D.C. AG Sues RealPage, 14 Landlords In Alleged 'Rent-Setting Cartel'
D.C.'s top local law enforcement official has filed a lawsuit against property management software company RealPage and more than a dozen of the city's largest landlords, alleging they colluded in a scheme to inflate apartment rents.
The 47-page lawsuit filed by D.C. Attorney General Brian Schwalb in D.C. Superior Court on Wednesday says the companies violated the D.C. Antitrust Act. It asks for a jury trial and seeks to secure financial compensation for the city and residents and prevent the companies from engaging in “anticompetitive behaviors.”
The suit names 14 landlords as defendants: Avenue5 Residential, AvalonBay Communities, Bell Partners, Bozzuto Management Co., Camden Summit Partnership, Equity Residential Management, Gables Residential Services, GREP Atlantic, Highmark Residential, JBG Smith Properties, Mid-America Apartments, Paradigm Management II, UDR and WC Smith.
D.C.’s suit is the latest in a string of lawsuits against RealPage and owners that use the software. Thirty separate pieces of litigation, from renters in Boston to New York to Seattle, have been consolidated in Nashville federal court. Meanwhile, the Department of Justice is weighing whether to bring enforcement action against RealPage after members of Congress called on it to investigate the company for potential violations of a law that prohibits businesses from engaging in activity to stifle competition.
“In seeking to draw a causal connection between revenue management software like ours and increases in market-wide rents, this copycat suit repeats the inaccuracies of predecessor cases,” RealPage spokesperson Jennifer Bowcock told Bisnow in an emailed statement.
“The complaint and others like it are wrong on both the facts and the law and we will vigorously defend against it,” she added.
The AG alleges the defendant landlords colluded in what it calls a “rent-inflating cartel” to use RealPage’s Revenue Management software as a centralized pricing system instead of competing on price among themselves. In doing so, they also agreed to share competitively sensitive information to feed RealPage’s software and aided in recruiting others to the cartel, the lawsuit says.
RealPage’s Revenue Management software set the prices for 50,000 units in mostly large buildings in the D.C. metro area, according to the lawsuit. The defendant landlords accounted for 40,000 of those affected units.
The lawsuit says that RealPage advertised revenue boosts of between 2% and 7% by using the system, potentially translating to millions in added rent costs for D.C. residents. The AG claims landlords aided the inflation by providing sensitive data, against D.C. law.
The suit comes to the conclusion that the alleged collusion not only hurt tenants in the affected units but impacted affordability across the entire D.C. market.
“By demanding unlawfully high cartel rents, Defendants have inflicted real harm on neighborhoods across the District,” the lawsuit says.
“Every dollar of increased rent that the cartel illegally squeezes from District renters contributes to widening wealth caps, forces hardworking residents to forego other uses of their money, and pushes residents out of the District whose housing they increasingly cannot afford,” it adds.
