A nonprofit that focuses on antitrust issues urged entire Ninth Circuit to rehear a price-fixing case accusing several Las Vegas casino-hotel operators of using the same algorithm to set prices for hotel rooms.

In an amicus brief filed Thursday, the American Antitrust Institute said the Ninth Circuit erred in August when it ruled in favor of Blackstone, the hotel operators Caesars Entertainment Inc., Treasure Island LLC, Wynn Resorts Holdings LLC, JC Hospitality LLC and the software companies Cendyn Group LLC and its subsidiary The Rainmaker Group Unlimited Inc. in a proposed class action filed by guests of the hotel-casinos.

The guests accused Blackstone and the hotel operators of agreeing to use the software companies' GuestRev pricing algorithm to raise casino-hotel room prices in an anticompetitive way. Blackstone used to run the Cosmopolitan of Las Vegas casino-hotel, according to the lawsuit.

The antitrust group said the court failed to properly scrutinize the business agreements between the hotels and the software companies because it didn't use a "rule of reason" analysis to determine whether the deals allowed the companies to run a price-fixing scheme for hotel rooms.

The panel found the agreements were normal business contracts that didn't create anticompetitive conditions, which was a mistake, the group argued.

"The panel opinion demonstrates a fundamental confusion about antitrust causation: it treats agreements as 'causing' restraints instead of recognizing that agreements are restraints which can cause anticompetitive effects," the group said.

"It directly contradicts the Supreme Court's holding in Board of Trade of the City of Chicago v. United States that '[t]he true test of legality' of an agreement is not 'whether it restrains competition,' but whether, based on 'the relevant facts,' it 'merely regulates and perhaps thereby promotes competition or whether it is such as may suppress or even destroy competition,'" the nonprofit further argued, referring to the high court's 1918 decision.

The American Antitrust Institute said the Ninth Circuit cited a book about antitrust law to rule that the business agreements between the operators and the software companies weren't anticompetitive. But that book doesn't support the court's ruling, the group said, because it says an "ordinary sales contract" is an example of common "vertical agreements between actual or would-be suppliers."

According to the nonprofit, the book's passages align with the U.S. Supreme Court's 1911 ruling in Standard Oil v. United States , which determined that the Sherman Act is supposed to combat anticompetitive business dealings and that trade will generally be restricted by normal business contracts.

"The court's confusion about antitrust causation is evident in its statement that 'Section 1 requires a causal link between a contested agreement and an anticompetitive restraint of trade in the relevant market,'" the nonprofit said, referring to the Sherman Act's Section 1.

"The panel believes that contracts, combinations, and conspiracies cause restraints of trade," it continued. "It is mistaken. Contracts, combinations and conspiracies are restraints of trade."

Additionally, the Ninth Circuit's ruling raises an important question about whether companies can use pricing software such as GuestRev in an anticompetitive manner, the group said.

The nonprofit pointed to case law such as a Washington federal court's 2024 decision in Duffy v. Yardi Systems Inc. to argue that courts have obeyed U.S. Supreme Court precedent by using "rule of reason" analysis to determine whether pricing software was used in antitrust conspiracies.

"No court has done what the panel does, which is to exempt competitors' use of a shared pricing algorithm from scrutiny under Section 1 altogether," the nonprofit argued.

"By holding that firms' licensing agreements with third-party pricing software providers are 'ordinary sale contracts' incapable of restraining trade in the relevant market, the panel opinion creates a rule that, in this circuit, competitors' use of the same third-party pricing software provider is immunized from scrutiny under the antitrust laws regardless of any alleged anticompetitive effects," it said.

In a Friday statement to Law360, the American Antitrust Institute's in-house counsel David O. Fisher reiterated that "longstanding Supreme Court precedent" requires courts to scrutinize whether business agreements have an anticompetitive impact.

"But the [Ninth Circuit] panel declined to consider those anticompetitive effects because it assumed they simply couldn't exist," Fisher said. "That's wrong as a matter of economics and law."

"Experts agree that competitors' use of the same pricing algorithm can raise prices and facilitate collusion, and the panel's opinion risks exempting this increasingly widespread practice from antitrust scrutiny," he added.

Additionally, on Friday, class counsel Steve Berman told Law360 the nonprofit's amicus brief "was spot on as to the importance of the issue and the panel's fundamental error in ignoring longstanding precedent."

Counsel for the appellees didn't respond to requests for comment.

The American Antitrust Institute is represented in-house by David O. Fisher.

The proposed class is represented by Steve Berman and Rio Pierce of Hagens Berman Sobol Shapiro LLP.

Cendyn Group is represented by Sadik H. Huseny, Brendan A. McShane, Timothy L. O'Mara, Melissa A. Sherry, Anna M. Rathbun, Christopher J. Brown and Graham Haviland of Latham & Watkins LLP and Jon C. Williams of Campbell & Williams.

The Rainmaker Group is represented by Alicia Rubio-Spring and Arman Oruc of Goodwin Procter LLP and Nicholas J. Santoro of Spencer Fane LLP.

Caesars Entertainment is represented by Boris Bershteyn of Skadden Arps Slate Meagher & Flom LLP and Adam Hosmer-Henner, Chelsea Latino and Jane Susskind of McDonald Carano LLP.

Treasure Island is represented by Patrick J. Reilly, Arthur Zorio and Eric D. Walther of Brownstein Hyatt Farber Schreck LLP.

Wynn Resorts is represented by Mark C. Holscher and Tammy Tsoumas of Kirkland & Ellis LLP.

Blackstone and Blackstone Real Estate Partners VII LP are represented by Daniel R. McNutt and Matthew Wolf of McNutt Law Firm PC and Matthew L. McGinnis of Ropes & Gray LLP.

JC Hospitality is represented by Kasey J. Curtis, James C. Martin and Charles P. Hyun of Reed Smith LLP.

The case is Richard Gibson et al. v. Cendyn Group LLC et al., case number 24-3576, in the U.S. Court of Appeals for the Ninth Circuit.