Dealer backlash intensifies over OEM association letter to DOJ – Len Bellavia | DealerLaw.com

A recent letter from the Alliance for Automotive Innovation to the U.S. Department of Justice (DOJ) has initiated intense backlash within the automotive retail industry. The letter, which calls on the DOJ to examine state dealership, franchise, and warranty laws, has been labeled a “declaration of war” by many in the dealer community. On the latest episode of CBT Now, we are joined by Len Bellavia, Esq., founding partner at DealerLaw.com, to unpack the legal and strategic implications of this move and what it could mean for the future of dealer-manufacture relationships.

Bellavia clearly stated that the automaker group’s letter was not only inflammatory but also strategically unwise. He argues that the Alliance misuses an executive order originally signed by President Trump in its appeal to the DOJ. This order, which is meant to support small business startups, is being used as a tool to undermine decades of state-level franchise protections.

At the core of the Alliance’s arguments is the push to eliminate revealable market area protection. These laws prevent manufacturers from placing new dealerships near existing ones, a safeguard common across franchise industries and essential for protecting dealer investments. Bellavia argues that removing such protections would pave the way for manufacturers to saturate markets and squeeze dealers out of viability.

He further warns that this could be a prelude to something more aggressive: the push toward direct-to-consumer sales. Bellavia noted that this could be seen as a legal and public relations tactic designed to weaken dealer leverage before introducing new, potentially monopolistic sales models.

Despite the seriousness of the challenge, Bellavia remains optimistic about the industry’s responses. He praised the National Automobile Dealer Association (NADA) for issuing a detailed rebuttal and encouraged all dealers to read the Alliance’s letter to understand what’s at stake. Additionally, he predicts that the fallout will ultimately strengthen the dealer community’s position.

The letter, he suggests, could serve as a powerful legal tool for dealers to push back against costly manufacturing mandates, such as multi-million-dollar facility renovations, forcing inventory acceptance, or inequitable warranty compensation.

“I would think that every general counsel for every OEM should disavow any participation or approval of this letter if they’re smart.”

Bellavia also addressed the constitutional and legislative barriers standing in the Alliance’s way. Under the Supremacy Clause, federal law can override state law, but no federal legislation currently governs dealer franchise frameworks. Instead, over the past 70–80 years, bipartisan, state-specific processes have established these protections, which manufacturers have consistently failed to overturn.

He concluded by speculating that the Alliance may face internal turmoil as a result of the fallout.

 

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Alliance, NADA clash in ‘holy war’ over state franchise laws in Justice Department review

The Alliance for Automotive Innovation has asked the U.S. Department of Justice to examine whether state franchise laws restrict competition and harm consumers, provoking a battle with the National Automobile Dealers Association in an auto industry clash of the titans.

The alliance’s May 27 letter, addressed to the government’s new Anticompetitive Regulations Task Force, specifically asks the Justice Department to examine state laws governing vehicle warranty service and state laws that limit establishing franchised new-vehicle dealerships in certain areas.

 

NADA views the alliance’s actions as “a direct attack to the franchise system,” the group told its board and its Automotive Trade Association Executives in a July 14 email obtained by Automotive News. The Automotive Trade Association Executives represent more than 100 state and metropolitan franchised new-car dealer associations in the U.S. and Canada.

The alliance represents major U.S. automakers, and NADA represents more than 16,000 franchised car dealers.

“If there is such thing as a holy war in the franchise world, it’s a holy war,” said Don Hall, CEO of the Virginia Automobile Dealers Association. The alliance’s letter is “an affront to this industry.”

The U.S. Department of Justice did not respond to a request for comment. It established the Anticompetitive Regulations Task Force in March as part of an effort to eliminate anticompetitive state and federal laws and regulation that “undermine free market competition and harm consumers, workers and businesses.”

By:
Molly Boigon
July 16, 2025 11:36 AM
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Len Bellavia urges dealers to take action as OEM practices and tariffs threaten profits

As the automotive industry braces for the financial ripple effect of U.S. tariffs on Chinese goods, Len Bellavia, founding partner of Bellavia Blatt and a prominent attorney for dealers, is urging retailers to shift focus from inventory constraints to long-term operations profitability and legal preparedness. During the latest episode of Inside Automotive, Bellavia outlines the growing list of manufacturer tactics, intentional or otherwise, that could cost individual dealers hundreds of thousands, if not millions, in annual gross profit.

According to Bellavia, one issue taking root involves the short payment of dealer reimbursements for warranty repairs and no-cost battery replacements. Although these occurrences may seem isolated, Bellavia emphasizes that the cumulative loss in gross profit can reach $100,000 to $125,000 per store annually. These patterns, he suggests, are not random. “Manufacturers are always thinking three to six months ahead,” he said. “There’s going to be an increase in fixed ops, and dealers are going to become smart about this. So they’re pushing back early by underpaying dealers and hoping it slips under the radar.”

Rather than pursuing manufacturers individually, Bellavia recommends that dealers work through state associations to identify common issues and act collectively. He estimates the industrywide impact could be as much as $1 million per rooftop each year. With retail reimbursement alone, Bellavia argues that many dealers are leaving an additional $250,000 annually on the table due to flawed processes and improper discounting on the customer-pay side, which negatively impacts reimbursement submissions.

FTC’s CARS rule dismantled: Attorney Len Bellavia weighs in

Len Bellavia CBT

In a major victory for car dealers, the U.S. Appeals Court has struck down the Federal Trade Commission’s (FTC) controversial CARS Rule, a decision that industry advocates view as a rejection of regulatory overreach. In today’s episode of Inside Automotive, Leonard A. Bellavia Esq., founding partner of Bellavia Blatt – DealerLaw.com, breaks down the ruling and its implications, highlighting the FTC’s flawed approach and the automotive industry’s already stringent regulatory environment.

