Steve Cottrell

“The human side of the layoffs is sweeping,” Authenticom founder, president and CEO Steve Cottrell said. “I deeply, personally regret this. We’ve done everything in our power to avoid this.”

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Authenticom, a La Crosse-based data integrator in the automotive industry, informed 55 employees that they will be laid off effective Feb. 2 because of the company’s prolonged antitrust battle with two larger companies, founder and CEO Steve Cottrell said Wednesday.

“I consider these people as family,” Cottrell said during a phone interview Wednesday in which his voice reflected obvious anguish over the decision, which he described as a “resizing mode.”

“I deeply, personally regret this. We’ve done everything in our power to avoid this,” Cottrell said of the action, which will leave Authenticom with 36 employees.

Authenticom Inc. gained substantial traction in its antitrust lawsuit against two companies that the La Crosse corporation contends are trying to drive it out of business when a federal judge granted a temporary injunction against the pair.

Cottrell had remained steadfast in his resolve to keep Authenticom’s roughly 110 employees on the payroll as the antitrust suit against CDK Global and Reynolds and Reynolds Co. winds its way through the court system.

Cottrell’s announcement to the affected employees came two days after the Seventh Circuit Court of Appeals in Chicago dealt Authenticom a blow in its suit, which the company filed in federal court in Madison on May 1.

Preliminary injunction quashed

The appeals court set aside a district court’s preliminary injunction barring CDK Global and Reynolds from interfering with Authenticom’s business.

“Although we are disappointed with the Court of Appeals’ ruling, we continue to remain confident in the ultimate success of our case and continue to work diligently through discovery in preparation for trial,” Cottrell said in a letter addressed to “valued partners” Tuesday.

“The human side of the layoffs is sweeping,” Cottrell lamented during the interview. “One employee has been with me for 15 years and has four small children. There are employees with pregnant spouses, and some who have just bought homes.”

Authenticom, which tried to hold its number of layoffs to the dozen announced in August, set the Feb. 2 date to lay off the 55 to extend benefits for them, Cottrell said. They will receive help with job-placement efforts, resume writing and other assistance needed to secure new jobs, he said.

“These are the people who made this company, and made us a success,” he said. “This is a tribute to what the larger team has done.”

After the downsizing, Authenticom will be “well-positioned and viable” and able to pay bills that had piled up as CDK and Reynolds took actions that Cottrell said are intended to bankrupt the company he founded in 2002 in his son’s bedroom.

“We have found significant opportunities outside of the automotive sector,” he said.

“Change is on the horizon, and we are inspired by the way our industry has embraced both technological change and at the same time pushed back on the status quo of control of emerging technology by the privileged few,” he said.

Authenticom, which is headquartered in the Doerflinger building in downtown La Crosse, is a third-party data integrator that links car dealers to software vendors such as CDK and Reynolds. Cottrell’s suit alleges that CDK and Reynolds have colluded in an illegal plot to block Authenticom from access to their data, costing it millions of dollars and pushed it to the brink of insolvency.

CDK and Reynolds counter that their data is proprietary and insist that Authenticom should not be allowed to scrape the information.

Profits plunge nearly 80 percent

The companies’ actions caused Authenticom’s profits to plunge by 77.22 percent between the third quarter of 2015 and the first quarter of this year, according to Authenticom’s suit filings.

They “have left Authenticom cash-flow insolvent, with insufficient earnings and resources to satisfy its outstanding debt obligations,” the suit alleges.

Authenticom had been unable to pay an $11 million principal payment to a bank in April, as well as a tax-related obligation of about $1.17 million that same month, among other financial setbacks, the suit contends.

CDK and Reynolds are the two big dogs in the automotive data sector, in which Authenticom is the other major player. CDK is a publicly traded Delaware corporation with headquarters in Hoffman Estates, Ill. It provides DMS software and services to car dealerships throughout the country and has more than $2 billion in annual revenues. The private corporation of Reynolds and Reynolds is headquartered in Dayton, Ohio.

For its part, CDK issued a statement saying, in part, “We strongly believe that our policy of not allowing unauthorized intermediaries onto our systems is the best way to preserve the integrity of those systems and the security of our customers’ data.”

