By Mark Zinman | Zona Law
Class action lawsuits have recently been filed against RealPage alleging that its rent software improperly colludes with property owners and managers to control pricing in violation of antitrust laws. The first such lawsuit was filed on October 18, 2022, in California on behalf of residents against RealPage and several large property management companies. A second lawsuit was filed in Washington state, alleging the same facts. We expect more lawsuits to be filed across the country (even between the writing and publishing of this article, we expect that more lawsuits will have been filed).
The general overview of the lawsuits is that by agreeing to use RealPage’s software, owners are agreeing with their competitors to set rental rates and set when units go on the market, in violation of the Sherman Antitrust Act. The lawsuit alleges that this results in artificially increased rental rates. RealPage has already put out numerous statements denying any wrongdoing and alleging that they will vigorously defend the lawsuits.
We are not familiar with RealPage’s software or the accuracy of the allegations in the lawsuit and take no stance on whether the plaintiffs will win their lawsuit or not. (Frankly, we would advise anyone not to opine on what will happen in a multimillion-dollar lawsuit, mere days after it’s been filed). However, such complaints must be taken seriously and cannot be ignored.
Many AZREIA members may read this article and say it doesn’t affect them because they don’t use the software. However, that is a misguided response – there is always something to learn even when you are not directly being impacted. We recognize that this software is more often used by large operators and management companies, and not AZREIA members. However, AZREIA members must be aware of such matters for two main reasons. First, the threat of a class action lawsuit should be good motivation for everyone to review policies and procedures. Just because something has been done in the past and it may have worked, doesn’t mean that such policies should continue forever. We regularly speak with clients who disregard our advice about different matters on the basis that “they have always done it this way” we then learn later that they end up getting sued because their practices were not legal.
Second, regardless of the merits of the case, we expect that it will cause more regulatory investigations into the rental industry. In the month since the first lawsuit was filed, Seventeen Democratic members of the U.S. House of Representatives sent a letter to the Department of Justice and the Federal Trade Commission asking the agencies to investigate RealPage’s rent-setting software. This letter follows a letter from a senator from Ohio, who previously wrote to the FTC after the lawsuit was filed and asked for an investigation into the company.
Again, we do not know what will happen in the lawsuit. Whether the claims are true or not, such lawsuits put pressure on legislators to take action. It’s important to be aware of these matters as they will affect the attempts at regulation of our industry.