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RealPage Inc. and major residential landlords, already facing antitrust litigation over their alleged scheme to drive up rental prices nationwide, have been hit with a proposed second class action lawsuit claiming the conspiracy had an impact disproportionate on the student housing market.
In addition to RealPage, a subsidiary of Thoma Bravo LP, the lawsuit filed Wednesday targets one of the same property managers as the previous lawsuit: GreyStar Real Estate Partners LLC, the largest U.S. landlord. But it also targets nearly a dozen people who are not currently involved in the first case.
The lawsuit, filed in Seattle, accuses them of colluding to avoid price competition through data analysis software made by RealPage, rather than competing to attract tenants. The software, based on algorithmic pricing mechanisms, is said to include other functions allowing cartel members to monitor each other.
The heart of the plot is an agreement between property managers to set prices through RealPage’s software, which relies on real-time access to sensitive business data, while remaining “disciplined” and tolerating empty units at the instead of undercutting each other, according to the complaint. .
“In a competitive market, this strategy would quickly fail,” but “in the market created by RealPage and lessors, each lessor had mutual assurance that other lessors would also keep prices high, leaving students with no choice,” says the trial. “Lessors are compressing an already tight housing market.”
A RealPage spokesperson told Bloomberg Law in a statement Thursday that the company is “aware” of the new lawsuit filed in U.S. District Court for the Western District of Washington by University of Washington student Gabriel Navarro. Washington.
“We strongly deny the allegations and will vigorously defend against the lawsuit,” the statement said. “Beyond that, we do not comment on ongoing litigation.”
The owners did not immediately respond to requests for comment on Thursday.
Susceptible to collusion
In addition to GreyStar, the property managers named as defendants are Cushman & Wakefield Inc., a subsidiary of Cushman, BH Management Services LLC, Campus Advantage Inc., Cardinal Group Holdings LLC, CA Ventures Global Services LLC, DP Preiss Co.,
Cushman is said to be the third-largest commercial real estate services company in the world, and several of the other landlords are among the largest in the student housing market.
The previous lawsuit, also a proposed class action, was filed in federal court in San Diego in mid-October, days after the ProPublica news agency published an investigative report into RealPage’s software and its used by leading property managers. In addition to RealPage and GreyStar, the first case targets eight other major owners.
The two lawsuits list about half a dozen characteristics of the residential apartment market that would make it vulnerable to collusion, including the high cost of acquiring a building, obstacles that prevent tenants from breaking their leases, lack of other options, the concentrated nature of the industry and the possibilities of collusion among owners.
According to the new complaint, one of the architects of RealPage’s pricing software is a former chief revenue officer for Alaska Airlines who was involved in a conspiracy between eight airlines in the 1980s to illegally share non-public information about routes and fares via common software.
The former airline executive “clearly hasn’t learned his lesson,” the lawsuit says.
Cause of Action: Section 1 of the Sherman Act.
Relief: Triple damages, injunctive relief, costs, fees and interest.
Potential class size: Anyone who has rented student housing from a landlord using RealPage software since 2010.
Lawyers: Navarro is represented by Hagens Berman Sobol Shapiro LLP.
The deal is Navaro v. RealPage Inc.WD Wash., no. 22-cv-1552, complaint filed on 02/11/22.