California Drivers Launch Landmark AI Price-Fixing Lawsuit Against Gas Giants Under New AB 325 Law
A federal antitrust class-action lawsuit represents the first significant legal test of California's newly enacted antitrust and algorithmic pricing legislation, Assembly Bill 325 (AB 325), which went into effect on January 1, 2026. The lawsuit, Casciani, et al. v. Knowledge Support Systems, Inc., et al. (Case No. 2:26-cv-02211), was filed on June 22, 2026, in the U.S. District Court for the Eastern District of California (Sacramento). It accuses major fuel retailers and an AI software provider of using algorithmic tools to artificially inflate gasoline prices across California.
The Parties and Allegations
The plaintiffs, three California drivers, filed the lawsuit on behalf of all California consumers who purchased gasoline from the defendants' stations since June 2022.
The defendants include:
- Knowledge Support Systems, Inc. (doing business as Kalibrate), the provider of the AI-powered pricing software.
- 14 major fuel retailers, including BP, Marathon Petroleum, 7-Eleven, Walmart, Albertsons, and Circle K, which collectively operate more than 1,700 gas stations in California.
The complaint alleges that the fuel retailers violated California's Cartwright Act (as amended by AB 325) by subscribing to Kalibrate’s AI-powered pricing software. Instead of competing independently, the retailers allegedly fed real-time, non-public pricing and inventory data into Kalibrate’s platform. The software then used this pooled data to coordinate pricing recommendations, driving pump prices artificially high and squeezing consumers during a period of high inflation.
The Role of California's Assembly Bill 325
AB 325 was specifically designed to address "algorithmic collusion" where competitors use a common third-party algorithm to coordinate prices, even in the absence of an explicit, traditional "smoke-filled room" agreement. The law clarifies that under California's Cartwright Act:
- The joint use of a single algorithmic pricing tool that relies on non-public competitor data to set prices can be construed as an unlawful agreement.
- Outsourcing pricing decisions to a third-party AI vendor does not shield competitors from antitrust liability.
The Casciani lawsuit is the first major case to litigate these newly codified standards, making it a critical bellwether for state-level algorithmic antitrust enforcement.
Case Status and Recent Procedural Developments (July–August 2026)
The case is actively moving through the Eastern District of California under District Judge Dale A. Drozd and Magistrate Judge Chi Soo Kim.
- June 22, 2026: Magistrate Judge Chi Soo Kim granted several initial procedural applications.
- August 5, 2026: District Judge Dale A. Drozd signed multiple pro hac vice orders admitting out-of-state counsel representing the gas giants and Kalibrate, signaling that the defendants are assembling major national legal teams to fight the allegations.
- August 11, 2026: The court issued a Minute Order regarding case management and initial scheduling.
- August 4, 2026: The case was highlighted on the national stage during a U.S. Senate Judiciary Subcommittee hearing on "AI Surveillance Pricing." Lee A. Hepner, Senior Legal Counsel for the American Economic Liberties Project, testified that the Kalibrate lawsuit is a prime example of how "the RealPage theory just landed at the gas pump," demonstrating that algorithmic price-setting is rapidly expanding from rental housing into everyday consumer commodities like fuel.