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Federal Judge Tosses Hotel Price-Fixing Lawsuit Over Insufficient Evidence Of Collusion Through Revenue Software
08/05/2025On July 18, 2025, Judge Jeffrey S. White of the United States District Court for the Northern District of California granted a motion to dismiss filed by hotel operators and a software provider in a high-profile antitrust case, but permitting plaintiffs leave to amend. The 12(b)(6) motion challenged the sufficiency of plaintiffs’ allegations that defendants conspired to fix hotel room prices through the use of revenue management software. Dai, et al. v. SAS Inst. Inc., et al., No. 24-cv-02537-JSW (N.D. Cal. 2025).
Plaintiffs, a group of hotel customers, sued five major hotel chains—Wyndham Hotels & Resorts, Hilton Domestic Operating Company, Four Seasons Hotels, Omni Hotels Management, Hyatt Corporation—and IDeaS, Inc., a leading provider of revenue management software (RMS). Plaintiffs alleged these hotel defendants used IDeaS’s software to share non-public, competitively sensitive pricing and occupancy data in real time, enabling the software to generate supra-competitive pricing recommendations that the hotels then implemented. Plaintiffs claimed this conduct amounted to a hub-and-spoke conspiracy to fix prices in violation of Section 1 of the Sherman Act. Defendants moved to dismiss, arguing that the Complaint failed to plausibly allege a horizontal agreement.
To survive a motion to dismiss on a Section 1 Sherman Act claim, plaintiffs must allege: (1) a contract, combination, or conspiracy among two or more distinct entities; (2) an intent to restrain trade; and (3) actual injury to competition. Here, the Court emphasized parallel conduct alone is insufficient to establish conspiracy and that plaintiffs must provide additional facts—or “plus factors”—that suggest an agreement amongst competitors rather than independent action.
Plaintiffs argued the hotel defendants had motive and opportunity to collude, and that their use of IDeaS’s RMS, sharing of confidential data, and adoption of similar pricing strategies supported an inference of a horizontal agreement. Plaintiffs further argued that high barriers to entry in the hotel market, inelastic demand, and sharing of confidential information against self-interest were sufficient plus factors to support the existence of a conspiracy.
The Court found plaintiffs failed to plausibly allege enough evidence to support a claim of horizontal price fixing under a hub-and-spoke conspiracy. The Court noted that the Complaint did not specify when the hotel defendants began using IDeaS’s software or when they allegedly changed their pricing strategies. The allegations regarding the sharing and use of confidential information were deemed conclusory, lacking factual detail about how the data was pooled or used to generate pricing recommendations shared among competitors. The Court also found that the cited industry characteristics were not enough to nudge the claim from possible to plausible. The Court distinguished this case from others where more detailed allegations had survived, finding plaintiffs’ allegations were more analogous to cases where the claims lacked specificity.
The Court granted defendants’ motion to dismiss but allowed plaintiffs leave to amend. This decision underscores the high pleading standard for antitrust claims based on alleged algorithmic price fixing and highlights the need for detailed factual allegations to support claims of horizontal agreements in complex, technology-driven markets.
A prior order dismissed defendant SAS, finding plaintiffs failed to plead sufficient facts to show that the software company was part of the alleged conspiracy. An analysis of that order is available here.
