In re Dealer Mgmt. Sys. Antitrust Litig.

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IN RE DEALER MANAGEMENT SYSTEMS ANTITRUST LITIGATION This Document Relates to: LOOP, LLC, d/b/a AUTOLOOP v. CDK GLOBAL, LLC.

MDL No. 2817

Master Nos. 18 C 864, 18 C 2521

United States District Court, N.D. Illinois, Eastern Division

November 21, 2023

MEMORANDUM OPINION AND ORDER

REBECCA R. PALLMEYER, United States District Judge.

This case is one of several consolidated for coordinated pretrial proceedings by the Judicial Panel on Multidistrict Litigation and assigned here as the “transferee” court. Pretrial proceedings are largely complete. In these circumstances, the expected protocol in multidistrict litigation (“MDL”) is that, unless the parties have waived personal jurisdiction and venue objections, the case will be remanded for trial to the district court in which it was originally filed. See 28 U.S.C. § 1407(a). Plaintiff Loop, LLC (hereinafter “AutoLoop”), asks the court to remand the case to the Western District of Wisconsin-but it was filed directly in this court, not in Wisconsin. “Direct filing” of cases in a transferee court is not uncommon, and the practice can promote efficiency and flexibility. Because no formal direct-filing order was in place, however, confusion has arisen about whether Wisconsin is in fact the “home” district for this case. As explained below, this court concludes that it is and will return this case to the JPML with a suggestion of remand to the Western District of Wisconsin.

BACKGROUND^[1]

As noted, this case was not filed in the Western District of Wisconsin, but a related case was filed against Defendant CDK Global, LLC (hereinafter “CDK”) there earlier. On May 1, 2017 Authenticom, Inc. sued CDK and the Reynolds and Reynolds Company in the Western District of Wisconsin, alleging that the two companies had engaged in anti-competitive conduct in violation of the Sherman Act. See Authenticom, Inc. v CDK Glob., LLC, No. 17-CV-318-JDP, 2017 WL 3017048, at *1 (W.D. Wis. July 14, 2017), vacated, 874 F.3d 1019 (7th Cir. 2017). Authenticom claimed that the two defendants “conspir[ed] to drive it out of business” by blocking Authenticom's access to their “dealer management systems,” which contain car dealer data necessary to Authenticom's business. Id. Authenticom sought a preliminary injunction that would require CDK and Reynolds to allow Authenticom to continue its historical practice of accessing dealer data on defendants' information systems. Id. After a three-day hearing, Chief Judge James Peterson of the Western District of Wisconsin concluded that Authenticom had established “at least a moderate chance of success in proving that [CDK] h[ad] violated the Sherman Act.” Id. Other factors weighed in favor of injunctive relief, as well: Authenticom had demonstrated a significant risk that it would face bankruptcy if defendants were not enjoined from blocking its access to their systems; and that risk outweighed countervailing harms defendants claimed to be facing if the injunction issued, including alleged increased susceptibility to cybersecurity threats. Id. Judge Peterson granted Authenticom's motion and directed the parties to negotiate the language of the injunction. Id. at *11. In fact, they reached a settlement. (See Stipulation of Dismissal with Prejudice of Authenticom's Claims Against CDK and CDK's Counterclaims Against Authenticom [1199].)

Following the Authenticom action, more than a dozen related cases were filed across the country against CDK. On February 1, 2018, these cases were consolidated in an MDL and the JPML appointed Judge Amy St. Eve to preside over the cases in the Northern District of Illinois.^[2]are material to CDK's motion requesting that this court retain the AutoLoop matter in the Northern District of Illinois for trial.

(See Transfer Order [1].) At an initial hearing [43], Mr. Derek Ho, co-lead counsel for Plaintiffs, informed Judge St. Eve that his firm anticipated filing another action in the MDL-referring to this case, on behalf of Plaintiff AutoLoop. (Ex. 2 to Pl.'s Opp. [1399-2] at 4:7-10.) Judge St. Eve observed that “it might make sense, rather than filing it in some other state and going through the process of coming here, that you can file directly here.” (Id. at 4:16-19.) Mr. Ho stated that his firm would consider the court's proposed direct filing procedure.^[3] (Id. at 4:20-21.)

On April 4, 2018, Plaintiff AutoLoop's counsel emailed counsel for Defendant CDK requesting that CDK consent to a stipulation and order; the proposed language would have confirmed that “the parties consent to AutoLoop filing its complaint in Illinois but that the complaint will be deemed filed in Wisconsin” and that “CDK would not waive its right to object to venue in Wisconsin.” (Ex. 3 to Pl.'s Opp. [1399-3] at 3.) Ms. Britt Miller counsel for Defendant, responded that CDK “is not inclined to join the stipulation,” because, in CDK's view, “AutoLoop has little connection to the W.D. Wisconsin ....” (Id. at 2.) Nevertheless, as she was “mindful of the Court's preference [for direct-filing],” Ms. Miller added that “[CDK] will not oppose” AutoLoop's motion. CDK did not consent to the motion, however, and “reserve[d] all of its rights (including as to venue).” (Id.)

