Attorneys who represented thousands of car dealers in a sprawling class action lawsuit against auto dealership software maker CDK stand to collect nearly $40 million in fees and recovered costs, after CDK agreed to pay $100 million to settle claims it used its market dominance to make the dealers pay more than they should have to use their products.
Over the next few months, automotive dealerships in Illinois and throughout the U.S. will have the opportunity file claims for a cut of the settlement.
It is unknown at this point how much each of the dealerships could reap from the settlement. According to court documents, the settlement funds that remain after paying attorneys and settlement administrators will be divided among the dealerships based on the number of claims submitted; the number of dealership locations they may have operated; and how much they can prove they used CDK software at their dealership locations since 2013.
Peggy Wedgworth
| Milberg Coleman Bryson Phillips Grossman
The settlement agreement, however, makes clear that the plaintiffs' lawyers who led the legal action will be allowed to claim up to 33% of the $100 million settlement fund in fees and an additional $7.5 million in costs.
Attorneys Peggy J. Wedgworth, Elizabeth McKenna, Robert A. Wallner, John Hughes and Michael Acciavatti, of the firm of Milberg Coleman Bryson Phillips Grossman, of New York, filed the motion for approval of the settlement with the court. They served as co-lead counsel on the matter.
"After almost seven years of litigation and extensive settlement negotiations, we have reached agreement with CDK to resolve dealership class plaintiffs’ claims. This settlement provides a significant monetary recovery for the class, and we look forward to being able to distribute funds from the settlement with CDK, as well as funds from our prior settlement with Reynolds," Wedgworth said in a statement.
Other plaintiffs' attorneys listed on the settlement agreement as serving on the so-called "plaintiffs' steering committe," include Leonard A. Bellavia, of Bellavia Blatt PC, of Mineola, New York; Daniel C. Hedlund and Michelle J. Looby, Gustafson Gluek PLLC, of Minneapolis; James Barz and Frank Richter, of Robbins Geller Rudman & Dowd LLP, of Chicago.
Robert A. Clifford, of Clifford Law Offices PC, of Chicago, is listed as liaison counsel for the MDL.
A multi-prong legal action has been pending against CDK in courts in Chicago and elsewhere since 2018 accusing CDK of violations of federal and state antitrust law.
Thousands of car dealers have filed claims against CDK in that time. Federal judges have consolidated those claims into one so-called multi district litigation before U.S. District Judge Rebecca Pallmeyer of the Northern District of Illinois court in Chicago.
The claims assert CDK abused its position as the market leader for so-called Dealer Management Systems to conspire with another company, The Reynolds and Reynolds Company, to monopolize access to essential industry data and restrain competition to force dealers to pay more for the DMS products and services than they believe they would have in an open market.
Reynolds earlier settled the claims against them for $29.5 million.
At the same time, CDK also faces additional claims, including antitrust actions from other software developers, accusing the company of unfair competition.
Judge Pallmeyer agreed in July to allow those claims to proceed as a class action.
And more recently, CDK has been hit with class actions from car dealers seeking to make CDK pay after a hack crashed DMS systems for days this summer, hamstringing car dealerships nationwide.
Those claims are not included in the most recent $100 million settlement, which was announced in mid-August, a few weeks before the dealerships' antitrust claims were set to go to trial in September.
Judge Pallmeyer granted preliminary approval to the settlement on Aug. 23.
Under that order, the judge established a schedule for what happens next. Notices of the settlement will be sent to eligible dealerships beginning Sept. 23. Dealers will have until Jan. 9, 2025, to submit claims.
In the intervening months, plaintiffs' lawyers will submit a more detailed motion in support of their fee request and a motion for final approval of the settlement.
A final approval hearing has been scheduled for Feb. 25, 2025.
CDK has been represented by attorneys Mark Filip, Kevin M. Jonke, Craig S. Primis, Matthew J. Reilly, K. Winn Allen and Katherine Katx, of Kirkland & Ellis, of Chicago and Washington, D.C.