Two prominent Chicago-based rental property management companies have been looped into an expanded antitrust lawsuit lodged by the U.S. Justice Department, Illinois' attorney general, and other states, accusing landlords from across the country of allegedly using property management software provided by RealPage to conspire to keep rents artificially high in Chicago and other cities across the country.
The amended complaint enlarged the original lawsuit to now include six of the largest residential rental property management companies from across the U.S.
According to the Justice Department, these six firms hold more than 1.3 million apartments and other rental homes in 43 states and the District of Columbia.
The list of additional defendants in the action now includes the Chicago-based companies of Cushman & Wakefield, along with its Texas-based subsidiary, Pinnacle Property Management Services; and LivCor LLC, which is itself a subsidiary of real estate and private equity giant, Blackstone.
Other rental property management and ownership firms targeted in the expanded lawsuit included Camden Property Trust, of Houston; Cortland Management LLC, of Atlanta; Greystar Real Estate Partners LLC, of Charleston, South Carolina; and Willow Bridge Property Company LLC, of Dallas.
The Justice Department first filed suit in August 2024 against RealPage alone, accusing the company of violating federal antitrust laws by providing software products that allegedly allowed corporate landlords to improperly share proprietary information and coordinate actions to set apartment rent prices artificially high, regardless of actual market conditions.
The state attorneys general of North Carolina, California, Colorado, Connecticut, Minnesota, Oregon, Washington and Tennessee joined the U.S. Attorney General Merrick Garland in the original action.
“Americans should not have to pay more in rent because a company has found a new way to scheme with landlords to break the law,” Garland said at the time the suit was filed.
After months of proceedings and presumably further investigations and discovery, the Justice Department revised the lawsuit to now include the large corporate residential landlords.
In the new complaint, the attorneys general of Illinois and Massachusetts have added their states to the list of states joining in the action.
“Access to affordable housing is a basic human right. It is unacceptable that the people of Illinois should have to pay higher rental rates because a scheme to utilize new technology and break a long-standing law has stacked the odds against them,” Raoul said in a statement announcing Illinois' participation in the five-month-old legal action.
According to the complaint, executives and other representatives of the property management companies allegedly used RealPage's market tracking software to coordinate rents and other offerings to tenants.
The complaint asserts that senior managers at Cushman and other property management firms participated in so-called "market surveys" which allegedly gave participating companies "insight into the very specific handful of competitors closest" to specific properties, allowing them to set common rents.
The complaint, for instance, provided details from an alleged "February 2020 industry event" at which "representatives from Cushman & Wakefield and two other landlords shared tips on collecting information on concessions and net effective rents from competitors."
The complaint said: "The suggestions included bi-weekly and monthly meetings with competitors, sponsored 'cocktail hours for regional competitors to share info and build relationships and rapport,' and using Google Drive documents to share information on a weekly basis."
The federal and state complaint asserted: "... The representatives cautioned that the collected data was used to make 'major decisions about pricing,' so the landlord employees collecting data should be trained accordingly to ask such questions as 'are you seeing a slow down?' and 'are you adjusting pricing?'" (sic)
"Some landlords engage in even more sensitive communications about price, demand, and market conditions," the complaint said. "These communications are not isolated instances at a specific property. Rather, they are conversations at the corporate revenue management level about strategies and approaches to market conditions that apply to the landlords' business across all markets."
The complaint further asserts the property managers and RealPage allegedly were aware their actions could violate federal and state "price-fixing" laws. The complaint includes an instance in which an unidentified representative of the Cushman firm allegedly appeared to scoff at that notion, however.
The lawsuit accuses RealPage and the landlords of violating federal and state antitrust laws, including the Illinois antitrust act.
The governments are seeking penalties and damages allowed under those laws.
The Justice Department indicated it has already reached an agreement with one of the landlords, Cortland, that would resolve the claims against that company. That agreement is awaiting action from the federal court to approve the so-called "consent decree."
Neither Cushman & Wakefield nor LivCor responded to requests for comment from The Record concerning the lawsuit.