On April 6, 2018, at the next status hearing in front of Judge St. Eve, the parties again addressed the issue of where to file the AutoLoop case. Below is the exchange between Mr. Ho, Ms. Miller, and Judge St. Eve:

MR. HO: One other housekeeping issue, your Honor. As I mentioned at the last status conference, we are about to file another case on behalf of another vendor. We've been working with the defendants on a stipulation by which the parties would agree -- or at least the defendants would not oppose -- a process where we would direct file in this district, but the case would be deemed to have been filed in the Western District of Wisconsin, preserving their right to object to venue.

THE COURT: That makes the most sense.

MS. MILLER: We said, your Honor, we would not -- we weren't sure why the Western District of Wisconsin. It's a Florida company, at least from what we can tell, not registered in Wisconsin. But we said if your Honor was inclined to allow a direct file, we would not oppose the motion, but we weren't going to stipulate to its filing.

THE COURT: I will allow -- and I thought my original scheduling order said that you can file -- directly file. It makes the most sense from an efficiency and cost standpoint. So, yes, you may directly file that here.

(Ex. 1 to Pl.'s Opp. [1399-1] at 44:4-23.) Mr. Ho responded that AutoLoop would directly file the case in the Northern District of Illinois and offered to “submit a proposed order, as well.” (Id. at 45:1-2.) Ms. Miller interjected and asked, “Do we need a proposed order, or do they just have to file?” (Id. at 45:3-4.) The court's clerk responded to Ms. Miller's question by directing Mr. Ho to “just file and just mention on the civil cover sheet the MDL.” (Id. at 45:5-6.) Judge St. Eve, Ms. Miller, and Mr. Ho all agreed with this procedure. (See id. at 45:7-13.)

On April 9, 2018, AutoLoop filed this class-action in the Northern District of Illinois. (See Compl. [1] in No. 18-cv-2521.) In its complaint, AutoLoop asserted that venue is proper in the Western District of Wisconsin and added in a footnote:

Pursuant to the Court's instructions at the April 6, 2018 status hearing in In re Dealer Management Systems Antitrust Litigation, No. 18 C 864 (MDL No. 2817), AutoLoop has filed this Complaint directly in the MDL court but requests that the Complaint be deemed filed in the Western District of Wisconsin and transferred to the Western District of Wisconsin for trial.

(Compl. ¶ 36 n.3; see also Am. Compl. [191] ¶ 36 n.4.)

Apart from class certification briefing, the case is now ready for trial; but where? CDK argues that this court should retain the case, filed directly in this court; AutoLoop argues that the court must remand the case to the Western District of Wisconsin pursuant to 28 U.S.C. § 1407.

DISCUSSION

The initial question before the court is whether the remand procedures of § 1407(a)^[4]govern this case. It is undisputed that a case transferred by the JPML to an MDL court (as opposed to a case filed directly in the MDL court) should be remanded to its originating court after pretrial proceedings end. Indeed, the Supreme Court squarely addressed this issue in Lexecon Inc. v. Milberg Weiss Bershad Hynes &amp Lerach, 523 U.S. 26 (1998). In Lexecon, the Court considered whether a transferee court in an MDL has the authority under § 1404(a) to transfer a case to itself for trial, or must instead remand the case to its originating court. Id. at 28. The Supreme Court unanimously held that an MDL transferee court does not rule on a § 1404(a) motion and that, instead, § 1407 “obligates the [JPML] to remand any pending case to its originating court” when pretrial proceedings conclude, absent waiver by the plaintiff. Id. at 3435. As for the circumstances when a change of venue would be appropriately ordered in a case consolidated under the MDL statute, the Court contemplated that transfer under § 1404(a) could happen after the case was remanded to the originating court. Id. at 39.

Lexecon did not involve direct filing, and Defendant CDK argues that § 1407 and Lexecon do not apply in a case like this one, where AutoLoop filed its complaint directly with the clerk of this court. Such a case should remain here, CDK argues. In support, CDK points out that the text of § 1407 does not contemplate transfer or remand of direct-filed cases. See 28 U.S.C § 1407(a) (stating that “[e]ach action so transferred shall be remanded by the panel at or before the conclusion of such pretrial proceedings to the district from which it was transferred”). Because a...