DOJ weighs in on RealPage suit

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Biden DOJ supports those suing RealPage

The Biden Department of Justice (DOJ) has come down on the side of the plaintiffs suing RealPage and many property management companies over their use of revenue management software in setting rents. The DOJ has filed a Statement of Interest of the United States with the court where the 21 suits against RealPage have been consolidated. It opposes a motion by RealPage to have the cases dismissed.

Origins of the case

RealPage’s legal woes were set in motion when ProPublica published an article in October 2022 alleging that the use of RealPage’s revenue management software was helping to drive the pandemic-era rapid increase in rents. This led to several Democratic senators calling for the DOJ to investigate RealPage over this issue. Eventually, 21 lawsuits were filed against RealPage and 34 property managers in 6 different Federal court districts alleging antitrust violations. The cases were centralized to the Middle District of Tennessee and assigned to judge Waverly D. Crenshaw, Jr., an appointee of President Obama.

Arguing the point

The DOJ quotes Section 1 of the Sherman Act as prohibiting “[e]very contract, combination in the form of trust or otherwise, or conspiracy” that unreasonably restrains trade. It asserts that if in-person exchanges of sensitive non-public information or person-to-person price fixing agreements are illegal under the Sherman Act, then exchanges of such information or price fixing via algorithm should also be illegal. The DOJ concludes, “Although not every use of an algorithm to set price qualifies as a per se violation of Section 1, taking the allegations set forth in the complaints as true, the alleged scheme meets the legal criteria for per se unlawful price fixing.”

Of course, the allegations in the complaints have not yet been demonstrated to be true.

The DOJ’s Statement of Interest was signed by a dozen Justice Department attorneys. Now that they have the apartment industry’s use of revenue management software in their sights, it will be interesting to see if they also go after other industries, such as airlines and hotels, that also employ revenue management algorithms.