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Third Circuit Reverses Dismissal Of Algorithmic Price-Fixing Claims Against Atlantic City Casino-Hotels
09/01/2026On July 29, 2026, the United States Court of Appeals for the Third Circuit reversed the District of New Jersey’s dismissal of a putative class action alleging that several Atlantic City casino-hotels conspired to fix hotel room prices through the use of a shared dynamic pricing algorithm in violation of Section 1 of the Sherman Act. Cornish-Adebiyi, et al. v. Caesars Entertainment, Inc., et al., No. 24-3006 (3d Cir. July 29, 2026). The Court held that plaintiffs’ allegations were sufficient to support a plausible inference that defendants had agreed to fix prices through the software and remanded for further proceedings.
Plaintiffs, a putative class of hotel guests, alleged that defendants entered a hub-and-spoke conspiracy to inflate hotel room prices. Defendants include nine casino-hotel operators and their pricing software vendor. According to the complaint, defendants installed the dynamic pricing software directly into their property management systems and provided the platform current, non-public room pricing and occupancy data on a continuous basis. The algorithm then processed this non-public data to generate “optimal” room rate recommendations. Plaintiffs alleged that defendant casino-hotels accepted these recommendations 90 percent of the time.
To state a Section 1 claim based on circumstantial evidence, plaintiffs must allege parallel conduct along with “plus factors” that tend to demonstrate the existence of an agreement beyond mere parallelism. The district court dismissed the complaint, reasoning that plaintiffs failed to establish an agreement among the casino-hotel defendants. The district court found that plaintiffs did not adequately allege how the algorithm pooled or exchanged proprietary data and noted that the casino-hotels retained final pricing authority. It also found that the casino-hotel defendants’ staggered adoption of the software across fourteen years undermined an inference of coordinated conduct.
The Third Circuit disagreed. On parallel conduct, the Court found that plaintiffs sufficiently alleged conscious parallelism based on two theories: first, the casino-hotels’ contemporaneous use of the platform as a “shared pricing agent” that generated recommended rates using each participant’s non-public data; and second, the movement of prices and output during the class period, characterized by rising room rates and declining occupancy.
On plus factors, the Court found that the complaint adequately alleged (1) motive to conspire stemming from financial hardship in the years preceding the class period and structural market features conducive to collusion; (2) actions against economic self-interest, including the failure to reduce room rates despite declining occupancy in a business where filling rooms drives casino revenue; and (3) evidence of a traditional conspiracy, including de facto exchanges of non-public commercial information through the software, opportunities to collude at industry events, knowledge of each other’s relationship with the pricing software vendor, and sudden departures from longstanding independent pricing practices.
The Court rejected defendants’ argument that retention of final pricing authority negated an inference of agreement, quoting longstanding Supreme Court precedent that “[p]rices are fixed when they are agreed upon,” regardless of whether conspirators always adhere to them. The panel also held that the district court erred in requiring plaintiffs to plead with specificity how the algorithm functions internally, observing that such a requirement was akin to expecting plaintiffs to explain proprietary software operations without the benefit of discovery.
Antitrust Litigation