Plaintiffs request for Parts Data before Defendants ever communicated with each other regarding the
formation of OEC.

Defendants further assert that with respect to OEC, Plaintiff has acknowledged that OEC does
not have Parts Data to license. Defs.’ Mem. at 19. In addition, the alleged conspiratorial activity
occurred before OEC was incorporated in December 2000. Jd. Therefore, Plaintiffs attempt to avoid
this issue by claiming that Defendants engaged in “coordinated action through OEC” fails because there
is no evidence to support these allegations. Id.

(b) Defendants’s second argument is that Plaintiffhas no direct evidence ofa conspiracy. Defs.’
Mem. at 19. In order to prove a conspiracy, a plaintiff must produce evidence that “tends to exclude the
possibility of independent action by [the defendants]. That is, there must be direct or circumstantial
evidence that reasonably tends to prove that [the defendants] had a conscious commitment to a common
scheme designed to achieve an unlawful objective.” Monsanto Co. v. Spray-Rite Serv. Corp., 465 U.S.
752, 768 (1984).

Defendants assert that Plaintiff has no “compelling direct evidence” of a conspiracy. Defs.’
Mem. at 19. “Direct evidence is evidence which, if believed, resolves a matter in issue.” 1 McCormick
on Evidence 641 (5" ed, 1999). For instance, none of the alleged evidence cited by Plaintiff establishes
the existence of any agreement, much less one that violates the antitrust laws. Jd. Defendant, therefore,
asserts that contrary to what Plaintiff seeks, the Court cannot infer an agreement when the actual
conduct in the case will not permit such an inference. Jd.

(c) Defendants’ third argument is that Plaintiff’ s allegation that Defendants engaged in “parallel
conduct”does not constitute circumstantial evidence of an agreement to withhold Parts Data. Defs.’
Mem. at 20. Defendants, thus, argue that Plaintiff distorts the record by falsely stating that each
Defendant refused to grant Plaintiff a Parts Data license. Jd. This assertion is contrary to the record

which demonstrates that each Defendant responded to Plaintiff uniquely and independently.

19


B. Arguments

(1) Defendants present the following arguments that Plaintiff seeks unprecedented mandatory
injunctive relief that subverts the purpose of a preliminary injunction by dramatically and irreparably
changing the status quo. Defs.’ Mem. at 11.

“(T)he granting of a preliminary injunction is the exercise of a very far reaching power, never
to be indulged in except in a case clearly demanding it.” Roland Mach. Co. v. Dresser Indus., 749 F.2d
380, 389 (7" Cir. 1984).

“The purpose of a preliminary injunction is to preserve the object of controversy in its then
existing condition, i.e., to preserve the status quo.” EEOC v. City of Janesville, 630 F.2d 1253, 1259 (7"
Cir. 1980). Defendants, however, argue that Plaintiff seeks to alter the status quo by asking the Court
to “direct[] each manufacturer defendant . . . immediately to provide Parts Data to Plaintiff.” Am.
Compl. 124. Defendant contends that Plaintiff does not need to obtain Parts Data in order to build a
functional part locator (because its dealer customers already have the data in their DMSs). Defs.” Mem.
at 11. Rather, Plaintiff only seeks to obtain Defendants’ proprietary data so that it can incorporate the
Parts Data into its own software which will irreparably alter the way GM and Ford do business. Jd. at
11-12.

Defendants next argue that the antitrust laws impose no general requirement that Defendants slit
their throats by helping Plaintiff sell non-OE parts. Defs.’ Mem. at 12. See, e.g., United States v. Colgate
& Co., 250 U.S. 300, 307 (1919) (A “manufacturer may “freely” choose the “parties with whom he will
deal”); Olympia Equip. Leasing Co. v. Western Union Tel. Co., 797 F.2d 370, 375-79 (7" Cir. 1986) (No
duty to assist a competitor). Defendants argue the Plaintiff has not cited, and Defendants are unaware
of, any case in which a court has issued a preliminary mandatory injunction ordering a company to

provide its proprietary data to another company.

13


to Defendants’ parts distribution systems, the nearly 20,000 dealerships selling OE parts, and those
dealers’ customers. Jd.
IV. Plaintiff's Reply in Support of its Motion for Entry of a Preliminary Injunction

In its reply memorandum, Plaintiff presents, inter alia, the following arguments:

(A) Plaintiff first argues that Defendants have misrepresented the nature of Plaintiffs business
and the manner in which it proposes to use Defendants’ Parts Data. Pl.’s Reply at 2. Plaintiff contends
that it does not sell parts over the Internet and in fact, its business is to provide software and technology
that will enable car dealers and collision shops to enhance the efficiency of the processes they currently
use to locate, purchase and sell automotive parts. Jd.

(B) Plaintiff next argues that it needs Defendants’ Parts Data in order to successfully operate its
parts locator business. PI.’s Reply at 3. OEC’s expert issued a report stating: “[Plaintiff’s software]
design requires a centralized database of all manufacturer parts data. ...” Jd. (Rumelt Report § 1.11.)
Defendants, however, argue that Plaintiff should have stopped production of its product and started over
with a “distributed” design. Jd. Plaintiff, however, contends that Defendants’ argument ignores the
existence of their conspiracy and that Defendants would have conspired against Plaintiff even if it had
developed a distributed system. /d. Thus, Defendants’ intent is to control Plaintiffs business model
and changing the design of its software would not alleviate Defendants’ efforts to this end. Id.

(C) Plaintiff argues that Defendants have attempted to postulate after-the-fact theories in order
to negate evidence of Defendants’ conspiracy. Pl.’s Reply at 4. For instance, Defendants attempt to re-
write the record to create the false impression that each Defendant acted in an “entirely different”
manner when responding to Plaintiff's request for Parts Data. Jd. Plaintiff, however, asserts that each
Defendant acted in the same manner by refusing to make a bona fide offer to license its Parts Data to
Plaintiff. Jd. While DCX did offer Plaintiff license, the offer required that Plaintiff release DCX from
the conspiracy at issue. Jd. at 5. Moreover, Ford’s temporary license offer (for testing purposes) was

not responsive to Plaintiff's request because it did not allow enough time to properly perform testing.

23


A party seeking a preliminary injunction must establish: (1) some likelihood of succeeding on
the merits; (2) that it has “no adequate remedy at Jaw,” and (3) that it will suffer “irreparable harm,” if
preliminary relief is denied. Abbott Lab. v. Mead Johnson & Co., 971 F.2d 6, 11 (7" Cir. 1992) (citing
Lawson Prods., Inc. v. Avnet, Inc., 782 F.2d 1429, 1433 (7" Cir. 1986); Roland Mach. Co. v. Dresser
Indus., Inc., 749 F.2d 380, 386-87)). If the moving party is unable to establish this threshold showing,
the court’s inquiry is over and the injunction will be denied. Jd. If the moving party can satisfy this
showing, the court must then consider the irreparable harm the non-moving party will suffer if
preliminary relief is granted, balancing that harm against the irreparable harm to the moving party if
relief is denied. Jd. Lastly, the court must also consider the public interest, that is, the consequences
to non-parties of granting or denying the injunction. Jd.

B. Arguments

(1) Plaintiff presents the following arguments in support of its assertion that it will succeed on
the merits of its antitrust claim.

(a) Plaintiff first argues that Defendants’ concerted refusal to provide it with Parts Data violates
Section 1 of the Sherman Act. Pl.’s Mem. at 14. To prevail under Section 1, Plaintiff asserts that it must
establish a “contract, combination, . . . or conspiracy” that unreasonably restrains trade. 15 U.S.C. § 1.

(i) Direct Evidence of Conspiracy

Plaintiff alleges that there is direct evidence ofa conspiracy, in that, Defendants have unlawfully
agreed not to provide Parts Data to Plaintiff. P1.’s Mem. at 15. Plaintiff presents the following evidence
in support of its conspiracy theory.

Plaintiff asserts that the conspiracy began in early 2000. Pl.’s Mem. at 8. For example, inGM’s
March 10, 2000, “Opportunities and Threats” presentation to its parts division management, Plaintiff
was described as a potential threat to GM’s revenue; thereby, jeopardizing the division’s ability to meet
commitments made to GM’s Board of Directors. Knott Ex. 1; Mackie Dep. 89. Shortly thereafter, in

early May 2000, GM, Ford and DCX representatives attended a private conference conducted by


Furthermore, Defendants’ responses to Plaintiff's request for Parts Data licenses do not constitute a
“plus factor,” in that, they cannot be viewed as being pretextual. Jd.

