CDK Global will pay $100 million to settle a class action by auto dealerships claiming they overpaid for the company’s dealer management systems.
Lawyers representing a class of thousands of dealers filed the proposed settlement on Aug. 16 in Chicago federal court, according to a Reuters story. The accord requires a judge’s approval. A trial in the dealers’ case had been set for September.
The plaintiffs had alleged CDK violated antitrust law by conspiring to eliminate competition among vendors that need to access dealer data to create apps–such as inventory management, repair orders, warranty services and other functions within dealer-management systems—for dealers.
Lawsuit Details
The proposed settlement covers purchases of dealer management systems from CDK and Reynolds & Reynolds since September 2013. Reynolds in 2018 settled claims lodged by car dealers for nearly $30 million. Texas-based CDK sells software platforms to dealers to run their daily sales, financing and service operations.
“It’s a good day for dealers,” Leonard Bellavia of Bellavia Blatt in Mineola, N.Y., one of the attorneys representing the dealership plaintiffs in the lawsuit told Automotive News . “It shows how dealers can collaborate and collectively seek redress on a nationwide scale by joining forces and working together.”
CDK faces other legal claims over its business practices.
Cases Pending
A judge last month ruled software vendors can band together as a class to sue CDK for allegedly restricting access to data and causing them to pay hundreds of millions of dollars in overcharges. A U.S. District Judge said AutoLoop, which sells software to thousands of dealerships, had met the legal standard to certify its 2018 lawsuit as a class action with hundreds of other auto industry vendors.
And looming is class-action lawsuit from the ransomware attack by the BlackSuit cybercriminal gang, which encrypted key parts of CDK’s network. CDK Global was forced to shut down most of its operations, paralyzing auto dealerships that rely on its software.
The Texas-based company faces at least eight lawsuits from auto dealerships over cyberattacks that took down the software provider’s dealer management system, crippling car sellers’ operations.
Cyberattack Fallout
The complaints filed in the U.S. District Court for the Northern District of Illinois and the U.S. District Court for the Southern District of Florida both allege that the attack exposed consumer personal information and caused over 15,000 dealerships’ sales, financing, servicing and payroll operations to stop. CDK also faces several other lawsuits in the Northern District of Illinois filed by consumers who were allegedly affected by the breach.
The complaints allege that CDK negligently failed to protect consumer information and also alleges damages related to loss of commissions and sales.
CDK, which did not admit wrongdoing in the settlement last week, controls approximately 50% of the dealership management software market in the US and serves around 15,000 auto dealerships across North America.
