On April 16, U.S. District Judge Amy J. St. Eve appointed attorneys from Millberg Tadler Phillips Grossman LLP and Kellogg Hansen Todd Figel & Frederick PLLC as co-lead plaintiffs’ counsel in antitrust multidistrict litigation that links CDK Global LLC and Reynolds and Reynolds Co. to allegedly monopolizing car sales and service data in software licensed to auto dealerships.
Judge St. Eve signed the appointment of P Derek T. Ho of Kellog Hansen as the interim lead counsel for plaintiff Authenticom Inc. and Peggy J. Wedgworth of Millberg Tadler as interim lead counsel for multiple auto dealers suing over restricted access to information in computerized “dealer management systems.” These systems are the software platforms that are used to run the everyday operations of auto dealerships including payroll, inventory, accounting, sales, parts, service, finance and insurance. The “dealer management system” was developed by auto sales industry giants CDK and Reynolds.
For over a year, Ho has led a Kellogg Hansen team of antitrust and complex commercial litigators representing Authenticom, a third-party data integrator that accumulates or “scrapes” data from a CDK- or Reynolds-owned dealer management systems and converts it into a more user friendly format such that auto dealers can then access the systems through apps.
The claim is that CDK and Reynolds allegedly conspired in 2015 to prevent middlemen independent data integrators, such as Authenticom, from accessing their proprietary software. The goal was to cut them off from the dealer management system in order to monopolize the market for themselves. In addition, they sought out to bring this business to their own affiliates offering digital car registration or title services.
Authenticom claims that this conspiracy hurt their business because without the access to big data management systems, it was left with the less attractive options of either creating their own databases directly for dealerships or losing the chance to do business with a large majority of dealerships overall.
Furthermore, due to their collusion to exclude Authenticom from accessing the dealer management systems, CDK and Reynolds were able to dramatically raise the prices for their services. Authenticom had charged $50 per month to dealers for their services before the alleged conspiracy began. Afterwards, Reynolds and CDK began to charge $893 and $735 per month for their respective services.
Authenticom began legal proceedings against CDK and Reynolds in a Wisconsin federal court in May 2017, claiming that the alleged 2015 conspiracy was a violation of the Sherman Act and scored a preliminary injunction barring CDK and Reynolds from restricting Authenticom’s access.
The Seventh Circuit, however, vacated that injunction seven months later, ordering the district court to reconsider the merits of Authenticom’s claims.
With Authenticom’s representations demonstrating a need for a quick resolution in order to not go out of business, the appellate panel urged the district court “to do what it can to expedite its final judgment,” according to the Nov. 6 ruling.
Meanwhile, last October, the first proposed class action from auto dealerships was filed in New Jersey over the escalating costs associated with CDK’s and Reynolds’ new restrictions on access to their DMS. About a dozen other putative class actions were filed later on across the country before being consolidated by the Judicial Panel on Multidistrict Litigation. The consolidated case was then transferred to the Northern District of Illinois.
The plaintiffs are represented by Derek T. Ho of Kellogg Hansen Todd Figel & Frederick PLLC, Peggy J. Wedgworth of Milberg Tadler Phillips Grossman LLP, Robert A. Clifford of Clifford Law Offices PC, Leonard A. Bellavia of Bellavia Blatt PC, Daniel Hedlund and Michelle Looby of Gustafson Glueck PLLC, James Barz and Frank Richter of Robbins Geller Rudman & David LLP.
CDK Global is represented by Britt M. Miller, Matthew D. Provance and Mark W. Ryan of Mayer Brown LLP.
Reynolds & Reynolds Co. is represented by Aundrea K. Gulley, Brian T. Ross and Ross M. MacDonald of Gibbs & Bruns LLP, Michael P.A. Cohen and Leo D. Caseria of Sheppard Mullin Richter & Hampton LLP.
The case is In Re: Dealer Management Systems Antitrust Litigation, case number 1:18-cv-00864 or MDL number 2817, in the U.S. District Court for the Northern District of Illinois.