Multifamily Home Renters Defeat Motion to Dismiss RealPage Rental Antitrust Case

Case addresses antitrust implications when competitors use algorithms to make pricing decisions.

A ruling by U.S. Judge Waverly Crenshaw in Tennessee has kept alive a Sherman Act Section 1 antitrust action brought by renters of multifamily homes (“Multifamily Plaintiffs”) against RealPage, Inc., provider of widely used rental management software (“RMS”) for landlords. Plaintiffs allege RealPage conspired with competing property owners to inflate rents nationwide. The judge dismissed separate claims brought by renters of student housing (the “Student Plaintiffs”), however. 

[Watch the MoginRubin Blog for commentary on the opinion.] 

The key question raised in the litigation is how the Sherman Act will apply when competing businesses use algorithms to make pricing decisions. In this case, landlords and property owners provide real-time pricing and supply data to RealPage which compiles and analyzes via a common algorithm.

Judge Crenshaw found that the Multifamily Plaintiffs adequately argued for standing under Sherman Act Section 1, saying they “plausibly alleged that Defendants engaged in parallel conduct when they each became RealPage RMS clients and began prioritizing raising rent prices over decreasing vacancy rates. This parallel conduct is consistent with RealPage’s pledge to its RMS clients that it will help them ‘outperform the market,’ primarily through raising rent prices.”

The judge wrote, though, that he could change his opinion depending on new evidence gathered during discovery. “[W]hether Plaintiffs’ individual rents were set pursuant RMS recommendations and, if not, whether those rents were still inflated by the alleged conspiracy remains to be seen.”

The “most persuasive evidence of horizontal agreement,” Judge Crenshaw wrote, “is the simple undisputed fact” that the RMS clients provided RealPage their “proprietary commercial data, knowing that RealPage would require the same from its horizontal competitors and use all of that data to recommend rental prices to its competitors.”

Regarding the Student Plaintiffs, Judge Crenshaw wrote that they wanted the court to “infer regional submarket market power based on the same alleged admissions by Defendants they claim demonstrate nationwide market power … Unfortunately for Plaintiffs, all but one of these admissions concern revenue, not price.  … This does not plausibly allege—or permit the inference of—market power across the regional submarkets over the supposed 13-year conspiracy.” The judge dismissed their claims. 

Judge Crenshaw reached the same conclusions with regard to state antitrust claims. 

The 76-page memorandum opinion was handed down on Dec. 28, 2023 (In re RealPage, Inc., Rental Software Antitrust Litigation, No. 3:23-md-03071, MDL No. 3071, M.D. Tenn., Nashville Div.)

In his previous remarks on the case, MoginRubin’s Jonathan Rubin wrote, “Exchanges of information between competitors—particularly pricing information—is inherently suspect under the antitrust laws. The legal issue here will be whether the algorithmic process based on information from competing suppliers constitutes joint profit maximization.” Further, he wrote, “When competitors set their prices jointly—rather than individually—they commit the ‘supreme evil of antitrust.’ Whether joint price setting is accomplished through the functionality of a database platform or by conventional means makes no difference, price fixing is unlawful per se.” Read the post.]

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