Dive Brief:

• Washington state resident Mckenna Duffy filed an antitrust class-action lawsuit last week in the U.S. District Court for the Western District of Washington against property management software company Yardi Systems and 18 apartment managers.
• In the lawsuit filed on Sept. 8, Duffy accused Yardi and the management companies of orchestrating a nationwide scheme to fix the cost of multifamily apartment rent. It contends that Yardi exchanged competitively sensitive and non-public information with clients through its automated pricing software, Revenue IQ (formerly RENTmaximizer) and that defendants engaged in direct conversations with their competitors about pricing through market surveys. It also implies that there were opportunities for collusion at the Yardi Advanced Solutions Conferences and social events for its customers.
• The lawsuit alleges that competing management companies essentially outsourced pricing decisions and unit supply to Yardi by using the company’s software, which “eliminated competition between the companies.” Instead of competing for customers by offering discounts, the plaintiffs relied upon Yardi’s software, which led to companies aggressively raising rents, the suit said.

Dive Insight:

The Yardi lawsuit includes confidential statements from former employees of Salt Lake City-based Bridge Property Management. One of these former employees said the pricing practice gave “an unfair advantage” to lessors because they “all know what they should be renting for” by using the same pricing platform, according to the lawsuit filed by Seattle-based law firm Hagens Berman.

The lawsuit cites research, conducted in August 2023, showing that companies using Yardi’s software in Seattle; Charlotte, North Carolina; and Phoenix had rents 6% higher than the market. “In summary, the widespread adoption of RENTmaximizer has distorted the multifamily rental market by artificially inflating prices and sharply lessening competition,” the suit said.

The lawsuit seeks to recover damages to the maximum extent of the law and to end the alleged price-fixing scheme. It names as defendants or co-conspirators the following property management companies using Yardi’s management software: 

• Alco Management Inc.
• Bridge Property Management
• Calibrate Property Management
• Clear Property Management
• Creekwood Property Corp. (Tonti Properties)
• Dalton Management
• HNN Associates
• Jones Lang Lasalle (JLL)
• KRE Group
• LeFever Matson
• Legacy Partners
• Manco Abbott
• McWhinney Property Management
• Morguard Corp.
• Pillar Properties
• Summit Management Services
• Towne Properties
• Tribridge Residential

Multifamily Dive reached out to these operators for comment but did not receive responses as of publication time.

Yardi’s response

After the suit was filed, Yardi posted a response, saying that its software does not mandate anything, including advertised rent or price increases. “In fact, Revenue IQ regularly adjusts prices upward and downward based on supply and demand,” Yardi said. “Many clients also use Revenue IQ to prioritize steady occupancy rather than rent growth, and the software includes settings to help clients comply with various rent control requirements and state-of-emergency rent cap programs.”

In addition, Yardi said that Revenue IQ does not use confidential or competitor rent information to adjust asking rents. Instead, those adjustments are individualized and based upon a client’s unit availability, prospect traffic and leasing activity and the asking rents for comparable projects that the manager selects that come from the operator’s own research, public survey information and information from public websites. 

“In sum, there is nothing illegal about revenue management, and the allegations in the complaint have no merit,” the company said. “Yardi stands behind Revenue IQ and will vigorously defend this ill-conceived lawsuit.”

A series of antitrust suits

The Yardi allegations come on the heels of suits against its competitor RealPage alleging similar rent price-fixing tactics.

After a ProPublica report last October investigated RealPage’s pricing model in October, a group of renters — three in California and two in Washington state — of market-rate apartments sued the Richardson, Texas-based property management software and data analytics provider and a number of large operators a week later, alleging that they committed antitrust violations under the Sherman Act. The five renters accused property managers of sharing “competitively sensitive information with one another” by using RealPage as a conduit.

In late 2022 and early 2023, more than 30 class-action suits were filed against RealPage and apartment owners and managers alleging antitrust violations through the use of the company’s revenue management systems. These cases have been consolidated into one suit that moved forward in U.S. District Court for the Middle District of Tennessee this month when Waverly D. Crenshaw Jr., chief U.S. District Court judge for the Middle District of Tennessee, deferred a series of motions asserting the case should be dismissed, according to Bisnow.

Recently, Arlington, Virginia-based REIT AvalonBay Communities was released from the class action suit surrounding antitrust allegations, the REIT announced in a 10-Q filing with the Securities and Exchange Commission released earlier this month.

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