The 9th Circuit Court of Appeals this week issued a favorable decision in the appeal of a case brought by dealer management system providers attacking an Arizona law intended to protect dealer data. This is good news for new car dealers, who have growing concerns about companies like CDK and Reynolds and Reynolds having too much control over dealer data.
CDK and Reynolds and Reynolds filed suit (CDK Global LLC v. Brnovich) challenging an Arizona statute aimed at strengthening privacy protections for consumers whose data is collected by car dealers and restricting anti-competitive business practices by technology companies that provide database services for dealers. CDK and Reynolds and Reynolds filed the appeal after the District Court ruled against them on a number of constitutional and other challenges to the Arizona statute called the “Dealer Law.” The 9th Circuit panel “affirmed the district court’s order denying plaintiffs’ motion for a preliminary injunction against enforcement of the “Dealer Law”.
Arizona passed the “Dealer Law” in 2019 to provide tools to dealers to protect consumer data in dealer systems. The Law prohibits third parties from taking any action by contract, technical means or otherwise from preventing dealers from sharing, storing, protecting, or using their data in any way they deem appropriate, and it prohibits certain excess fees charged by third parties for access to dealer data.
CDK and Reynolds & Reynolds challenged the Law shortly after its enactment, alleging a wide array of constitutional and federal statutory violations. In 2020 the Arizona District court dismissed most of the claims and denied CDK/R&R’s motion to enjoin enforcement of the Law based on the four remaining claims.
This litigation and the passage of the Dealer Law was defended by the Arizona Attorney General and the Arizona Automobile Dealers Association (“AADA”), with strong financial and other support from NADA. The 9th Circuit’s decision was a clear victory for the AADA and Arizona dealers.
This ruling allows Arizona to enforce the “Dealer Law” and is an important next step in helping to provide dealers nationwide with important tools and protections for dealer data.