Compass Lexecon Auto Dealer Management Systems Clients Settle for $630MM (130% of estimated damages) in Class Action Litigation

On January 13, 2024, Compass Lexecon clients the Auto Dealer Management Systems (DMS) Vendor Class Plaintiffs (case 3:24-cv-00571), comprised of makers of car dealership apps, entered into a settlement agreement with Defendant CDK Global LLC (CDK), an automotive tech company. As noted in the agreement, “the settlement provides for the payment of $630 million by CDK to the Vendor Class, which is $140 million above the Vendor Class’s single damages of $490 million that it would have sought at trial. This provides extraordinary benefit to the Vendor Class. A pre-verdict settlement of 130 percent of joint-and-several damages is rare and exceptional.”

The core of Plaintiffs' claim was that Defendant CDK and co-conspirator Reynolds and Reynolds conspired to monopolize what are known as “DIS markets” resulting in significant overcharges paid by “App vendors.” Dr. Mark Israel’s work covered all economic aspects of these claims, including market definition, market power, economic evidence of conspiracy, empirical demonstration of antitrust injury, class certification, and damages. His difference-in-difference regression analysis formed the basis of the $490 million damages estimate that contributed to the final settlement number.

This outcome concluded the last in a long series of DMS cases. Compass Lexecon has been involved in these cases for more than seven years, working with Plaintiffs’ counsel at Kellogg Hansen Todd Figel & Frederick PLLC since before the filing of the first complaint. Dr. Israel submitted seven reports on topics including liability, damages, and class certification in these cases. Multiple Judges rejected Daubert challenges to his testimony, and one Judge relied on his reports in denying Defendants’ motions for summary judgment. In July 2024, US District Judge Rebecca Pallmeyer indicated that, “[t]he court has ruled numerous times now, and has done so again today, that Dr. Israel’s economic analyses related to antitrust injury are reliable.”

With respect to Dr. Israel and Compass Lexecon’s work in the matter, lead partner Michael Nemelka said “Dr. Israel and the entire Compass Lexecon team made all the difference to the incredible outcomes we achieved in the DMS cases, including and especially this settlement where CDK paid 130% of our actual damages. Dr. Israel provided the economic support for our claims, and the court repeatedly rejected every challenge defendants lodged. He also provided the damages analysis, which again the Court upheld in every respect. Not only was his work unassailable, but he and his team are wonderful to work with. Having Dr. Israel as our economic and damages expert was one of the best and most important decisions we made.”

Dr. Israel was supported by a team at Compass Lexecon led by Ian MacSwain that included Theresa Sullivan, Dan O’Brien, Josephine Xu, Prerana Nanda, Benjamin Spulber, Arela Haluci, Ziyu Fan, Chris He, Jerry Wang, Alexander Collison, and Matthew McCabe.

The DMS Vendor Class was represented by counsel from Kellogg Hansen Todd Figel & Frederick PLLC, including Michael N. Nemelka, Derek T. Ho, Aaron M. Panner, Daniel V. Dorris, Collin R. White, Bethan R. Jones, Ana N. Paul, Matthew J. Wilkins, Daren G. Zhang, and Kaleb J. LeGore.