Online Hotel Booking Price-Fixing Class Action Lawsuit Dismissed

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A consolidated class action lawsuit claiming that online travel agencies conspired with hotels to unfairly fix the price of hotel rooms has been dismissed by a federal judge in Texas.

In 2012, online travel discount company Skoosh filed a class action lawsuit against 12 dominant hotel chains in the United States and nine online travel agencies, including Expedia, Hotels.com, Travelocity.com and Orbitz, alleging that the hotels and travel agencies had unfairly shut Skoosh out of the market and violated antitrust laws by agreeing to fix hotels room prices.The class action lawsuit was consolidated into other antitrust litigation that alleged the defendants entered into an industry-wide conspiracy to impose “rate parity” across hotel room booking websites as early as 2003.

Late in 2013, the defendant hotels and travel agencies moved to dismiss the online hotel booking class action lawsuit, arguing the plaintiffs had not demonstrated that the defendants had violated antitrust laws by entering into agreements fixing the prices that the travel agencies would sell hotel rooms online. U.S. District Judge Jane Boyle agreed with the defendants and dismissed the complaint on Feb 18.

The judge noted “The Complaint’s four counts are based on two general categories of misconduct on the part of the Defendants. First, Defendants allegedly entered into an industry-wide conspiracy to restrain competition in the U.S. market for ‘direct online sale of hotel room reservations,'” and, “Second, Defendants’ advertisements guaranteeing that their respective websites offered the ‘best’ or ‘lowest’ price online—when that price was the same across all online channels—were purportedly deceptive/unfair to consumers.”

The judge further explained “the Court focuses on whether the Complaint plausibly alleges (1) an agreement or conspiracy for purposes of the antitrust law claims and (2) the two essential elements of Plaintiffs’ consumer protection claim.”

The judge stated that “Plaintiffs’ antitrust claims rest entirely on the circumstantial facts purportedly showing that Defendants entered into an ‘express or tacit’ industry-wide conspiracy not to compete” and that “Plaintiffs certainly may rely on circumstantial facts to establish the first element of their claim … but these facts must be enough to surmount the pleading bar set by the Supreme Court.”

The plaintiffs’ proposed class action lawsuit did not meet that bar however. The judge noted that the “parallel conduct,” the same prices of hotel rooms between online travel agencies and agreements made to protect room prices in the online marketplace, did not amount to evidence of the existence of a conspiracy; “[T]he real ‘nub’ of the Complaint in this case is Defendants’ parallel business behavior—the adoption of similar [resale price maintenance] agreements seen across pairs of [online travel agencies] and Hotel Defendants … Defendants’ parallel adoption of similar business strategies is not suspicious or suggestive of an agreement. On the contrary, common economic experience and the Complaint itself offer a natural or ‘obvious’ explanation for why the Hotel Defendants on one side, and [online travel agency] Defendants on the other, individually entered into the same two-term [resale price maintenance] agreements.”

The judge explained further that the plaintiffs’ allegations that the online hotel booking companies conspired during several trade conferences did not amount to evidence of conspiracy noting “[t]he attendance of these executives merely presents an opportunity to conspire, but the surrounding allegations fail to suggest they actually did conspire. In fact, the presence of non-defendants at the EyeforTravel conferences—including airline representatives and a business school professor—belies the suggestion that a secretive price fixing agreement came out of these meetings.”

The judge dismissed the online hotel booking class action lawsuit without prejudice and lawyers for the plaintiffs indicated they would replead the case.

The plaintiffs are represented by Hagens Berman Sobol Shapiro LLP, Stanley Iola LLP and Federmna & Sherwood, among others.

The Online Hotel Price-Fixing MDL is In re: Online Travel Company Hotel Booking Antitrust Litigation, Case No. 12-cv-03515, in the U.S. District Court for the Northern District of Texas.