The U.S. Court of Appeals for the Third Circuit has reinstated a proposed antitrust class action challenging the use of shared pricing software by several Atlantic City casino-hotels, issuing a precedential opinion that examines how traditional competition laws apply in an era of artificial intelligence and increasingly sophisticated pricing technology.
The lawsuit alleges that several Atlantic City casino-hotels unlawfully coordinated room prices through their use of Cendyn’s Rainmaker revenue management platform. According to the complaint, participating hotels provided confidential pricing and occupancy information to the platform, which used that data to generate pricing recommendations that were accepted at unusually high rates, resulting in artificially inflated room prices for consumers.
Reversing the district court’s dismissal of the case, the Third Circuit held that the plaintiffs’ allegations were sufficient at the pleading stage to plausibly allege a hub-and-spoke conspiracy under Section 1 of the Sherman Act. In addressing how established antitrust principles apply to modern pricing technology, Judge Theodore A. McKee wrote:
Collusion among competitors in today’s world need not be characterized by handshakes (or a wink and a nod) in smoke-filled rooms. Technology can enable participants in the marketplace to coordinate pricing and thereby collude in ways that reduce competition at the expense of consumers who bear the brunt of higher prices and reduced output or supply. This is what the Sherman Act is intended to prevent.
At the same time, the Court recognized that artificial intelligence and dynamic pricing technology can offer substantial benefits to businesses and consumers and emphasized that their use is not inherently anticompetitive. Rather, the opinion makes clear that longstanding antitrust principles continue to apply when such technologies are allegedly used to facilitate coordination among competitors.
The Third Circuit’s decision comes as businesses across a wide range of industries increasingly rely on sophisticated technologies to inform pricing decisions. This opinion provides timely guidance on the application of existing antitrust law to those evolving practices while reaffirming the Sherman Act’s fundamental role in protecting competition and consumers.
The case now returns to the United States District Court for the District of New Jersey for further proceedings. Spector Caldes & Corrigan, PC serves on the Executive Committee for the proposed plaintiff class and will continue working alongside co-counsel as the litigation moves forward. For further information, or if you want to discuss your legal rights in the proposed class-action lawsuit, please email SCC partners Bill Caldes at bcaldes@scc.law or Jeff Spector at jspector@scc.law, or call our office at 215-496-0300.
The case is Cornish-Adebiyi et al. v. Caesars Entertainment Inc. et al., case number 24-3006, in the United States Court of Appeals for the Third Circuit.
