
This unconstitutionally protects the people presiding over the process, Asbury argues.
“The result is that enforcement actions that can have wide-ranging impacts on the American economy are currently taken by unelected individuals that are not controlled by the President,” the suit states.
The FTC voted unanimously to bring the complaint against Asbury, but two commissioners issued statements with further commentary at the time. Commissioner Melissa Holyoak cautioned the FTC to “tread carefully” in the methods it’s using to make a case against the car dealerships.
“In guidance to the public—and, when it would not compromise our enforcement, during pre-litigation discussions with potential defendants—the Commission and Commission staff should be clear about the methodology the Commission uses to assess liability under (the Equal Credit Opportunity Act),” Holyoak wrote. “Lack of awareness of agency enforcement methodology can lead to significant backlash.”
Commissioner Andrew N. Ferguson wrote that while the FTC settled similar claims against Coulter Motor Company for violating Section 5 of the Federal Trade Commission Act earlier this year, Asbury made it clear that the company would challenge the FTC in court.
“The reader can do the math,” Ferguson wrote. “The majority has advanced its novel theory in a case no court will decide but omitted it from a proceeding that could very well go to court. The only inference to draw is that the majority does not want a court to look under the hood of its new Section 5 theory.”
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