US Justice Dept backs consumers in Las Vegas hotel pricing case
By Mike Scarcella
Oct 25 (Reuters) -The U.S. Justice Department on Thursday backed consumers who are fighting to revive a closely watched lawsuit accusing major hotels in Las Vegas of using shared data and computer algorithms to charge artificially inflated room rates.
Justice Department lawyers said in a friend-of-the-court brief to the 9th U.S. Circuit Court of Appeals that the use of algorithms by competitors to guide pricing decisions created “new dangers” for consumers.
The DOJ said a federal judge in Nevada who dismissed the consumers’ proposed class action made legal errors that should not be upheld.
The plaintiffs had accused a group of hotel owners along the famed Las Vegas strip of overcharging guests by feeding sensitive internal information to a shared software platform that offered pricing recommendations.
The price-fixing lawsuit filed last year against software maker Cendyn and the hotels, including Wynn Resorts and Caesars, was the first to reach a U.S. appeals court, and the case will be closely watched for its potential to influence other cases.
Cendyn, Wynn and Caesars either declined to comment or did not immediately respond to a request for comment. The Justice Department did not immediately respond to a similar request.
Plaintiffs’ attorney Steve Berman, a lawyer for the consumers, welcomed what he called the government's “powerful” submission to the San Francisco-based appeals court. The Justice Department is not part of the case but sometimes weighs in on cases where it believes there is broad public interest.
The hotels and software provider Cendyn have denied any wrongdoing.
In dismissing the lawsuit, Chief U.S. District Judge Miranda Du said in May that the consumers had not shown that the hotels were using Cendyn's software platform at the same and in coordination. Du also said the system generated pricing recommendations that hotels were not bound to follow.
The Justice Department's filing argued that a decision upholding the trial court ruling “could stymie meritorious antitrust claims involving pricing algorithms.”
Plaintiffs do not need to show “simultaneous action” to allege a price-fixing scheme, the brief said, and agreements among rivals to use algorithms to establish a default or starting price are illegal “even if there is no further agreement on final prices.”
Several pending lawsuits in other federal courts challenge corporate use of revenue management software.
In one case, a federal judge in New Jersey on Sept. 30 dismissed a consumer price-fixing lawsuit that was lodged against hotels in that state.
The case is Richard Gibson et al v. Cendyn Group et al, 9th U.S. Circuit Court of Appeals, No. 24-3576.
Read more:
Atlantic City hotels defeat latest class action over casino room rates
Consumers seek second chance in Las Vegas hotel price-fixing lawsuit
CoStar, hotels slam consumers' ‘fanciful’ room pricing lawsuit
Renters suing RealPage get US backing in pricing lawsuits
Reporting by Mike Scarcella
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