Yardi, Landlords’ Appeal on Pricing Conspiracy Lawsuit Dismissed

A federal court in Washington on Thursday, December 5, rejected an appeal from real estate owners and brokerage firm Yardi Systems to dismiss a lawsuit that accused them of overcharging millions of American renters in multifamily housings.

US District Judge Robert Lasnik in Seattle said in his ruling that the tenants presented enough evidence for now to allow their price-fixing claims to move forward against the landlords and software maker Yardi.

The proposed class action was filed against a group of real estate owners and operators of multifamily residential properties last year, alleging that they were violating the US antitrust law by coordinating on rental prices.

They said the landlords were unlawfully agreeing to use the company’s software and data pricing algorithms, “to artificially inflate” apartment rents, a claim that was strongly denied by the defendants.

In December, the defendants filed a motion to dismiss the case, arguing that landlords’ retention of some pricing discretion invalidated any price-fixing claim.

Yardi said in a statement that its software does not use confidential pricing figures to generate rent recommendations but instead relied on publicly available housing market information and its clients’ own data.

“There is nothing illegal about Yardi’s revenue management product, and the allegations against the company are simply false,” the company said.

Steve Berman, a lawyer representing the plaintiffs, called Lasnik’s ruling “a total victory for us.”

The lawsuit forms part of a wave of new cases in recent years accusing property companies and owners of relying on revenue platforms and computer algorithms to coordinate illegally on pricing rather than making individual business decisions.

A similar ruling was heard in the federal court in Nashville last year, where eight states and the Department of Justice (DOJ) filed a lawsuit against technology company RealPage for allegedly conspiring with property owners to inflate rental prices.

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

Meanwhile, Yardi and the property managers argued that there was no information that would evidence a price-fixing conspiracy, urging Lasnik to dismiss what they called an “ill-conceived lawsuit.”

In addition, the defendants said they were not bound by any rental price recommendations made by Yardi’s software.

For his part, Lasnik argued the fact that property managers did not meet as a group, but instead used Yardi as an intermediary does not preclude the existence of an agreement or change its unlawful nature.

The judge also said the allegations amply suggest that the landlords intended to and, for the most part, did adhere to Yardi’s pricing recommendations.