FTC Abandons Disparate Impact, Modifies Passport, Napleton, Coulter Agreements
Federal Trade Commission Chairman Andrew Ferguson has formally announced the agency will no longer pursue claims of disparate impact, a “pernicious,” statistical analysis-based legal theory that led to widespread charges of racial discrimination against auto dealers and finance sources, among other businesses.
In a release accompany a policy statement, Ferguson says the FTC reviewed and will “modify” agreements with Napleton Inc., an Illinois dealer group; Passport Automotive Group of Maryland and Virginia; and Gregory Depaoloa, the former general manager of Arizona’s Coulter Cadillac Tempe and Tempe Buick GMC.
“Disparate-impact claims are nearly impossible to square with our colorblind Constitution,” Ferguson writes. “They impose liability for discrimination without any evidence that anyone intended to discriminate, which pushes businesses to make race-based decisions in order to avoid liability. The Commission never had authority to impose disparate-impact liability. Today, we announce that the Commission will never do so again.”
In a LinkedIn video post, attorney and Mosaic Compliance Services CEO Jim Ganther says the change does not legalize discrimination.
“Disparate impact discrimination will not be pursued, but disparate treatment discrimination will be,” Ganther warns.
Last year, President Donald Trump signed an executive order stating that disparate impact “holds that a near insurmountable presumption of unlawful discrimination exists where there are any differences in outcomes in certain circumstances among different races, sexes, or similar groups, even if there is no facially discriminatory policy or practice or discriminatory intent involved, and even if everyone has an equal opportunity to succeed.”
