Case 1:22-cv-01329 Document 1 Filed 12/19/22 Page 1 of 43
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`UNITED STATES DISTRICT COURT
`WESTERN DISTRICT OF TEXAS
`AUSTIN DIVISION
`
`Selena Vincin, Laura Boelens, Phillip
`Mackie, and Anna Rodriguez, Individually
`and on Behalf of All Others Similarly
`Situated,
`
`Case No. 1:22-cv-01329
`
`CLASS ACTION COMPLAINT
`
`Plaintiffs,
`
`JURY TRIAL DEMANDED
`
`v .
`
`REALPAGE, INC.; GREYSTAR REAL
`ESTATE PARTERS, LLC; LINCOLN
`PROPERTY COMPANY; MID-
`AMERICA APARTMENT
`COMMUNITIES, INC.; RPM LIVING,
`LLC; CORTLAND PARTNERS, LLC;
`CUSHMAN & WAKEFIELD, INC.;
`KNIGHTVEST RESIDENTIAL;
`CAMDEN PROPERTY TRUST;
`AVENUE5 RESIDENTIAL, LLC;
`DAYRISE RESIDENTIAL, LLC;
`KAIROI MANAGEMENT, LLC;
`ALLIED ORION GROUP, LLC; and
`CONTI CAPITAL
`
`Defendants.
`
`Plaintiffs Selena Vincin, Laura Boelens, Phillip Mackie, and Anna Rodriguez individually
`
`and on behalf of all others similarly situated (the “Classes,” as defined below), upon personal
`
`knowledge as to the facts pertaining to themselves and upon information and belief as to all other
`
`matters, and based on the investigation of counsel, bring this class action complaint to recover treble
`
`damages, injunctive relief, and other relief as appropriate, based on Defendants RealPage, Inc. and
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`Greystar Real Estate Partners, LLC; Lincoln Property Company; Mid-America Apartment
`
`Communities, Inc.; Rpm Living, LLC; Cortland Partners, LLC; Cushman & Wakefield, Inc.;
`
`Knightvest Residential; Camden Property Trust; Avenue5 Residential, LLC; Dayrise Residential,
`
`

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`Case 1:22-cv-01329 Document 1 Filed 12/19/22 Page 2 of 43
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`LLC; Kairoi Management, LLC; Allied Orion Group, LLC; and Conti Capital’s violations of
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`federal antitrust laws.
`
`Nature of the Action
`
`1.
`
`This action arises from Defendants’ conspiracy to fix, raise, maintain, and stabilize
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`rental housing prices in the Austin, Dallas, and Houston, Texas housing markets (the “Greater
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`Austin Metro Area”;1 “Greater Dallas Metro Area”;2 and “Greater Houston Metro Area,”3
`
`respectively).
`
`2.
`
`Defendants are RealPage, Inc. (“RealPage”), the developer of a software platform
`
`called “AI Revenue Management” (previously known as “YieldStar”), and several managers of
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`large-scale residential apartment buildings that used RealPage’s software platform to coordinate
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`and agree upon rental housing pricing, among other things, in Austin, Houston, and Dallas, Texas.
`
`1 As used throughout this Complaint, the Greater Dallas Metro Area is coterminous with the
`Dallas–Fort Worth–Arlington, TX Metropolitan Statistical Area, as established by the United
`States Office of Management and Budget. Specifically, the Greater Dallas Metro Area consists of
`the City and County of Dallas, Collin County, Denton County, Ellis County, Hunt County,
`Kaufman County, Rockwall County, Johnson County, Parker County, Tarrant County, and Wise
`County. References to Dallas throughout this Complaint, unless specifically limited, refer to the
`Greater Dallas Metro Area.
`
`2 As used throughout this Complaint, the Greater Austin Metro Area is coterminous with the
`Austin–Round Rock–San Marcos, TX Metropolitan Statistical Area, as established by the United
`States Office of Management and Budget. Specifically, the Greater Austin Metro Area consists of
`the City of Austin, Bastrop County, Caldwell County, Hays County, Travis County, and
`Williamson County. References to Austin throughout this Complaint, unless specifically limited,
`refer to the Greater Austin Metro Area.
