Source: Morgan Lewis

The Third Circuit, in Cornish-Adebiyi v. Caesars Entertainment, Inc., No. 24-3006 (3d Cir. July 29, 2026), reversed a district court’s dismissal of a class complaint alleging that Atlantic City casino hotel operators used Cendyn Group’s AI revenue-optimization software, Rainmaker, to fix and artificially inflate hotel room prices. Plaintiffs alleged each hotel continuously uploaded real-time, confidential pricing and occupancy data into Rainmaker; the AI generated optimal prices multiple times per day; those recommendations were uploaded into each hotel’s reservation system; hotels accepted the recommendations about 90% of the time; and Rainmaker made deviation difficult by requiring special overrides and tracking override usage.

The Third Circuit held the complaint adequately alleged parallel conduct and found the alleged circumstantial evidence could plausibly support an inference of collusion, citing departures from economic self-interest, exchanges of nonpublic commercial information through Rainmaker, industry opportunities to conspire, Cendyn presentations discouraging “price wars,” and each operator’s awareness that competitors were using Rainmaker. The opinion distinguishes the Ninth Circuit’s Gibson v. Cendyn decision, noting Gibson did not advance hub-and-spoke conspiracy allegations and therefore addressed only whether vertical licensing agreements alone violated Section 1; the Third Circuit’s ruling underscores risks where algorithmic pricing tools use shared, nonpublic inputs and are adopted and followed overwhelmingly by competitors.