United States District Court, E.D. Texas, Texarkana Division
TRAVELPASS GROUP LLC, PARTNER FUSION INC, RESERVATION COUNTER LLC, Plaintiffs,
CAESARS ENTERTAINMENT CORPORATION, CHOICE HOTELS INTERNATIONAL INC, HILTON DOMESTIC OPERATING COMPANY INC., MARRIOTT INTERNATIONAL INC, RED ROOF INNS INC, SIX CONTINENTS HOTELS INC, WYNDHAM HOTEL GROUP LLC, HYATT CORPORATION, Defendants.
W. SCHROEDER, III UNITED STATES DISTRICT JUDGE
above-entitled and numbered civil action was referred to
United States Magistrate Judge Caroline M. Craven pursuant to
28 U.S.C. § 636. On August 29, 2019, the Magistrate
Judge issued a Report and Recommendation (Docket No. 183)
(“R&R”), recommending the following motions
• Joint Motion to Dismiss on Behalf of
Defendants Hilton Domestic Operating Company Inc., Hyatt
Hotels Corporation, Marriott International, Inc., Red Roof
Inns, Inc., Six Continents Hotels, Inc. and Wyndham Hotel
Group, LLC (Docket No. 53);
• Defendant Caesars Entertainment
Corporation’s Motion to Dismiss for Failure to State a
Claim (Docket No. 55) and supplement thereto (Docket No. 159)
• Defendant Choice Hotels International,
Inc.’s Motion to Dismiss for Failure to State a Claim
(Docket No. 56).
Caesars Entertainment Corporation filed objections to the
R&R’s findings regarding its individual motion to
dismiss. Docket No. 187. Plaintiffs responded to
Caesars’ objections. Docket No. 190. The Court conducts
a de novo review of only the objected to portions of
the Magistrate Judge’s findings and conclusions. 28
U.S.C. § 636(b)(1)(C).
are downstream online travel agencies (“OTAs”)
that sell hotel rooms from different chains to consumers in
the United States. Docket No. 1 ¶ 45. According to
Plaintiffs, there are two types of OTAs: (1) Gatekeeper OTAs,
including Expedia and Priceline, that maintain direct
relationships with major hotel chains to market hotel
inventory online and (2) Downstream OTAs, like Plaintiffs,
that have affiliate agreements with Gatekeeper OTAs for
access to hotel inventory. Id. ¶ 46.
Plaintiffs’ business model includes bidding on branded
keyword search results to attract hotel consumers to the
hotel inventory on its websites. Id. ¶ 48.
branded keyword advertising, Plaintiffs and other advertisers
bid with search engines, like Google, to place their ads at
the top of a search engine’s results page when certain
keywords are searched. Id. ¶ 5. Higher bids
receive better placement. Id. Historically,
according to Plaintiffs, an individual searching for a
particular hotel chain would see results for that brand,
competing hotel brands, Gatekeeper OTAs and Downstream OTAs,
all of which submitted high bids on that keyword.
Id. ¶¶ 6, 67.
filed this antitrust case against several hotel chains: (1)
Caesars Entertainment Corporation (“Caesars”);
(2) Choice Hotels International, Inc.; (3) Hilton Domestic
Operating Company, Inc.; (4) Hyatt Corporation; (5) Marriott
International, Inc.; (6) Red Roof Inns, Inc.; (7) Six
Continents Hotels, Inc. and (8) Wyndham Hotel Group, LLC.
Id. Plaintiffs allege these hotel chains and others
conspired to eliminate interbrand competition on keyword
searches. Id. ¶ 1. Specifically, Plaintiffs
assert that the defendants conspired horizontally with each
other not to engage in branded keyword advertising for a
competitors’ search term. Id. Plaintiffs also
argue “the Defendant Hotels implemented a series of
additional, or secondary, horizontal conspiracies under which
Gatekeeper OTAs (1) agreed to stop bidding on branded search
keywords and (2) also agreed to force Downstream OTAs to
follow suit.” Id. ¶ 9. According to
Plaintiffs, the Gatekeeper OTAs, at the instruction of the
defendant hotels, removed the Downstream OTAs access to hotel
inventory if the Downstream OTAs did not stop branded keyword
search advertising. Id. ¶ 149. Plaintiffs
allege these conspiracies harmed consumers as well as
Plaintiffs’ business. Id. ¶ 152; see
also Id . ¶¶ 151, 157, 160, 162–63.
asserted the following claims against all defendants: (1) a
violation of the Sherman Act, 15 U.S.C. § 1 (per
se bid rigging/group boycott/market division); (2) a
violation of the Sherman Act, 15 U.S.C. § 1
(unreasonable restraint of trade); (3) a violation of related
Utah Antitrust Act § 1 and (4) tortious interference
with prospective business relations. Id. ¶
164–94. Caesars moved to dismiss under Federal Rule of
Civil Procedure 12(B)(6), arguing Plaintiffs failed to
include specific factual allegations that Caesars engaged in
an antitrust conspiracy. Docket No. 55. According to Caesars,
Plaintiffs alleged only that Caesars joined an industry group
with other hotel defendants and that Plaintiffs received word
from a Gatekeeper OTA that Caesars was cutting off
Plaintiffs’ access to Caesars’ room list.
Id. at 5. Caesars asserts Plaintiffs failed to point
to any agreement between itself and any other horizontal
competitor to deny access to its hotel rooms. Id. at
8. Caesars argues that Plaintiffs were required to plead some
factual allegation sufficient to show a conspiracy between it
and the other horizontal competitors, and the facts included
in the Complaint fail to rise to the pleading standards
mandated in Ashcroft v. Iqbal, 556 U.S. 662 (2009),
and Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007).
Magistrate Judge, in her R&R, found that Plaintiffs
allege sufficient facts to state a plausible claim for
antitrust conspiracy against all the defendants collectively.
See R&R at 79. Regarding Caesars’ motion
to dismiss, the Magistrate Judge viewed the facts in the
light most favorable to Plaintiffs and concluded that
Plaintiffs sufficiently state an antitrust conspiracy claim
against Caesars at this stage of ...