Authenticom, Inc. v. CDK Global, LLC (In re Dealer Mgmt. Sys. Antitrust Litig.)
313 F. Supp. 3d 931
E.D. Ill.2018Background
- Authenticom, a data-integrator that scrapes dealer management systems (DMS) to supply vendors, sued CDK Global and Reynolds alleging horizontal and vertical antitrust violations and tortious interference after being blocked from accessing many dealers' DMSs.
- CDK and Reynolds are dominant DMS providers (collective market share alleged ~75% by providers, ~90% by vehicles sold) and operate proprietary integration programs (CDK 3PA; Reynolds RCI) with high fees.
- In 2015 the parties executed agreements (including a Data Exchange Agreement) that allegedly limited cross-access and included provisions restricting assistance in accessing the other’s DMS; Authenticom alleges these and related conduct effectuated a conspiracy to exclude third-party integrators.
- Authenticom alleges (1) a horizontal conspiracy to block third-party integrators and to allocate single-brand aftermarkets; (2) vertical exclusive-dealing and tying arrangements with vendors and dealers that foreclose rivals; and (3) monopolization of single-brand aftermarkets. It also alleges tortious interference and price/choice harm downstream.
- The district court previously granted, and the Seventh Circuit vacated, a preliminary injunction ordering access; the Seventh Circuit emphasized firms generally have no duty to deal and directed the district court to expedite the case. This ruling addresses Rule 12(b)(6) motions to dismiss the complaint.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Authenticom’s alleged unauthorized access/cyber conduct bars its antitrust claims | Authenticom says any access issues do not preclude antitrust claims; CFAA or similar claims against it do not shield defendants from antitrust liability | Defendants argue the complaint pleads CFAA/Wisconsin cyber violations so Authenticom lacks lawful rights and antitrust injury | Court: Plaintiff's possible CFAA liability does not categorically bar antitrust claims at pleading stage; authorization is factual; claims survive this threshold challenge |
| Sufficiency of Section 1 horizontal conspiracy claim (group boycott / agreement to block integrators) | Alleged direct admissions by CDK and Reynolds executives and the 2015 agreements plausibly show an agreement to lock out integrators | Defendants contend conduct was unilateral or legitimate clarification of security/hostile-access issues and that confessions are ambiguous | Court: Denies dismissal as to horizontal conspiracy to block integrators; direct admissions and agreement terms plausibly allege agreement |
| Sufficiency of Section 1 market-allocation claim (divide single-brand aftermarkets) and antitrust injury to a competitor | Authenticom says DEA and related documents show market division and resulting harm | Defendants argue market-allocation would benefit a competitor (Authenticom) so Authenticom lacks antitrust injury | Court: Dismisses market-allocation theory without prejudice—competitor plaintiff cannot plausibly claim antitrust injury from a horizontal allocation that raises prices benefiting competitors |
| Vertical claims: exclusive dealing and tying based on dealer/vendor contracts | Authenticom alleges vendor contracts force exclusive use of 3PA/RCI and dealer contracts bar third-party access, amounting to foreclosure and (negative) tying | Defendants say these are lawful refusals to deal (Trinko/Linkline), and dealers/vendors are not plausibly the purchasers for tying analysis | Court: (a) Exclusive-dealing claim survives as to vendor contracts (pleaded foreclosure); dealer-license-based exclusive-dealing dismissed. (b) Tying claim dismissed without prejudice because dealers are not plausibly the purchasers of integration services |
| Section 2 monopolization of single-brand aftermarkets | Authenticom alleges CDK and Reynolds acquired/maintain aftermarket power via anticompetitive agreements and locking-in customers (Eastman Kodak theory) | Defendants rely on Trinko, argue no duty to deal and that any alleged access denial is lawful; they also assert knowledge/notice defeats aftermarket claim | Court: Denies dismissal of Section 2 claims as to aftermarket monopolization; factual issues (lock-in, notice, information/switching costs, secrecy provisions) make Kodak-style aftermarket claim plausible |
| Tortious interference claim | Authenticom contends defendants intentionally interfered with its vendor/dealer relationships and spread falsehoods | Defendants argue Authenticom’s vendor/dealer contracts are unenforceable due to cyber-law violations and/or their interference was privileged | Court: Denies dismissal; authorization and privilege are factual and not resolvable on pleadings |
Key Cases Cited
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (pleading standard for conspiracy requires enough factual matter to raise reasonable expectation discovery will reveal agreement)
- Ashcroft v. Iqbal, 556 U.S. 662 (plausibility pleading standard)
- Verizon Commc'ns Inc. v. Law Offices of Curtis v. Trinko, 540 U.S. 398 (no general antitrust duty to deal)
- Pacific Bell Tel. Co. v. Linkline Commc'ns, Inc., 555 U.S. 438 (no antitrust duty to share access in upstream retail contexts)
- Eastman Kodak Co. v. Image Tech. Servs., Inc., 504 U.S. 451 (single-brand aftermarket monopolization; importance of customer lock-in and information/switching costs)
- Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574 (evidentiary standard for conspiracy at summary judgment; caution against importing that standard to pleading)
- Perma Life Mufflers, Inc. v. Int'l Parts Corp., 392 U.S. 134 (in pari delicto not a defense to antitrust suits)
- Klor's, Inc. v. Broadway-Hale Stores, Inc., 359 U.S. 207 (group boycott / concerted refusal to deal treated as per se illegal)