Melissa Holyoak and Andrew Ferguson are the two newest commissioners of the Federal Trade Commission, having been sworn into their positions in March and April, respectively.

But Holyoak and Ferguson certainly are not bashful when questioning how the FTC operates, especially in recent days when reviewing actions involving car dealerships.

On Friday, Holyoak shared a 277-word, single-page statement following the FTC proceeding with allegations of “payment packing” and more involving a trio of Texas dealerships that are part of Asbury Automotive Group.

What makes the perspective Holyoak even more interesting is the fact that most recently, she served as solicitor general with the Utah attorney general’s office, where she oversaw the civil appeals, criminal appeals, constitutional defense and special litigation, and antitrust and data privacy divisions.

On a federal level, the solicitor general determines the cases in which Supreme Court review will be sought by the government and the positions the government will take before the court.

So, take a look at what Holyoak said following the announcement involving Asbury, where she stated from the start that “I vote to bring this case because I have reason to believe respondents are violating the law.”

Holyoak continued, saying she’s generally concerned about the FTC’s approach to enforcing the Equal Credit Opportunity Act (ECOA).

“First: To the extent we deploy methods we have not yet tested in court, we must tread carefully,” Holyoak said in her statement. “For example, we should use the most relevant and reliable data sets for the evaluation of the conduct in question, and control for all relevant factors that could affect the conclusions of any statistical analysis. When that’s not possible, we should explore other ways to establish our claims.

“Second: 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 ECOA. Lack of awareness of agency enforcement methodology can lead to significant backlash,” she continued.

“Third: The commission should carefully consider the propriety of bringing an ECOA claim based on a disparate impact theory3 as well as use of such theory against an individual defendant,” Holyoak went on to say.

“Fourth: Operating with these principles in mind will benefit the Commission and consumers,” she added. “The cases we choose to bring will be stronger. Settlement negotiations will be more productive and will result in faster relief for consumers. Companies will better understand our approach and their potential legal obligations. Ultimately, consumers will benefit.”

Holyoak closed with a line that made me think of a scene of Law & Order, one of my favorite TV shows.

“We should embrace transparency, not shrink from it,” she said.

(Insert Law & Order scene change music here).

Meanwhile, just like he did with the matter associated with Coulter Motor Co., and its Arizona franchised stores the FTC is looking to penalize, Ferguson gave his reservations about the FTC leveraging disparate impact too much to make its case.

“The majority’s disparate treatment of Asbury and Coulter is a particularly stark example of a dangerous trend taking hold in the commission,” Ferguson said in his statement following the Asbury announcement. “The majority has developed a penchant for pressing aggressive and novel theories in complaints it knows will not be litigated and relying on those unadjudicated complaints as a form of precedent for subsequent commission action.”

Like Holyoak, Ferguson also most recently served as a solicitor general, but further to the East in Virginia. Prior to that position, Ferguson served as chief counsel to Sen. Mitch McConnell of Kentucky, the Republican leader of the U.S. Senate.

So, are these actions involving car dealers just politics? Maybe. But here’s what Ferguson said about how the FTC is progressing with these actions, creating at least three problems, in his opinion.

“First, unadjudicated complaints are not the law,” Ferguson said. “A complaint is an accusation, nothing more. It is subject neither to adversarial testing — the defining feature of the American legal tradition — nor to adjudication by the commission or an impartial Article III judge. It signals only that a majority of the commission has ‘reason to believe’ — a capacious ‘standard … committed to each Commissioner’s discretion’ — that the defendant violated the law.

“Settlements do not alter the analysis,” he continued. “A firm may settle because it believes it broke the law and wishes to rectify that violation without the expense of litigation.13 But many firms settle even if they honestly believe they did nothing wrong and that they would prevail in litigation. Those firms reasonably conclude that a swift end to the commission’s investigation or threatened enforcement advances their interests more than a litigation victory.

“A settlement extracted from an innocent party reveals much about the commission’s power, but nothing about the law,” Ferguson added.

Next, Ferguson brought lawmakers into his discussion.

“The overtness with which the majority dodges judicial review frustrates Congress’s design of (Section 5 of the Federal Trade Commission Act) and damages the commission’s legitimacy,” he said. “Congress did not give the commission the power to decide on its own which practices were unfair.

“Our role is to issue a complaint if we have reason to believe conduct is unfair, and then either determine in our own administrative proceedings whether the conduct is in fact unfair or else support our complaint in an Article III district court with evidence and argument,” he continued.

Furthermore, Ferguson touches on processes and outcomes that perhaps isn’t much of a stretch to think has been considered by compliance officers and legal counsels of dealerships and finance companies, too.

“Finally, this practice generates perverse incentives,” Ferguson said. “The majority has pushed its novel discrimination theory only in unadjudicated complaints and omitted it from complaints alleging substantively identical conduct that might make their way into court. But it continues to rely on the untested theory as grounds to enforce Section 5 — and therefore as grounds to coerce regulated firms into compliance.

“The majority thus creates for itself an endlessly recursive legal loop,” he went on to say. “It develops a novel legal theory to accuse a firm of misconduct; the firm does not resist the accusation, content to settle so that the commission goes away; the majority then treats the accusation as ‘the law;’ and the majority enforces the accusation-cum-law in future cases.”

By the way, the majority that Ferguson references include three commissioners. FTC chair Lina Khan joined in June 2021. Rebecca Kelly Slaughter has been with the FTC the longest among the five commissioners, having been sworn in on May 2, 2018. And Alvaro Bedoya has been with the FTC since May 16, 2022.

While perhaps complete gridlock can be avoided at the FTC since 3-2 votes could unfold regularly, the recent perspectives of the newest commissioners certainly gives off the sentiment that the new folks are questioning how things are being done.

And car dealers appear to be a prime subject for arguments to happen.

“I do not begrudge my friends in the majority their right to pursue novel, aggressive enforcement theories in which they earnestly believe,” Ferguson said.

Let’s all see what surfaces next.

Nick Zulovich is a senior editor with Cherokee Media Group and can be reached at nzulovich@cherokeemediagroup.com.