On Tuesday, a class action lawsuit was brought against RealPage Inc. and nine landlords in the Southern District of California. RealPage, according to the complaint, is a company that provides software and services to the real estate industry, and is accused of violating the Sherman Antitrust Act by eliminating natural imbalances and competitive pricing for multifamily residential real estate leases.
The complaint explains that lessors have traditionally followed the “heads in the beds” approach. Heads in beds is purportedly a result of natural market imbalance where an increase in vacant properties would drive down housing prices because lessors need to fill the vacancies or risk irrecoverable financial loss.
The plaintiff class asserts that RealPage has eliminated this natural market fluctuation and competition amongst lessors by implementing software that collects real time pricing and supply data, making pricing recommendations to lessors based on that data.
The suit goes on to explain that “While Lessors are able to reject the RealPage pricing through an onerous process, RealPage emphasizes the need for discipline among participating Lessors. To encourage adherence to its common scheme, RealPage explains that for its services to be most effective in increasing rents, Lessors must accept the pricing at least eighty percent of the time.” If lessors want to deviate from recommendations, they are required to explain these decisions to RealPage, the complaint says. These measures purportedly dissuade lessors from reverting back to the “heads in the beds” method of pricing.
The plaintiffs believe that this practice is monopolistic, as it artificially inflates the prices of available units while decreasing the volume of units filled. They say RealPage’s database accounts for 16 million individual units, adding that this issue is disproportionately affecting veterans and military personnel. 63% of service members reside in off-post housing. As a result, many military families are forced to live in homes that they cannot afford while waiting for housing on base or looking for more affordable living.
The plaintiffs claim that this behavior displayed by the defendant is characteristic of a “cartelized market” that decreases natural competition amongst lessors. The plaintiff class believes that this behavior justifies an intervention from the courts that would enjoin the defendants from continuing these activities.
The plaintiff is represented by Lieff Cabraser Heimann & Bernstein, Justice Catalyst Law, Hartley LLP, and Berger Montague.
