A federal court ruling blocking part of New York’s algorithmic rent-setting law has introduced a constitutional complication into efforts to police automated pricing.
In a Sept. 29 decision in RealPage Inc. v. James, U.S. District Judge Valerie Caproni preliminarily barred New York Attorney General Letitia James from enforcing a provision that prohibits landlords from using software recommendations to set rental prices, on grounds that such advice is commercial speech protected by the First Amendment. But she left intact a separate prohibition on facilitating agreements among competing landlords not to compete.
The ruling exposes a tension policymakers increasingly face as they try to regulate pricing algorithms. Governments can prohibit anticompetitive conduct, but restrictions that reach the communication of pricing recommendations may require a separate constitutional justification.
New York enacted the law in October 2025 as an addition to its Donnelly Act antitrust statute. It targets software that performs a “coordinating function,” such as collecting rental information from independent landlords, processing that information and recommending rents, occupancy levels or other lease terms.
The distinction between the law’s two prohibitions proved key to Caproni’s ruling. Section 2 of the law addresses facilitating an anticompetitive agreement, including through software. Section 3 treats a landlord’s setting or adjusting lease terms based on recommendations from coordinating software as an unlawful agreement.
RealPage, which licenses rent-recommendation software to property owners and managers, sued in November 2025. It argued that the law suppresses protected advice. New York countered that the statute regulates anticompetitive conduct rather than speech.
Caproni accepted RealPage’s claim that the landlord provision effectively prevents it from communicating pricing recommendations. She classified those recommendations as commercial speech, triggering intermediate scrutiny rather than the more demanding test generally applied to restrictions on noncommercial expression.
That standard requires a reasonable fit between the government’s objectives and its chosen restrictions. New York’s interests in protecting competition and consumers were substantial, Caproni acknowledged. But the problem was the provision’s breadth, she said. It did not distinguish recommendations using public information from those relying on competitors’ confidential data.
“Although it is a close call,” Caproni wrote, RealPage was “marginally, likely to succeed on the merits.”
The Justice Department’s separate settlement with RealPage helps explain why that distinction matters. Announced in November 2025, the agreement requires restrictions on the use of competitors’ nonpublic information in pricing operations, required changes to features that limited price decreases or aligned competitors’ pricing, and the naming of a compliance monitor.
“Competing companies must make independent pricing decisions,” Assistant Attorney General Abigail Slater said when announcing the agreement.
According to Caproni’s opinion, the settlement became a final judgment in May 2026. Since then, RealPage had shifted toward recommendations using customers’ own information and public data, with limited exceptions. The constitutional dispute therefore concerns the reach of New York’s prohibition over advice produced under that changed model.
In another twist, however, Law360 reported Oct. 14 that James had requested reconsideration and sought to vacate the injunction. Subsequent reporting said RealPage opposed that request, urging the court to preserve its ruling.
Frankfurt Kurnit attorney Peter Devlin identified potential implications for personalized pricing restrictions beyond housing, particularly laws reaching recommendations supplied by vendors or used by businesses. Those implications remain untested; Caproni did not decide the constitutionality of other pricing laws.
Nor did the ruling immunize algorithmic price-fixing. The prohibition on facilitating actual anticompetitive agreements remains enforceable, and the injunction is preliminary.
Caproni also left New York an opening to provide a stronger explanation of why restricting recommendations based primarily on public data advances its competition objectives. For regulators, the challenge is to connect restrictions on algorithmic advice to demonstrable pricing harms. For vendors and users, protected advice remains distinct from an unlawful agreement to coordinate prices.
