On Tuesday, the Justice Department and attorneys general from 10 states filed an amended complaint in their antitrust lawsuit against data and software firm RealPage to sue six landlords for allegedly “participating in algorithmic pricing schemes that harmed renters,” according to a press release from the DOJ.

The complaint alleges the landlords participated in a scheme to decrease competition in apartment pricing. They are:

• Charleston, South Carolina-based Greystar Real Estate Partners.
• Blackstone’s Chicago-based LivCor.
• Houston-based Camden Property Trust.
• Chicago-based Cushman & Wakefield and its subsidiary Pinnacle Property Management Services.
• Dallas-based Willow Bridge Property Co.
• Atlanta-based Cortland Management.

In addition to the amended complaint, the DOJ also filed a consent decree with Cortland that requires the company to cooperate with the government, stop using its competitors’ sensitive data to set rents and cease using the same algorithm as its competitors without a corporate monitor. If approved by the court, the consent decree would resolve DOJ’s claims against Cortland, and the firm would cooperate in the Justice Department’s investigation and litigation.

In a statement to Multifamily Dive, a Cortland spokesperson said that the firm was “pleased to announce the US Department of Justice filed a proposed settlement that would resolve the Antitrust Division’s civil investigation” into the company.

Additionally, the spokesperson said the firm had “invested years and significant internal resources into developing a proprietary revenue management software tool that does not rely on data from external, non-public sources.” 

Inside the compliant

The DOJ’s amended complaint alleges that the six firms coordinated pricing beyond using RealPage’s algorithm, including:

-DOJ alleged that the companies communicate with competitors’ senior managers about rents, occupancy and other competitively sensitive topics. For instance, it said that Greystar allegedly supplied Camden with information about recent renewal rates, its approach to pricing for the upcoming quarter, its acceptance of RealPage’s pricing recommendations, use of concessions and competitively sensitive information about occupancy. 

• The filing called out the industry practice of property managers calling or emailing competitors to share, and sometimes discuss, information about rents, occupancy, pricing strategies and discounts.
• In “user groups” hosted by RealPage, DOJ said landlords discussed how to modify the software’s pricing methodology and their pricing strategies. The Justice Department cited a user group discussion where LivCor and Willow Bridge executives allegedly talked about plans for renewal increases, concessions and acceptance rates of RealPage’s rent recommendations.
• The complaint said that landlords shared information about parameters in RealPage’s software with competitors. For example, at the request of Willow Bridge’s director of revenue management, Greystar’s director of revenue management supplied its standard auto-accept parameters for RealPage’s software, according to the Justice Department.

Multifamily response

In a note posted on its website, Greystar said it was disappointed that the DOJ added the company and other operators to their lawsuit against RealPage. 

“Greystar has and will conduct its business with the utmost integrity. At no time did Greystar engage in any anti-competitive practices,” the firm said in the statement. “We will vigorously defend ourselves in this lawsuit.”

Cushman & Wakefield, which acquired its Pinnacle subsidiary in 2020, said that revenue management software can help property owners efficiently manage rents and help prevent discrimination and bias in decision-making. However, it also noted that Pinnacle is solely a property manager and does not own any properties or set strategy, pricing or occupancy targets.

“We also do not decide whether the properties managed by Pinnacle use revenue management services and software, which software provider to use, if any, and whether to accept recommendations provided by such software,” a Cushman & Wakefield spokesperson said.

On its website, Camden said that it disagrees with the allegations made in the amended complaint. “Camden will vigorously defend itself against these claims and intends to move for dismissal,” the firm said.

The REIT said that many of the Department of Justice claims arose around actions that were taken during the COVID-19 pandemic. “This was a time when Camden made the decision not to increase renewal rates, to waive late fees, to freeze evictions and to take the unprecedented step of providing over $10 million in cash directly to our residents to assist them during that uncertain period, no strings attached,” the company said.

RealPage, which filed a motion to have the suit dismissed in December, said that it was time to stop scapegoating the firm and its customers for housing affordability issues in a statement shared with Multifamily Dive.

“We are disappointed that the DOJ, just one month after abandoning its baseless criminal investigation and less than two weeks before the agency changes hands, is expanding its civil lawsuit related to use of revenue management software,”  said RealPage spokesperson Jennifer Bowcock, senior vice president of communications and creative at the company. “Fewer than 10% of all rental housing units in the U.S. use RealPage software to suggest rental prices, and our software recommendations are accepted less than half the time, as the DOJ has acknowledged.”

The other two firms did not post a statement or respond to Multifamily Dive’s request for comment by publication time.

Continued battle

The DOJ move represents an escalation in its civil battle against algorithmic pricing, despite the department closing its criminal investigation into pricing practices in the multifamily rental housing industry in December, according to RealPage.

Cortland confirmed this in its statement to Multifamily Dive. “Cortland and its employees are no longer subject to the criminal investigation that motivated the Department of Justice’s May 2024 search at Cortland’s headquarters in Atlanta,” the firm said.

In August, the DOJ and the states alleged that RealPage’s revenue management software was an “unlawful scheme to decrease competition among landlords in apartment pricing and to monopolize the market.” 

Co-plaintiffs in the original case were the attorneys general of California, Colorado, Connecticut, Minnesota, North Carolina, Oregon, Tennessee and Washington. Illinois and Massachusetts joined the amended complaint as co-plaintiffs.

The civil suit said that the Richardson, Texas-based software and data firm violated the Sherman Act, which prohibits unfair monopolies. 

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