Reading through the proposed vendor lawsuit led by AutoLoop against CDK – filed late last night.
Here are the initial key points of the settlement:
1. CDK to pay $630 million to the vendor class
2. Four installments ($450 million immediately, and $60 million annually for three years).
3. Settlement is $140 million above the Vendor Class’s single damages of $490 million that it would have sought at trial.
From the proposed settlement: “This provides extraordinary benefit to the Vendor Class. A pre-verdict settlement of 130 percent of joint-and-several damages is rare and exceptional.”
4. AutoLoop might seek a service award of up to $250,000 “for the hundreds of hours it spent representing the interests of the class.”
5. Class Counsel intends to request a reimbursement of up to $20 million for expenses
6. The settlement administrator may seek up to $350,000 for reimbursement
7. Approximately $609 million remain after fees and expenses are paid
8. Out of the $609 million, Class Counsel intends to request fees of up to one-third of the settlement (this is in addition to the $20 million expense fee)
9. Counsel expects $406 million to be distributed to the class members — meaning each class member could receive more than 82% of their alleged damages.
10. “The guiding principle behind the Proposed Distribution Plan is that class members will be compensated based on their proportionate share of the alleged damages, as calculated by the Vendor Class’s expert.”
Background
The initial suit was filed by MVSC in February 2017 against both CDK and Reynolds and Reynolds, alleging violation of antitrust laws.
Authenticom, owned by Steve Cottrell, jumped into the fray in May 2017, alleging both firms had violated sections of the Sherman Act in conspiring to force competing data integration service providers out of business.
Other vendors followed, as did several dealers, also suing both companies.
At the time, the battle over who controlled dealership data was at its peak. Dealers and vendors accused CDK and Reynolds and Reynolds of charging exorbitant prices via their data integration services to access the data on the dealer management systems.
The lawsuits were aggregated into multi-district litigation in the Northern District Court in Illinois in 2018. Reynolds and Reynolds “quickly” settled its lawsuit with the dealers for $29.5 million in 2018. CDK settled its dealer lawsuit in August 2024 for $100 million.
Reynolds and Reynolds settled all of the lawsuits it was involved with over the next couple of years. CDK also settled all of the lawsuits except for the one filed by AutoLoop in 2018.
Last year, the judge overseeing the MDL litigation ruled the vendor lawsuit (now being led by AutoLoop, representing 244 other vendors) had met the standard to certify the suit into a class action and kicked the suit to Wisconsin’s Western District Court.
Check out The Banks Report for historical and comprehensive analysis of the vendor (and dealer) lawsuits in the data arena involving vendors and the DMS providers.
