Hotels, Travel Sites Beat Price-Fixing Class Action
A federal judge on Tuesday dismissed a class action lawsuit alleging that hotel chains and online travel companies conspired to fix the price of rooms booked online, handing a big win to a brigade of defense lawyers.
In a 36-page ruling, U.S. District Judge Jane Boyle in Dallas concluded that a proposed class of consumers failed to allege an industry-wide conspiracy to eliminate price competition among hotel room booking websites. The dismissal was without prejudice, so plaintiffs counsel at Hagens Berman Sobol Shapiro can try again with different antitrust theories. But the decision is nonetheless a big win for the defendants, including Hilton Worldwide Inc., InterContinental, Expedia Inc., Marriott International Inc., Starwood Hotels and Resorts Worldwide Inc., Priceline.com Inc., Travelocity.com LP, Trump International Hotels Management, Orbitz Worldwide Inc., Wyndham Worldwide Corp. and Carlson Hotels Inc.
At issue in the case are so-called Resale Price Maintenance agreements between travel sites and hotel chains, which set a minimum price at which the sites can sell rooms. European regulators began scrutinizing the contracts two years ago, prompting Hagens Berman to file an antitrust case on behalf of U.S. consumers in August 2012. The firm alleged that the online retailers used their considerable power—they now account for half of U.S. hotel room sales—to induce the hotel chains into RPM agreements that guarantee high prices. "There is in no reality no best price, but instead there is a fixed uniform price," Hagens Berman wrote.
More than 20 copycat complaints followed and were eventually consolidated into multidistrict litigation before Boyle. The judge appointed Hagens Berman interim lead counsel along with the Oklahoma-based firm Federman & Sherwood. The plaintiffs lawyers filed an amended complaint last May.
The defendants moved to dismiss in September 2013. In their brief, they argued that the hotel chains and the travel sites had lawful, independent reasons for adopting distribution agreements that "by plaintiffs' own allegations, do nothing more than provide a consistent price for the same room reservation across a given hotel's online distribution channels."
Boyle agreed, writing in Tuesday's ruling that lawful economic forces can explain the industry's move toward RPM pricing. The agreements "gave hotels a right they highly value, the right to control online pricing for their rooms," she wrote.
The defense group included Weil, Gotshal & Manges (for Hilton), King & Spalding (for InterContinental), Covington & Burling (for Expedia), Baker Botts (also for Expedia), O'Melveny & Myers (for Marriott), Mayer Brown (for Starwood), Simpson Thacher & Bartlett (for Priceline), Locke Lord (also for Priceline), Cleary Gottlieb Steen & Hamilton (for Travelocity), Seyfarth Shaw (for Trump), Latham & Watkins (for Orbitz), Kirkland & Ellis (for Wyndham), Haynes and Boone (also for Wyndham) and Kelley Drye & Warren (for Carlson).