A Texas federal court recently declined to enjoin an administrative action brought by the Federal Trade Commission ("FTC") against Asbury Automotive Group ("Asbury"), one of the largest automobile dealer groups in the United States, dismissing much of the dealer group's constitutional challenge to the FTC's authority to adjudicate claims for violation of Section 5 of the FTC Act before an in-house administrative law judge. The court's decision left open the possibility, however, that Asbury might ultimately be able to show the agency's in-house administrative proceeding would deprive the dealer group of its right to proceed in an Article III court because "private rights" were implicated—even though the FTC is seeking only to enjoin future violations—further complicating the already stymied efforts of the agency to curb unfair and deceptive practices purportedly employed by some new car dealers.
Asbury Challenges the FTC Enforcement Action
In August 2024, the FTC announced it was bringing an enforcement action against three Texas dealerships owned by Asbury for allegedly charging consumers for "add-on items" those consumers had not agreed to purchase or were told were required, and for allegedly discriminating against "Black and Latino consumers" by targeting them with "higher-priced add-ons." The administrative complaint filed by the FTC alleged the dealerships had engaged in unfair and deceptive acts and practices in violation of the FTC Act and the Equal Credit Opportunity Act, and gave notice of a hearing before an in-house administrative law judge in Washington, DC to determine whether the agency should issue an injunction barring Asbury from engaging in further unlawful conduct.
In October 2024, Asbury filed a lawsuit against the FTC and the then-sitting commissioners of that agency in federal court in Texas, seeking an order enjoining the administrative proceeding and declaring it unconstitutional. The dealer group argued the FTC's administrative proceeding violated Article III of the Constitution by adjudicating private rights in a non-Article IIII tribunal; deprived them of their Seventh Amendment right to a jury trial; violated their Fifth Amendment due process rights; and was unlawful because the FTC administrative law judges and commissioners were unconstitutionally protected from removal. In November 2024, the FTC moved to dismiss Asbury's claims, twice agreeing since then to delay the administrative proceedings while awaiting a decision of the federal court on that motion.
Court Denies Preliminary Injunction Motion
On August 11, 2025, the court granted the overwhelming majority of the FTC's motion to dismiss, finding it lacked subject matter jurisdiction to hear claims for violation of the Fifth and Seventh Amendments and that Asbury's complaint failed to state a claim on its argument that the FTC administrative law judges and commissioners were unconstitutionally protected from removal. The court found that it could not resolve Asbury's argument that the administrative proceeding violated Article III by adjudicating private rights, and instead invited the parties to brief the issues for summary judgment. In the meantime, the court concluded that that the dealer group had failed to demonstrate a "substantial likelihood" of success on the merits of its claims, so that preliminary injunctive relief was not appropriate.
Asbury has since indicated its intent to file a motion for reconsideration of the court's order, and the parties have proposed competing schedules for the court to resolve that motion and the FTC's anticipated summary judgment motion. Meanwhile, the FTC on August 5, 2025 entered an order delaying the evidentiary hearing in the administrative proceeding until March 19, 2026. The federal court's ultimate decision on Asbury's challenge to the administrative proceeding on the grounds that it violates Article III by adjudicating private rights could have a profound impact on how the FTC pursues claims against car dealers allegedly engaged in unfair and deceptive acts and practices in violation of Section 5 of the FTC Act.
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