(d) Defendants fourth argument is that if Defendants had agreed not to provide Parts Data to
Plaintiff, such an agreement would have been lawful. Defs.’ Mem. at 21. The rule of reason prevails
in antitrust analysis, which requires a plaintiff to (1) define a relevant market, (2) show that defendants
have market power in that market, and (3) show that, on balance, the challenged agreement’s
anticompetitive effects outweigh its procompetitive benefits. See, e.g., Sanjuan v. American Bd. of
Psychiatry & Neurology, Inc., 40 F.3d 247, 251 (7" Cir. 1995). The Supreme Court has rejected any
broad application of the per se rule, that is, condemnation without extensive analysis of market power
or competitive effects, to allegations such as those alleged in this case. See Northwest Wholesale
Stationers v. Pacific Stationery & Printing Co., 472 U.S. 284, 294 (1985) (rejecting “per se” rule ina
concerted refusal to deal case), followed by Toys R Us, 221 F.3d at 935 (applying per se rule because
defendant has no justification for restraint); IIIA Phillip Areeda & Herbert Hovenkamp, Antitrust Law,
213-14 & n.49 (1996) (The “essential facility doctrine . . . is not a ‘per se’ rule in any sense,” even if
“collaboration” is alleged under Sherman Act § 1"). The rule of reason applies when the alleged
restraint is “ancillary” to a lawful transaction. L.A.P.D., Inc. v. Gen. Elec. Corp., 132 F.3d 402, 405 (7"
Cir. 1997).

Defendants assert that any concerted refusal to deal is ancillary to the formation of a legitimate
joint venture, namely, OEC, and must be analyzed under the rule of reason. Defs.” Mem. at 21.
Defendants argue that forming OEC was an efficiency-enhancing integration of assets. Jd. Moreover,
this type of agreement would prevent “free riding” in that if Parts Data was incorporated into Plaintiff's
collision shop product, aftermarket parts suppliers would be able to increase their sales at the expense
of genuine OE parts, without compensating the OEMs for use of their Parts Data. Jd. (Teece Rep.

40-41.) Defendants, therefore, contend that case law recognizes that the prevention of “free riding”

20


Doherty Assoc., Inc. v. Saban Entm't, Inc., 60 F.3d 27 (2TM Cir. 1995) (mandatory relief was necessary
to prevent the loss of the plaintiff's prospective goodwill because the plaintiff would otherwise “lose
an opportunity to become a major publisher of children’s books” and to “attract additional authors and
owners of [children’s] characters”). Id. at 38.

(F) Plaintiffasserts that it cannot be made whole for the full amount of damages it has suffered.
Pi.’s Reply at 10, Plaintiff argues that contrary to Defendants’ assertion, it cannot quantify its damages.
Jd. Defendants assert that Plaintiff can quantify its damages because an employee created a projection
comparing Plaintiffs actual revenues in early 2001 against estimated revenues in a December 2000
budget. /d, Plaintiffasserts that the revenue projection was never intended as an estimate of the damages
Plaintiff has suffered as a result of Defendants’ conspiracy. Id.

In addition, even though Plaintiff can quantify some of its damages, it will suffer irreparable
harm without injunctive relief. Id. See, e.g., Roland, 749 F.2d at 386 (7" Cir. 1984) (irreparable harm
is “harm that cannot be prevented or fully rectified by the final judgment after trial... The question is
... whether the plaintiff will be made whole if he prevails on the merits and is awarded damages.”); see
also, Cleveland Hair Clinic, Ine. v. Puig, 968 F. Supp. 1227, 1246-47 (N.D. Ill. 1996) (damages due to
loss of future customers and revenues “will be extraordinarily difficult if not impossible to ascertain
with any degree of reliability”).

(G) Plaintiff argues that without preliminary injunctive relief, it will not be able to effectively
compete with OEC. Pl.’s Reply at 11. For instance, OEC’s dealer-to-collision product which is similar
to that of Plaintiff's is already available in the marketplace. Jd. Moreover, Defendants have told dealers
that OEC’s parts locator product will be available during the first quarter of 2002. Jd. Therefore,
Plaintiff contends that it is unlikely that it will be able to implement its parts locator until 2003, at which
time, Defendants’ head start, vast resources and ability to offer dealer incentives will preclude Plaintiff

from competing with OEC. Jd.

26


By contrast, Defendants assert that Plaintiff would suffer no harm from waiting for a trial on the
merits. Defs.’ Mem. at 22. For instance, Plaintiff can continue to sell OneTouch and NPL products,
and test its new product. Jd. Moreover, Plaintiffcan sell its product to thousands of automobile import
dealerships. Jd. Therefore, Defendants assert that the risk of a grant of such extraordinary relief clearly
outweighs the risk that relief will be wrongly denied. Jd.

Defendants further assert that Plaintiffhas unclean hands because it made misleading statements
regarding its own business and that of Defendants. Def.’s Mem. at 22. Plaintiff also misappropriated
Defendants’ Parts Data in late 2000. Jd. (DX2123, DX2124, DX2125.) Furthermore, after the lawsuit
had been filed, Plaintiff ended its Dayton pilot that worked well without Defendants’ Parts Data. Jd.
Therefore, Defendants contend that Plaintiffs inequitable conduct bars its request for injunctive relief.

(6) Defendants argue that a mandatory injunction is contrary to the public interest. Defs.” Mem.
at 23. In an antitrust action, the public interest prong focuses on protecting markets and promoting
competition. See Morris, 117 F.Supp.2d at 1331.

Defendants assert that granting the requested relief will impair competition. Defs.’ Mem. at 23.
For instance, Plaintiffs expert stated that an injunction stripping OEC of access to Parts Data would
delay OEC’s market entry, and thus delay competition. Jd. (Nelson II Dep. 549-50.) Under Plaintiff's
theory, the requested relief against OEC would result in a court-sanctioned monopoly which would
clearly be contrary to the public interest. See Atlantic Richfield Co. v. USA Petroleum Co., 495 U.S. 328,
334 (1990).

Defendants argue that changing the status quo by ordering Defendants to provide their propriety
Parts Data before trial would irreparably harm GM’s and Ford’s dealers’ parts networks, which, in turn,
would harm customers. Defs.’ Mem. at 23. Moreover, aftermarket parts makers would “free ride” on
Defendants’ efforts and create a new rule that would reduce the incentive for business innovation. Jd.

Therefore, Defendants contend that if Plaintiff’ s requested relief is granted, it will result in serious injury

22


1990) “Only if [plaintiff] will suffer irreparable harm in the interim— that is, harm that cannot be
prevented or fully rectified by the final judgment after trial-can he get a preliminary injunction.”
Roland, 749 F.2d at 386. The “irreparable injury” prong requires Plaintiff to prove an emergency
warranting the imposition of equitable relief before trial. Jd.

(a) Defendants first argue that Plaintiff addresses the irreparable injury analysis only by making
a cconclusionary statement that “as a new entrant focused on forging early and strong customer ties,
[Plaintiff] will suffer irreparable harm from injury to its goodwill with automobile dealers and repair
shops.” Defs.’ Mem. at 15, Defendants assert that Plaintiff's statement fails because Plaintiff's action
demonstrates that there is no “emergency” in that its company will not go out of business before trial.
Id. at 15-16. Furthermore, Plaintiff has a steady stream of revenue from its parent companies’ existing
locator products that it now owns (e.g., OneTouch and NPL). /d. at 16.

Defendants further assert that Plaintiff has not been irreparably harmed because it has been
testing and marketing new products. Defs.’ Mem. at 16. In fact, Plaintiff continues to work on
“economical connectivity solutions that are admittedly critical to its success. Jd. (Burrus II Dep.16.)
Moreover, Plaintiff can also sell its product to import-automobile dealerships. Jd. Furthermore,
Plaintiff's management recently advised its Board of Directors that its new business plan “allows for
the development of premium products and funding of the lawsuit.” Jd. (DX1140, 9.)

(b) Defendants next argue that any harm Plaintiff has purportedly suffered from is self-inflicted.
Defs.’ Mem. at 16. “If the harm complained of is self-inflicted, it does not qualify as irreparable.”
Caplan y, Fellheimer Eichen Braverman & Kaskey, 68 F.3d 828, 839 (3" Cir. 1995) (citing 11A Charles
A. Wright, Arthur R. Miller, Federal Practice & Procedure § 2948.1 (1995)).

Defendants assert that Plaintiff erred when it presumed that it could obtain Parts Data. Defs.’
Mem. at 16. In fact, Plaintiff had known since February 2000 that GM refused to grant it a Parts Data

license because Plaintiff intended to promote the sale of non-OE parts. Jd. (DX1174, 3.) Plaintiff,

17


cannot be justified by plausible arguments that it was designed to enhance overall
efficiency.

