CDK Global, the leading US dealer management system (DMS) supplier, has just settled a long-running dispute with dealers for allegedly overcharging its clients.

CDK Global has agreed to pay $US100 million ($A147 million) in a settlement that will avoid the matter going for trial.

While the settlement has still to be signed off by a court, the dispute was due to be heard at a trial set down for September in the U.S. District Court for the Northern District of Illinois.Settlement at this point avoids CDK being publicly exposed to prolonged, detailed and potentially embarrassing evidence that would have been led during the court case which was brought by thousands of aggrieved dealers.  

According to a report by Reuters, the plaintiffs alleged CDK violated antitrust law by conspiring to eliminate competition among vendors that need to access dealer data to create apps for dealers. 

Those apps could include inventory management, repair orders, warranty services and other functions within dealer-management systems.

CDK Group denied the claims and, as part of the settlement, CDK admits no wrong-doing.  

The settlement comes in the midst of a nightmare time for the DMS market leader.

Just weeks ago CDK Global featured in the worst ransom attack ever in car retailing involving the locking of the management systems of some 15,000 North American dealers said to have cost car retailers nearly a billion dollars in lost sales and recovery costs. 

According to the website DealerLaw.com, 12,000 dealers have already signed on to a class action for damages they suffered in the ransom attack; adding further to the CDK’s legal woes.

Meanwhile, the just-settled lawsuit regarding data charges of dealers was originally filed in 2017 against CDK and Reynolds & Reynolds. Reynolds had earlier settled the class action for $US30 million. As with CDK Global, Reynolds & Reynolds admitted no wrong-doing.

The core grievance alleged in the class action lawsuit revolves around dealers being charged additional fees for access to the dealers’ own data where it was being used to perform services for dealers by third-party vendors.

The CDK Global settlement covers up to 17,000 dealership rooftops.Len Bellavia, founding partner of the law firm Bellavia Blatt, also known as DealerLaw.com, said in a statement: “Dealers were essentially being overcharged for access to their own data and the class action mechanism allowed us to consolidate those complaints into a collective legal action that resulted in a significant settlement.”

Mr Bellavia, one of the attorneys representing the dealership plaintiffs in the lawsuit, said: “It shows how dealers can collaborate and collectively seek redress on a nationwide scale by joining forces and working together.

“The case sets a precedent for how class actions can address systemic problems in the automotive industry.

“This case is not just about a monetary settlement; it (has) changed the competitive landscape of the DMS market.”

The law firm said the settlement will indirectly promote a more competitive DMS market “by challenging the duopoly control of CDK and Reynolds”.

It said the lawsuit has led to increased competition in the DMS space as new vendors enter the market. 

“It is expected that this increased competition will lead to more competitive pricing for dealers in the future.”

CDK, which also is paying up to $250,000 for “notice and claims administration” costs, said it was glad to move on from the long legal dispute.“We are pleased to bring the long-standing DMS antitrust dispute filed by dealers in 2017 to a conclusion and move forward,” a CDK spokesperson said. 

“As we’ve always done, we will continue to empower dealers with tools and capabilities that allow them to control their data access and the choice of which vendors to share data with.”

According to DealerLaw.com, previous antitrust lawsuits against Reynolds and CDK have also been settled.

A data integration service provider, Authenticom, had filed an antitrust lawsuit against Reynolds, but that case was settled in May 2022; CDK settled with Authenticom in November 2020.

Cox Automotive also sued CDK Global with its own antitrust claims. This was concluded with an undisclosed financial settlement with Cox in 2019. 

CDK in 2019 also settled with 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 a vendor from joining its data access programs.

CDK faces other legal claims. 

Reuters reports that 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.

Chief U.S. District Judge Rebecca Pallmeyer 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.

By John Mellor