`
`3 As used throughout this Complaint, the Greater Houston Metro Area is coterminous with the
`Houston–The Woodlands–Sugar Land, TX Metropolitan Statistical Area, as established by the
`United States Office of Management and Budget. Specifically, the Greater Houston Metro Area
`consists of the City of Houston, Austin County, Brazoria County, Chambers County, Fort Bend
`County, Galveston County, Harris County, Liberty County, Montgomery County, and Waller
`County. References to Houston throughout this Complaint, unless specifically limited, refer to the
`Greater Houston Metro Area.
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`

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`Case 1:22-cv-01329 Document 1 Filed 12/19/22 Page 3 of 43
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`3.
`
`AI Revenue Management works by collecting vast amounts of non-public data from
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`its client property managers regarding lease transactions, rent prices, occupancy levels, and virtually
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`every other possible data point that drives rent. This data is fed into an algorithm, along with
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`additional data collected from Defendant RealPage’s myriad other data analytics and rental
`
`management software products. RealPage’s algorithm uses that data to generate a rental price for
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`each of RealPage’s client’s available units, which is updated daily. RealPage makes sure all of its
`
`clients know that to maximize revenues, they must accept the software’s rental price at least 80%-
`
`90% of the time, and RealPage’s “Revenue Management Advisors” monitor clients’ compliance
`
`with that recommendation. As the allegations and evidence set forth below demonstrate, RealPage
`
`and the property managers who use its revenue management services constitute a price-fixing cartel,
`
`and the revenue growth they have achieved is possible only through coordinated price setting.
`
`4.
`
`With the assurance that their competitors are respectively setting Austin, Dallas, and
`
`Houston rental prices using the same algorithm, each Defendant property manager could allow a
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`larger share of their units to remain vacant while maintaining higher rental prices across their
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`properties. This increased their revenue at the expense of renters.
`
`5.
`
`Defendants’ strategy only succeeded because of the pricing coordination among
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`competing property managers enabled by this cartel. Knowing this, Defendant RealPage
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`repeatedly and explicitly emphasizes that for the software to work properly, everyone needs to
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`accept its suggested price at least 80%-90% of the time. As one property manager using RealPage
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`put it: “[W]e are all technically competitors . . . [but RealPage] helps us work together . . . to
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`work with a community in pricing strategies, not to work separately.”
`
`6.
`
`Before the introduction of coordinated rent-setting software, residential property
`
`managers generally set prices independently, to maximize occupancy. Allowing apartments to
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`3
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`Case 1:22-cv-01329 Document 1 Filed 12/19/22 Page 4 of 43
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`stand vacant in the Greater Austin, Dallas, and Houston Metro Areas at their advertised rental
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`prices made little sense when similar apartments in the area were available for less. Thus, in the
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`past, property managers had an incentive to lower rents until all available units were occupied.
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`Allowing apartments to sit, unoccupied, would not be a profitable strategy unless there was some
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`assurance or expectation that other property managers in the Greater Austin, Dallas, and Houston
`
`Metro Areas would similarly allow their units to remain vacant without lowering rents. Defendant
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`RealPage’s software provides that assurance.
`
`7.
`
`Beyond the anticompetitive exchange of nonpublic and competitively sensitive
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`information among competing property managers, Defendant RealPage uses additional
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`mechanisms to facilitate coordination among cartel members and prevent cheating by conspiracy
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`participants. First, by allowing property managers to outsource their rent-setting process,
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`RealPage causes them to consider higher rent prices than they ever would have before. In the
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`words of an executive at one of RealPage’s major clients: “The beauty of YieldStar is that it pushes
`
`you to go places that you wouldn’t have gone if you weren’t using it.”4
`
`8.