No court has “mandated unfettered access to the data and systems operated by another company,” according to the statement. “We remain committed to protecting our property rights and those of third parties with data on our systems, and will continue to mount a vigorous defense against the meritless claims that have been made against us by Authenticom.”

Obama lauded company for growth, wages

Cottrell was thrust into the national spotlight in 2015, when President Barack Obama saluted Authenticom during a major financial address he delivered at the University of Wisconsin-La Crosse.

“So this business that began in Steve’s son’s old bedroom is now one of America’s own fastest-growing private companies based in a historic building right here in downtown La Crosse,” Obama said.

“Now, I guarantee you Steve worked hard, he put everything he had into it. He took enormous risks,” the president said. “But he also is somebody who recognizes that he didn’t do it by himself.

“He’s proud of what he accomplished, but he also talks about how fortunate he’s been to be part of a community like La Crosse,” Obama said.

The president lauded Authenticom’s practices of paying fair wages, with paid sick days, and treating employees like family.

In the letter to clients, Cottrell said, “We are ready to further our role as the data integrator of choice and the premier data services provider.”

In addition, he wrote, Authenticom plans to launch new, simplified technology and a new website for its DealerVault product.

During the interview, Cottrell expressed gratitude for the support that Mayor Tim Kabat and U.S. Rep. Ron Kind, D-La Crosse, have offered his company amid the throes of the court actions.

Cottrell also voiced confidence in the company’s ability to rebound, saying, “This is just a chapter in the book, but the book is not written.

“We are taking steps necessary to make this a 100-year company,” he said.

From Tribune files: Openings and closings of La Crosse area businesses

Each week, Tribune business columnist Steve Cahalan reports on the latest openings and closings in the La Crosse area.

  • Steve Cahalan For the La Crosse Tribune

Ryan Johnson has opened the Tanglewood Cafe in downtown Trempealeau, where he’s serving coffee, tea and smoothies, as well as doughnuts, muffins, scones and cookies from Bloedow Bakery in Winona.

  • Steve Cahalan For the La Crosse Tribune

Thrifty Pickin’s and Widner Wood Creations have moved to the former Main Street Mercantile building at 219 Central Ave., along Hwy. 14/61 in downtown Coon Valley. And owners of the two businesses have begun renting spaces in the large building to vendors.

  • Steve Cahalan For the La Crosse Tribune

Luke and Emily Wagner opened a Beef Jerky Outlet store last week in Onalaska’s Crossing Meadows shopping center, and the La Crosse couple plan to eventually open more locations in other markets.

  •  Steve Cahalan For the La Crosse Tribune

Kraus-Anderson Inc., the Minneapolis-based company that owns Shelby Mall and is part owner of the U.S. Bank Place building in downtown La Crosse, has purchased the Crossing Meadows shopping center in Onalaska for $16.3 million, according to county records.

  • Steve Cahalan For the La Crosse Tribune

After an extensive renovation, 4 Sisters 4th Street Bar and Catering opened Jan. 4 in the former Consumers Bakery building at 133 S. Fourth St. in downtown La Crosse.

  • Steve Cahalan For the La Crosse Tribune

Robert and Meghan Arguelles have doubled the size of their Apex Hobby Shop, with its move to the former Secret Sun tanning salon location at 1910 Campbell Road, across from the University of Wisconsin-La Crosse.

  • Steve Cahalan For the La Crosse Tribune

Sonya and Dean Pennel plan to open La Crosse Burn Boot Camp in late January at 4320 Mormon Coulee Road, in Shelby Mall on the far South Side of La Crosse.

  • Steve Cahalan For the La Crosse tribune

Some of his friends call him Crazy Dave because of things he’s done — such as occasionally jumping with daredevil friends from one moving freight train to another in a La Crosse railyard during his high school years.

  • Steve Cahalan For the La Crosse Tribune

The La Crosse coffee shop scene is expanding, with MOKA opening a drive-thru location last week at 330 Adams St., and Cabin Coffee planning to open its second La Crosse coffee shop on Jan. 16 at 2843 Darling Court, in part of the La Crosse Wellness Center complex just south of Famous Dave’s restaurant, off Hwy. 16.

