Real Estate Tech Company RealPage’s Antitrust Reckoning Comes After Years of Legal Quiet

Last October, ProPublica published the results of a real estate market investigation alleging that one company selling rent-setting software to landlords around the country had an outsized influence over apartment prices, and that, “at a minimum … [it] may be artificially inflating rents and stifling competition.”

That company is Richardson, Texas-based RealPage, Inc, a technology platform for real estate owners and managers. RealPage and its clients, who include some of the largest property management companies in the country, are now the targets of multi-district litigation alleging an antitrust conspiracy to fix rental prices in various multi-family and student housing markets.

At the heart of the suit is RealPage’s revenue management product that, per the filings, makes use of statistical models to estimate supply and demand for housing specific to geographic areas and unit types. It also generates a rental price for those units to maximize landlord profits.

To feed the tool, landlords give up competitively sensitive pricing information like actual rents paid, occupancy rates, and records of lease transactions, the federal government added in a statement of interest filed in the MDL in mid-November. The company’s pricing algorithm is the main conduit for “disrupt[ing] the decentralized price-setting mechanism in the market,” the memorandum said, concluding that the purported scheme per se transgresses Section 1 of the Sherman Act.

Moreover, the collusion “has contributed to the national housing crisis by placing massive pressure on renters’ efforts to keep roofs over their heads,” one of two operative MDL complaints alleged.

Since the 2022 ProPublica exposé by Heather Vogell, there has been notable outcry against RealPage, including a litigation frenzy, federal investigations, and in early November, a parallel antitrust action by the District of Columbia Attorney General against a significant proportion of the District’s landlords in addition to RealPage.

Docket Alarm analytics reveal that previously, RealPage was largely unassailed by lawsuits. Data points also show who RealPage has relied on for litigation defense and where the company has been sued. One prediction difficult for data alone to answer is what the outcome of the MDL might be, despite clues about the presiding Judge Waverly D. Crenshaw, Jr.’s experience with and resolution of previous antitrust suits.

RealPage’s Litigation Outlook

Since 2000, RealPage has faced just 460 lawsuits, with 252 of those coming in the last three years.

In three months following publication of the ProPublica report, more than 100 cases were filed. Of 111 proceedings, 91 bear the PACER case type 410 for antitrust, Docket Alarm reports.

In terms of geographic case spread over the same timeframe, RealPage has been hauled into court most often in Tennessee where the MDL is underway (a consolidation of suits from Arizona, California, Colorado, Florida, Massachusetts, Pennsylvania, Tennessee, Texas, Washington, Washington D.C., and Virginia). Litigation in the Southern District of California and Washington state was some of the first-filed against RealPage and alleging a horizontal price fixing scheme.

The company is also a frequent visitor to the nation’s patent and trademark bodies, Docket Alarm analytics show.

The Nashville, Tenn. MDL, captioned “In Re: RealPage, Inc., Rental Software Antitrust Litigation (No. II)” consists of two putative classes, one purporting to represent a class of multifamily rental housing tenant plaintiffs and the other a student rental housing market class.

Since last November, RealPage has employed nine law firms to defend these cases, relying most heavily on Gibson, Dunn & Crutcher for antitrust defense in the MDL as well as Pacific Northwest-based Bradley Bernstein Sands.

Judge Waverly D. Crenshaw, Jr. By the Numbers

Judge Waverly D. Crenshaw, Jr. is a Vanderbilt University Law School graduate who has been on the bench for over seven years after appointment by President Barack Obama. Docket Alarm Analytics show the main case types before Judge Crenshaw have been prisoner and civil rights, insurance, social security, labor, and personal injury from his 2016 appointment to last October.

Docket Alarm analytics show that just three cases tagged with an antitrust case type have come before Judge Crenshaw prior to the RealPage suits. Two of the three bear mention because of their size, complexity, and/or procedure.

First, Judge Crenshaw oversaw a multi-state indirect purchaser class action over the price of Lovenox, a branded anticoagulant drug. The suit reportedly involved claims with “several elements unprecedented or unusual in a class case, including an antitrust violation predicated on deception of a quasi-governmental standard-setting organization, and a theory of damages predicated on delay of a second generic entrant.”

The 2015 case against Momenta Pharmaceuticals, Inc. and Sandoz Inc. by hospitals, third-party payors, and patients resulted in settlements of $120 million. Resolution came after Judge Crenshaw denied the defendants’ motion to dismiss, granted the plaintiff’s renewed motion for class certification, and while motions for summary judgment were pending.

Second, Judge Crenshaw ruled on a 2018 monopoly case after a four-day bench trial. 

In that case, the court resolved claims brought by private security service companies in Davidson County, Tenn., who hired off-duty Metropolitan Nashville Police Department (MNPD) officers to provide part-time security services. The MNPD transitioned officers away from those private companies in a five-year plan, and itself entered the market.

The 17-page opinion said that in order to win business, “MNPD lowered rates, changed administrative procedures, and eventually prohibited off-duty MNPD officers from working for private security companies,” eventually becoming a significant and successful player.

The plaintiffs’ claims that MNPD used illegal methods to secure a monopoly in the market in violation of Section 2 of the Sherman Act were rejected by the court for failure to prove sufficient market power and anticompetitive conduct. The decision was subsequently affirmed by the Sixth Circuit Court of Appeals. 

In the RealPage cases, which seek treble damages and injunctive relief, oral argument on the motions to dismiss are slated for Dec. 11, 2023. For their part, the defendants assert a litany of defenses, including improper group pleading, no antitrust standing, failure to state a claim for want of market definition and for want of anticompetitive effects, and no fraudulent concealment.