`
`Second, Defendant RealPage polices cartel members by applying heavy pressure on
`
`them to accept the algorithm’s suggested price at least 80%-90% of the time. The AI Revenue
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`Management service includes more than its rent-setting algorithm. Clients can expect constant
`
`communication with one or more of RealPage’s Revenue Management Advisors who provide
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`“expert oversight of [clients’] pricing strategy.”5 Any client property manager who chooses to
`
`4
`Heather Vogell, Rent Going Up? One Company’s Algorithm Could Be Why, PROPUBLICA
`(Oct. 15, 2022) (quoting Kortney Balas, director of revenue management at JVM Realty).
`5
`RealPage AI Revenue Management, REALPAGE,
`INC., https://www.realpage.com/
`assetoptimization/ revenue-management/ (last visited Nov. 1, 2022).
`
`4
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`Case 1:22-cv-01329 Document 1 Filed 12/19/22 Page 5 of 43
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`diverge from the algorithm’s price is expected to provide justification to a Revenue Management
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`Advisor.
`
`9.
`
`Third, the software also recommends lease renewal dates for its clients’ properties.
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`Using Defendant RealPage’s vast store of data on lease transactions, the algorithm suggests dates
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`that are staggered to avoid temporary periods of oversupply resulting from the natural ebb and
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`flow of the market.6 This further reduces the incentive for property managers to undercut would-
`
`be competitors, which is the strongest during these temporary oversupply periods.
`
`10.
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`Fourth, Defendant RealPage facilitates direct information exchanges between
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`competitors and provides opportunities for direct coordination of prices. It hosts online forums,
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`organizes in-person events for its clients,7 and maintains standing committees of cartel members to
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`advise on pricing strategy.8
`
`11.
`
`As the property managers acknowledge, they are competitors. Yet, Defendant
`
`RealPage’s clients shared a common goal of increasing rent prices across the board and understood
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`that RealPage–which has been explicit that its aim is to help its clients “outperform the market [by]
`
`3% to 7%”9 –was the means by which to do it. RealPage’s clients include many of the largest
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`property managers in the Greater Austin, Dallas, and Houston Metro Areas, who control a majority
`
`of the rental units in desirable neighborhoods in each of those markets. A recent analysis
`
`6
`Revenue Management: Proven in Any Market Cycle: See How These Companies
`Outperformed During Downturns (2020) (ebook), https://www.realpage.com/ebooks/outperform-
`in-a-down-market/.
`7
`Susan Gaide, Real World 2022 Customer Conference Recap, REALPAGE, INC., (July 29,
`2022), https://www.realpage.com/blog/realworld-2022-customer-conference-recap/ (last visited
`Dec. 7, 2022).
`8
`User Group Overview, REALPAGE, INC., https://www.realpage.com/user-group/overview/
`(last visited Nov. 1, 2022).
`9
`Vogell, supra note 1 (citing RealPage web page which has since been removed).
`
`5
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`Case 1:22-cv-01329 Document 1 Filed 12/19/22 Page 6 of 43
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`conducted by ProPublica showed that rents in areas where RealPage clients control a high
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`percentage of rental units have increased at a significantly higher rate than those where the
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`company’s influence is weaker.10
`
`12.
`
`Specifically, within each of the Greater Austin, Dallas, and Houston Metro Areas,
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`rental prices have consistently increased since 2016, while vacancy rates in each of the Greater
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`Austin, Dallas, and Houston Metro Areas have remained at 4.5%-6.5% (excluding the COVID
`
`period).11 In the Greater Austin Meto Area, vacancy rates have fluctuated between 5.2% and 6.5%;
`
`in the Greater Dallas Metro Area, vacancy rates have fluctuated between 4.7% and 6.1%; and in the
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`Greater Houston Metro Area vacancy rates have fluctuated between 5.3% and 6.2%.12 Even during
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`times of comparatively high vacancy rates in each of the of the Greater Austin, Dallas, and Houston
`
`Metro Areas, rents did not decrease, nor did they increase at a slowed rate. This inelasticity in each
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`of the markets demonstrates that the forces of supply and demand no longer control the price of rent
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`in the Greater Austin, Dallas, and Houston Metro Areas.
`
`13.
