AvalonBay released from Washington, D.C., RealPage litigation

Dive Brief:

On May 29, Arlington, Virginia-based REIT AvalonBay Communities’ motion to dismiss was granted in an antitrust suit brought by Washington, D.C., Attorney General Brian Schwalb. The REIT declined to comment on the litigation.
The story was first reported by Law360, which previously reported that a REIT was seeking a dismissal because its contract precludes sharing of its pricing and supply data. The removal of AvalonBay from the Washington lawsuit follows a similar dismissal of the REIT in a class action case in Tennessee last year.
The Washington, D.C., Superior Court denied last week the dismissal requests from two other firms named in the suit: Highmark Residential and JBG Associates. Neither company responded to Multifamily Dive’s request for comment. The court said that the rationale for the decisions involving AVB, Highmark and JBG would be included in a forthcoming memorandum opinion, according to regulatory news site MLex.

Dive Insight:

Last November, Schwalb brought suit against RealPage and 14 apartment owners and managers, accusing them of “unlawfully colluding” by collectively adopting the rents set by Richardson, Texas-based RealPage’s technology and “unlawfully agreeing to exchange competitively sensitive data in violation of the District of Columbia Antitrust Act.”

By using RealPage’s revenue management system, landlords inflated the rents in thousands of apartments across the District, which caused renters to pay millions of dollars above what they would have, according to the lawsuit filed in the Superior Court of the District Of Columbia on Nov. 1. The defendants “extracted these inflated rents by agreeing to delegate their price-setting authority to a centralized entity — RealPage — rather than competing on price,” the suit said.

Schwalb accused the 14 companies of agreeing in writing to share “competitively sensitive data,” including signed lease rents, to feed RealPage’s software. He claimed the company policed these contracts, and landlords abided by its suggested rents more than 90% of the time. If the market were truly competitive, he said the defendants would “keep their pricing strategies confidential.”

RealPage has a broad reach in the nation’s capital, according to Schwalb. He said that 90% of units in buildings with 50 or more apartments use RealPage software. Overall, the product is used by operators of 50,000 units in the District.

“RealPage and the defendant landlords illegally colluded to artificially raise rents by participating in a centralized, anticompetitive scheme, causing District residents to pay millions of dollars above fair market prices,” Schwalb said in a news release announcing the suit. “Defendants’ coordinated and anticompetitive conduct amounts to a District-wide housing cartel. At a time when affordable housing in D.C. is increasingly scarce, our office will continue to use the law to fight for fair market conditions and ensure that District residents and law-abiding businesses are protected.”

The 14 apartment firms listed in the Washington, D.C., suit include: