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Friday, August 16, 2019

Tech companies challenge Arizona's new cybersecurity law

Federal Court

By Marian Johns | Aug 13, 2019


PHOENIX (Legal Newsline) – Two technology companies that supply dealer management systems (DMS) to automotive dealerships have filed a lawsuit against Arizona's attorney general and director of its department of transportation challenging a state law that forces them to give access to their proprietary systems to third parties. 

According to the July 29 filing with the U.S. District Court for the District of Arizona, CDK Global LLC and The Reynolds and Reynolds Co. filed the complaint against Mark Brnovich, Arizona attorney general and John Halikowski, director of the Arizona Department of Transportation, alleging conflict preemption of the Digital Millennium Copyright Act, Copyright Act, Defend Trade Secrets Act, Computer Fraud and Abuse Act and Gramm-Leach-Bliley Act. 

Among the plaintiffs' other allegations are unconstitutional abridgement of freedom of speech and violation of the Federal Contracts Clause and Dormant Commerce Clause. 

According to the suit, Arizona's DMS Law, designed to be a cybersecurity measure, requires the plaintiffs to give access to their proprietary systems to third parties such as automotive marketing firms and service providers as long as requested by a dealership employee. 

The plaintiffs argue that would give third parties access to data stored on the DMS, including sensitive customer data, without the plaintiffs' permission. The plaintiffs also argue the law interferes with their contract rights and intellectual property.

The suit seeks to permanently enjoin the enforcement of the Arizona DMS law due to the preemption of federal laws as well as relief for plaintiffs' litigation expenses. They are represented by Brian A. Howie and Lauren Elliott Stine of Quarles & Brady in Phoenix and others.

U.S. District Court for the District of Arizona case number 2:19-cv-04849

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