Plaintiff, thus, alleges that Defendants collectively agreed to deny Plaintiff the Parts Data it needed to
operate it parts locator service. Pl.’s Mem. at 20. Moreover, Defendants’ Parts Data is critical and is
only available in a commercially usable form from each Defendant. Jd, Furthermore, each Defendant
is clearly “dominant” with respect to Parts Data and there is no justifiable efficiency argument for
Defendants’ collective refusal to deal. Id.

(b) Plaintiff's second argument is that pursuant to the Sherman Act, Defendants’ have engaged
in a conspiracy to monopolize. P1.’s Mem, at 20. Under the Sherman Act, a conspiracy claim requires
proof of: (1) a combination or conspiracy; (2) an overt act in furtherance of the conspiracy; and (3) a
specific intent to monopolize. See, e.g., Am. Tobacco Co, v. United States, 328 U.S. 781, 809-10 (1946).
A plaintiff alleging a conspiracy to monopolize must show the existence of an agreement to engage in

illegal conduct. Jd. at 810.

Plaintiff alleges that all of the elements needed to prove a conspiracy claim have been satisfied.
Pl.’s Mem. at 21. For instance, Defendants conspired to exclude Plaintiff as a competitor and
Defendants have engaged in anticompetitive acts in furtherance of a conspiracy. Jd. Furthermore,
Defendants have acted with the specific intent to monopolize by foreclosing Plaintiff from
commercializing its product through “conduct that has no legitimate business justification but to destroy
or damage competition.” GTE New Media Servs., Inc. v. Ameritech Corp., 21 F. Supp.2d 27, 45 (D.C.
Cir. 1998).

(c) Plaintiff's third argument is that, even if Defendants acted unilaterally, their actions constitute
unlawful acts of attempted monopolization and violations of the “essential facilities” doctrine. Pl.’s
Mem. at 21. Plaintiff asserts, however, that even though these “unilateral conduct” claims are well-

supported in the record, it seeks entry of a preliminary injunction based on the evidence of Defendants’


make certain substantive business decisions autonomously. As the clearest example, GM for the first

time would lose control of its proprietary data and have that data involuntarily associated in sale

promotions with non-OEM knock-off (“aftermarket”) and salvage parts.'° In these circumstances, it

cannot be said that the Plaintiff has clearly established a right to a mandatory preliminary injunction."!
CONCLUSION

In view of the foregoing, Plaintiff's motion for preliminary injunction is denied.

ENTER:

IAN 'H. LEVIN
United States Magistrate Judge

Dated: April 18, 2002

'Parenthetically: it appears, realistically, as Defendants argue, that ifa preliminary injunction
is granted, it will, at the least, be difficult to roll back the situation to the present status quo if the
Defendants prevail at trial.

"A {though Plaintiff has a stronger case as to the other preliminary injunction elements (e.g.
inadequate remedy at law, irreparable harm, public interest), in view of the court’s holding, the court
deems it unnecessary to decide those elements herein.

In view of our holding herein, it also is deemed unnecessary to decide Plaintiff's threshold
argument that no legal basis (or precedent) exists here to compel Defendants to furnish their
“proprietary” data to Plaintiff.

32


of its business in future years and it was not required to estimate the value of its goodwill and/or other
intangible assets. Id.

Plaintiff further asserts that calculating the damages it has suffered as a result of Defendants’
conspiracy should involve a different type of analysis. PI.’s Ltr. dated 12/18/01. Cf Heppenstall v.
Commissioner, 8 T.C.M. 136 (1949) (book value is not an appropriate measure of a company’s value
if it is a going concern). Plaintiff asserts that the analysis used to prove damages, in this case, should
entail estimates of Plaintiff's earnings, expenses, and past and future profits.’ Pl.’s Ltr. dated 12/18/01.
Thus, the fact that Plaintiff has determined that it could use capital contributions as a proxy for the
initial value of its business for equity option purposes only, has nothing to do with whether Plaintiff can
readily prove the full amount of the legally-recoverable damages. /d. Plaintiff further argues that when
acompany uses capital contributions as a proxy for its initial value, that the company cannot be viewed
as having definitively established its value forever. Furthermore, Plaintiff argues that if Defendants’
assertions were true, a newly formed company that chose to create a stock option plan could never
recover damages for lost appreciation in its business. Jd. Therefore, Plaintiff asserts that it has no
adequate remedy at law, in that, it cannot readily prove the full measure of its damages. Id.

V. Oral Argument.
Atoral argument, the parties presented further evidence regarding the subject motion issues and

arguments, which was made part of the record.

This type of analysis would involve projections of prices, costs, market condition and
various other factors. Pl.’s Ltr. of 12/18/01.

29


Ford regarding a B2B initiative. Jd. GM also shared its “Opportunities and Threats” presentation with
DCX. Knott Dep. 95-96.

On May 18, 2000, GM and DCX met to discuss Carlisle’s proposal for a “Genuine Parts
Exchange.” Pl.’s Mem. at 9. During the meeting, Carlisle warned GM and DCX that Plaintiff would
make it easier in the future to buy non-OE parts; thereby, threatening OEM profit margins. Carlisle
further expressed the belief that “it is unlikely that an unorganized consortium of OEs will be able to
gain control of [Plaintiff] and guarantee maintenance of its current closed exchange environment.”
Smith Dep. at 53-55. Carlisle concluded that “the smart response is to counter with the collaborative
development of a closed exchange that will trade only in genuine parts, from all partner OEs.” Jd.

Plaintiff argues that Defendants GM, DCX, and Ford recognized that changes in the automotive
parts business posed substantial threats to their ability to maintain historic levels of profitability on the
sale of replacement parts. Pl.’s Mem. at 9-10. Defendants responded to these threats by jointly creating
an OEM-only parts portal (i.e., Marmaduke/OEC) to control the purchase and sale of parts in a way that
would suppress the emergence of new forms of competition. Jd. at 7-8.

Plaintiff argues that Defendants GM, Ford, and DCX, and Bell & Howell created
Marmaduke/OEC so that it “[would] be the sole source for accurate OEM data.” Pl.’s Mem. at 12.
(DCX 001884.) In mid-August 2000, GM prepared the Terms of Agreement for the formation of
Marmaduke/OEC. The Agreement provided, inter alia, that:

Technology partners not agreeing to terms for participation in the OE portal will be left
to compete against the OE portal in the marketplace, without benefit of OE endorsement
or OE catalog or technical service information. (Loeffler Ex. 17.)

A September 14, 2000 draft proposal among Defendants GM, DCX, and Ford, and Bell & Howell
provided, inter alia, that:

The 3 OEM’s also agree not to participate or support any other automotive parts
eCommerce initiative with a similar vision of the Portal. The 3 OEMs further agree not
to provide access to the parts catalog data and other related Intellectual Properties to
other parties potentially competing with the Portal. Baumgartner Ex. 31 (Pl.’s Mem. at
12.)


Carlisle & Company (“Carlisle”), an industry consultant that had worked extensively with GM, DCX
and other OEMs. /d. At the conference, Carlisle presented a report on Internet threats, which specifically
identified Plaintiff s firm as one that “may particularly threaten the genuine collision parts business” by
putting pressure on profit margins. Smith Ex. 1; Knott Dep. 34-35. In a draft document provided to
GM prior to the conference, Carlisle further opined that “[t]he name of the game is in controlling the
portals” and “[t]he only way to beat this challenge is to retake control of dealer parts management
practices.” Carlisle Ex. 3.

On May 4, 2000, GM met with Plaintiff, and responded to Plaintiff’s prior requests for Parts
Data by presenting Plaintiff with a list of “Veto Rights/Boundary Conditions” which Plaintiff would
need to accept before GM would consider providing the requested Parts Data. Mackie Ex. 7; Loeffler
Ex. 1. GM’s “boundary conditions” were designed to impose control over Plaintiff's business model
by dictating an “OE-centric” business model that would ensure that the benefits of any Internet-based
solutions developed by Plaintiff would be denied to companies manufacturing non-OE parts. Id.

On May 5, 2000, senior officials of GM and Ford met and discussed the “threat” Plaintiff's parts
locator business posed to their profitability. Pl.’s Mem. at 9. At the meeting, GM shared its
“Opportunities and Threats” presentation posed by “Internet start-ups” with Ford. Tudor Dep. 53-55;
Tudor Ex. 5. The main threat GM discussed with Ford was that such “Internet start-ups” reduce OEM
profits by increasing competition from non-OE parts, Plaintiff's company was identified as one posing
such a threat during the meeting. Tudor Dep. 58.

