Cox Auto., Inc. v. CDK Global, LLC (In re Dealer Mgmt. Sys. Antitrust Litig.)
360 F. Supp. 3d 788
E.D. Ill.2019Background
- Plaintiffs (Cox Automotive and subsidiaries: Autotrader, Dealer.com, Kelley Blue Book, Dealertrack, HomeNet, vAuto, VinSolutions, Xtime) provide software that depends on dealer data stored in dealer management systems (DMS). CDK and Reynolds control dominant shares of the DMS market (CDK ~45%; combined ~75% by dealers, ~90% by vehicles sold).
- Independent data integrators (e.g., Authenticom) historically accessed dealer data with dealer authorization; CDK previously touted an "open" DMS and publicly said dealers could authorize third-party access.
- In 2015 CDK allegedly "closed" its DMS and, together with Reynolds, entered written and unwritten agreements that limited third-party access, coordinated wind-downs, granted reciprocal exclusive integration channels (3PA and RCI), and sought to exclude hostile integrators.
- Plaintiffs allege CDK coerced vendors into exclusive 3PA contracts, forced long dealer renewals, and raised integration prices dramatically (allegedly up to ~900%), harming competition and raising costs for vendors and dealers.
- Plaintiffs plead claims under Section 1 (horizontal conspiracy/group boycott), Section 2 (monopolization), exclusive dealing, tying, California Cartwright Act, California UCL, CUPA, and several state-law claims; CDK moved to dismiss. The court grants in part and denies in part.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Horizontal conspiracy (Section 1) | CDK and Reynolds agreed to block third-party integrators and divide integration business, a per se illegal group boycott | Agreements merely wind down hostile access or reflect independent, parallel conduct | Denied as to conspiracy/group-boycott theories (sufficient allegations of agreement and admissions); granted as to market-division theory (no precedent treating servicing a competitor's product as "territory") |
| Exclusive dealing | CDK required vendors to use 3PA exclusively, foreclosing substantial portion of integration market and raising prices | No separate product market for integration; no substantial foreclosure; parallel channels remain | Denied as to vendor contracts (pleaded separate product market and substantial foreclosure plausible); granted as to dealer contracts (no allegation CDK required dealers to use CDK DMS exclusively) |
| Tying (Section 1) | CDK used control over DMS (tying product) to force purchase/use of integration services (tied product) | Dealers, not vendors, are the buyers of the tying product, so tying doctrine inapplicable | Granted (tying claim dismissed); court finds vendors are purchasers of integration services and dealers do not plausibly make the economic choice for integrators |
| Monopolization (Section 2) | CDK has brand-specific aftermarket monopoly over integration for its DMS and maintained it via anticompetitive agreements and exclusive dealing | Claims are barred by refusal-to-deal precedent (Trinko) or are merely Section 1 matters | Denied (plaintiffs plausibly plead brand-specific Kodak-type aftermarket power, anticompetitive conduct via conspiracy/exclusive dealing; Trinko does not shield concerted or other unlawful conduct) |
Key Cases Cited
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (pleading standard requires allegations raising plausible entitlement to relief)
- Ashcroft v. Iqbal, 556 U.S. 662 (complaints must contain more than labels and conclusions)
- Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574 (conscious parallelism vs. agreement in antitrust context)
- Eastman Kodak Co. v. Image Tech. Servs., Inc., 504 U.S. 451 (brand-specific aftermarkets and "locked-in" consumers)
- Aspen Skiing Co. v. Aspen Highlands Skiing Corp., 472 U.S. 585 (concerted refusals to deal can be unlawful)
- Toys "R" Us, Inc. v. F.T.C., 221 F.3d 928 (joint efforts by firms to deny competitors relationships can be per se illegal)
- Nw. Wholesale Stationers, Inc. v. Pac. Stationery & Printing Co., 472 U.S. 284 (discussing per se unlawful concerted efforts to disadvantage competitors)
- Republic Tobacco Co. v. N. Atl. Trading Co., 381 F.3d 717 (exclusive-dealing violates antitrust only when foreclosure is substantial)