August 1, 2026  ·  Complaint filed July 29, 2026  ·  tnmd, No. 3:26-cv-01072

Newman News, By David Brunk

Read the filing

Winston v. Jude Alleges LKQ Hid FinishMaster’s Collapse Before $2.1B Deal

Shareholder Says Defendants Knew FinishMaster Was Losing Customers Pre-Acquisition, Concealed $55M to $65M Synergy Projections

A derivative shareholder suit filed July 29, 2026, alleges that LKQ Corporation’s directors and officers orchestrated the company’s $2.1 billion acquisition of Uni-Select Inc. while concealing that its FinishMaster business was already losing major customers and market share. The complaint, brought by shareholder Zachary Winston on behalf of LKQ, targets current and former executives—including CEO Justin L. Jude and former CEO Dominick P. Zarcone—as well as nearly the entire board, claiming they breached fiduciary duties and issued materially false and misleading statements in proxy materials and earnings calls.

On February 27, 2023, LKQ announced its definitive agreement to acquire Uni-Select Inc., including FinishMaster, for approximately $2.1 billion. The acquisition closed on August 1, 2023, with FinishMaster—representing 40% of Uni-Select’s annual revenue and operating approximately 200 U.S. locations—integrated into LKQ’s North American operations. During the acquisition announcement, the defendants touted "some very significant financial benefits that will accompany this acquisition" (Compl. ¶47). The complaint alleges that LKQ initially projected $55 million in cost synergies from the Uni-Select acquisition over the first three years, a figure later updated to $65 million (Compl. ¶49, ¶55). Defendant Rick Galloway, LKQ’s CFO, updated projections for the acquisition to be dilutive in 2023 but accretive in 2024 (Compl. ¶51).

Yet the complaint alleges that the defendants knew FinishMaster was losing major customers before the deal closed. In October 2024, the defendants admitted that FinishMaster had been losing business "pre- and post-acquisition," a fact the complaint claims was concealed from shareholders. The concealment allegedly continued through earnings calls and proxy statements, including a February 20, 2025 call in which CEO Jude touted the FinishMaster integration, stating, "our Wholesale – North America team’s agility and integration experience has the Uni-Select plan ahead of schedule" (Compl. ¶52). The complaint alleges that these statements were materially false and misleading, as "the Director Defendants were utterly failing in their oversight duties" (Compl. ¶62).

The complaint ties the alleged misrepresentations to four major stock declines between April 2024 and July 2025, totaling a roughly 57% drop in LKQ’s share price. On April 23, 2024, LKQ lowered financial guidance, and former CEO Zarcone departed; the stock fell $7.28 per share, or about 15%. On July 25, 2024, disappointing second-quarter 2024 earnings triggered a $5.53 per share decline (over 12%). On April 24, 2025, LKQ disclosed continued market share losses in North America due to competitors undercutting prices, missing revenue targets by $200 million and EBITDA margin targets by $24 million. The stock fell $4.87 per share (about 12%). On July 24, 2025, LKQ missed EBITDA targets by $20 million, and the stock declined $6.88 per share (about 18%) (Compl. ¶70). The Individual Defendants admitted that the Company’s earnings and margin declines were predominantly driven by business losses from increased competition (Compl. ¶71).

Audit Committee Accused of Failing to Oversee Internal Controls and Permitting False Statements

The complaint alleges that the Audit Committee Defendants—Andrew C. Clarke, Xavier Urbain, John William Mendel, and Meg Ann Divitto—failed to detect or prevent misrepresentations about FinishMaster’s performance. The complaint specifically alleges that these defendants violated the Audit Committee Charter by failing to ensure the integrity of LKQ’s financial statements, legal compliance, and internal controls (Compl. ¶42-43, ¶85). For example, the defendants claimed in earnings calls that the Uni-Select integration was "ahead of schedule" and that synergies had increased from $55 million to $65 million, even as LKQ’s North American operations underperformed. The complaint alleges that these statements were false and that the Audit Committee permitted the issuance of materially false and misleading statements, including in LKQ’s proxy materials. The Director Defendants issued proxy statements that misrepresented the board’s risk oversight and the company’s internal controls to solicit stockholder votes for their re-election (Compl. ¶58-59, ¶63).

Demand Futility Alleged Due to Board’s Lack of Independence

The complaint alleges that demand on the board to institute this action would be futile because six of the eight directors are defendants facing substantial liability (Compl. ¶78). The complaint specifically alleges that CEO Jude, as President and CEO, is not independent (Compl. ¶84). The complaint also alleges that the board could not respond disinterestedly or independently to a demand, as at least half of the directors are defendants. The complaint states, "In reality, the Director Defendants were utterly failing in their oversight duties" (Compl. ¶62).

Claims Include Breach of Fiduciary Duty, Section 14(a) Violation, Unjust Enrichment, and Contribution Under Exchange Act

The complaint asserts four counts:

• Count I: Breach of Fiduciary Duty – The complaint alleges that the individual defendants breached their fiduciary duties by orchestrating the Uni-Select acquisition while concealing material risks. The complaint further alleges that the defendants exercised control over the wrongful acts and public statements issued by LKQ and acted as agents of each other and the company within the scope of their agency (Compl. ¶38-39, ¶41).
• Count II: Violation of Section 14(a) of the Exchange Act – The complaint alleges that the director defendants negligently issued materially misleading statements in proxy materials to solicit stockholder votes for their re-election. The false proxies, the complaint claims, misrepresented the board’s risk oversight and the company’s inadequate internal controls. The section 14(a) claims are based solely on negligence, not fraud (Compl. ¶94-95).
• Count III: Unjust Enrichment – The complaint alleges that the individual defendants received financial benefits, bonuses, stock options, or compensation tied to LKQ’s performance or stock price (Compl. ¶100). The complaint seeks disgorgement of these profits.
• Count IV: Contribution under Sections 10(b) and 21D of the Exchange Act – The complaint alleges that defendants Jude, Galloway, and Zarcone’s willful or reckless violations contributed to LKQ’s potential liability in a related securities class action, City of Miami General Employees’ & Sanitation Employees’ Retirement Trust v. LKQ Corporation et al., No. 3:26-cv-00498 (filed April 22, 2026) (Compl. ¶104).

The complaint seeks damages for LKQ from the Individual Defendants’ breaches of fiduciary duties, corporate governance reforms (including a shareholder vote on amendments to LKQ’s By-Laws and Articles of Incorporation and enhanced Board supervision procedures), restitution and disgorgement of profits, costs and fees, and a jury trial.

The allegations in the complaint are unproven, and no defendant has yet responded.

The allegations described here are taken from the filing and remain unproven; no responsive pleading is reflected in the source document.

David Brunk is a civil litigation attorney. He can be reached at david@newmanbrunk.com.