RealPage Sues Berkeley Over Ban on Rental Pricing Software

RealPage, a prominent real estate software company, has taken legal action against the city of Berkeley, California, over a newly enacted ban on rental price-setting software. The lawsuit, filed on Wednesday in federal court, challenges the city’s ordinance, which tenant advocates argue could enable landlords to collude in raising rents. According to a statement from RealPage, the company views the ban as a direct threat to its business model, leading them to seek an injunction to prevent the ordinance from taking effect.

This lawsuit is the latest in a series of legal challenges faced by RealPage, as the company is already embroiled in multiple antitrust lawsuits from renters and has been targeted by a broader investigation from the U.S. Department of Justice over concerns related to price-fixing. The action also signals a potential legal battle with other cities, such as San Jose, that are considering similar restrictions.

RealPage’s software is designed to assist landlords by analyzing rental data to recommend optimal pricing strategies. Landlords who are customers of the company share their rental data, which RealPage aggregates and uses to suggest whether rents should be increased or decreased, or if it may be more profitable to leave units vacant temporarily to attract higher-paying tenants later. The company maintains that its recommendations are based on publicly available data and that its software complies with legal standards, rejecting any claims of involvement in price-fixing.

The company’s lawsuit against Berkeley argues that the ordinance, which prohibits the use of such software, violates the First Amendment by infringing on RealPage’s right to provide lawful recommendations to its customers. Stephen Weissman, outside counsel for RealPage, stated in a press call on Wednesday that the ordinance effectively curtails the company’s ability to offer advice to landlords, which he argued constitutes protected speech.

However, legal experts have questioned whether this “free speech” argument will hold weight in court. David Meyer, an antitrust lawyer based in Washington, D.C., noted that the issue at hand is not the content of the recommendations but the broader implications of such advice in manipulating market prices. “There is not a First Amendment defense to price-fixing allegations,” Meyer commented.

Related: Washington State Considers Ban on Rent Pricing Software Amid Federal Lawsuit

Additionally, RealPage contends that Berkeley’s decision to implement the ban was based on “false claims” about its software, with Weissman stating that the company was not given an opportunity to present evidence or engage in discussions prior to the city’s council vote on the ordinance in mid-March. “We had no opportunity whatsoever to participate, to present facts,” Weissman said, criticizing the city for what he viewed as a hasty decision-making process.

As of Wednesday morning, Berkeley city officials had not been formally served with the lawsuit. A spokesperson for the city confirmed this but did not provide further comment on the matter.

The controversy surrounding RealPage comes amid broader debates over housing affordability in the Bay Area, with rising rents becoming a key issue for many local governments. The ordinance passed by Berkeley is part of a larger trend in the region, as progressive lawmakers and tenant advocates push to regulate landlord practices. However, RealPage argues that the blame for high housing prices lies elsewhere, pointing to the region’s ongoing housing shortage. The company’s lawsuit claims that municipalities are seeking scapegoats for their own role in restricting the housing supply.

Berkeley has long struggled with balancing housing development and affordability. While recent years have seen a shift toward more pro-housing policies, with leaders like former mayor Jesse Arreguin and current mayor Adena Ishii pushing for increased construction, the city has also strengthened tenant protections. In November, voters passed Measure BB, which mandates that landlords negotiate with unionized tenants and increases eviction protections for renters.

While RealPage is currently focused on halting the Berkeley ban, the company has signaled that it may take similar action against other cities, including San Francisco, Philadelphia, and Minneapolis, which have enacted similar restrictions. Weissman stated, “Everything is on the table,” suggesting that the company is prepared for a prolonged legal battle if necessary.

With other California cities, such as San Diego and San Jose, also considering their own bans on RealPage and similar software, the outcome of this lawsuit could have broader implications for the future of rental pricing technology and tenant protection laws across the state.

Source: Sillicon Valley