States Urge Judge To Reject Settlements In RealPage Rent-Fixing Lawsuit

Attorneys general from four states are asking a judge in Nashville to reject proposed settlements in a lawsuit alleging that a group of landlords colluded to inflate rents. 

The top lawyers from Washington, D.C., Maryland, New Jersey and Kentucky are asking the judge to reject the settlements in a case centered on the use of software from RealPage that the attorneys general allege in separate lawsuits allowed the landlords to operate as a rent-fixing cartel. 

The state officials say the landlords are paying a paltry sum relative to the alleged damages and that the landlords failed to follow required legal guidelines in the settlement proposals. 

The filing in the U.S. District Court for the Middle District of Tennessee in Nashville also says state investigators have uncovered additional evidence not considered in the class-action lawsuit that indicates the degree to which the landlords and property managers were involved in the price-fixing scheme. 

The Nashville judge is being asked to provide preliminary approval for the settlements, which were reached in October and cover 27 landlords and property managers. Another 22 defendants, including RealPage, have yet to reach a deal.

The attorneys general are asking the court to reject the proposed settlements with Greystar, Avenue5, Bell Real Estate, BH Management, Bozzuto Group and First Communities Management and to withhold approval for the others. The state officials are asking for rejections for landlords that they are still separately suing over the antitrust violations. 

RealPage declined to comment on the late-October filing. Greystar, which was set to pay $50M to resolve the civil suit, the largest fine of any of the landlords, didn’t respond to Bisnow’s request for comment. 

The constellation of lawsuits against RealPage, landlords and property management firms that have cropped up center on the use of the company’s AI Revenue Management platform, previously known as Yieldstar. The suits allege that RealPage and the software helped landlords coordinate and inflate rents across dozens of markets.  

“Greystar played a central role in advancing the alleged conspiracy,” the attorneys general filing alleges in a highly redacted section that also accuses Bozzuto of playing an “active role” in the scheme and includes additional redacted allegations against property management firm Avenue5. 

The attorneys general said the fines being imposed “reflect very low recoveries compared to the harms suffered.” The settlements also have insufficient guardrails to prevent some of the same landlords from using software that could once again enable rent coordination, they said.  

The settlements don’t include any rules governing whether software the landlords use can create rules that keep key price components from ever falling below competitors’ rates, which the attorneys general call a “textbook antitrust violation."

RealPage has denied any wrongdoing even as it has made minor adjustments to its platform to assuage state and local regulators. At least nine local governments have passed legislation regarding rent-setting algorithms in response to a 2022 ProPublica investigation that first revealed the alleged collusion. 

RealPage struck its first deal with state regulators in September, which includes a $200K contribution to a Nevada fund for rental assistance programs. That deal still needs final approval from a judge. 

Greystar, which manages 900,000 apartments across the U.S., and the federal government reached a cooperation agreement in August in their sprawling antitrust suit.

Cortland also reached a consent decree in the case, which is ongoing and has ensnared some of the country’s largest property managers and landlords, including Blackstone’s LivCor, Camden Property Trust and Cushman & Wakefield.

The attorneys general filing in the civil case includes new details about its federal antitrust suit. Discovery in that case is ongoing. 

More than 100 depositions have been taken and millions of documents reviewed as part of that suit, the attorneys general wrote, including 28 interviews associated with the six firms seeking settlement approval. Still, the filing says it isn’t uncommon for preliminary approval of a settlement to be denied before a final settlement is ultimately approved. 

It also highlights deficiencies in the proposed settlements that the state officials say should preclude its approval, including a failure to provide a list of impacted renters and details on how settlement money would be distributed. 

“The result undermines confidence in the integrity of the negotiation process and casts serious doubt on whether the proposed settlements satisfy the fairness, reasonableness and adequacy requirements” of rules governing settlements, the attorneys general wrote.