Yardi's RENTmaximizer Accused of Inflating Rents in Multi-Million Dollar Lawsuit

In a legal battle that could reshape the landscape of the multifamily housing rental market, McKenna Duffy, a tenant, has filed a class-action lawsuit against Yardi Systems, Inc., and a group of property management companies.

The suit, filed on September 8, 2023, in the United States District Court for the Western District of Washington, alleges that the defendants conspired to use Yardi's RENTmaximizer software to artificially inflate rental prices across the nation.

The plaintiff, McKenna Duffy, alleges that the software, which is designed to help landlords optimize rental pricing, was instead used by the defendants to eliminate competition and coordinate pricing. According to the complaint, "RENTmaximizer outsources pricing decisions to Yardi, leading to supracompetitive pricing across a group of landlords."

The defendants in the case include a host of property management companies such as Bridge Property Management, LLC, Calibrate Property Management, LLC, Clear Property Management, LLC, Dalton Management, Inc., HNN Associates, LLC, LeFever Mattson, Manco Abbott, Inc., Morguard Corporation, Pillar Properties, LLC, Summit Management Services, Inc., Creekwood Property Corporation, Legacy Partners, Inc., and Jones Lang Lasalle Incorporated.

The lawsuit alleges that the defendants' use of the software led to a widespread increase in rental prices. "Economic analysis confirms that the usage of RENTmaximizer results in higher prices for users," the complaint reads. The lawsuit also suggests that studies show that "industry-wide usage of a shared pricing algorithm leads to anticompetitive effects."

The plaintiff argues that these actions violated Section 1 of the Sherman Act, which prohibits any agreement that restrains trade. The complaint states, "Defendants' conduct constitutes a per se violation of Section 1 of the Sherman Act, 15 U.S.C. § 1, because it involves an agreement among competitors to fix, raise, stabilize, or maintain prices."

The lawsuit also alleges a violation of the same section of the Sherman Act for conspiracy to exchange competitive information. "Defendants have conspired to exchange competitively sensitive information and coordinated their multifamily rental prices," the complaint alleges.

The plaintiff seeks damages for the harm caused by the alleged anticompetitive behavior. The complaint states, "Plaintiff and the Class Members are entitled to damages, including treble damages, for the injuries they suffered as a result of Defendants' violations of the antitrust laws."

The lawsuit also seeks injunctive relief, which would prevent the defendants from continuing their alleged anticompetitive behavior. The complaint reads, "Plaintiff and the Class Members are entitled to injunctive relief prohibiting Defendants from continuing to engage in the unlawful conduct complained of herein."

The class in this lawsuit is defined as all persons who leased multifamily residential real estate units directly from a defendant or co-conspirator from September 8, 2019, through the present.

This case serves as a stark reminder of the potential for technology to be used in ways that may harm consumers. As the legal battle unfolds, it will be interesting to see how the court navigates the complex intersection of technology, competition, and the housing market.

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