No Price-Fixing Conspiracy Among Atlantic City Hotels, Says New Jersey Court

Inside Class Actions reports that a New Jersey federal court recently dismissed Cornish-Adebiyi v. Caesars Entertainment, an antitrust class-action suit accusing multiple Atlantic City hotels of engaging in a price-fixing conspiracy using pricing algorithms. 

The plaintiffs alleged that the hotels had coordinated to set room prices through a “hub-and-spoke” model facilitated by software, but the court ruled that their allegations lacked sufficient factual support.

This decision follows a similar ruling from a Nevada court in Gibson v. Cendyn Group, which also rejected claims that hotel pricing software facilitated illegal coordination.

The claims in both cases rested on the accusation that the hotels’ use of a pricing algorithm created an unlawful agreement to fix room rates. The plaintiffs argued that the use of the software amounted per se to anti-competitive conduct.

Both the Nevada and New Jersey courts ruled that absent direct evidence of agreements between the hotels, “parallel conduct” indicative of collusion was necessary to show a coordinated scheme.

The Nevada court found two significant flaws in the plaintiffs’ claims. First, the timeline of each hotel’s adoption of the software, spanning over fourteen years, was too varied to suggest simultaneous coordination. Second, the hotels retained discretion over room pricing rather than blindly following the algorithm’s recommendations, further weakening claims of collusion.

Law firms will note that the ruling emphasizes the evidentiary burden plaintiffs face when alleging an algorithm-driven price-fixing conspiracy. Both cases underscore the need for robust proof of explicit or closely aligned conduct among alleged conspirators.

The rulings also demonstrate judicial reluctance to apply antitrust liability without clear evidence of collusion or data-sharing among competitors.