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`Defendants’ price fixing conspiracy is a per se unlawful restraint of trade under
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`Section 1 of the Sherman Act. It has resulted in artificially inflated rent prices and a diminished
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`supply of rental units in each of the Greater Austin, Dallas, and Houston Metro Areas. Plaintiffs
`
`and members of each Class, who rent in the Greater Austin, Dallas, and Houston Metro Areas,
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`respectively, from property managers that use Defendant RealPage’s software, paid significant
`
`10
`
`Id.
`11
`Due to conditions caused by the COVID-19 pandemic that will take years to unwind
`(including generally slowed construction of new apartment units and restrictions on the availability
`of evictions), current vacancy numbers do not accurately reflect market forces.
`Moody’s Analytics REIS.
`12
`
`6
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`Case 1:22-cv-01329 Document 1 Filed 12/19/22 Page 7 of 43
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`overcharges on rent and suffered harm from the reduced availability of rental units they could
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`reasonably afford.
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`JURISDICTION AND VENUE
`
`14.
`
`Plaintiffs bring this antitrust class action lawsuit pursuant to Sections 4 and 16 of
`
`the Clayton Act (15 U.S.C. §§15 and 26), to recover treble damages and the costs of suit, including
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`reasonable attorneys’ fees, for the injuries sustained by Plaintiffs and members of the Classes; to
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`enjoin Defendants’ anticompetitive conduct; and for such other relief as is afforded under the laws
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`of the United States for Defendants’ violations of Section 1 of the Sherman Act (15 U.S.C. §1).
`
`15.
`
`This Court has subject matter jurisdiction pursuant to 28 U.S.C. §§1331, 1337, and
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`Sections 4 and 16 of the Clayton Act (15 U.S.C. §§15(a) and 26).
`
`16.
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`Venue is proper in this District pursuant to Sections 4, 12, and 16 of the Clayton
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`Act (15 U.S.C. §§15, 22, and 26), and pursuant to 28 U.S.C. §1391(b), (c), and (d), because, at all
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`relevant times, one or more of the Defendants resided, transacted business, was found, is licensed
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`to do business, and/or had agents in this District.
`
`17.
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`This Court has personal jurisdiction over each Defendant because, among other
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`things, each Defendant: (a) transacted business throughout the United States, including in this
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`District; (b) leased residential units to individuals throughout the United States, including in this
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`District; and/or (c) engaged in an antitrust conspiracy that was directed at and had a direct,
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`foreseeable, and intended effect of causing injury to the business or property of persons residing
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`in, located in, or doing business throughout the United States, including in this District.
`
`18.
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`The activities of the Defendants and their co-conspirators, as described herein, were
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`within the flow of, were intended to, and did have direct, substantial, and reasonably foreseeable
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`effects on the interstate commerce of the United States.
`
`7
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`Case 1:22-cv-01329 Document 1 Filed 12/19/22 Page 8 of 43
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`19.
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`No other forum would be more convenient for the parties and witnesses to litigate
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`this case.
`
`THE PARTIES
`
`20.
`
`Plaintiff Selena Vincin is a citizen and resident of the State of Texas. Ms. Vincin
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`rented residential units in properties, including Creekside Village Apartments in Plano, Texas, that
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`were managed by Lessor Defendant Conti at various times between in 2015 through 2020. Ms.
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`Vincin has paid higher rental prices by reason of the violations alleged herein.
`
`21.
`
`Plaintiff Laura Boelens is a resident and citizen of the State of Washington. Ms.
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`Boelens was a citizen of the State of Texas from 2016 through 2020. Ms. Boelens rented a
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`residential unit in a Euless, Texas property managed by Lessor Defendant MAA named Colonial
`
`Grand at Bear Creek, beginning in 2016 through 2020. Ms. Boelens has paid higher rental prices
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`by reason of the violations alleged herein.
`
`22.
`
`Plaintiff Phillip Mackie is a resident and citizen of the State of Texas. Mr. Mackie
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`rented a residential unit in a property managed by Lessor Defendant Camden Property Trust,
`
`named Camden Gaines Ranch in Austin, Texas, beginning in 2018 through the date of this filing.
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`Mr. Mackie has paid higher rental prices by reason of the violations alleged herein
`
`23.
