Key Takeaways
- RealPage has filed a lawsuit against Berkeley, California, claiming its rent pricing ordinance is unconstitutional.
- The ordinance, set to take effect on April 24, bans the use of pricing algorithms by landlords.
- RealPage argues the city did not allow them to contribute to discussions prior to the ordinance’s enactment.
RealPage Takes Action Against Berkeley’s Ordinance
RealPage, a software and data provider based in Richardson, Texas, is challenging a newly passed ordinance in Berkeley, California, which it argues unconstitutionally restricts lawful speech. The company filed a suit in U.S. District Court, asserting that the regulation effectively bans its revenue management software following what it deems an “intentional campaign of misinformation.”
The Berkeley City Council approved the ordinance on March 25, which prohibits landlords from using automated pricing algorithms to determine rent and occupancy levels for residential units. The law is poised to go into effect on April 24 unless intervened by the court.
City Councilmember Ben Bartlett emphasized that businesses employing “dynamic pricing systems that prioritize profits over people” will incur fines of $1,000 per violation. This statement reflects the council’s perspective on the potential negative impact of such technologies on renters.
In their lawsuit, RealPage contends that the ordinance violates the First Amendment by imposing content-based restrictions on free speech, specifically regarding recommendations and advice about rent pricing. Antitrust attorney Stephen Weissman, representing RealPage, argued that Berkeley’s actions restrict advice provided by the company to its clients. He explained, “Berkeley is trying to enact an ordinance that prohibits speech in the form of advice and recommendations from RealPage to its customers.”
Weissman further elaborated that the ordinance prohibits information without considering if that information facilitates lawful conduct. By doing so, he argues it necessitates the court’s application of a higher standard to evaluate free speech restrictions. He highlighted the lack of engagement from the city, stating that his attempts to communicate with city officials were ignored, denying RealPage any chance to voice its concerns during the ordinance’s draft process.
Moreover, Weissman hinted that RealPage might pursue legal action against other cities, including San Francisco, where similar restrictions against its software have been established. He remarked, “Everything is on the table,” indicating the company is weighing its legal options carefully.
RealPage’s lawsuit underscores a growing tension between tech companies and municipal governments over regulations affecting the housing market, raising questions about the balance between tenant protections and corporate freedoms in providing rental technology solutions. The outcome of this legal battle may have significant implications not only for RealPage but for other technology firms facing similar regulatory challenges across jurisdictions.
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