  • Steve Cahalan For the La Crosse Tribune

Heather Yahnke has opened Heavenly Crossroads Salon & Spa at 2835 Darling Court, in part of the building that houses the La Crosse Wellness Center on the city’s far North Side. The building is just south of Famous Dave’s restaurant.

  • Steve Cahalan For the La Crosse Tribune

Nearly a decade after they operated it in downtown Melrose, Cindy and Jeff Waughtal have opened JC’s Pizza & Pub at N378 Hwy. 108, three miles south of Melrose.

  • Steve Cahalan For the La Crosse Tribune

Rafael Mendoza and his wife, Mariana Acevedo, opened Mexican Tamales Restaurant last week at 306 Sand Lake Road, across from the Center 90 shopping center in Onalaska.

  • Steve Cahalan For the La Crosse Tribune

Paul Grant and his son, Boyd, have moved their Designz screen printing, embroidery and promotional products business from the Coulee Region Business Center to 528 Loomis St., at the corner of St. Andrew and Loomis streets in La Crosse.

  • Steve Cahalan For the La Crosse Tribune

Jo-Ann Fabric and Craft Stores will open its new Onalaska store on Thursday in Suite 300 at 1220 Crossing Meadows Drive, after remodeling the Crossing Meadows shopping center space where Hancock Fabrics closed July 22.

  • Steve Cahalan For the La Crosse Tribune

Clothes Mentor, an upscale resale store for women, will open within a few months in Suite A at 1226 Crossing Meadows Drive, the former Blockbuster Video space in the Crossing Meadows shopping center in Onalaska.

  • Steve Cahalan For the La Crosse Tribune

A year after it opened, Karen Bressi is moving her Creative Canvas & Board painting studio next door, to one of the largest remaining vacant retail spaces in downtown La Crosse — the former Salem Markos and Sons store at 313 Pearl St. The apparel store closed in 2005 when its owners retired.

  • Steve Cahalan For Lee Newspapers

A July 16 grand opening is planned for the new Ross Dress for Less off-price apparel store in the former OfficeMax store at 9412 State Road 16, next to Hobby Lobby in the Pralle Center in Onalaska.

  • Steve Cahalan For the La Crosse Tribune

Feb. 24 is expected to be the last day for the Jeri’s Hallmark store in Valley View Mall, said Tonya Whitewater, who manages both that store and the Jeri’s Hallmark in the Crosseroads Center shopping center in Onalaska.

  • Steve Cahalan For the La Crosse Tribune

Evan Mau’s original Gaming Generations store at 714 La Crosse St. is moving to the former Suppz location, Suite 103 at 40 Copeland Ave., in Three Rivers Plaza, effective April 1. Suppz moved last fall.

  • Steve Cahalan For the La Crosse Tribune

After moving back to the area from Florida, Onalaska native Matthew Peterson expected to open Surf & Scotch men and women’s apparel and accessories sometime this weekend at 320 Pearl St. in downtown La Crosse. At press time, it wasn’t certain which day that would be.

  • Steve Cahalan For the La Crosse Tribune

The La Crosse-based MOKA coffee shop chain opened its seventh location — a drive-thru — last week in the Crosseroads Center shopping center along Hwy. 16 in Onalaska.

  • Steve Cahalan For the La Crosse Tribune

Pa Houa Vang and her husband, Chao Thao, opened Taste of Thai restaurant last Monday — yes, on Labor Day — in Suite 106 at 205 S. Holmen Drive in Holmen. It’s in the same multi-tenant building that houses Holmen Ace Hardware & Rental.

  • Steve Cahalan For the La Crosse Tribune

Coulee Bank has applied to federal and state regulators for permission to open a full-service branch in part of The Shoppes at Hale Drive retail/office development planned at 129 Hale Drive, near the new Festival Foods store that’s under construction in Holmen.

Nearly a year after it closed, new operators Cassandra and Justin Birdd will reopen the Treehouse Gift and Home store in Onalaska on Wednesday. And the gifts and home decor store at 9546 E. 16 Frontage Road will have its grand opening celebration Friday and Saturday.