`
`Plaintiff Anna Rodriguez is a resident and citizen of the State of Texas. Ms.
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`Rodriguez rented a residential unit in a property managed by Lessor Defendant Karoi Residential,
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`named Siena Round Rock in Round Rock, Texas, beginning in 2022 through the date of this filing.
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`Ms. Rodriguez has paid higher rental prices by reason of the violations alleged herein.
`
`24.
`
`Defendant RealPage is a corporation headquartered in Richardson, Texas,
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`organized and existing under the laws of Delaware. RealPage provides software and services to
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`managers of residential rental apartments, including the YieldStar/AI Revenue Management
`
`8
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`Case 1:22-cv-01329 Document 1 Filed 12/19/22 Page 9 of 43
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`software described herein. RealPage was a public company from 2010 until December 2020, when
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`it was purchased by Chicago-based private equity firm Thoma Bravo, LP, in a transaction that
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`valued RealPage at approximately $10.2 billion.13 At that time, RealPage had over 31,700 clients,
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`including each of the 10 largest multifamily property management companies in the U.S.14
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`25.
`
`Defendant Greystar Real Estate Partners, LLC (“Greystar”) is a limited liability
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`company headquartered in Charleston, South Carolina, organized and existing under the laws of
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`Delaware. Greystar is by far the largest manager of residential rental apartments in the country,
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`with over 698,000 units under its management, including approximately 108 properties in the
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`Greater Dallas Metro Area, 94 properties in the Greater Austin Metro Area, and 160 properties in
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`the Greater Houston Metro Area.
`
`26.
`
`Defendant Lincoln Property Company (“Lincoln”) is a corporation headquartered in
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`Dallas, Texas, organized and existing under the laws of Texas. Lincoln is a residential apartment
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`manager with over 210,000 rental units under its management, including approximately 103
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`properties in the Greater Dallas Metro Area, 27 properties in the Greater Austin Metro Area, and
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`27 properties in the Houston Greater Metro area.
`
`27.
`
`Defendant Mid-America Apartment Communities, Inc. (“MAA”) is a corporation
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`headquartered in Germantown, Tennessee, organized and existing under the laws of Tennessee.
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`MAA is a residential apartment manager with over 100,000 rental units under its management,
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`including approximately 36 properties in the Greater Dallas Metro Area, 21 properties in the Greater
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`Austin Metro Area, and 16 properties in the Greater Houston Metro Area.
`
`13
`Press Release, RealPage, Inc., Thoma Bravo Completes Acquisition of RealPage (Apr. 22,
`2021), https://www.realpage.com/news/thoma-bravo-completes-acquisition-of-realpage/.
`14
`RealPage Inc., Annual Report (Form 10-K) at 6 (Mar. 1, 2021).
`
`9
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`Case 1:22-cv-01329 Document 1 Filed 12/19/22 Page 10 of 43
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`28.
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`Defendant RPM Living, LLC (“RPM”) is a limited liability company headquartered
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`in Austin, TX, organized and existing under the laws of Texas. RPM manages over 112,000 rental
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`units nationally, including approximately 47 properties in the Greater Dallas Metro Area, 49
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`properties in the Greater Austin Metro Area, and 26 properties in the Greater Houston Metro Area.
`
`29.
`
`Defendant Cortland Partners, LLC (“Cortland”) is a limited liability company
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`headquartered in Atlanta, GA, organized and existing under the laws of Delaware. Cortland
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`manages over 63,000 rental units nationally, including approximately 43 properties in the Greater
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`Dallas Metro Area, 7 properties in the Greater Austin Metro Area, and 18 properties in the Greater
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`Houston Metro Area.
`
`30.
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`Defendant Cushman & Wakefield, Inc. (“Cushman & Wakefield”) is a corporation
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`headquartered in New York, NY, organized and existing under the laws of Delaware. Cushman &
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`Wakefield manages over 172,000 apartments nationally, including approximately 34 properties in
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`the Greater Dallas Metro Area, 29 properties in the Greater Austin Metro Area, and 29 properties
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`in the Greater Houston Metro Area.
`
`31.
