Third Circuit Revives Algorithmic Price-Fixing Claims Against Atlantic City Hotel-Casinos

A federal appeals court just reinstated a lawsuit accusing Atlantic City hotel-casinos of using a common pricing software to allegedly inflate hotel room rates. On July 29, 2026, the U.S. Court of Appeals for the Third Circuit revived a proposed class action against the hotel-casinos and their common pricing software provider, Cendyn Group, finding that the plaintiffs’ claims of “algorithmic collusion” deserved to be revisited. See Cornish-Adebiyi v. Caesars Ent., Inc., No. 24-3006, 2026 WL 2182291 (3d Cir. July 29, 2026).

The district court had dismissed the plaintiffs’ complaint on grounds that the plaintiffs did not sufficiently plead the existence of a “hub-and-spoke” conspiracy — an arrangement where a central actor (the hub) coordinates pricing for multiple competitors (the spokes). The district court reasoned that plaintiffs’ allegations failed to show the requisite “rim,” i.e., an agreement among the “spokes” to use the “hub” to set their respective prices.

On appeal, however, the Third Circuit disagreed, finding that the complaint adequately alleged circumstantial evidence of an agreement among the hotel-casinos. The Third Circuit pointed to allegations of “parallel conduct,” namely that the hotel-casinos used the same software to make pricing decisions during the relevant class period, and that room rates rose while occupancy fell over the same period — the opposite of what one might expect if each hotel-casino was acting in its own self-interest rather than pursuant to a conspiracy.

The Third Circuit also found that the plaintiffs had sufficiently alleged certain “plus factors” to suggest the existence of a horizontal agreement among the hotel-casinos. Most notably, the court cited the alleged exchange of non-public commercial information as supporting the inference of a price-fixing agreement.

The decision offers several important lessons for companies that use algorithmic pricing tools and for anyone watching this rapidly evolving area of antitrust law:

First, the exchange of confidential, non-public information remains a key factor in determining which software uses may be problematic. In response to concerns that reversing the decision below would effectively criminalize industry-wide use of algorithmic software, the Third Circuit emphasized that the complaint “involves many more factors that go beyond merely using the same independently-operated software to set production levels,” and pointed to allegations that Cendyn Group’s Rainmaker software received non-public commercial information from each hotel-casino and, in return, gave each hotel-casino the benefit of its competitors’ non-public data in formulating a price recommendation. As a practical matter, companies using algorithmic pricing tools should be mindful of whether the tool requires them to submit non-public information. Tools that do so present heightened antitrust risk compared to those that rely on public data to generate recommendations.

Second, to state a claim, plaintiffs did not need to explain how the non-public information was used to develop the pricing recommendations. The district court had dismissed the complaint in part because it failed to allege that the hotel-casinos’ proprietary data was pooled or otherwise commingled into a common dataset against which the algorithm ran. The Third Circuit held that plaintiffs were not required to explain how the pricing software works before taking discovery, writing that “at this stage of litigation, such level of detail into the software’s operations is neither required nor appropriate.” Companies using similar software should therefore proceed with caution even if they believe the tool segregates their non-public information from other users’ data.

Third, defendants did not need to adopt the software at the same time for the court to infer the existence of a conspiracy. The district court had found that the fourteen-year gap between when the first and last hotel-casino signed up for Cendyn’s software militated against a finding of parallel conduct. The Third Circuit disagreed, holding it sufficient that all the hotel-casinos used the software to price rooms throughout the time of the alleged conspiracy.

Fourth, defendants did not need to accept the software’s recommended price every time for plaintiffs to state a claim. It was undisputed that the hotel-casinos retained final pricing authority and the ability to override the algorithm’s suggested prices, which they reportedly did in roughly 10% of instances (that is, they allegedly followed Cendyn’s recommendations approximately 90% of the time). Nevertheless, the Third Circuit held that the complaint sufficiently stated a claim for conspiracy, reasoning that the alleged 90% compliance rate itself supported an inference of an agreement. Thus, the occasional exercise of pricing discretion may not serve as a defense where a company accepts the software’s recommendations the great majority of the time. In particular, the Third Circuit found it significant that Cendyn’s pricing recommendations were automatically fed into each hotel-casino’s property management system on a real-time basis, and that special overrides were required to justify departures from Cendyn’s recommendations.

Fifth, the specific dynamics of the relevant market matter. The Third Circuit observed that hotel-casinos have a greater incentive than normal hotels to fill rooms to capacity, since guests are a source of casino revenue. As the court explained, “economic principles state that a casino-hotel whose room occupancy is steadily decreasing over the years would lower room rates in order to compete for more hotel guests who will then be available to venture into the casino.” The fact that the hotel-casinos instead raised rates as occupancy declined supported, in the court’s view, an inference of collusion.

Sixth, the novelty of “AI-powered dynamic pricing” software is not itself a defense. While acknowledging that “existing antitrust jurisprudence may not be fully equipped to tackle future developments in technology and the new issues that may subsequently arise,” the Third Circuit held that the antitrust laws reach conduct that deprives the market of independent centers of economic decision-making. This signals that courts’ unfamiliarity with new pricing technologies may not shield coordinated pricing conduct from antitrust scrutiny.

The Third Circuit’s opinion is significant as the first appellate decision reversing a dismissal of an algorithmic-pricing antitrust case and the first to squarely reach the sufficiency of a hub-and-spoke conspiracy theory in this context. The Ninth Circuit considered a similar case against the same software provider and other hotel defendants. But there, plaintiffs had abandoned their hub-and-spoke conspiracy claim on appeal, and the court affirmed the dismissal of those plaintiffs’ remaining claim.

Whether courts in other circuits follow the Third Circuit’s analysis remains to be seen. Foley’s Antitrust & Competition practice group has published widely on algorithmic pricing (including reports on past court decisions, states’ efforts to curb the practice, and practical tips for businesses that use algorithmic pricing software) and will continue to monitor and report on developments in this area.