SEATTLE–(BUSINESS WIRE)–Downtown Seattle tenants have filed a class action lawsuit accusing 10 major leasing companies of an illegal deal to artificially inflate the price of residential real estate in the area, driving up rents in some of Seattle’s densest neighborhoods, according to Seattle law firm Hagens Berman .
The antitrust lawsuit cites confidential witnesses working for local lessors and was filed November 11, 2022 in the U.S. District Court for the Western District of Washington. The class action accuses 10 local rental companies of engaging in a scheme involving RealPage Inc., a third party that connected housing companies to real-time shared data based on algorithms. The lawsuit says defendants Greystar, Trammell Crow Company, Lincoln Property Co., FPI Management, Avenue5, Equity, Essex Property Trust, Thrive, AvalonBay Communities and Security Properties Inc collaborated and shared data via RealPage, thereby inflating the prices of multi-family residential real estate. real estate in and around downtown Seattle above competitive levels.
If you currently rent an apartment in Seattle serviced by one of these companies or have done so since 2010, you may have paid artificially inflated rents and this may be affected. The lawsuit says the price-fixing affected Seattle’s central neighborhoods, including Downtown Seattle, Capitol Hill, the Central District, South Lake Union and Queen Anne, which include most of the city’s densest neighborhoods. .
The lawsuit follows a similar case filed by Hagens Berman earlier this month on behalf of students renting near campuses in college towns, affected by similar rent-fixing agreements between housing management companies.
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The lawsuit cites confidential witnesses who have come forward to share information about the scheme. Greystar employees in Seattle routinely conducted market research in which they called competitors for rental prices and then submitted that data to their managers. A witness quoted in the lawsuit says, “It was price fixing…how else can you call it when you literally call your competitors and change your price based on what they say?” Another anonymous witness states that the defendant’s employees called each other two to three times a day to obtain detailed price information.
“Anyone who’s played the rental game in Seattle knows that prices have gotten astronomically high, and leasing companies prefer to trick the public into thinking it’s all down to honest supply and demand,” Berman said. , managing partner at Hagens Berman, representing the proposed class of Seattle Tenants. “Here, we believe we have found compelling evidence that this is simply not the truth.”
RealPage’s platform and algorithm provided an unprecedented method for landlords to track competitors’ rents and agree to respond to rate changes in real time, at the same pace, the lawsuit says. “Around 2016, more and more lessors replaced their independent pricing and procurement decisions with collusion by adopting a common revenue management agenda, thereby artificially manipulating the forces of supply and demand. in their favour.”
“This rigged game has all the hallmarks of classic antitrust,” Berman said. “A few key players in one space have agreed to act in unison with the clear understanding that all parties are on board. This type of winking and nodding behavior is a red flag indicating that price control can be present in the market.”
According to the lawsuit, RealPage provided the collusion platform and algorithm through software called YieldStar, which granted landlords an unprecedented ability to “accurately track your competitors’ rent.” Landlords involved in this program submitted data including rents charged for each unit and floor plan, rental terms, amenities and move-in dates. The lawsuit says that, based on public data, the average and median advertised rents for Seattle properties rented by the 10 defendants are consistently higher than those operated by other companies. While RealPage reports that annual rent growth in the Seattle-Bellevue-Everett market has averaged 3.25% over the past five years, it also reports that its software is capable of “generating up to 400 % return on investment in the first year”.
“Thanks to its illegal sharing of market data, RealPage has even managed to outperform during market downturns, including the housing market crash of 2008 and the COVID-19 pandemic,” Berman said. “When our antitrust team sees numbers like this, we know we’re suspicious.”
The lawsuit seeks to reimburse those who were charged higher rents as a result of the scheme and also seeks to hold the companies accountable under federal antitrust law, the Sherman Act, under which damages can be multiplied in a punitive manner.
Hagens Berman is a global law firm specializing in complex plaintiffs’ rights litigation, with a tenacious drive to achieve real results for those harmed by corporate negligence and fraud. Since its founding in 1993, the firm’s determination has earned it numerous national accolades, awards and titles of “Firm’s Most Feared Plaintiff”, MVP and Pioneers in Class Action Law. To learn more about the law firm and its successes, visit www.hbsslaw.com. Follow the company for updates and news on @ClassActionLaw.