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Rent a Capitol Hill apartment from one of these companies? You ‘may have rights under antitrust laws to compensation’ as lawsuit alleges price-fixing violations in Seattle

A lawsuit filed on behalf of tenants accuses a group of leasing companies that control thousands of apartment units in the city including on Capitol Hill of price fixing and antitrust violations that artificially drive rents higher in core Seattle neighborhoods.

Greystar, Trammell Crow Company, Lincoln Property Co., FPI Management, Avenue5, Equity, Essex Property Trust, Thrive, Avalonbay Communities, and Security Properties have been named in the suit for their actions to allegedly control prices at buildings they manage when they “colluded and shared data through RealPage, effectively inflating the prices of multifamily residential real estate in and around downtown Seattle above competitive levels,” according to the federal suit filed Friday.

The Hagens Berman Sobol Shapiro firm is seeking renters to joint the potential class action lawsuit.

UPDATE: The Seattle Times reports at least two other suits have been filed in Washington targeting the companies for the alleged violations.

The lawsuits come after an investigation by nonprofit news organization ProPublica revealed landlords using the YieldStar software from RealPage to “push the highest possible rents on tenants” across the country including in Seattle and on Capitol Hill.

“In one neighborhood in Seattle, ProPublica found, 70% of apartments were overseen by just 10 property managers, every single one of which used pricing software sold by RealPage,” ProPublica reported. While that anecdote comes from analysis of the Belltown neighborhood, the same companies control a major portion of the Capitol Hill and Central District apartment rental markets.

Meanwhile, a flurry of legal activity has followed including this proposed class action lawsuit in California.

Lawyers for the Washington suit say the price-fixing cartel targeted the central neighborhoods of Seattle, including downtown, Capitol Hill, the Central District, South Lake Union and Queen Anne, “which include most of the city’s densest neighborhoods.”

(Source: Hagens Berman Sobol Shapiro)

“This rigged game has all the markers of a classic antitrust,” Steve Berman, managing partner at Hagens Berman said in a statement. “A few key players in a single space agreed to act in unison with the clear understanding that all parties take part in the scheme. This kind of wink-and-nod behavior is a red flag that price control may be present in the market.”

The law firm says RealPage provided the platform and the algorithm through its software called YieldStar, “which granted the lessors unprecedented ability to ‘track your competition’s rent with precision.'” The companies using the software entered data including rents charged for each unit and each floor plan, lease terms, amenities and move dates. According to the firm, in one example, employees at Greystar “would regularly perform market surveys in which they would call competitors to get rental pricing, then submit that data to their managers.”

The Department of Justice typically sets strict guidelines for services that provide shared industry data including recency factors and aggregation intended to help thwart antitrust or price-fixing activities.

Using the data from the system to set higher rents would not necessarily be a violation but any effort to collude with competitors to set those prices most certainly would.

The firm behind the lawsuit says its analysis showed “average and median advertised rents for Seattle properties leased by the 10 defendants are consistently higher than those operated by other companies.” According to the analysis, the firms named in the suit listed 1-bedroom apartment units for about 8% more than other companies.

But the lawsuit may grow. Hagens Berman Sobol Shapiro says “other large property management companies” also are using the software and additional tenants “may have rights under antitrust laws to compensation for your losses due to this scheme.”

The defendants have not yet responded in court to the federal case.

 

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8 Comments
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Dub
Dub
1 year ago

I’m surprised that other big and sucky management companies like NW Apartments and Cornell aren’t on this list. Are those DBA names or are they somehow not involved?

chres
chres
1 year ago
Reply to  Dub

How’s Cornell bad? I was looking at their places to maybe rent, but if they’re shady…

Hillery
Hillery
1 year ago

GET EM. I have rented from one of those companies and some of their prices are just preposterous even for today’s/Seattle’s situation.

d4l3d
d4l3d
1 year ago

It’s my understanding that SHA uses similar software to aid in establishing their rates in concert with subsidies. This makes me wonder if these algos are also problematic or influenced by the surrounding artificially set algo rates in CH and CD. Concerned for me and my community. For example, my SHA rent has been shooting up only to be brought back within reason by a temporary med adjustment. If this is manipulation, SHA has to take this seriously as well.

zach
zach
1 year ago
Reply to  d4l3d

Isn’t SHA rent determined by your income (you pay 30% of what your income is)? If this is true, then your rent is fixed and should not go up, unless your income goes up. Correct?

Whichever
Whichever
1 year ago

Just wait until you find out that this is common practice in many industries. Hotels, etc. I think it’s a stretch to say it’s price fixing but whatever.

Jim
Jim
1 year ago

An algorithm is doing the price fixing. While the competitors may not be personally working together to cheat or deceive, the algorithm is. It’s providing the same outcome as if the competitors met and made a plan that influences pricing to their advantage without the actual discourse.

I 100% believe this is collusion though I think the fact that it’s an algorithm producing the results rather than two or more entities working together will prove difficult for the plaintiffs.

LinkRider
LinkRider
1 year ago

If this turns out to be legal, the fight is just free advertising for RealPage. So curious to see how this case goes…