On May 8, 2000, GM met with DCX to discuss its interest in developing a business-to-business
(“B2B”) proposal. Knott Ex.10. GM was interested in a B2B proposal because it “realize[d] the
importance of responding quickly to competitive threats.” Id. GM told DCX that it viewed Delphi (the
parts manufacturing unit that had recently spun off of GM) as a major threat and believed that Delphi
would implement a B2B strategy to circumvent GM’s parts operations. GM told DCX about its

discussions with Plaintiff (which GM viewed as a “direct threat”) as well as its initial discussions with


however, continued to design its product to incorporate OE Parts Data. Jd. at 16-17. Defendants,
therefore, contend that Plaintiff must live with the consequences of its actions, at least until a trial on
the merits. See, e.g, Morris, 117 F. Supp.2d at 1330-31; Caplan, 68 F.3d at 839 (“Because [movants]
have acted to permit the outcome which they find unacceptable, we must conclude that such an outcome
is not an irreparable injury”).

(4) Defendants present the following arguments asserting that Plaintiff cannot prevail on its
conspiracy claim (Section 1 of Sherman Act). Def.’s Mem. at 18. In order to prove such a claim, a
plaintiff will need to establish “(1) a contract, combination, or conspiracy; (2) a resultant unreasonable
restraint of trade in the relevant market; and (3) an accompanying injury.” MCM Partners v. Andrews-
Bartlet & Assocs., 161 F.3d 443, 448 (7" Cir. 1998). (citations omitted.) Introductorily, Defendants
maintain that, at the threshold, ChoiceParts cannot establish the requisite unreasonable restraint of trade.
Defendants’ maintain that dealers already can access the Parts Data in question and it was ChoiceParts
that failed to design its system to take advantage of that fact. Moreover, there is significant competition
among parts locators, and other methods of communication, such as the telephone, would prevent anti-
competitive harm. Indeed, Defendants’ assert, ChoiceParts itself admits that its primary competition
is the telephone.

(a) Defendants initially argue that Plaintiff’s conspiracy claim fails because Defendants acted
in dramatically different ways in response to Plaintiff’s Parts Data license requests. Defs.’ Mem. at 18.
For instance, GM has consistently denied the Parts Data license, Ford offered a limited license, and
DCX is willing to grant a license. See Matsushita Elec. Indus. Co., 475 U.S. at 593 (Courts cannot
“infer conspiracies when such inferences are implausible, because the effect of such practices is often
to deter procompetitive conduct”). In addition, Defendants assert that Plaintiff would have the burden
of presenting “evidence that ‘tends to exclude the possibility’ that” any of the OEMs “acted

independently.” Jd. at 588. Plaintiff cannot do so here because it is undisputed that GM denied

18


parallel conduct by the defendants, together with one or more “plus factors.” Petruzzi’s IGA
Supermarkets v. Darling-Delaware Co., Inc., 998 F.2d 1224, 1232 (3 Cir. 1993). “Plus factors,” for
example, can include pretextual explanations of a defendant’s conduct. Id.

Plaintiff asserts that Defendants GM, Ford, and DCX have engaged in parallel conduct by
refusing to grant it Parts Data licenses.* Pl.’s Mem. at 16. Moreover, GM, Ford, and DCX gave the
identical Parts Data (that Plaintiff requested) to both OEC and other independent businesses whose
activities do not involve parts locator services. Jd. Furthermore, most other major automobile
manufacturers have provided Parts Data to Plaintiff. Jd. Plaintiff, thus, asserts that Defendants have
engaged in a common scheme, in that, they have agreed to withhold Parts Data. Id.

Plaintiff further argues that Defendants’ reasons for their refusal to provide Plaintiff with Parts
Data are merely pretextual (“plus factor”). Pl.’s Mem. at 17. Plaintiff alleges pretextual behavior on
the part of each Defendant. Jd. at 17-18. Plaintiff, therefore, asserts that Defendants’ parallel conduct
in refusing to grant it Parts Data licenses as well as their pretextual reasons given for refusing to deal
with Plaintiff, constitute circumstantial evidence of the existence of a conspiracy. Jd, at 18.

Plaintiff asserts that Defendants’ conspiracy unreasonably restrains trade in that Defendants’
collective refusal to deal or group boycott is per se illegal. Pl.’s Mem. at 19-20. See e.g., Northwest
Wholesale Stationers, Inc. v. Pacific Stationery & Printing Co., 472 U.S. 284, 294 (1985). Moreover,
in Toys “R” Us v. Fed. Trade Comm’n, 221 F.3d 928, 935-36 (7" Cir. 2000), the Seventh Circuit
explained that a boycott is per se illegal under Northwest Stationers:

without an extensive inquiry into market power and economic pros and cons [when]
(1) the boycotting firm has cut off access to a supply, facility or market necessary for the
boycotted firm . . . to compete; (2) the boycotting firm possesses a “dominant” position
in the market (where “dominant” is an undefined term, but plainly chosen to stand for
something different from antitrust’s term of art “monopoly”); and (3) the boycott . . .

‘Plaintiff contends that after the lawsuit was filed, DCX offered it a Part Data license, but
only on the condition that Plaintiff dismiss its action against DCX and release DCX from all liability
for its conspiratorial actions. Pl.’s Mem. at 16.


Id. Plaintiff, thus, alleges that these license offers were made after it had charged Defendants with
conspiracy and collusion. /d. Therefore, Defendants’ independent claims of acting differently with
respect to license offers merely reflect an effort to cover up their conspiracy. Jd.

Plaintiff asserts that Defendants also attempt to justify their conspiracy by claiming that it was
“ancillary” to a “legitimate” joint venture and should therefore be judged by the “rule of reason.” PI.’s
Reply at 6. Defendants make this argument because the antitrust laws do not allow any explanation or
justification for agreements that are per se unlawful. See, e.g., Arizona v. Maricopa County Medical
Society, 457 U.S. 332 (1982).° Plaintiff contends that Defendants’ argument is contradicted by the
record indicating that Defendants formed their venture for an illegal purpose and that the venture has
had an anticompetitive effect. Jd. Moreover, Defendants rejected Plaintiff's offer to use their Parts Data
on a limited basis and insisted that Plaintiff refrain from engaging in business activities which were not
related to Defendants’ Parts Data. Jd. Plaintiff, therefore, asserts that this type of restriction cannot be
considered “ancillary” to a “legitimate” joint venture, Jd.

Plaintiff further argues that Defendants’ “free rider” argument is another post hoc justification
because Plaintiff has agreed not to use Defendants’ Parts Data for side-by-side comparisons with non-
OEM parts or for any other “improper” purpose. Pl.’s Reply at 6. In addition, any “free riding” could
be prevented through independent limits on the licenses granted by Defendants. Jd. Therefore, Plaintiff
contends that Defendants did not need to agree to withhold Parts Data from Plaintiff in order to prevent
“free-riding” by non-OEM suppliers. Jd.

Plaintiff further asserts that Defendants attempt to justify their conspiracy by arguing that
Plaintiff “consistently refused” to accept a license from any of the three Defendants is belied by the

record, Pl.’s Reply at 7. Thus, even though Defendants cite an e-mail message from Plaintiff's CEO,

‘Defendants argue that the Matsushita standard applicable to conspiracy cases based on
ambiguous circumstantial evidence should be applied in this case. Defs.” Mem. at 18. However,
Plaintiff asserts that Matsushita does not apply because there is alleged direct evidence of
Defendants’ conspiracy. Id.

24


6

Minute Order Form (06/97)

United States District Court, Northern District of Minois

courtroom
deputy’s
initials

SM

(J Dateltime received in
central Clerk's Office

Name of Assigned Judge Joan B, Gottschall Sitting Judge if Other Jan H. Levin
or Magistrate Judge than Assigned Judge
CASE NUMBER 01C 67 DATE 4/18/2002
CASE Choiceparts LLC vs. GM Corp
TITLE
{In the following box (a) indicate the party filing the motion, e.g., plaintiff, defendant, 3rd party plaintiff, and (b) state briefly the nature
MOTION: of the motion being presented.]
DOCKET ENTRY:
ql) Q Filed motion of [ use listing in “Motion” box above.]
(2) Qo Brief in support of motion due
@) o Answer brief to motion due, . Reply to answer brief due,
(4) o Ruling/Hearing on set for at
(5) | Status hearing held.
(6) oO Pretrial conference[held/continued to] {set for/re-set for] on set for at
(7) im Trial{set for/re-set for] on at
(8) a [Bench/Jury trial] [Hearing] held/continued to at
(9) a This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to]
OOFRCP4(m) OGeneral Rule21 CIFRCP41(a)\(1) 1 FRCP41(a)(2).
ao [Other docket entry] Enter memorandum opinion and order. Choiceparts motion for
preliminary injunction [6-1] is denied.

al) [For further detail see order attached to the original minute order.]

