Though a judge dismissed a class-action lawsuit against five Las Vegas casino operators and a software company in May 2024, the plaintiffs have not given up.
The hotel customers recently filed a motion with the 9th US Circuit Court of Appeals to have the price-fixing lawsuit reinstated.
The plaintiffs contend that, despite what US District Chief Judge Miranda Du said when she tossed the case, they have enough evidence to proceed with the legal action.
Key Highlights
- Plaintiffs claim hotels collectively shared data with a software program to set prices.
- The judge ruled that the plaintiffs did not have enough evidence.
- A similar lawsuit against Atlantic City hotel-casinos was just thrown out.
Did Hotels Share Info and Inflate Prices?
The case dates back to January 2023, when the law firm of Hagens Berman filed a class-action suit against Wynn Resorts, Caesars Entertainment, Treasure Island, Blackstone (The Cosmopolitan), JC Hospitality (Virgin Hotels Las Vegas), and software company Cendyn Group.
Cendyn’s subsidiary, Rainmaker Group, developed Rainmaker revenue management software used by the properties for room pricing recommendations.
The lawsuit alleges that the hotels colluded by sharing sensitive information, feeding it into the Rainmaker platform. Rainmaker then provided room pricing suggestions that were higher than the operators would normally set on their own.
“Our antitrust attorneys have uncovered what appears to be an unlawful agreement in which Rainmaker collects and shares data between Vegas hotel competitors to unlawfully raise prices of hotel rooms,” said Hagens Berman Managing Partner Steve Berman when he filed the lawsuit.
The plaintiffs claim that by collectively using Rainmaker, the hotels artificially boosted prices without genuinely trying to compete with one another.
Judge Says Not Enough Evidence
In her ruling in May, Judge Du told the plaintiffs that they did not have evidence to show that the hotels and software developer actually coordinated their efforts.
Du added that the hotels “are not required to and often do not accept the pricing recommendations” produced by the Rainmaker system.
The plaintiffs argued that the sheer fact that the hotels used the pricing recommendations is evidence of collusion, even if they were allowed to price however they wanted.
.…ignored well-established case law, and embraced reasoning that would effectively immunize algorithmic price fixing from liability
– Gibson v Cendyn
The appeal, filed in late September, says that the plaintiffs do, in fact, have enough evidence to support their accusation of price-fixing.
“Left undisturbed, the order would effectively immunize algorithmic price fixing from antitrust scrutiny,” the filing states.
The appeal added that in the May ruling, “the court drew inferences against Plaintiffs, ignored well-established case law, and embraced reasoning that would effectively immunize algorithmic price fixing from liability.”
Prices Hit Record Highs in 2022
According to the Las Vegas Review-Journal, room rates on the Strip hit all-time highs in 2022, the calendar year before the lawsuit was filed.
Record-high rates were first hit in April 2022, with Las Vegas hotels averaging $173.63 per night and Strip hotels averaging $187.72.
Those numbers were easily eclipsed in September 2022, when the average Las Vegas room rate was $187.18, and the average rate on the Strip was $199.49.
The very next month, rates reached an average of over $200 per night: $209.89 for Las Vegas and $225.69 for the Strip.
Atlantic City Lawsuit Failed
Attorneys filed a similar class-action suit in New Jersey against Cendyn, Caesars Entertainment, MGM Resorts International, and Hard Rock International, again claiming that their Atlantic City hotels colluded to fix prices.
On October 1, US District Judge Karen Williams dismissed the case with prejudice, meaning it cannot be filed again. Like in Nevada, the judge said the plaintiffs did not have enough evidence to prove collusion.
The plaintiffs claimed the Rainmaker software was a “shared pricing brain” that “does all the hard work for them.”
They added that even though the use of AI is still fairly new, “the underlying conduct is not.”
In her ruling, Judge Williams said that the hotels determined their own room rates and that it was “implausible that they tacitly agreed to anything, much less to fix the prices of their hotel rooms.”
Sources
https://www.reviewjournal.com/business/casinos-gaming/hotel-guests-seek-appeal-in-las-vegas-hotel-price-fixing-lawsuit-3178628/
https://www.reviewjournal.com/business/casinos-gaming/las-vegas-strip-hotels-colluded-inflated-room-rates-lawsuit-claims-2718478/
https://fingfx.thomsonreuters.com/gfx/legaldocs/xmvjbgojavr/Gibson%20v%20Cendyn%20-%20CA9%20brief%20-%2020240926.pdf
https://www.reuters.com/legal/litigation/atlantic-city-hotels-defeat-latest-class-action-over-casino-room-rates-2024-10-01/
https://www.reuters.com/legal/government/las-vegas-hotels-defeat-price-fixing-class-action-over-room-rates-2024-05-09/
