Antitrust Law Daily Wrap Up, ANTITRUST NEWS: En banc 9th Circuit review of Las Vegas hotel algorithmic pricing antitrust lawsuit urged by AAI, (Oct 15, 2025)

By Kenneth H. Ryesky, M.B.A., J.D.

AAI argues that panel's misunderstanding of antitrust causation resulted in "a fundamental error" in failing to recognize that agreements themselves are restraints instead of possible causes of restraints.

The American Antitrust Institute (AAI) announced the filing of an amicus curiae brief with the Ninth Circuit, exhorting the court to rehear the case en banc after a three-judge panel of the court upheld the dismissal of a novel algorithmic pricing antitrust class action lawsuit against Las Vegas hoteliers and a software provider. The brief advocates that the Circuit review the panel's decision in light of what the plaintiffs and the AAI view as flaws in the panel's rationale (Amicus Brief, Gibson v. Cendyn Group, LLC, No. 24-3576 (9th Cir. Oct 9, 2025)).

Background. The Rainmaker Group, Unlimited, Inc. (Rainmaker) was acquired by Cendyn Group, LLC (Cendyn) in 2019. Rainmaker had developed certain revenue management software products, which it had licensed to six Las Vegas hotel-casino operators. In 2023, two individuals filed a putative class action lawsuit in federal district court against Cendyn and Rainmaker (hereinafter, collectively Cendyn), and also named the six hotel-casino operators as defendants (collectively, the Hotel Defendants). The complaint as amended alleged collusion in connection with the pricing algorithms in the licensed software, in violation of Section 1 of the Sherman Act [15 U.S.C. § 1]. The district court dismissed the complaint for failure to plausibly plead a cause of action [Fed. R. Civ. P. 12(b)(6)].

The dismissal was upheld on appeal by the Ninth Circuit. The individual plaintiffs moved for the Ninth Circuit to conduct a rehearing en banc. With the consent of all parties, the American Antitrust Institute, "an independent nonprofit organization devoted to promoting competition that protects consumers, businesses, and society," filed an amicus curiae brief in support of the plaintiffs' motion for the en banc rehearing.

Pricing software licensing contracts. The AAI's brief argues that the Ninth Circuit's three-judge panel mistakenly viewed a software licensing agreement as an "ordinary sales contract" that does not in and of itself restrain trade in the relevant market. As explicitly stated by the second word in the antitrust statute's verbiage [15 U.S.C. § 1], a "contract" that restrains trade is an antitrust law violation. The three-judge panel opinion states that "Cendyn does not contribute the raw materials, capital, or labor necessary for Hotel Defendants’ production of hotel-room rentals on the Las Vegas Strip." The AAI contends that software, along with "materials, capital, or labor," can indeed be an "input" in a relevant market and therefore be subject to a per se or rule or reason analysis.

Rule of Reason analysis. The AAI's brief notes that the panel's approach "creates a new category of agreements which, in its view, are not capable of restraining trade in the relevant market and therefore do not need to be analyzed under the rule of reason." This, the AAI asserts, conflicts with the Supreme Court's Chicago Board of Trade ruling [Board of Trade of the City of Chicago v. United States, 246 U.S. 231 (1918)]. Under Chicago Board of Trade and its progeny, agreements that are not per se illegal under the antitrust statute must be given rule of reason analysis. The three-judge panel's decision is accordingly at odds with more than a century of precedent. The panel's categorical exclusion of licensing agreements from rule of reason analysis, "is a serious error which must be corrected" even if the particular licensing agreements at issue here are found to not run afoul of the Sherman Act.

Case of "exceptional public importance." The AAI's amicus brief urges the Ninth Circuit to seize the opportunity presented here to weigh in on the issue of "whether competitors’ use of third-party pricing software can ever violate the antitrust laws." Pricing algorithms, which are costly to create, develop, and maintain, are often licensed from specialist entities by entrepreneurs instead of being done in-house. Pricing algorithm software is increasingly used in diverse industries, and the use of the same software by competitors in a relevant market has drawn attention of academics and enforcers for its potential to inhibit competition. Regardless of the effects caused by the particular software that was licensed here, the AAI encourages the Ninth Circuit to address the broader questions.

The Case is No. 24-3576.

Attorneys: Steve Berman (Hagens Berman Sobol Shapiro, LLP) for Richard Gibson. Melissa Arbus Sherry (Latham & Watkins, LLP) for Cendyn Group, LLC.

Companies: Cendyn Group, LLC

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