`
`Defendant Knightvest Residential (“Knightvest”) is a limited liability company
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`headquartered in Dallas, TX, organized and existing under the laws of Texas. Knightvest manages
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`over 30,000 rental units nationally, including approximately 31 properties in the Greater Dallas
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`Metro Area, 6 properties in the Greater Austin Metro Area, and 30 properties in the Greater Houston
`
`Metro Area.
`
`32.
`
`Defendant Camden Property Trust (“Camden”) is a real estate investment trust
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`headquartered in Houston, TX, organized and existing under the laws of Texas. Camden manages
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`176 properties nationally, comprising over 58,000 rental units, including approximately 15
`
`10
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`Case 1:22-cv-01329 Document 1 Filed 12/19/22 Page 11 of 43
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`properties in the Greater Dallas Metro Area, 11 properties in the Greater Austin Metro Area, and
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`26 properties in the Greater Houston Metro Area.
`
`33.
`
`Defendant Avenue5 Residential, LLC (“Avenue5”) is a limited liability company
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`headquartered in Seattle, Washington, organized and existing under the laws of Delaware. Avenue5
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`is a residential apartment manager with over 86,000 rental units under its management, including
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`approximately 13 properties in the Greater Dallas Metro Area, 16 properties in the Greater Austin
`
`Metro Area, and 6 properties in the Greater Houston Metro Area.
`
`34.
`
`Defendant Dayrise Residential, LLC (“Dayrise”) is a limited liability company
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`headquartered in Houston, TX, organized and existing under the laws of Texas. Dayrise manages
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`81 properties nationally, including approximately 21 properties in the Greater Dallas Metro Area,
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`1 property in the Greater Austin Metro Area, and 26 properties in the Greater Houston Metro Area.
`
`35.
`
`Defendant Kairoi Management, LLC (“Kairoi”) is a limited liability company
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`headquartered in Dallas, Texas, organized and existing under the laws of Texas. Kairoi is a
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`residential apartment manager with over 28,000 rental units under its management, including
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`approximately 20 properties in the Greater Dallas Metro Area, 7 properties in the Greater Austin
`
`Metro Area, and 18 properties in the Houston Greater Metro area.
`
`36.
`
`Defendant Allied Orion Group, LLC (“Allied Orion”) is a limited liability company
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`headquartered in Houston, Texas, organized and existing under the laws of Texas. Allied Orion
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`manages over 20,000 apartments nationally, including approximately 11 properties in the Greater
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`Dallas Metro Area, 8 properties in the Greater Austin Metro Area, and 63 properties in the Greater
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`Houston Metro Area.
`
`37.
`
`Defendant Conti Capital (“Conti”) is a real estate investment company
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`headquartered in Dallas, TX, organized and existing under the laws of Delaware. Conti managed
`
`11
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`Case 1:22-cv-01329 Document 1 Filed 12/19/22 Page 12 of 43
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`approximately 17 properties in the Greater Dallas Metro Area and 1 property in the Greater Austin
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`Metro Area during the class period.
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`38.
`
`Various other persons, firms, and corporations not named as defendants have
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`participated as co-conspirators with Defendants and have performed acts and made statements in
`
`furtherance of the conspiracy. The Defendants are jointly and severally liable for the acts of their
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`co-conspirators whether or not named as defendants in this Complaint.
`
`39. Whenever reference is made to any act of any corporation, the allegation means
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`that the corporation engaged in the act by or through its officers, directors, agents, employees, or
`
`representatives while they were actively engaged in the management, direction, control, or
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`transaction of the corporation’s business or affairs. Each of the Defendants named herein acted as
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`the agent of or for the other Defendants with respect to the acts, violations, and common course of
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`conduct alleged herein.
`
`40.
`
`Defendants are also liable for acts done in furtherance of the alleged conspiracy by
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`companies they acquired through mergers and acquisitions.
`
`FACTUAL ALLEGATIONS
`
`A.
`
`35.
