Atlantic City Casinos Win Legal Fight over Alleged Price-Fixing
Casino and hospitality operators in Atlantic City recently succeeded in persuading a judge to dismiss a consumer class action accusing them of price-fixing related to room rentals. US District Judge Karen Williams ruled that the plaintiffs failed to show sufficient evidence to allow the lawsuit to proceed.
The Tropicana casino resort in Atlantic City at night. (Source: LinkedIn)
LISTEN TO THIS ARTICLE:Reuters reports that Williams dismissed the case with prejudice, which means the lawsuit cannot be refiled. This could be viewed as a significant victory for the casino operators and their co-defendant, the revenue management platform Cendyn, as it could set a precedent for similar litigation in the future.
Related: Atlantic City Casinos Face Lawsuit over Price CollusionThe case was part of a broader trend of lawsuits targeting the use of revenue management platforms in the hotel industry. Plaintiffs in these cases have claimed that hotels and management platforms conspire to artificially inflate room rates by sharing sensitive pricing and occupancy data.
These platforms, which analyze competitors' data, then provide pricing recommendations that the plaintiffs allege can lead to collusion between rival hotels. However, in this particular lawsuit, the judge found the evidence insufficient to substantiate the claims.
According to the court, the plaintiffs did not demonstrate how the hotels used the data that was provided to the revenue management platform Cendyn. The judge noted that this missing information made the case both factually and legally incomplete.
Without clear proof of how the allegedly confidential data was utilized after being shared with Cendyn, the claims were deemed speculative. The ruling emphasized that while the plaintiffs asserted that sensitive internal information, such as real-time pricing and occupancy rates, was shared with Cendyn, they did not explain how the hotels subsequently used this data to fix prices.
In her ruling, Judge Williams stated that the plaintiffs' allegations were implausible, particularly because the hotels maintained the ability to set their own room rates. She reasoned that if each hotel had the autonomy to determine its pricing, it was unlikely that the hotels collectively agreed to fix room prices. The court found that the plaintiffs' argument lacked the necessary factual basis to move forward with their claim.
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Continued Setbacks
This ruling is the second setback for plaintiffs making similar accusations against major hotel chains. In a related case, a Nevada federal judge dismissed a similar lawsuit involving Wynn Resorts, Caesars Entertainment, and other major hotel operators.
The plaintiffs in that case have appealed the dismissal, continuing to argue that the use of shared revenue management platforms constitutes price-fixing under antitrust laws. Despite these efforts, the courts have thus far found the evidence presented by the plaintiffs to be insufficient in both cases.
The defendants in the Atlantic City case have consistently denied any wrongdoing. The hotels have argued that their use of revenue management software is a standard industry practice and does not amount to unlawful collusion. Cendyn has maintained that its platform is designed to assist hotels in optimizing pricing strategies based on market data, not to facilitate price-fixing.
The plaintiffs have raised concerns about the growing use of data-driven software in the hotel industry. They claim that these platforms allow hotel operators to share competitively sensitive information, leading to artificially inflated prices for consumers. While the courts have yet to side with the plaintiffs, the ongoing litigation highlights the increasing scrutiny of revenue management practices in the hospitality industry.
Judge Williams' ruling in favor of the Atlantic City casino-hotel operators could influence the outcome of other similar cases across the country. With the dismissal of this lawsuit, the plaintiffs are left without further recourse in this particular case, as the court's decision to dismiss with prejudice prevents them from refiling the claim. Meanwhile, the appeal of the Nevada case continues, potentially setting the stage for further legal battles over the use of revenue management platforms in the hotel sector.
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