CDK Global loses 2 court decisions as antitrust lawsuit advances

A federal judge allowed a proposed class-action lawsuit to proceed against CDK Global alleging the dealership management system giant colluded with a rival to reduce competition and boost prices for dealers.

A separate but related decision also dismissed CDK's counterclaims, granting the dealerships' motion for summary judgment. Both decisions set the stage for the case to go to trial after a multiyear process, according to Leonard Bellavia, who is representing the plaintiffs in the lawsuit.

"The fact that CDK counterclaimed, however futile, actually proved our point that it has an illegal stranglehold on its dealer customers," Bellavia told Automotive News.

A CDK spokesperson said the company does not comment on pending litigation.

CDK's summary judgment motion to dismiss all claims brought by the dealership-driven case was denied in a June 29 ruling by U.S. District Court Chief Judge Rebecca Pallmeyer of the Northern District of Illinois. It is an incremental decision but lets the dealership plaintiffs proceed and seek a trial date in front of Pallmeyer, Bellavia said.

In granting the motion for summary judgment, the court ruled CDK failed to prove the dealership plaintiffs violated the Digital Millennium Copyright Act, citing a lack of evidence that the dealership plaintiffs worked around CDK technological controls to prevent unauthorized third-party DMS access. The DMCA is a federal law dating to 1998 that governs copyright infringement issues and internet protocols. CDK had alleged that the dealership plaintiffs breached their contracts with CDK by letting independent data integrators access CDK's dealership management system without approval.

Plaintiffs include 17 automotive dealerships in Illinois, Massachusetts, Minnesota, Missouri, New Jersey and New York, according to legal documents.

The two decisions combined allow the dealerships' class action-related consumer protection claims to proceed in 12 states and state antitrust claims to proceed in 20 states, some of which overlap. Bellavia said the law firm is seeking named dealer representatives for the proposed antitrust lawsuit in 15 additional states.

This is the latest development in an ongoing saga that goes back to at least 2017 when a dealership proposed class-action lawsuit was filed against CDK and rival Reynolds and Reynolds Co. accusing both companies of federal and state antitrust violations.

The suit alleges, in part, that CDK and Reynolds essentially formed a duopoly to corner the market for data integration service programs that extract data from dealership management systems that is then used by application vendors.

Plaintiffs include dealerships ACA Motors. Inc./Continental Acura in Ill., Baystate Ford in Massachusetts and Cherry Hill Jaguar in New Jersey.

Reynolds previously agreed to pay $29.5 million to settle the auto dealer class action in 2018, though settlement funds paid by Reynolds are being held in escrow pending the outcome of the case against CDK. Data integration service provider Authenticom also had filed an antitrust lawsuit against Reynolds, but that case was settled in May 2022; CDK settled with Authenticom in November 2020.

Cox Automotive had also sued CDK Global with its own antitrust claims, but the dealership software giant reached an undisclosed financial settlement with Cox in 2019. CDK in 2019 also settled with MVSC (Motor Vehicle Software Corp.), an electronic vehicle registration and titling services vendor that had sued it and Reynolds alleging antitrust behavior for alleged illegal blocking of MVSC from joining their data access programs.