In re Extended Stay Hotel Antitrust Litigation

Background

The plaintiffs brought a purported nationwide class action under Section 1 of the Sherman Act, which prohibits certain agreements restraining trade. They alleged that five hotel companies—Extended Stay America, Hilton, Hyatt, Sonesta, and Wyndham—and two software developers—Integrated Decisions and Systems, Inc. (IDeaS) and its parent company, SAS Institute Inc.—conspired to fix, raise, or stabilize prices and reduce the supply of extended-stay hotel rooms by using the G3 RMS pricing algorithm.

Five defendants—IDeaS, SAS Institute Inc., Hilton Domestic Operating Company Inc., Wyndham Hotels & Resorts, Inc., and Hyatt Corporation—moved under 28 U.S.C. § 1404(a) to transfer the action from the Northern District of Illinois to the Northern District of California. They pointed to an earlier, similar nationwide class action in California involving most of the same defendants and substantially similar allegations. Extended Stay America and Sonesta did not join the motion because they were not defendants in the California action, but they did not oppose the requested transfer.

Transfer-of-Venue Analysis

Section 1404(a) allows a federal district court to transfer a civil action to another district where it could have been brought. The defendants had the burden to show that the Northern District of California was clearly more convenient.

The court found that venue was proper in both districts. It gave the plaintiffs’ choice of Illinois little weight because this was a nationwide class action and only one of the 18 named plaintiffs was assumed, for purposes of the motion, to reside in the Northern District of Illinois. The court found that the location of material events did not favor either district because the alleged conspiracy had national effects and the defendants’ corporate headquarters were geographically dispersed. It also treated access to evidence as neutral because documents could be handled electronically.

The court found that convenience to witnesses favored transfer. Because the Illinois and California cases were substantially similar, many witnesses could overlap, and requiring them to participate in nearly simultaneous litigation in two districts could create unnecessary burdens. The court also found that convenience to the parties favored transfer, particularly because the defendants would otherwise have to litigate two substantially similar actions at the same time.

The court concluded that the interests of justice strongly favored transfer. Although general case-processing statistics suggested that civil cases could move faster in Illinois, the California action was already further along: briefing on a motion to dismiss was complete and oral argument was pending. The California court therefore had greater familiarity with the allegations, facts, and legal disputes. The court found that both cases alleged the same type of conspiracy, relied on the same G3 RMS pricing algorithm, involved overlapping geographic markets, and raised overlapping factual and liability questions under the same federal antitrust law. The court determined that handling the related litigation in one district would avoid duplicative discovery and motion practice and reduce the risk of inconsistent rulings.

Disposition

Judge Georgia N. Alexakis granted the defendants’ motion to transfer venue to the Northern District of California. The Clerk was directed to transfer the action forthwith. The opinion did not decide whether the alleged antitrust conspiracy violated the Sherman Act.