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Dealer Services Corporation Files Counterclaim against Automotive Finance Corporation Seeking Damages in Excess of $25 Million; Alleges Anticompetitive Behavior To Unlawfully Inflict Harm Upon Dealer Services Corporation.

CARMEL, Ind. -- Dealer Services Corporation ("DSC"), a privately held automobile floorplan finance company, announced today that it has filed a counterclaim against Automotive Finance Corporation ("AFC"), a wholly-owned subsidiary of ADESA Inc. (NYSE: KAR), claiming that AFC has engaged in anticompetitive behavior solely intended to cause harm to DSC. The counterclaim was filed yesterday in Hamilton Superior Court in the State of Indiana.

In the counterclaim, DSC alleges that AFC engaged in unfair competition and tortiously interfered with DSC's prospective business relationships by routinely providing false information to potential customers of DSC, refusing to enter into a blanket intercompany creditor agreement with DSC, and knowingly filing frivolous, baseless claims against DSC in bad faith. DSC is seeking an award in excess of $25 million for punitive and other damages. DSC has retained Akin Gump Strauss Hauer & Feld LLP as legal counsel.

In the counterclaim, DSC also expressly denies all allegations brought against it by AFC in AFC's amended verified complaint filed August 17, 2005. DSC contends that AFC's lawsuit is an ill-conceived and futile attempt to drive DSC out of business, and to illegitimately intimidate current AFC employees from pursuing employment at DSC.

Established in 2004, DSC is a rapidly-growing floorplan finance company in the $80 billion auto auction industry, having already signed up more than 1,000 independent automotive dealers across North America. Managed by John Fuller, Founder and Chief Executive, DSC's veteran senior management team has over 50 years industry experience and is singularly focused on innovative technologies and practices designed to redefine customer service in this industry. DSC's strong balance sheet and financial commitments ensure that it will actively compete in today's dealer-oriented market.

Jonathan L. Sulds, of Akin Gump Strauss Hauer & Feld LLP, DSC's counsel, stated, "This is a classic example of David versus Goliath - AFC and its parent company, ADESA, are threatened by the emergence of a strong, new competitor in the floorplan finance business and have attempted to use unlawful business practices and frivolous litigation to prevent DSC from growing into a major player in this industry. Under the leadership of John Fuller, DSC has the vision, relationships and experience to become a market-leader. As a result, AFC representatives have routinely and purposely made unlawful and incorrect claims regarding the existence of non-disclosure and confidentiality agreements and that AFC's proprietary information is protected under law as trade secrets."

Sulds added, "Neither John Fuller nor any other person hired by DSC is bound by the terms of any non-competition agreement. In addition, as a condition of their employment, former AFC employees have agreed not to disclose confidential AFC information to DSC. In fact, a number of AFC employees have left AFC because of low moral, customer discontent, lack of new product, outdated technology, and workplace issues."

Sulds concluded, "AFC's claim that DSC unlawfully appropriated AFC's proprietary information is also meritless. DSC has developed its own state-of-the-art internet-based system, from the ground up, to ensure customer service and satisfaction, further eroding AFC's only competitive advantage - the lack of competition in the marketplace."

Dealer Services Corp. is a business focused on financial services for the automotive sales industry. The company works with automotive dealers throughout North America to finance the purchase of vehicles from manufacturers and wholesalers.
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Publication:Business Wire
Date:Sep 7, 2005
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