No notices required, advised in open court. ocument

No notices required ‘ ‘Number

umber of poices dosti otis

S| Notices mailed by judge’s staff. os

Notified counsel by telephone. ‘AP. ad , 9.2002

Docketing to mail notices.

Mail AO 450 form. sees feocketing Yoputy initials
oY | Copy to judge/magistrate judge. | 2)

4/18/2002

date mailed notice

sM

mailing deputy initials



agreement to deny Parts Data to all competitors who are unwilling to capitulate to their demands. Id.
Moreover, OEC will be able to charge higher prices than would otherwise prevail and Defendants will
be able to keep automotive parts prices high by thwarting new forms of competition. Jd. Moreover,
Defendants will be able to stop those advancements that enable independent collision shops (and their
customers) to obtain less-expensive non-OE parts more efficiently. Jd. 22-23.

Cc. Prayer for Relief.

Plaintiff, therefore, respectfully requests that the Court enter an order (1) enjoining each
Defendant, and all those acting in concert with them, from jointly refusing to deal with Plaintiff with
respect to factory parts pricing data and Parts Data; (2) directing each Defendant, and all those acting
in concert with them, to provide Parts Data to Plaintiff in accordance with the ordinary and customary
terms followed heretofore in the marketplace, and (3) enjoining each Defendant (including OEC) from
using Parts Data in its business in connection with an advanced parts locator service until 180 days after
such time as Plaintiff has been given access to Parts Data by each of the OEM Defendants for use as it
relates to its advanced parts locator service.’ (P].’s Motion at 3, Am. Compl. at 24). At oral argument:
Plaintiff requested certain additional mandatory injunctive relief, which in view of the court’s ruling,
infra, need not be addressed further herein.

I. Defendants’ Joint Memorandum in Opposition to Plaintiff's Motion for Entry of a Preliminary
Injunction

A. Introduction

In their response memorandum, Defendants contend that Plaintiff cannot offer any clear evidence
of its antitrust claims. Defs.’ Mem. at 1. For instance, there is no evidence of unreasonable restraint of
trade, nor have Defendants conspired to withhold their respective proprietary Parts Data from Plaintiff.

Id. In fact, long before the alleged conspiracy, GM told Plaintiffs management that it would not grant

SAt oral argument, Plaintiffs did not mention (3) above in its request for relief.

11


conspiracy. Jd. Therefore, Plaintiff intends to present evidence on its conspiracy claims, but reserves
the right to offer evidence in support of its other claims at trial. Jd.

(2) Plaintiffargues that it lacks an adequate remedy at law, in that, without access to Defendants’
Parts Data, it cannot remain in business. Pl.’s Mem. at 22. Moreover, although the destruction of
Plaintiff’s business will result in monetary harm, the economic consequences of its exclusion from the
market will be difficult to ascertain with precision, See, e.g., Hyatt Corp. v. Hyatt Legal Servs., 736 F.2d
1153, 1158 (7" Cir. 1984) (loss of sales or potential growth would be “remarkably difficult to convert
into damages”). Furthermore, as a new business entrant focused on forging early and strong customer
ties, Plaintiff will suffer irreparable harm from injury to its goodwill with automobile dealers and repair
shops. See, e.g., Meridian Mut. Ins. Co. y. Meridian Ins. Group, Inc., 128 F.3d 1111, 1120 (7° Cir.
1997) Gnjury to goodwill constitutes irreparable harm for which there is no adequate remedy at law).

Plaintiff further argues that even if it could obtain access to Defendants’ Parts Data, the delay
is likely to permanently damage Plaintiff's relationship with over 250 dealers who have already signed
contracts with Plaintiff. Pl.’s Mem. at22. Accordingly, injunctive relief is appropriate because Plaintiff
does not have an adequate remedy at law. Id. See Multi-Channel TV Cable Co. v. Charlottesville Quality
Cable Operating Co., 22 F.3d 546, 522 (4" Cir. 1994) (“when the failure to grant preliminary relief
creates the possibility of permanent loss of customers to a competitor or the loss of goodwill, the
irreparable injury prong is satisfied.”).

(3) Plaintiff argues that the balance of harm favors entry of a preliminary injunction because
Plaintiff cannot remain in business without Defendants’ Parts Data. Pl.’s Mem. at 22. In addition,
Plaintiff will be harmed because it will not be a viable competitor in the marketplace. Jd. In contrast,
Plaintiff assert that Defendants will not suffer any harm. Jd.

Plaintiff further asserts that the public interest favors entry of a preliminary injunction. P1.’s

Mem. at 22. A preliminary injunction is warranted because Defendants’ documents memorialize an

10


injunction on the charge(s) of conspiracy without a full and final hearing on the merits on the mandatory
permanent injunction issue.
Although it was not argued by the parties in their briefs in this framework, the court finds that
Plaintiff's conspiracy case does not clearly meet the traditional better than negligible likelihood of
success on the merits test, when applied to the requisite sliding scale/balance of harm’s analysis. As
the Seventh Circuit has stated:
This process involves engaging in what we term the sliding scale approach; the more
likely the plaintiff will succeed on the merits, the less the balance of irreparable
harms need favor the plaintiffs position. Jd. The sliding scale approach is not
mathematical in nature, rather “it is more properly characterized as subjective and
intuitive, one which permits district courts to weigh the competing considerations
and mold appropriate relief.” Id.

Ty, Inc. v. The Jones Group, Inc., 237 F.3d 891, 895-896 (7" Cir. 2001).

Upon review, the court finds that although Plaintiff’ s conspiracy case has a better than negligible
chance on the merits, at this juncture Plaintiff, respectfully, does not have a prevailing case on its
conspiracy claim(s).° Against Plaintiff's evidentiary case of conspiracy, the Defendants presented
considerable evidence that the actions of each Defendant were independently and individually prompted
for legitimate business reasons and not as part of any conspiracy. Applying, then, the required sliding
scale/balance of harms analysis, the court finds that the subject mandatory preliminary injunction issue
comes out in the Defendants’ favor. Plaintiff has established it will suffer significant harm, but the court
finds that the Defendants would suffer perhaps not equal but, nonetheless, meaningful harm if a

preliminary injunction was granted herein. A forced license with the Plaintiff would either involuntarily

and fundamentally change the way that each of the Defendants do business or remove their ability to

°Under the conventional reasonable likelihood of success on the merits test, traditionally
employed by courts of equity, Plaintiffs conspiracy case would not prevail.

31


FINDINGS®
As backdrop, it is clearly established in the Seventh Circuit that:
A preliminary injunction is an extraordinary remedy that should not be granted unless
the movant, by a clear showing, carries the burden of persuasion. (Citations
omitted).
Boucher v. School Bd. Of the School District of Greenfield, 134 F.3d 821, 823 (7 Cir. 1998).

Accordingly, as that court stated in an antitrust case:

““(t)he granting of a preliminary injunction is an exercise of a very far-reaching
power, never to be indulged in except in a case clearly demanding it.’”

(Citations omitted.) Roland Mach, Co. v. Dresser Indus., 749 F.3d 380, 389 (7" Cir. 1984).
Regarding mandatory preliminary injunctions, the Seventh Circuit has firmly declared:
Because a mandatory injunction requires the court to command the defendant to take
a particular action, “mandatory preliminary writs are ordinarily cautiously viewed and
sparingly issued.” Jordan v. Wolke, 593 F.2d 772, 774 (7" Cir. 1978); see also W.A.

Mack, Inc. v. General Motors Corp., 260 F.2d 886, 890 (7" Cir. 1958) (finding that
“mandatory injunctions are rarely issued and interlocutory mandatory injunctions are
even more rarely issued, and neither except upon the clearest equitable grounds.”
Graham y, Medical Mutual of Ohio, 130 F.3d 293, 295 (7" Cir. 1997).
The issues in the case, including the claim(s) of conspiracy, are being strenuously fought by both
sides. The underpinning of Plaintiff's case is its allegation of conspiracy. However, the conspiracy issue

is very fact-intensive at this preliminary injunction stage. And applying the above heightened

standard(s), the court is unable to perceive a clear basis to justify granting a mandatory preliminary

‘Applying the standards set forth in Ty, Inc. v. The Jones Group, Inc., 98 F. Supp. 988, 1002
(N.D. IIL 2001), the court is unpersuaded that any genuine and material or well-disputed factual issue
exists herein and that an evidentiary hearing would be productive. The court therefore finds that an
evidentiary hearing is not necessary in resolving the Motion for Preliminary Injunction, and that the
Motion is decidable on the papers filed and oral argument presented to the court. It bears noting that
after the court indicated that an evidentiary hearing on the motion would not be required, at a
minimum, the Plaintiff did not oppose this determination.

