Seattle Apartments Price-Fixing Antitrust Class Action

Rents in specific areas of the Seattle, Washington downtown multifamily submarket have been steadily increasing. This antitrust class action alleges that a cartel exists, based on a platform and algorithm from RealPage, Inc., in which the members have agreed to exchange competitive information and raise prices together. The markets involved are the central neighborhoods of Seattle, including Downtown Seattle, Capitol Hill/Central District, and South Lake Union/Queen Anne.

The class for this action is all persons in the identified neighborhoods and zip codes of Seattle, Washington that are direct holders of multifamily residential real estate leases from a lessor participating in RealPage’s pricing software, or from a division, subsidiary, predecessor, agent, or affiliate of such a lessor, at any time between January 1, 2016 and the date when the unlawful conduct and its anticompetitive effects cease to persist.

The defendants in this case include RealPage and a substantial list of apartment owners in the neighborhoods above, such as Greystar Real Estate Partners, LLC and Trammell Crow Company, LLC. “Based on publicly available data,” the complaint alleges, “both average and median advertised rents for defendant properties are consistently higher in the Seattle area than that of non-Defendant properties[.]”

Normally, the complaint alleges, lessors—those offering apartments for rent—set the prices for their leases themselves, based on their own ideas of how best to compete with other lessors. The complaint alleges, “Lessors operating in a competitive market will often lower prices to attract renters from their competitors and maximize occupancy of their properties.” This might, for example, take the form of offering a month’s rent for free.

However, sometime around 2016, the complaint claims, “Lessors agreed to use a common third party that collected real-time pricing and supply levels, and then received forward-looking, unit-specific pricing and supply recommendations from that third party, based on a common algorithm using shared data. Lessors also agreed to follow these recommendations, on the expectation that competing Lessors would do the same.”

The third part was RealPage, offering a platform and algorithm via its YieldStar software, which the complaint alleges stored extensive information on rentals, “including rents charged for each unit and each floor plan, lease terms, amenities, move-in and move-out dates.” From all this information, the complaint claims, the program would recommend a price for each specific unit. This, the complaint alleges, would “giv[e] the Lessor the courage to charge an inflated price by the implicit assurance that all of their competitors were doing the same.”

In addition to the use of the software program, the complaint alleges, the lessors would regularly call those at supposedly competing properties to exchange information. The complaint cites testimony from confidential witnesses, former employees of the colluding lessors, to support this contention. The complaint quotes one as saying, “It was price-fixing … what else can you call it when you’re literally calling your competition and changing your rate based on what they say?”

Article Type: Lawsuit
Topic: Antitrust
Tags: Anticompetitive Actions, Antitrust, Collusion and Price Fixing, Requiring Consumer to Pay Higher Prices