Hagens Berman: Student college renters join new class action lawsuit against mega-property management companies

SEATTLE-(BUSINESS WIRE)–Attorneys at Hagens Berman today filed a lawsuit against some of America’s largest housing managers on behalf of college student renters who accuse the companies of fixing apartment rents in student housing markets across the country.

The lawsuit, filed in the U.S. District Court for the Western District of Washington, alleges that through an elaborate scheme of intentional data sharing and conspiracy, the defendants, 11 housing management companies, agreed to fix the price of student housing. The lawyers allege that the defendants entered into this illegal agreement with the help of RealPage Inc., a third party that connected housing companies to shared, real-time, algorithm-driven data that includes “more than 1 million student beds with in-depth market data.” and key performance indicators for nearly 1,000 universities based on his materials.

RealPage specifically designed an algorithm for the student housing market, called YieldStar Student, to help landlords maximize profits by increasing the rents they charge students, according to the lawsuit. Lawyers say RealPage specifically touted that its software helped lessors shift from focusing on maximizing occupancy to maximizing profits. In other words, rather than trying to rent all available space, as would be expected in a competitive market, landlords using RealPage focused on charging higher rents to maximize profits, even if that meant letting more space vacant. RealPage also specifically said it encouraged landlord clients to stop giving discounts or other concessions to students that would lower the prices they paid for housing, the lawsuit said.

According to attorneys, price-fixing occurred in college towns, including cities such as Ann Arbor, Michigan; Austin, Texas; Columbus, Ohio; Eugene, Oregon; Gainesville, Florida; Salt Lake City, Utah; Seattle, Washington and Tucson, Arizona, where college student tenants were subject to fixed rents. Defendants include Greystar Real Estate Partners LLC, Cushman & Wakefield Inc., BH Management Services, LLC, Campus Advantage Inc., Cardinal Group Holdings LLC, CA Ventures Global Services LLC, DP Preiss Company Inc. and The Michaels Organization LLC.

Today’s lawsuit seeks to represent a nationwide class consisting of those who have rented student housing directly from any defendant or co-conspirator since January 2010 – a significant number of tenants and potentially hundreds of millions of dollars in rent. If you rent an apartment in a student town maintained by one of these defendants, or have done so since 2010, you may be affected by this active lawsuit.

The new lawsuit isn’t the first time Hagens Berman has fought for the rights of college students. It secured a $209 million settlement and a Supreme Court victory that affected NCAA college athletes. The firm has also secured multiple settlements with colleges and universities regarding campus closures related to COVID-19, as well as retention of fees and expenses paid by ratepayers. The firm continues to fight these cases along with additional lawsuits against the NCAA regarding compensation rights for the name, image and likeness of college athletes.

The “super-competitive” market becomes algorithmically rigged

RealPage’s own filings say the student housing rental market is “complex” and “super-competitive,” detailing the typical gifts and incentives landlords use to lure prospective tenants, including free first-month deals and other giveaways. , the lawsuit says. Despite this natural incentive to lower prices to attract tenants from competitors and maximize occupancy, the class-action lawsuit alleges that in 2009, landlords increasingly replaced independent pricing with collusion through the joint use of RealPage’s algorithmic pricing model, which relied on information gathered from each of the lessors.

“The housing markets in college towns used to be competitive, with many landlords competing for very specific square footage, and under fair circumstances, rents in college towns couldn’t be expected to rise as we’ve found,” said Steve Berman, managing partner at Hagens Berman. , representing the proposed class of college students. “Housing is a basic human right, not a metric for companies to gamble on for profit. RealPage’s algorithm allowed her and the other defendants in our lawsuit to rig the rental market.”

The lawsuit quotes Dave McKenna, vice president of student housing at RealPage, as saying, “Student housing has some of the most demanding operational needs in the apartment building industry,” which is compounded by a different rental cycle, renting by the bed rather than by the unit. , limited same-tenant renewals, and a smaller customer base that is limited by the student population and further limited by on-campus housing requirements, enrollment changes, and unique time-sensitive needs.

RealPage’s platform and algorithm provided an unprecedented method for landlords to track competitor rents and negotiate to respond to changing rates in real-time, on the fly. In RealPage’s words, landlords provided data “as fine and granular as grains of sand,” including rents for each unit and each floor plan, lease terms, amenities, check-in and check-out dates. In presentations, RealPage emphasized that its software and related information sharing allows landlords to maximize profits by getting higher rents than they might otherwise get.

“In a competitive market, this strategy would quickly fail,” the lawsuit says. “…units that are listed at above market price will remain vacant and the property manager will eventually go out of business. In the marketplace created by RealPage and the Landlords, each Landlord had mutual assurances that the other Landlords would also maintain high prices, leaving students with no choice but to pay what the Landlords demanded.”

Calculated crime

According to the lawsuit, RealPage said its revenue management software provides a 2-7% market revenue beat, and one landlord named as a defendant in the lawsuit said, “Over the past 10 years, covering approximately 150 projects, the services what [RealPage] provided that approximately 90% of these projects will have an ROI of around 300%.” Campus Advantage says on its website that the average rent has increased by 8.3% in the more than 240 communities it has managed since 2003.

“There is no mistake in this. This is a planned crime,” Berman said. “An increase of two to seven percent may seem small, but it should be large enough to be profitable, but not too large to negatively affect the solvency of the market. We believe that RealPage and its associates know exactly what they have done and have calculated exactly how much they can squeeze out of the rental market in each college town without completely disrupting it.”

The lawsuit seeks refunds from those who were charged rent increases because of the scheme, and seeks to hold the companies liable under the federal antitrust law, the Sherman Act, which can increase punitive damages.

Learn more about the class action lawsuit against student housing landlords on behalf of those who pay rent near campuses.

About Hagens Berman

Hagens Berman is a global law firm that practices complex plaintiffs’ rights litigation and is committed to achieving real results for those affected by corporate negligence and fraud. Since its founding in 1993, the firm’s determination has earned it numerous national awards, accolades, and designations as “Most Feared Plaintiff’s Firm,” MVP, and Pioneer in Class Action Law. More about the law firm and its successes can be found at www.hbsslaw.com. Follow the updates and news of the firm at the address @ClassActionLaw.