30


Moreover, in a memorandum of understanding that led to the formation of OEC,? Defendants indicated
that Plaintiff has “no OEM data” and “of course this gives OEMs leverage.” Tudor Ex. 17.

Defendants GM, DCX, and Ford agreed that they would not grant Plaintiff’ s data requests unless
Plaintiff agreed to their anticompetitive conditions for a business arrangement. Pl.’s Mem, at 12. For
example, Defendants noted that, as a result of the “unified” front of GM, Ford and DCX, Plaintiff “will
do anything we want[].” Miller Ex. 15, Moreover, because Defendants were unable to coerce Plaintiff’ s
management into acceding to their demands, Defendants engaged in a “divide and conquer” strategy by
approaching the senior executives of Plaintiff's parent companies. Jd. For instance, Mr, John Smith
(GM) called Mr, Lloyd Waterhouse (Reynolds) and stated, that if, Plaintiff's founders continued to
support Plaintiff as a competitor of Marmaduke/OEC, then “we will not provide the parts data.”
Waterhouse Dep. 68-77. Furthermore, ata December 14, 2000 meeting with Plaintiff, Mr. Smith further
stated (in the presence of Ford and DCX representatives) that GM would maintain its position in
withholding Parts Data from Plaintiff. Galbato Dep. 546.

Plaintiff alleges that it requested Parts Data from each Defendant. Pl.’s Mem. at 11. Following
each request, however, Plaintiff was informed that Defendants GM, Ford and DCX would continue to
withhold Parts Data (refusal to provide Parts Data was confirmed on September 11, 2000 and October 5,
2000). Galbato Dep. 264-66.

ii) Circumstantial Evidence of Conspiracy

Plaintiff alleges that, in addition to the above-reference direct evidence, circumstantial evidence
of a conspiracy exists that demonstrates that Defendants conspired to withhold Parts Data. P1.’s Mem.
at 15. Plaintiff argues that proof of a conspiracy may be established by “circumstantial evidence that
reasonably tends to prove that [the parties] had a conscious commitment to a common scheme designed
to achieve an unlawful objective.” Monsanto Co. v. Spray-Rite Serv. Corp., 465 U.S. 752, 768 (1984).

Moreover, to prove a conspiracy based on circumstantial evidence, a plaintiff must prove evidence of

30EC was formed on December 7, 2000. Jordan Ex. 26.

7


justifies the type of agreement alleged in this case. See Chicago Prof’! Sports Ltd. Partnership v. Nat’l
Basketball Ass'n, 961 F.2d 667, 674 (7" Cir. 1992).

(e) Defendants fifth argument is that Plaintiff cannot establish a conspiracy to monopolize claim
under Section 2 of the Sherman Act. Defs.’ Mem. at 21. Defendants allege that Plaintiffs conspiracy
to monopolize claim fails for the same reasons as its Section I claim, in that, Plaintiff cannot show an
anticompetitive agreement. Jd. In addition, a Section 2 conspiracy claim cannot be considered a distinct
statutory offense from that of a Section 1 conspiracy claim if it is based on the same conduct. Jd. at
21-22. See, e.g., NYNEX Corp. v. Discon, Inc., 525 U.S. 128, 139 (1998) (citing Phillip Areeda &
Herbert Hovenkamp, Antitrust Law J 65 le, at 81-82 (1986)). Therefore, Defendants allege that Plaintiff
cannot succeed on its Section 2 claim.

(5) Defendants argue that the balance of harms favors denial of Plaintiff's requested relief.
Defs.’ Mem. at 22. Defendants assert that the harm to GM and Ford would be substantial in that they
would lose control of their proprietary Parts Data and be forced to assist Plaintiff in promoting the sale
of non-OE parts to the detriment of their own OE parts sales. Jd. As to DCX and OEC, a mandatory
injunction would limit their ability to make unilateral decisions. Further, argue Defendants, Plaintiffhas
never explained how this court would formulate the appropriate license terms and license fees in
fashioning such an unprecedented order, a monumentally complex task because the OEMs have never
licensed their data for a use of the type that Plaintiff proposes. (Defendants’ memo p. 22).

Additionally, asserts Plaintiff, once dealers have its system, it will be hard, if not impossible, to
take it from them after trial. Jd. Defendants would be harmed after collision shops implemented
Plaintiff's locator system, because these shops would ultimately purchase greater numbers of
aftermarket and salvage parts. Jd. Thus, dealers would suffer a substantial loss in OE parts sales that

traditionally provide dealers with much of their profit. Jd.

21


(H) Plaintiff argues that the requested relief is within the Court’s authority. Pl.’s Reply at 13.
For instance, mandatory injunctive relief is a well-established remedy for anti-trust violations. Section
16 of the Clayton Act gives courts broad authority to award injunctive relief to private parties suing for
antitrust violations. 15 U.S.C. § 26. See, e.g., California v. Am. Stores Co., 495 U.S. 271, 283-85
(1990). Moreover, the Seventh Circuit has also recognized that federal courts have broad discretion to
award mandatory injunctive relief in antitrust cases. See, e.g., Trabert & Hoeffer, Inc. v. Piaget Watch
Corp., 633 F.2d 477, 486 (7" Cir. 1980). Therefore, Plaintiff asserts, that as indicated by the referenced
case law, the Court is empowered to grant the relief requested, which cannot be viewed as being
“extraordinary” for an antitrust case like this involving an unlawful conspiracy. The Plaintiff alleges,
moreover, while some of the non-antitrust cases cited by Defendants refer to a reluctance to grant
mandatory injunctive relief, none provide any meaningful analysis of the issue. Indeed, Plaintiff claims
the Seventh Circuit has never squarely addressed the question of whether a heightened burden of proof
applies to requests for mandatory injunctive relief. In any event, the issue is immaterial here, Plaintiff
asserts, where ChoiceParts seeks relief pursuant to Section 16 of the Clayton Act.

(D Plaintiff argues that there is no factual basis for Defendants’ assertions that Plaintiff has
“unclean hands.” Pl.’s Reply at 14. Plaintiff further asserts that, as a matter of law, “unclean hands”
is not a defense to a Sherman Act violation. See, e.g., Kiefer-Steward Co. v. Joseph E. Seagram & Sons,
Inc., 340 U.S. 211, 214-24 (1951). Thus, because federal courts have consistently “declined to permit
the unclean hands defense in antitrust suits where injunctive relief is sought,” Plaintiff asserts that it
should not apply herein. Chrysler Corp. v. Gen. Motors Corp., 596 F. Supp. 416, 419 (D.C. Cir. 1984),

(J) Plaintiffs Supplemental Reply Letter.

Regarding certain of Defendants’ adequate remedy at law contentions:

Plaintiff argues that Defendants’ assertion that “[Plaintiff’s] management valued the entire
company when it was necessary to do so for income taxes” is without merit. Pl.’s Ltr. dated 12/18/01;

Defs.’ Resp. at 11. In support of its position, Defendants rely on a document entitled “Valuation of

27


ChoiceParts was organized to “engage in the business of creating and operating an Internet and network-
based marketplace for the purchase and distribution of OEM Parts, Non-OEM Parts and Salvaged
Parts.” ChoiceParts was based upon its founding companies’ industry knowledge and expertise to create
an end-to-end solution comprised of two components: (1) dealer-to-dealer software designed to enable
dealers to locate parts from other dealers and consummate transactions electronically, and (2) dealer-to-
collision shop software designed to allow dealers to accept orders electronically from collision shops,
interface with the dealer-to-dealer locator software as necessary, and consummate sales transactions with
collision shops electronically. Id.

Plaintiff initially developed an automotive parts locator designed to provide participating dealers
with access to real-time inventory information from potential sellers. Pl.’s Mem. at 4. The software
allows dealers to search not only for specific part numbers, but also (using “supersession” data) to locate
parts that are interchangeable with the original part identified by the dealer. Jd. Plaintiff plans to
integrate its dealer-to-dealer software with DMS’s enabling selling dealers to automatically generate
invoices and adjust inventory information. Id.

