Antitrust Law Daily Wrap Up, CONSUMER PROTECTION—N.D. Ill.: Dismissal denied for auto dealership VP following settlement with corporate defendants, (May 12, 2025)

By Patricia K. Ruiz, J.D.

The court found res judicata did not apply to claims against the individual defendant where the settlement with corporate defendants occurred in the instant action, and not a prior suit.

The U.S. District Court for the Northern District of Illinois denied a motion to dismiss by the former vice president of U.S. operations for ten Illinois automobile dealerships (corporate defendants) who had previously settled consumer protection claims by the Federal Trade Commission (FTC) and the Illinois Attorney General (AG). The court disagreed with the former vice president’s arguments that the FTC and the Illinois AG lacked subject-matter jurisdiction, that the FTC lacked standing, and that the complaint was insufficiently pleaded (FTC v. ACIA17 Automotive Inc., No. 1:24-cv-13047 (N.D. Ill. May 8, 2025)).

Complaint. In a complaint filed by the FTC and the Illinois AG, the agencies charged the dealerships, along with former vice president of U.S. operations James Douvas, with violating the FTC Act and Illinois consumer protection laws. The complaint alleged the defendants deceived consumers about the price and availability of vehicles, charged them for expensive add-ons without consent, tacked on unwanted junk fees to purchases, posted fake reviews, and failed to disclose that U.S. customers were buying cars imported from Canada, along with other unlawful conduct.

Settlement. The corporate defendants settled with the FTC and the Illinois AG to resolve the claims against it. Under the settlement, the dealerships agreed to pay $20 million, to clearly disclose a car’s offering price for vehicles in advertising and other communications, and to provide the total cost of the vehicle when discussing leases or financing with consumers. The settlement also required the company to have consumers’ express informed consent before charging them for add-ons and other fees.

Douvas’ motion to dismiss. Douvas moved to dismiss the complaint, arguing the court lost subject-matter jurisdiction over the claims against him because of the settlement between the dealerships and the plaintiffs, arguing res judicata applied. However, the court disagreed, seeing no reason that res judicata should apply to the facts of the case where the settlement was in the instant action and not a prior suit. The court declined to dismiss the complaint for lack of subject matter jurisdiction.

Douvas further argued the FTC lacks standing to bring its claims because he has not been engaged in commerce since September 2023 and that the FTC Act only applies to individuals engaged in commerce at the time a complaint is filed. The court instead considered the argument under Rule 12(b)(6), as the applicability of the FTC Act to Douvas does not implicate standing. The court found that under Rule 12(b)(6), Douvas’s argument is unavailing, as the FTC Act’s language does not require current participation in commerce. The court denied the motion as to this basis.

The court disagreed that the complaint does not comply with Rules 8(a)(2) and 12(b)(6), finding that the complaint alleges sufficient facts to support the plaintiffs’ claims and that the plaintiffs sufficiently stated the circumstances of the alleged fraud with specificity. The court further declined to dismiss the complaint on the bases of Douvas’s remaining “underdeveloped and scattershot arguments for dismissal.

The Case is No. 1:24-cv-13047.

Judge: Alonso, J.

Attorneys: Rachel F. Granetz for the FTC. Jacob Michael Gilbert, Office of the Illinois Attorney General, for the People of the State of Illinois. Steven M. Wernikoff (Honigman LLP) for ACIA17 Automotive, Inc., ACIA ACQ Corp., ACIA FINCO Corp., ACIA CH LLC and ACIA CL LLC.

Companies: ACIA17 Automotive, Inc.; ACIA ACQ Corp.; ACIA FINCO Corp.; ACIA CH LLC; ACIA CL LLC

Cases: ConsumerProtection FederalTradeCommissionNews