DOJ RealPage Suit Buoys Private Algorithmic Price-Fixing Cases

The Justice Department’s suit against RealPage will likely influence the outcome of other cases with similar claims, potentially bolstering arguments that the revenue management firm colluded to raise rents nationwide.

The DOJ filed a civil case against RealPage in the US District Court for the Middle District of North Carolina late last week, alleging the company violated antitrust law by helping property managers conspire to inflate rental prices on millions of units. North Carolina, California, and Minnesota are among the eight states that also joined the lawsuit, heightening pressure on the Thoma Bravo LP affiliate that analyzes data from landlords to recommend rental unit prices in a specific area.

The case’s survival boils down to whether the DOJ has pleaded facts that sufficiently allege a conspiracy, but some attorneys are skeptical whether the government has. The DOJ’s case is also a test of how decades-old antitrust laws apply to an increasing number of suits alleging that algorithmic databases are at the center of nationwide conspiracies.

“It’s a new frontier for very, very old statutes,” said Danielle Morello, an attorney in Clifford Chance’s Washington, D.C., office who focuses on antitrust law.

The DOJ filed its case against RealPage about two years after private plaintiffs first sued the company. Several cases were consolidated into multidistrict litigation in Tennessee. Washington, D.C., filed suit last year against RealPage and several landlords, alleging they agreed to exchange competitively sensitive data in violation of the District of Columbia Antitrust Act. That case is set for trial in 2026.

Private plaintiffs can beef up existing and future claims against RealPage by using discovery developed and cited in the DOJ’s case. They could also add similar claims from the DOJ’s suit, including that RealPage maintained a monopoly in revenue management software that violates Section 2 of the Sherman Act. The DOJ is able to conduct precomplaint discovery and can do even more after filing.

‘Powerful Tool’

Whenever the DOJ files a lawsuit with similar claims to those a private plaintiff has made, it buttresses the notion that there is some legitimacy to the private litigation, said Dylan Carson, partner with Manatt, Phelps & Phillips LLP in Washington and a former trial attorney at the DOJ’s antitrust division.

Unlike private litigants, the DOJ was able to conduct extensive discovery, including taking depositions and looking at documents, two years before filing suit. That discovery can now be cited by private plaintiffs, Carson said. “The plaintiffs in other cases can ask RealPage for everything it has produced in response to the DOJ’s investigation.”

The facts and quotes collected by the DOJ over two years of investigation could be persuasive to courts grappling with these algorithmic cases and used by private plaintiffs to “change or supplement their discovery strategy,” added Ken Racowski, partner with Holland and Knight LLP in Philadelphia and co-head of the firm’s antitrust team.

Should the DOJ’s case survive, it would reinforce arguments against RealPage in over 100 geographical submarkets where RealPage has alleged market power, said Parker Miller, partner on Alston & Bird LLP’s antitrust team in Atlanta.

“That’s going to be a powerful tool in the markets in which the government makes its case,” Miller said. “Those findings will be very useful to the plaintiffs in showing the judge that they can defeat summary judgment, and it has to go to a jury.”

Information Exchange

The DOJ case differs from the private litigation in that it accuses RealPage of engaging in an illegal information exchange, as opposed to a price-fixing case, Racowski said.

“DOJ won’t have to show a lot of what private plaintiffs have to show about an agreement to fix prices,” Racowski said. “They only have to show an agreement among the landlords to use the software, give RealPage their confidential information with the knowledge that others are for purposes of benefiting from the RealPage software recommendations.”

The DOJ’s case also cites RealPage as the lone defendant, as opposed to several landlords, removing the challenges that come with levying allegations against multiple parties.

RealPage said in a statement it believes the claims brought by DOJ “are devoid of merit” and intends to vigorously defend itself against these accusations. “The DOJ has chosen this moment to pursue a lawsuit that seeks to scapegoat pro-competitive technology that has been used responsibly for years,” it said.

Plaintiffs in other RealPage cases welcome the DOJ’s decision to pursue legal action.

“This antitrust lawsuit only underscores the significance of our case against RealPage,” said Patrick Coughlin, an attorney in San Diego with Scott & Scott Attorneys at Law LLP, a law firm representing plaintiffs in the Tennessee multidistrict litigation.

D.C. Attorney General Brian Schwalb said in a statement that he is glad to have the DOJ and the states joining. “RealPage’s conduct increased rents for thousands of residents, in a time when affordable housing is increasingly scarce in DC and across the country,” Schwalb said.

Hurdles Ahead

Whenever the government sues, there’s a little bit of a “halo effect” that benefits private plaintiffs, but the case could ultimately be difficult to prove, said Joe Ostoyich, partner and head of Clifford Chance’s US antitrust litigation practice in Washington.

For example, the suit doesn’t have enough detail to show there was communication among competitors, he said.

The complaint says that RealPage subscribers had discretion when using the company’s database and could reject pricing recommendations, Ostoyich said. “It’s got sort of loose allegations that some property managers at some point may have talked to each other, but it’s not clear to me where the conspiracy would be.”

The case is United States v. RealPage, Inc., M.D.N.C., No. 1:24-cv-00710, 8/23/24.