`
`Historical Competition Among Residential Property Managers
`
`Before the introduction of software like YieldStar, competition in rental housing
`
`markets was driven by property managers’ desire to keep occupancy levels in their buildings as
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`high as possible and to keep turnover among their tenants down.15 In addition to lost rent revenue
`
`caused by letting apartments sit empty, the costs of owning and maintaining a rental apartment are
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`not significantly different whether the unit is occupied or not. This provides a strong incentive for
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`property managers to lower their rents to fill vacant units. While property managers knew in theory
`
`15
`
`Supra note 3.
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`12
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`Case 1:22-cv-01329 Document 1 Filed 12/19/22 Page 13 of 43
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`that if they all resisted this temptation, they would all benefit from higher average rents, any
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`individual property manager that lowered its rents to fill vacancies while the others did not would
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`be able to gain market share at the others’ expense.
`
`36.
`
`As Donald Davidoff, the principal developer of the competing price-setting software
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`that Defendant RealPage acquired in 2017, Lease Rent Options, explained in a 2020 blog post: “All
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`[property managers] would be better off limiting their rent reductions; however, should one
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`[property manager] lower their rents while the others don’t, then that operator would outperform.
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`The result can be a race to the bottom that is not good for anyone, but the fear of missing out coupled
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`with laws prohibiting collusion make this the most likely outcome.”16 This so-called “race to the
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`bottom” might be bad for all property managers but is, of course, good for renters. It represents
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`nothing beyond healthy price competition.
`
`37.
`
`Absent collusion, property managers could not unilaterally raise rents above
`
`market rates – any property manager that did so would lose tenants to its competitors who offered
`
`rental units at market rates, granting them a higher share of the available profits. This dynamic
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`causes rental prices in a competitive marketplace to be sensitive to changes in demand. For
`
`example, rents have historically gone up quickly in neighborhoods that become trendy, or when
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`new public transportation infrastructure is added, and have fallen in areas where businesses
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`close, or that new generations find less desirable than previous ones did. Any number of factors
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`that made people want to live in a certain area or a certain type of apartment could cause rents
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`to rise or fall accordingly. Rents were also historically responsive to changes in renters’ average
`
`income.
`
`16
`Donald Davidoff, They’re Heckling Revenue Management Again, THE DEMAND
`SOLUTIONS BLOG (Aug. 18, 2020), https://www.d2demand.com/mfhblog/theyre-heckling-
`revenue-management-again.
`
`13
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`Case 1:22-cv-01329 Document 1 Filed 12/19/22 Page 14 of 43
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`38.
`
`As described more fully below, Defendants’ conspiracy avoids a race to the bottom,
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`but it does so at the financial expense of their customers – the renters. It allows property managers
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`to hike rents at a faster pace when demand is strong without needing to lower them when it is
`
`weak. It eases natural competitive constraints and causes renters to spend higher and higher
`
`portions of their incomes on housing.
`
`B.
`
`39.
`
`RealPage and AI Revenue Management
`
`Defendant RealPage markets a “comprehensive platform of data analytics and on
`
`demand software solutions and services for the rental real estate industry.”17 Its clients are
`
`managers of residential rental apartments, to which it offers an array of products for (1) marketing
`
`and leasing of apartments, (2) resident experience (including IT portals and rent payment software),
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`(3) site management, (4) vendor and expense management, (5) budgeting and investment,
`
`(6) accounting, (7) data analytics, and (8) so-called “revenue management” — advisory services
`
`on how to obtain higher rents on every unit. This “revenue management” service is the fulcrum
`
`of Defendants’ anticompetitive scheme.
`
`42.
`
`RealPage was founded in 1998, and in 2002 it acquired the original YieldStar
`
`software from Defendant Camden.18 Two years later, the company hired Jeffrey Roper as its
`
`principal scientist to improve YieldStar’s performance and grow its client base.19 Roper saw
`
`potential in the software as a means for RealPage’s customers to increase their revenue by
`
`maintaining higher average rents, but he realized that to function properly, the algorithm needed
`
`17
`
`Supra note 11 at 6.
`18
`Press Release, RealPage, Inc., RealPage Acquires YieldStar Multifamily Revenue
`Management System (July 19, 2002), https://www.realpage.com/news/realpage-acquires-
`yieldstar-multifamily-revenue-management-system/.
