Third Circuit Revives Algorithmic Price-Fixing Claims, Signals Circuit Split
Companies using shared revenue-management or pricing software face heightened Sherman Act exposure after the Third Circuit revived hotel-room price-fixing claims and diverged sharply from other circuits on pleading standards.
In Cornish-Adebiyi v. Caesars Entertainment, the Third Circuit reversed dismissal of a putative class action alleging that nine Atlantic City casino-hotels conspired through Cendyn's Rainmaker pricing software. The court held that staggered adoption over 14 years, the ability to override recommendations, and lack of detail on proprietary algorithm mechanics do not defeat conspiracy inferences at the pleading stage. It credited allegations of roughly 90% adherence to recommendations, synchronized rate increases during declining occupancy, and executive statements about avoiding 'price wars' as sufficient plus factors. The decision departs from other courts that have required more concrete allegations of horizontal agreement and algorithm function, creating a likely circuit split and moving closer to a near-strict-liability framework for algorithmic collusion. Companies using third-party pricing platforms should audit data inputs, override mechanics, compliance rates, and demand-versus-price patterns, and assess antitrust compliance for AI and pricing tools.