Bloomberg Law
Free Newsletter Sign Up
Login
BROWSE
Bloomberg Law
Welcome
Login
Advanced Search Go
Free Newsletter Sign Up

RealPage, Landlords Now Face Collusion Claims on Student Housing

Nov. 3, 2022, 7:36 PM

RealPage Inc. and leading residential landlords, already facing antitrust litigation over their alleged scheme to drive up nationwide rental prices, were hit with a second proposed class action claiming the conspiracy has had an outsized impact on the student housing market.

In addition to RealPage, a Thoma Bravo LP affiliate, the lawsuit filed Wednesday targets one of the same property managers as the earlier suit: GreyStar Real Estate Partners LLC, the largest US landlord. But it also takes aim at nearly a dozen that aren’t currently involved in the first-filed case.

The suit, filed in Seattle, accuses them of colluding to avoid price competition through data analytics software made by RealPage, rather than competing to attract renters. The software, based on algorithmic pricing mechanisms, allegedly includes other functions that let members of the cartel police one another.

The core of the conspiracy is an agreement among the property managers to set prices through RealPage’s software, which relies on real-time access to sensitive commercial data, while staying “disciplined” and tolerating empty units instead of undercutting one another, according to the complaint.

“In a competitive market, this strategy would quickly fail,” but “in the market RealPage and lessors created, each lessor had mutual assurances that other lessors would also keep prices high, leaving students with no choice,” the suit says. “Lessors are squeezing an already-tight housing market.”

A spokesperson for RealPage told Bloomberg Law in a statement Thursday that the company is “aware” of the new suit filed in the US District Court for the Western District of Washington by Gabriel Navarro, a University of Washington student.

“We strongly deny the allegations and will vigorously defend against the lawsuit,” the statement said. “Beyond that, we do not comment on pending litigation.”

The landlords didn’t immediately respond to requests for comment Thursday.

Susceptible to Collusion

Besides GreyStar, the property managers named as defendants are Cushman & Wakefield Inc., a Cushman subsidiary, BH Management Services LLC, Campus Advantage Inc., Cardinal Group Holdings LLC, CA Ventures Global Services LLC, DP Preiss Co., Apollo Global Management Inc. affiliate Michaels Organization LLC, and a Michaels subsidiary.

Cushman is allegedly the third-largest commercial real estate services company in the world, and several of the other landlords are among the biggest involved in the student housing market.

The earlier suit, also a proposed class action, was filed in a federal court in San Diego in mid-October, a few days after the news organization ProPublica released an investigative report on RealPage’s software and its use by major real estate managers. In addition to RealPage and GreyStar, the first case targets eight other major landlords.

Both suits list roughly a half-dozen features of the residential apartment market that allegedly make it susceptible to collusion, including the high cost of acquiring a building, barriers that prevent renters from breaking their leases, the lack of other options, the concentrated nature of the industry, and the opportunities to collude among landlords.

According to the new complaint, one of the architects of RealPage’s pricing software is a former Alaska Airlines revenue director who was involved with a conspiracy among eight air carriers in the 1980s to illegally share nonpublic route and pricing information through common software.

The former airline executive “evidently did not learn his lesson,” the suit says.

Cause of Action: Section 1 of the Sherman Act.

Relief: Treble damages, an injunction, costs, fees, and interest.

Potential Class Size: Anyone who leased student housing from a landlord using RealPage’s software since 2010.

Attorneys: Navarro is represented by Hagens Berman Sobol Shapiro LLP.

The case is Navarro v. RealPage Inc., W.D. Wash., No. 22-cv-1552, complaint filed 11/2/22.

To contact the reporter on this story: Mike Leonard in Washington at mleonard@bloomberglaw.com

To contact the editors responsible for this story: Rob Tricchinelli at rtricchinelli@bloomberglaw.com; Maya Earls at mearls@bloomberglaw.com