Seattle Federal Judge Dismisses CoStar in Algorithmic Pricing Lawsuit
A Win for CoStar in Antitrust Battle
On September 2, 2025, a Seattle federal judge granted CoStar Group Inc.’s motion to dismiss a putative class action lawsuit accusing the commercial real estate giant and several hotel companies of engaging in algorithmic price-fixing. The ruling, issued by U.S. District Judge Robert Lasnik in the Western District of Washington, marks a significant victory for CoStar, though the case against hotel defendants continues.
Details of the Case and Ruling
The Allegations
The lawsuit, Jeanette Portillo et al. v. CoStar Group et al., filed in February 2024, alleged that CoStar, through its STR (Smith Travel Research) division, facilitated a price-fixing conspiracy with hotel operators like Hilton, Hyatt, Marriott, and others. Plaintiffs, a group of consumers seeking class-action status, claimed that STR’s hotel industry reports, which provide aggregated data on room rates, occupancy, and supply, enabled hotels to set artificially high prices using algorithms. The complaint argued these reports acted as the “essential fuel” for pricing algorithms, violating Section 1 of the Sherman Antitrust Act by fostering a hub-and-spoke conspiracy.
The Court’s Decision
Judge Lasnik ruled that the plaintiffs failed to demonstrate that CoStar’s STR reports constituted algorithmic pricing akin to cases like Duffy v. Yardi, where direct use of pricing software was implicated. Key points from the ruling:
- Nature of STR Reports: The court distinguished CoStar’s reports, which provide historical and aggregated benchmarking data, from algorithmic rental pricing software like Yardi’s RENTmaximizer, which directly recommends prices based on real-time competitor data. The judge found no evidence that STR’s reports included pricing recommendations or facilitated direct collusion.
- Lack of Conspiracy Evidence: The plaintiffs did not sufficiently allege that CoStar and the hotels agreed to fix prices, a prerequisite for a Sherman Act violation. The court noted that STR’s data was not equivalent to the real-time, non-public data exchanges seen in other algorithmic pricing cases.
- Dismissal Without Prejudice: While CoStar was dismissed from the case, the judge allowed plaintiffs the opportunity to amend their complaint, keeping the case alive against the hotel defendants (Hilton, Hyatt, Marriott, Loews Hotels, and STR Holdings).
Context and Industry Trends
Algorithmic Pricing Under Scrutiny
The CoStar case is part of a broader wave of antitrust lawsuits targeting algorithmic pricing across industries, including hotels and multifamily rentals. Recent cases, like Duffy v. Yardi (December 2024), saw courts deny motions to dismiss when plaintiffs showed competitors shared non-public data through pricing algorithms, leading to supra-competitive prices. In contrast, CoStar’s dismissal aligns with rulings like Gibson v. MGM Resorts in Nevada, where courts dismissed claims for insufficient evidence of a conspiratorial agreement.
CoStar’s Defense
CoStar and the hotels argued that STR reports are standard industry benchmarking tools, providing historical data on revenue and availability, not real-time pricing recommendations. They called the lawsuit “fanciful” and warned that allowing it to proceed could disrupt industries relying on benchmarking, such as airlines or retail. CoStar emphasized that its data does not involve the algorithmic coordination seen in cases against software providers like Yardi or RealPage.
Impact on U.S. Consumers and Businesses
For Consumers
The dismissal offers no immediate relief for consumers, who alleged higher hotel room prices due to the supposed conspiracy. If plaintiffs amend their complaint successfully, the case could still lead to damages or changes in how hotels use industry data. However, the ruling suggests that not all data-sharing practices constitute illegal price-fixing, potentially limiting the scope of future consumer claims.
For the Hotel and Real Estate Industry
CoStar’s victory reinforces the legality of industry-standard benchmarking reports, provided they avoid direct pricing recommendations or non-public data exchanges. This could embolden other data providers to defend similar practices. However, hotels like Hilton and Marriott remain under scrutiny, facing pressure to prove their pricing strategies are independent. The case highlights the fine line between lawful data aggregation and antitrust violations, especially as algorithmic pricing faces increased regulatory attention from the Department of Justice (DOJ) and Federal Trade Commission (FTC).
Economic Implications
The ruling may stabilize CoStar’s position in the commercial real estate data market, where it holds significant influence. A broader win for the plaintiffs could have disrupted CoStar’s STR division, potentially impacting its stock value and client relationships. For consumers, the ongoing case against hotels could influence room pricing in major markets like Washington, D.C., New York, and Chicago, where the lawsuit alleged inflated rates.
Public and Expert Reactions
Posts on X celebrated CoStar’s dismissal, with users like @CorpCounsel and @lawdotcom noting the ruling as a setback for plaintiffs’ attempts to equate benchmarking with price-fixing. Legal experts, such as those at Hogan Lovells, suggest the decision underscores the need for plaintiffs to provide concrete evidence of agreements in algorithmic pricing cases, aligning with dismissals in similar cases like Hanson Dai v. SAS Inst. Inc. Critics of algorithmic pricing, including the DOJ, argue that such practices can still harm consumers by enabling tacit collusion, a debate likely to persist in future litigation.
Future Outlook
The case against the hotel defendants will proceed, with plaintiffs given leave to amend their complaint by October 2025. If they strengthen their allegations—potentially showing direct evidence of coordinated pricing—the case could advance to discovery, mirroring Duffy v. Yardi. Meanwhile, CoStar’s dismissal may prompt plaintiffs to focus on software providers with clearer pricing algorithms, like Yardi or RealPage, rather than data aggregators. The DOJ’s ongoing scrutiny of algorithmic pricing, as seen in its August 2024 lawsuit against RealPage, suggests regulators will continue targeting perceived anti-competitive practices.
For consumers and businesses, the ruling clarifies that not all industry data reports violate antitrust laws, but it leaves open questions about how hotels use such data. The case’s next steps, and potential appeals, will shape the evolving legal landscape around algorithmic pricing in the U.S.