In the latter part of 2000, Plaintiff conducted a “proof-of-concept” test pilot of the dealer-to-
dealer software in Dayton, Ohio. Pl.’s Mem. at 4. As a result of the test pilot, Plaintiff initiated and
signed contracts with over 250 dealers (including GM, Ford and DCX dealers). Jd. In April, 2001,
Plaintiff acquired rights to software used by collision shops. Jd. Plaintiff has, subsequently, developed
dealer-to-collision software allowing collision shops to order parts from dealers electronically rather
than by manual ordering processes. Jd.

I. Plaintiff's Motion for Entry of a Preliminary Injunction
A. Introduction
In its opening memorandum, Plaintiffs threshold assertion is that it has satisfied the

requirements for entry of a preliminary injunction. Pl.’s Mem. at 14.


Defendants further assert that every court faced with such a request, as Plaintiff makes here, has
denied it, ruling that the data owner’s interests in protecting its data and its business, as well as
preventing “free riding,” justify a decision not to provide the requested data. See, e.g., Morris
Communications Corp. v. PGA Tour, 117 F. Supp.2d 1322, 1329-30 (M.D. Fla. 2000) (denying
mandatory preliminary injunction where “it appears that Defendant’s refusal to deal . . . is motivated
by a legitimate desire to protect its property interest rather than a predatory or anticompetitive animus”);
City of College Station, Tex. V. City of Bryan, Tex. 932 F. Supp. 887, 889 (S.D. Tex. 1995) (denying
preliminary injunction in Sherman Act case where Plaintiff “has not met its burden to show that
[Defendants] lack legitimate business reasons.”

Defendants assert that Plaintiff does not address the proper legal standard applicable to its
request for mandatory preliminary injunctive relief. Defs.’ Mem. at 12. Mandatory injunctions “are
rarely issued and interlocutory mandatory injunctions are even more rarely issued, and neither except
upon the clearest equitable grounds.” W.A. Mack, Inc. v. Gen. Motors Corp. , 260 F.2d 886, 890 (7" Cir.
1958). Therefore, such relief is inappropriate unless “the law and facts clearly favor the plaintiff.”
Morgan v. Drew, No. 91 CV 20167, 1992 U.S. Dist. LEXIS 4689, at *3 (N.D. Ill. Mar. 17, 1992); see
Standberry v. Coler, No. 87 C 1357, 1987 U.S. Dist. LEXIS 3965, at *33 (N.D. Ill. May 14, 1987) (A
“mandatory injunction . . . should issue only in exceptional circumstances and where the rights of the
parties are entirely clear.”)

Stated another way, “[i]rreparable loss resulting from refusal to accord the plaintiff new status,
as distinguished from interference with rights previously enjoyed by him, does not furnish the basis for
interlocutory relief.” Warner Bros. Pictures, Inc. v. Gittone, 110 F.2d 292, 293 (3 Cir. 1940) (reversing
preliminary relief that “was not to preserve the status quo but rather to alter the prior status of the parties
fundamentally”). In fact, a “mandatory injunction is similar to a mandamus in all essential respects.”

Gary Joint Venture v. Friendly Ice Cream Corp., No. 87 C 886, 1987 U.S. Dist. LEXIS 5351 at *12

14


motion because the alleged injuries can be quantified. See, e.g., Kowalski v. Chicago Tribune Co., 854
F.2d 168, 171 (7"" Cir. 1988).

(b) Defendants next assert that Plaintiff's claims that it will lose goodwill, suffer impaired
customer relations, or go out of business are without merit because they fail to demonstrate an
inadequate legal remedy. Defs.’ Mem. at 14. Plaintiff has not demonstrated that it has any “goodwill”
to lose before trial because it has no customers, and according to Plaintiffs own allegations, it has no
product to sell. Jd. (Shah Dep. 62). Moreover, with respect to a start-up business such as Plaintiff's,
“[t]he loss of goodwill of a business operated over a short period of time is usually compensable in
damages.” See DFW Metro Line Servs. v. Southwestern Bell Tel. Co., 901 F.2d 1267, 1269 (5% Cir.
1990) (lost goodwill of a plaintiff that had only been in business for one-and-a-half years was
calculable).

Defendants argue that Plaintiff’s claim that Defendants’ withholding of Parts Data may damage
its relationships “with the over 250 dealers who have already signed contracts with [Plaintiff]” is
without merit. Defs.’ Mem. at 14. Defendants contend that Plaintiff's reputation with these dealers is
the result of its own actions, in that, Plaintiff mislead those dealers by signing contracts late in 2000,
at a time when it knew that it did not have Parts Data licenses that it claims are essential. Jd.
Furthermore, because Plaintiff has valued its business as being worth $25 million, it has an adequate
remedy at law, if it were to go out of business. Id. See Baghdady v. Robbins Futures, Inc., No. 97 C
8794, 1998 U.S. Dist. LEXIS 1710, at *4-*5 (N.D. IL. Feb. 9, 1998) (“Because Plaintiffs’ alleged
injuries are all similarly amenable to pecuniary valuation, an injunction is not warranted”).

(3) Defendants present the following arguments in support of their assertion that Plaintiff has
not been irreparably harmed or injured.

A plaintiff seeking a preliminary injunction must prove an “irreparable harm” that is distinct and

independent from an “inadequate remedy at law.” See, e.g., Kellas v. Lane, 923 F.2d 492, 493 (7" Cir.

16


parts to other dealers, collision shops, and retail customers. Jd. Dealers buy parts from other dealers
when, for example, a needed part is unavailable from an OEM. Jd.

Dealers have many ways of locating automotive parts. Defs.’ Mem. at 3. For instance, they can
call other dealers or they can use electronic parts locator services; such as OneTouch, National Parts
Locator (“NPL”), or Parts Voice. Jd. Moreover, each OEM has developed data about each of its parts,
including detailed pricing information and cross-references to substitutable parts (i.e., “supersession
data”) (collectively, “Parts Data”). Each Defendant OEM owns its own Parts Data and this data is
considered to be highly proprietary. Id.

Almost all automobile dealers manage their parts businesses with software called “dealer
management systems” (“DMSs”). Defs.’ Mem. at 3. The two largest DMS providers are Reynolds &
Reynolds (“Reynolds”) and Automated Data Processing (“ADP”). Jd. Each OEM licenses its Parts Data
to DMS providers for use by its respective dealers. Id. Moreover, OneTouch, NPL, and PartsVoice
receive Parts Data from each OEM.' Jd. However, none of the OEMs license their Parts Data to these
companies, or to any others that sell non-OE aftermarket parts. Id.

OEC is a joint venture which was formed by Defendants GM, Ford and DCX, and Bell &
Howell in December, 2000. Pl.’s Mem. at 11. OEC was established for the purpose of operating a parts
locator service using Defendants’ Data Parts and selling OE parts only. Jd. at 12.

B. ChoiceParts

ChoiceParts was created as a joint venture in May, 2000 by three companies in the automotive
software industry: ADP (over $6 billion in annual revenue), Reynolds ($1 billion in annual revenue)

and CCC Information Services (“CCC”) (over $200 million in annual revenue).” Pl.’s Mem. at 3.

‘Other parts locators, however, operate without incorporating Parts Data (e.g., parts.com and
Wrenchhead). Defs.’ Mem. at 3.

2ADP and Reynolds are leading DMS providers, and CCC and ADP are leading “collision
estimating systems” providers. Pl.’s Mem. at 3.

2


Mr. Galbato, they ignore his testimony regarding the message. Jd. As Mr. Galbato explained, he believed
that “there was something going on” between Defendants and they were playing “games” with
Plaintiff’s Parts Data requests. Id. (Galbato Dep. 598-99.) Furthermore, another one of Mr. Galbato’s
e-mail messages indicate that Plaintiff should try to obtain pilot parts licenses from all three Defendants
simultaneously in order to protect itself from Defendants’ conspiratorial games. Jd. Therefore, Plaintiff
asserts that it has always been willing to accept bona fide data licenses from each Defendant.

(D) Plaintiff asserts that without a preliminary injunction, Plaintiff will not remain a viable
business. Pl.’s Reply at 7. Plaintiff argues that it cannot afford to wait for a trial on the merits because
recently prepared auditors’ financial statements indicate that the company will be unable to continue as
an ongoing business unless it obtains judicial relief. Id. Moreover, the auditors’ reports indicate that
Plaintiff will run out of money in three to four months and Plaintiff has already been forced to lay off
employees. Jd. Furthermore, Plaintiff's CEO and Director of Marketing have resigned. Id.

Plaintiff argues that even if its company survives through the preliminary injunction hearing, it
is doubtful that it will survive through a trial on the merits. Pl.’s Reply at 8. Plaintiff, thus, asserts that
even if it is successful at trial, that it will still take four to five months from that point before Plaintiff
can obtain Parts Data to begin an operational roll-out of its advanced parts locator. Jd. As a result,
Plaintiff will be unable to begin an operational roll-out to Defendants’ dealers until the year 2003. Id.

