After years of playing defense against suits from federal, state and local governments, along with renters, RealPage is going on the offensive.
The Richardson, Texas-based data and software provider has sued the city of Berkeley, California, for passing an ordinance that it claims imposes a “sweeping and unconstitutional ban on lawful speech specifically intended to outlaw software products,” according to a filing in the United States District Court for the Northern District of California on Wednesday.
RealPage alleges that the ordinance was prompted by an “intentional campaign of misinformation and false claims” about its revenue management software. The firm seeks an injunction against the legislation, which it said was adopted based on inaccurate statements concerning the software.
On March 25, the Berkeley City Council voted to ban rent pricing technology that uses pricing algorithms. It is scheduled to go into effect on April 24, unless enjoined by the court.
The ordinance makes it illegal for “a landlord to use a coordinated pricing algorithm … when setting rents or occupancy levels for residential dwelling units in the city of Berkeley."
City Councilmember Ben Bartlett said companies that target renters "through dynamic pricing systems that prioritize profits over people" will face $1,000 fines for each violation, according to CBS News.
RealPage response
RealPage argues that the Berkeley ordinance “violates the First Amendment’s prohibition on content-based speech restrictions,” specifically recommendations or advice on rents or occupancy levels.
“Berkeley is trying to enact an ordinance that prohibits speech in the form of advice and recommendations from RealPage to its customers,” said Stephen Weissman, an antitrust attorney for Gibson Dunn, who represents RealPage, on a call with reporters this week.
RealPage claims that the ordinance covers “information” with no limit or regard to whether it is used for lawful conduct.
“It is prohibiting speech because of what it says, which is a huge red flag and requires the court to apply a higher level of scrutiny to any restriction on free speech,” Weissman said.
Furthermore, Weissman said that the city of Berkeley didn’t allow RealPage’s input when it was drafting the ordinance.
“My calls to the city of Berkeley and its attorney were not returned,” Weissman said. “The email that I sent before the ordinance was enacted was not returned. We had no opportunity whatsoever to participate or to present facts.”
Weissman also left the door open to filing suits against jurisdictions like San Francisco that have banned RealPage’s software.
“Everything is on the table,” Weissman said. “I think we're evaluating our options, including in San Francisco, for sure.”