`19
`See Vogell, supra note 1.
`
`14
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`Case 1:22-cv-01329 Document 1 Filed 12/19/22 Page 15 of 43
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`huge amounts of detailed data regarding rent prices and occupancy of individual units.20 RealPage
`
`began collecting information from its clients and other sources in a “data warehouse,” which the
`
`algorithm could mine. Beyond rent prices and occupancy rates, this data included records of
`
`actual lease transactions, signed lease documents, lease renewal dates, records of rent payments,
`
`and detailed data on tenants and their finances.
`
`43.
`
`Roper had previously helped design similar price-setting software for Alaska
`
`Airlines that also facilitated information exchange and price-fixing, according to the DOJ.21
`
`During his tenure as director of revenue management, Alaska Airlines and its competitor airlines
`
`began using common software to exchange information regarding planned routes and ticket prices
`
`among themselves before that information became public.22 The software allowed the airlines to
`
`avoid price wars that would have lowered ticket prices. The Justice Department’s Antitrust
`
`Division filed suit against eight of the largest U.S. airlines, alleging that the software-enabled
`
`information exchange amounted to anticompetitive price fixing under the antitrust laws.23 A
`
`government economist calculated that the scheme cost consumers up to $1.9 billion.24 All eight
`
`airlines eventually entered into consent decrees requiring them to eliminate the information
`
`exchange features of the software that had enabled the conspiracy.25 At one point during the
`
`20
`
`See id.
`21
`Press Release, U.S. Dep’t of Just., Justice Department Settles Airlines Price Fixing Suit,
`May Save Consumers Hundreds of Millions of Dollars (Mar. 17, 1994), https://www.justice.gov/
`archive/atr/public/press_releases/1994/211786.htm.
`22
`Vogell, supra note 1.
`23
`Press Release, U.S. Dep’t of Just., Justice Department Files Price Fixing Suit Against Eight
`Airlines and Fare Dissemination System
`(Dec. 21, 1992), https://www.justice.gov/
`archive/atr/public/press_releases/1992/211323.htm.
`24
`Supra note 29.
`Supra note 29.
`
`25
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`15
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`Case 1:22-cv-01329 Document 1 Filed 12/19/22 Page 16 of 43
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`investigation, federal agents removed a computer and documents from Roper’s office at Alaska
`
`Airlines.26
`
`44. Much like the airlines’ price-fixing cartel, Defendants’ cartel avoids price wars
`
`and the “race to the bottom” during periods of oversupply. As Defendant RealPage declares to
`
`potential clients in its advertising materials: “You don’t have to sacrifice rent growth during a
`
`softening market.”27
`
`45.
`
`Naturally, YieldStar’s coordinated pricing strategy became more and more
`
`effective as more property managers implemented it. To this end, Defendant RealPage began
`
`buying up similar and competing software companies, and it has completed 26 acquisitions since
`
`its founding.28 The most important of these transactions came in 2017, when RealPage acquired
`
`Lease Rent Options (LRO), a company which offered a similar rent-setting software that was
`
`YieldStar’s strongest rival. Instead of relying on nonpublic data from competitors, however,
`
`LRO’s algorithm used only public market data as input. LRO’s chief architect, Donald Davidoff,
`
`designed it that way specifically to avoid the potential antitrust violations arising from the use of
`
`nonpublic data to coordinate prices among competitors.29
`
`46.
`
`LRO’s software was not the most valuable piece of the acquisition for Defendant
`
`RealPage, however — its customer base was. At the time of the merger, RealPage was pricing
`
`1.5 million units. That number doubled with the acquisition.30 RealPage rebranded the product
`
`AI Revenue Management, and its client base and influence on rental markets in urban areas across
`
`26
`
`27
`
`28
`
`29
`
`30
`
`Vogell, supra note 1.
`Supra note 3.
`BLOOMBERG COMPANY REPORT, REALPAGE, INC. (generated Nov. 1, 2022).
`Vogell, supra note 1.
`Id.
`
`16
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`

`

`Case