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Dealers in Reynolds-CDK lawsuit face Jan. 2 deadline on class action status

December 28, 2018
Dealers who wish to be excluded from the class action settlement with Reynolds and Reynolds in the lawsuit over excessive DMS charges must send a first class letter, postmarked by Jan. 2, indicating that intention.
 
Dealers are urged to review information on the settlement website at https://dealershipclassdmssettlement.com, or to contact class counsel, Len Bellavia at (516) 606-6000 or Peggy Wedgworth at (646) 515-1269.
 
Letters should be addressed to Dealership Class Settlement—DMS Antitrust Litigation, c/o Epiq, Settlement Administrator, P.O. Box 6727, Portland, OR 97228-6727
 
The dealers’ class action lawsuit alleges that Reynolds and CDK engaged in an antitrust conspiracy to restrain competition in the markets for DMS services and data integration services.
 
If you choose to opt out, you will no longer be a part of the settlement class against Reynolds, and you will have to litigate your own claims. Prior to opting out or excluding your dealership from the Reynolds settlement, you should consider:

• The settlement with Reynolds avoids the risk that class members will receive nothing at all. If dealers opt out and wish to pursue their own claims against Reynolds, there are risks and costs of doing so. The risk that dealers may ultimately be unable to prove that Reynolds conspired with CDK cannot be overlooked. In this regard, it is noteworthy that the Seventh Circuit Court of Appeals, in vacating a preliminary injunction against Reynolds and CDK in the Authenticom case stated, "Until 2015, the system furnished by CDK placed no restrictions on harvesting by third-party integrators; Reynolds, in contrast, has always forbidden that practice in its system licenses." Authenticom v. CDK Global, LLC, 874 F.3d 1019, 1022 (7th Cir. 2017). 
 
• Prior to reaching settlement, Reynolds moved to dismiss the case in its entirety, on numerous grounds. (The settlement avoids the need for a ruling on the motion). One of Reynolds’s principal arguments is that dealers signed arbitration agreements requiring them to individually arbitrate their claims against Reynolds. Courts (including Judge Dow presiding over this case), have routinely enforced arbitration agreements. Thus, there is a very significant risk that Reynolds dealers, in the absence of settlement, would be required to individually arbitrate their claims against Reynolds, and incur the expenses (including all the legal expenses and expert fees). This risk, as well as other risks, are more fully addressed in our final approval brief and declaration, submitted in support of the settlement, posted on the settlement website.
 
• Additionally, the settlement releases various counterclaims that Reynolds may have against Class Members regarding the sharing of user IDs and passwords with third parties. Reynolds, however, may assert those counterclaims against dealers who opt out of the class. We encourage you and your clients to review the releases in the settlement agreement (posted on the website, Section A.1(x)-(y), ¶¶ 6-7) carefully, which, among other things: (i) "do not release, alter, or affect any existing or future contractual obligations between Reynolds and a Dealership Class Member for Reynolds to provide products or services to the Dealership Class Member and for the Dealership Class Member to pay for those products or services," and (ii) do release "any claims that Reynolds could have asserted against the Dealership Class Releases relating to the use or sharing of log-in credentials prior to the Effective Date." 
 
• Reynolds agrees to release Dealership Plaintiffs and the Class from any counterclaims that could be asserted against them, including under the Computer Fraud and Abuse Act, 18 U.S.C. § 1030 et seq., the Copyright Act, 17 U.S.C. § 501, and the Digital Millennium Copyright Act, 17 U.S.C. § 1201. Importantly, Reynolds has already asserted counterclaims against Authenticom based on allegations that implicate the dealers. See Defendant The Reynolds and Reynolds Company’s Answer to Original Complaint, Affirmative Defenses, and Counterclaims (ECF No. 226) ¶ 106 ("Reynolds’s Customer Agreements prohibit Reynolds’s dealer customers from granting third-party integrators like Authenticom access to the Reynolds DMS without Reynolds’s consent."). Dealers who opt out of the Class lose the benefit of Reynolds’s release of such counterclaims.
 
 

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