Judge Rejects RealPage’s Motion To Dismiss Rent-Fixing Lawsuit
Real estate technology company RealPage must face a class-action lawsuit alleging it conspired with major residential property owners to artificially inflate multifamily rents after a federal judge rejected its motion to dismiss the case late last week.
Waverly D. Crenshaw Jr., chief U.S. District Court judge for the Middle District of Tennessee, ruled the renters who filed the suit showed enough cause for RealPage and its parent company, private equity firm Thoma Bravo, to confront claims they schemed to keep prices above market rates in violation of U.S. antitrust law.
The “most persuasive evidence” to support renters’ claims was the “simple undisputed fact” that residential property owners and managers gave RealPage private, commercially sensitive data as part of its revenue management platform, the judge wrote in the ruling. Crenshaw added that RealPage software, used to make recommendations for rental prices, contains a “melting pot” of confidential competitor information.
The ruling is the latest development in the suit, which last year consolidated more than 30 lawsuits alleging software sold by RealPage allowed property owners across the country to collude to inflate rents. A related suit alleging a conspiracy to unlawfully boost rental prices for student housing was dismissed, but the judge ruled against defense arguments in the larger case that “plaintiffs continue to make only vague, conclusory allegations that they paid ‘higher’ rental prices.”
A RealPage lawyer told Reuters the company would “vigorously defend” itself, adding that it was glad to see the student housing suit dismissed.
The class action suit centers around RealPage's revenue management software and a rent-pricing algorithm that the renters’ complaint alleges impacted pricing strategies. In his ruling, Crenshaw cited client comments used by plaintiffs to bolster their case, per Commercial Observer.
“We are all technically competitors, [but] LRO helps us to work together... to make us all more successful in our pricing,” an associate vice president of ECI Group Inc. wrote of Lease Rent Options, a revenue management software acquired by RealPage and later merged with its primary system. “LRO is designed to work with a community in pricing strategies, not work separately.”
“There is not much to do beyond checking the software to ensure that it is continuing to push prices higher,” client Camden Property Trust wrote, according to the renters' complaint.
Large REITs like Camden, Essex Property Trust, Equity Residential and Mid-America Apartment Communities are named in the lawsuit, as well as multifamily titans, including Greystar Real Estate Partners, Lincoln Property Co. and FPI Management.
In November 2023, the Department of Justice argued against dismissing the antitrust case, saying the RealPage algorithm is a modern technological spin on price collusion.
“Antitrust law does not become obsolete simply because conspirators find new ways to act in concert,” the department wrote in its November filing.
The DOJ argued that RealPage and its users violated the Sherman Act, a federal antitrust law, by outsourcing decision-making on rent prices to the same source. Landlords who use RealPage implement its pricing recommendations 80% to 90% of the time, according to the filing.
In a different but related case, Washington, D.C. Attorney General Brian L. Schwalb filed an antitrust lawsuit against RealPage in November.
The Tennessee court will move to discovery at some point this year.