Legal expert Len Bellavia urges dealer action against Scout DTC sales

Len Bellavia CBT News

Scout Motors’ decision to bypass Volkswagen stores and sell vehicles directly to consumers has stirred significant concerns in the retail automotive industry. In light of dealers’ recent success in the CDK class action settlement, many are now considering a similar approach to Volkswagen. In today’s episode of Inside Automotive, Len Bellavia, Founding Partner of the law firm of Bellavia Blatt, also known as DealerLaw.com, will help us unpack this issue.

CDK Global to pay $100 million to settle dealership antitrust suit

CDK Global to pay $100 million to settle dealership antitrust suit
The proposed settlement, which requires a judge’s approval, avoids a planned September trial. It does not affect other pending litigation against CDK.
August 19, 2024 04:11 PM
Mark Hollmer
MICHAEL CERDEIROS

CDK Global has agreed to pay $100 million to settle a class-action antitrust lawsuit alleging it colluded with a rival to inflate dealership management system prices to stifle competition.

“It’s a good day for dealers,” said Leonard Bellavia of Bellavia Blatt in Mineola, N.Y., one of the attorneys representing the dealership plaintiffs in the lawsuit. “It shows how dealers can collaborate and collectively seek redress on a nationwide scale by joining forces and working together.”

The settlement, if approved by a judge, resolves the dealership class-action lawsuit filed against CDK and rival Reynolds and Reynolds Co. in 2017 accusing both companies of federal and state antitrust violations. It also cuts off an expected September trial in U.S. District Court for the Northern District of Illinois. DMS market leader CDK, which also is paying up to $250,000 for “notice and claims administration” costs, said it was glad to move ahead from the long legal dispute.

“We are pleased to bring the long-standing DMS antitrust dispute filed by dealers in 2017 to a conclusion and move forward,” a CDK spokesperson said in an Aug. 19 emailed statement. “As we’ve always done, we will continue to empower dealers with tools and capabilities that allow them to control their data access and the choice of which vendors to share data with.”

As part of the proposed settlement, which was filed Aug. 16, CDK, of Austin, Texas, did not admit any wrongdoing.

The class-action lawsuit alleged, in part, CDK and Reynolds essentially formed a duopoly to corner the market for data integration service programs that extract information from dealership management systems that is then used by application vendors.

The proposed class-action settlement motion listed 23 “representative” dealerships including Baystate Ford in Massachusetts, Cherry Hill Jaguar in New Jersey and Toyota of Ann Arbor in Michigan. Chief Judge Rebecca Pallmeyer of the U.S. District Court for the Northern District of Illinois must rule on it first.

To better understand how dealerships are planning, installing and managing the infrastructure needed to sell and service EVs, Future Energy and the Automotive News Research & Data Center surveyed Automotive News subscribers and readers representing dealerships across the country. In this special report, we present the findings of our survey as well as stories from dealers on the ground—who share their own experiences and recommendations about effectively managing this important transition.

Because neither side opposes it at this point, the settlement and payment process should take about five months from start to finish, Bellavia said. He said Pallmeyer’s decision should happen in a matter of weeks, after which a procedural process for payments will be put in place — something that should play out through the end of 2024 and possibly into early 2025.

Dealerships will be notified via a website, mail, advertisements and informational releases that will list, in part, a toll-free number to call. Updates will be posted on the website dealershipclassdmssettlement.com, according to the proposed settlement.

All dealerships that purchased CDK’s DMS from September 2013 through 2024 will be eligible to apply for the settlement, according to co-lead plaintiffs’ attorney Peggy Wedgworth of Milberg Coleman Bryson Phillips Grossman in New York.

Reynolds and Reynolds was originally part of the proposed antitrust lawsuit, but the Dayton, Ohio, DMS provider previously agreed to pay $29.5 million to settle the class action in 2018 without admitting wrongdoing. The settlement funds paid by Reynolds were being held in escrow pending the outcome of the case against CDK. Now that a resolution is likely, the Reynolds’ settlement will be disbursed though a settlement administrator according to the same court schedule, Bellavia and Wedgworth said.

Settlement details
The proposed settlement is designed to resolve dealership claims and any counterclaims CDK filed through the course of the years long legal saga and the 81,000 plaintiff legal documents it produced, according to the settlement filing. It does not affect, release or alter any contracts between the settlement participants and CDK.

Any lawsuits stemming from the June 19 cyberattacks against CDK also are not affected. Asbury Automotive Group’s lawsuit against CDK over data control ahead of its pilot with rival Tekion also is proceeding, according to the settlement document.

The plaintiffs’ attorneys said in the settlement documents that they would pursue up to 33 percent of the combined CDK/Reynolds settlement funds, or about $34 million as attorneys fees. The money also will cover previously unreimbursed costs and expenses up to $7.5 million, subject to ruling on a separate motion.

In addition, the 23 dealership “class representatives” on the lawsuit itself are eligible for an award from the settlement of up to $10,000 for any fees and expenses they incurred.

Previous antitrust lawsuits against Reynolds and CDK were settled before trial.

Data integration service provider Authenticom also filed an antitrust lawsuit against Reynolds, but that case was settled in May 2022; CDK settled with Authenticom in November 2020.

Cox Automotive also sued CDK Global with its own antitrust claims, but the dealership software giant reached an undisclosed financial settlement with Cox in 2019. CDK in 2019 also settled with Motor Vehicle Software Corp., an electronic vehicle registration and titling services vendor that had sued it and Reynolds alleging antitrust behavior for alleged illegal blocking of a vendor from joining its data access programs. Reuters contributed to this report.