Facts
Guests of Atlantic City casino-hotels brought a putative class action against several casino-hotel operators and their pricing software provider, Cendyn Group. They alleged that each hotel continuously sent its current, non-public room pricing and occupancy data to Cendyn’s Rainmaker, an AI-powered dynamic pricing program. Rainmaker allegedly processed that data together with competitors’ data, generated suggested room rates for each hotel and uploaded them automatically into the hotels’ booking systems. According to the complaint, Cendyn itself says its clients charge the recommended rate 90 percent of the time. The U.S. District Court for the District of New Jersey dismissed the complaint for failure to plead an agreement among the hotels.
Question
The question on appeal was whether the allegations plausibly showed an agreement to fix prices in violation of Section 1 of the Sherman Act. The plaintiffs relied on a hub-and-spoke theory, with the software provider as the hub and the hotels as the spokes. The District Court had found no “rim”, meaning no agreement among the hotels themselves. In the background was the Ninth Circuit’s 2025 decision in Gibson v. Cendyn Group, which held that allegations that competing hotels knowingly used the same pricing software were not enough to state a Section 1 claim.
Decision
In a precedential opinion by Judge McKee, filed on 29 July 2026, the Third Circuit reversed the dismissal and remanded. It held the well-pleaded allegations sufficient to support a finding that the casino-hotels conspired to fix prices through Cendyn’s software. The court gave weight to the allegation that competitors’ non-public data was consolidated in the hub and returned as automatically applied price recommendations, so that each hotel could be confident its rate would not be undercut. The court quoted former acting FTC chair Maureen Ohlhausen: if it is not acceptable for a person to collect confidential price strategy information from all market participants and tell everyone how to price, it probably is not acceptable for an algorithm either. The plaintiffs will face a higher burden at later stages.
Why it matters
The opinion reaches a different result from the Ninth Circuit’s ruling in Gibson on similar facts involving the same software vendor, and commentators describe the two as a possible circuit split. The Ninth Circuit had noted that the Gibson plaintiffs did not allege that Cendyn pooled confidential information among competing hotels; the Third Circuit gave weight to exactly that kind of allegation and to the automatic implementation of recommendations. The ruling concerns the pleading stage only, and no violation has been found.
Related stages
In Gibson v. Cendyn Group, involving Las Vegas hotels and the same software vendor, the Ninth Circuit affirmed dismissal on 15 August 2025, and the U.S. Supreme Court denied certiorari on 20 April 2026 (No. 25-1109).