CDK’s Counterclaims Dismissed, Milberg’s Dealership Class Claims to Proceed

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July 10, 2023

by Kaitlin Gagnon

Federal Court Decision Allows Dealership Class Claims To Proceed Against CDK

On June 29, 2023, Chief Judge Rebecca Pallmeyer of the Northern District of Illinois denied defendant CDK Global, LLC’s summary judgment motion to dismiss all claims brought by a nationwide class of car dealerships, represented by Milberg. The case, which was originally filed in 2018, has seen extensive fact discovery (including over 80 depositions and document/interrogatory exchanges), expert discovery and substantial motion practice.

Dealership Plaintiffs accuse defendants CDK and The Reynolds and Reynolds Company (“Reynolds”) of anticompetitive conduct in the market for “dealership management system” software (“DMS”) and a related submarket for “data integration.”

While the Dealership Class settled with Reynolds in 2019 for $29.5 million, the funds remain in escrow to be distributed to the Dealership Class upon the conclusion of the litigation against the remaining defendant, CDK.

The Court’s ruling will allow the Dealership Plaintiffs to proceed to class certification and to seek a date for a trial in federal court in the Northern District of Illinois before Chief Judge Pallmeyer.

Pursuant to the Court’s Memorandum Opinion and Order (ECF No. 1381), Dealership Plaintiffs’ claims that may go forward include:

  • Sherman Act § 1 horizontal conspiracy claim for injunctive relief;
  • Consumer Protection Claims on behalf of the Dealerships in the following states: Alaska, California, Colorado, Florida, Kansas, Nebraska, Nevada, New Hampshire, New Mexico, South Carolina, West Virginia, and Wisconsin; and
  • State Antitrust Claims on behalf of the Dealerships in the following states: Arizona, California, Hawaii, Illinois, Iowa, Kansas, Maine, Michigan, Minnesota, Mississippi, Nebraska, New Hampshire, New Mexico, New York, Oregon, Rhode Island, South Dakota, Utah, Vermont, West Virginia.

In addition, the Court extended the class period to include two additional years, currently from 2013 to 2018, and did not eliminate the possibility that the Dealerships may seek certification of a nationwide class of car dealerships certified under Illinois law.

The consumer and antitrust claims covering 26 states form the basis for a damages calculation by Dealerships’ expert, Dr. Michael Williams, who will be calculating aggregate damages to the Dealership class in the coming months.

Though a total damages figure for the entire class is not addressed in the Opinion, Dr. Williams will provide an estimated damages model that will consist of the damages for all Dealerships in the 26 states listed above who purchased DMS services from CDK or Reynolds between 2013-2018.

Dealers Prevail, CDK’s Counterclaims Eliminated

Also on June 29, 2023, the Court granted Dealerships’ motion for summary judgment on CDK’s counterclaims in its entirety (ECF No. 1382). In dismissing CDK’s counterclaims, the Court found that CDK failed to demonstrate that any of the named Dealership Plaintiffs breached their contracts with CDK by allowing independent data integrators to access CDK’s DMS without authorization.

In addition, CDK failed to establish any damages in spite of retaining a damages expert for damages calculations regarding other claims in the litigation. Though CDK also attempted to seek injunctive relief, the Court again found that CDK did not sufficiently link the alleged irreparable harm it claimed with the conduct it sought to enjoin.

The Court further held that CDK failed to set forth evidence to demonstrate that two named plaintiff dealerships had violated the Digital Millennium Copyright Act (“DMCA”). Though CDK alleged that two named plaintiffs circumvented technological controls that it implemented to prevent unauthorized third party DMS access, the Court held there was no evidence to support such a claim.

The Court concluded that CDK’s inability to provide evidence assigning the alleged DMCA violations to particular dealerships was fatal to its counterclaim. With this finding, the Court found no need to determine additional deficiencies of CDK’s counterclaim; all counterclaims against named Dealership Plaintiffs have been completely dismissed.

Peggy Wedgworth, Lead Counsel for the nationwide class of car dealerships, confirms the recent opinions allow dealers to go forward with class certification.

We will be seeking a trial date as Dealerships have waited an extended period of time for their day in court. We are also pleased with the Court’s complete dismissal of defendant CDK’s counterclaims against our named Dealership representatives.

Ms. Wedgworth noted the collective efforts of the Milberg Antitrust Team contributing to this matter, including attorneys Elizabeth McKenna, Robert Wallner, John Hughes, and Michael Acciavatti.

As Dealership Class Counsel, Ms. Wedgworth may be contacted directly with any questions.