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Court Dismisses Putative Price-Fixing Class Action Over Hotel Benchmarking
09/16/2025On August 29, 2025, the Honorable Robert S. Lasnik of the Western District of Washington granted defendants’ motion to dismiss a putative class action alleging price fixing in the hotel industry via information exchanged through Smith Travel Research (“STR”). Portillo, et al. v. CoStar Group, Inc., et al., No. 2:24-cv-00229-RSL, (W.D. Wash. Aug. 29, 2025). The Court held that plaintiffs failed to plausibly plead an agreement under Section 1 of the Sherman Act, either through direct evidence, parallel conduct with plus factors, or a hub-and-spoke theory.
The named plaintiffs—who are individual travelers—alleged that STR, a unit of CoStar Group, and a group of hotel operators conspired to raise, fix, or maintain room prices by participating in STR’s benchmarking exchange. To use STR’s benchmarking product, hotels allegedly provided (i) historical room revenue data, which included total rooms revenue; (ii) profit-and-loss data; and (iii) future bookings data. STR then aggregated and anonymized hotel inputs before distributing benchmarking reports. Plaintiffs alleged that hotels could deanonymize report outputs to identify specific hotels, but—crucially—did not allege that either inputs to STR or outputs from STR revealed or allowed calculation of prices for any specific room on any given day.
Plaintiffs pointed to three pathways to a Sherman Act Section 1 violation: direct evidence, indirect evidence, or a hub-and-spoke theory. First, the Court determined that plaintiffs failed to allege “direct evidence” of a conspiracy between STR and the hotel operators. The Court held that the terms of the benchmarking program did not require submission of room prices. The complaint also did not allege that actual room prices were shared, and plaintiffs did not plead that deanonymization would yield the actual prices charged or quoted. For these reasons, plaintiffs failed to plead sufficient direct evidence of an agreement to share price information in violation of Section 1.
Second, the Court held that plaintiffs’ allegations of parallel conduct and “plus factors” were insufficient. The Court identified plaintiffs alleged parallelism as the hotel operators’ common use of STR benchmarking. It contrasted plaintiffs’ allegations to Duffy v. Yardi Systems, Inc., 758 F. Supp. 3d 1283, 1292 (W.D. Wash. 2024) where landlords allegedly supplied actual rent price inputs to an algorithm that returned coordinated price recommendations. Here, the court held that the “key missing ingredient is sufficient pleading that defendants gave STR any information on the actual prices of individual hotel rooms.”
Third, the Court held that plaintiffs’ hub-and-spoke theory also failed. Although plaintiffs argued that STR’s advertising constituted an “invitation” that hotel operators “accepted,” a hub-and-spoke conspiracy still requires an underlying agreement between the hub and spokes. Plaintiffs’ allegations related to a hub-and-spoke conspiracy failed on the grounds that there were no plausible allegations that STR and hotel operators exchanged actual pricing information.
Because plaintiffs failed to plausibly allege an agreement, the Court did not address the other Section 1 elements. Instead, it dismissed plaintiffs’ complaint with leave to amend. This case highlights the importance of plausibly alleging the actual exchange of pricing information or sharing of data that could be reverse-engineered to yield actual prices in a price fixing case. In prosecuting these cases, generalized allegations of sharing “pricing information” without exchange of actual prices (or the ability to reverse engineer prices) may not suffice.