(E) Plaintiff argues that it will suffer irreparable harm to its reputation and customer goodwill
because it has been unable to produce a product for which 250 dealers signed up for more than a year
ago. Pl.’s Reply at 9. Plaintiff also asserts that Defendants’ argument that Plaintiff does not have any
customer goodwill to lose because it is not actively selling its software is not supported by case law.
Id. For example, in Bascom Food Prods. Corp. y, Reese Finer Foods, Inc.,715 F. Supp. 616, 636-640
(D.N.J. 1989), the court entered a mandatory preliminary injunction requiring that the defendant supply
a product to a new entrant in the market. The court explained that mandatory relief was necessary to

prevent the plaintiff from suffering “incalculable” damage to its reputation and goodwill. See, e.g.,

25


IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION we

CHOICEPARTS, LLC, a Delaware
Limited Liability Company,

Plaintiff,

v. Case No. 01 C 0067
GENERAL MOTORS CORPORATION, a
Delaware Corporation, DAIMLERCHRYSLER
CORPORATION, a Delaware Corporation, FORD
MOTOR COMPANY, a Delaware Corporation,
and OECONNECTION LLC, a Delaware Limited
Liability Company,

Magistrate Judge lan H. Levin

Defendants.

MEMORANDUM OPINION AND ORDER

Before the court is ChoiceParts’ (“Plaintiff”) Motion for a Preliminary Injunction. The subject
motion concerns Plaintiff's assertion that Defendants General Motors Corporation (“GM”),
DaimlerChrysler (“DCX”), Ford Motor Company (“Ford”) and OEConnection, LLC (“OEC”) willfully
conspired to withhold automotive parts data Plaintiff needs to operate it’s automotive parts locator
business. Consequently, Plaintiff in this motion alleges that Defendants’ refusal to provide parts data
constitutes a conspiracy that unreasonably restrains trade in contravention of the antitrust laws.

I. Background

A. Original Equipment Manufacturers

Defendants GM, DCX and Ford are Original Equipment Manufacturers (“OEM”) who sell
automobiles and original equipment (“OE”) parts through their dealers. Defs.’ Mem. at 2. Specifically,
each OEM sells parts only through its authorized dealers, who then compete with each other and with

“aftermarket” (non-OE, knock-off) and “salvage” (recycled) parts sellers. Jd. Dealers, in turn, sell OE

\


Segments . . .” (Defs.’ Ex. DX 180b). Plaintiff contends, however, that the referenced document has
no connection to any “income tax purposes.” Pl.’s Ltr. dated 12/18/01. Rather, the document was an
internal estimate of a range of potential valuations developed for the purpose of negotiations for a
potential business venture based only on Plaintiff's first generation of expected products. Jd. Plaintiff,
further asserts that business negotiations such as these reflect a variety of factors that are typically
irrelevant to a calculation of damages caused by an antitrust violation. Jd. In addition, the fact that the
estimated value of Plaintiffs company varies to such a large extent (valued at between $105 million and
$180 million) belies Defendants’ argument that Plaintiff can readily ascertain the full measure of its
damages. Id.

Plaintiff also argues that Defendants’ contention that “[Plaintiff] asserted that the company was
worth $25 million when it established a stock option plan” is erroneous, Pl.’s Ltr. dated 12/18/01; Defs.’
Resp. at 15. Plaintiff argues that while it is true that it used $25 million as the basis for setting a “strike
price” for initial management equity option purposes in Plaintiff’s first quarter of operations, that this
has nothing to do with Plaintiff's ability to readily ascertain the full measure of its damages caused by
Defendants’ violations. P1.’s Ltr. dated 12/18/01 (emphasis added.). For instance, Plaintiff asserts that
when a newly formed Limited Liability Company (such as ChoiceParts) creates an equity option plan,
it is a common and legally permissible business practice to use initial capital contributions (both actual
and expected) from the entity’s founders as a proxy for the start-up value of the business. Jd. Plaintiff,
thus, contends this is exactly what the referenced document reflects, in that, it depicts Plaintiff's opening
position in the fall of 2000. Jd. Moreover, Plaintiff argues that during the initial start-up of a new
entity, there is usually no market history available and commercial activity may not have even begun.

dd, Furthermore, for purposes of its equity option plan, Plaintiff was not required to estimate the value

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it a Parts Data license. Jd. GM did so because Plaintiff intended to sell genuine GM parts side-by-side
with non-OE, knock off “aftermarket” parts in a virtual store on the Internet. /d. Defendants assert that
this would cut GM dealers out of their role as the sole providers of genuine GM parts and cause serious
harm to GM, its dealers and their customers. Jd. As early as February 2000, Plaintiff’s founders knew
that if it pursued its aftermarket plan, Plaintiff would “not only fail to obtain” Parts Data from GM and
other OEMs, but would “face open opposition from them.” Jd.

Defendant asserts that Plaintiff now attributes the consequences of its own flawed business plan
to an alleged conspiracy. Defs.’ Mem. at 2. Plaintiff, thus, attempts to allege a conspiracy that is in
contravention of the facts in this case. Jd. For example, the record is clear that GM is the only OEM that
would not grant Plaintiff a Parts Data license. Id. Ford offered Plaintiff a temporary Parts Data license,
and DCX offered Plaintiff a long- term Parts Data license. Jd. Plaintiff refused the license offers from
Ford and DCX, and decided not to accept a Parts Data license with any one OEM unless Plaintiff could
do so with all three OEMs simultaneously. Jd.

Defendants thus set forth facts seeking to support the following points (including those stated
in the preceding two paragraphs): Each OEM and its dealers sell vehicles and original equipment parts,
and each OEM uses its proprietary parts data to promote those sales; there are many parts locators
available to dealers and collision shops; R&R and ADP agreed to stop competing with each other, and
formed a dot.com type of joint venture; the internet creates a virtual store; ChoiceParts knew that it had
no licenses from the OEM’s, yet designed its product to use OEM data anyway; Ford and DCX each
offered to license parts data to ChoiceParts, but ChoiceParts refused those offers; ChoiceParts’ product
does not require OEM parts data to function; The OEM’s formed defendant OEConnection to provide
parts locating for OE parts only; GM, Ford and DCX did not conspire to deny parts data to ChoiceParts;

and, there is no emergency justifying mandatory injunctive relief. Defs.’ Mem. at 1-10.

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(N.D. Il. June 15, 1987). Defs.” Mem. at 13. Moreover, after a trial on the merits, this kind of relief
is extraordinarily “rare.” In re Brand Name Prescription Drug Antitrust Litig., 123 F.3d 599, 610 (7"
Cir. 1997) (“Rare” to require defendants to do anything beyond cessation of illegal activity).

Defendants, therefore, assert that Plaintiff cannot meet this heightened standard because a
preliminary injunction will hurt (1) dealers, who will see their parts sales decline, (2) OEMs, who will
have to give their proprietary data to a company that will promote aftermarket parts sales by their
competitors, and (3) consumers, who will suffer the consequences of lower-quality parts. Defs.’ Mem.
at 13. In addition, a preliminary injunction is not warranted because Plaintiff's requested relief does not
flow from its conspiracy claims. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574,
584 n.7 (1986) (Plaintiff must show that “the conspiracy caused [it] an injury for which the antitrust
laws provide relief”). Furthermore, Defendants argue that Plaintiff admits that the alleged harm would
have been caused solely by GM’s unilateral decision not to grant a license. See Movitz v. First Nat’l
Bank of Chicago, 148 F.3d 760 (7" Cir. 1998) (alleged act must be the proximate cause of the alleged
harm).

(2) Defendants present the following arguments in support of their assertion that Plaintiff has
an adequate remedy at law.

(a) Defendants first argue that, by Plaintiff’s own admission, its alleged pre-trial damages are
calculable. Defs.’ Mem. at 14. For example, two months after filing this action, Mr. Akash Shah, one
of Plaintiff's Vice-Presidents, prepared an analysis for Plaintiff's Board of Directors entitled the
“Revenue Walk,” which quantified the alleged financial impact of the delay in obtaining Defendants’
Parts Data. Jd, (Shah Dep. 37-42). Mr. Shah calculated the loss (as of June 2001) to be $1,854,000. Id.
(DX1161.) He calculated the damages by multiplying Plaintiffs expected revenue per customer by its

expected number of customers. Jd. Defendants, therefore, contend that the Court should deny Plaintiff's

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