Lee Schwalb LLC Secures Dismissal of Antitrust Claims on Behalf of Texas Property Management Client

Lee Schwalb LLC is pleased to announce that, together with co-counsel representing similarly situated defendants, we recently obtained an order from the United States District Court for the Western District of Washington dismissing all claims against our client, a Texas-based multifamily residential property management company, in a high-profile class action antitrust proceeding.

Background

The consolidated litigation, captioned In re Yardi Revenue Management Antitrust Litigation, is pending before Judge Robert S. Lasnik in Seattle. Plaintiffs filed class action claims against Yardi Systems, Inc. and dozens of property management companies across the country, alleging that the defendants' use of Yardi's RENTmaximizer revenue management software constituted an unlawful conspiracy to fix multifamily rental prices in violation of Section 1 of the Sherman Act. The plaintiffs' theory is that landlords who subscribe to RENTmaximizer collectively "outsource" their pricing decisions to a shared algorithmic system, and that doing so amounts to coordinated, anticompetitive price-setting.

The Motion

Our client, a Texas-based limited liability company that owns and manages multifamily residential communities exclusively within Texas, had no properties, employees, offices, or business relationships in Washington State. It had never set rental prices for Washington properties, never used Yardi's software in connection with any Washington property, and had no contact with any of the Washington-based co-defendants prior to this litigation.

On behalf of our client and in coordination with counsel for nine other similarly situated out-of-state limited liability companies, we moved to dismiss for lack of personal jurisdiction on two independent grounds. First, neither general nor specific jurisdiction existed under Washington's long-arm statute or the Due Process Clause, because our client had never purposefully directed any activity toward Washington. The plaintiffs' sole alleged connection, shared use of a third-party software platform, is constitutionally insufficient to subject a company to suit in a state with which it otherwise has no meaningful relationship. Second, Section 12 of the Clayton Act, which plaintiffs invoked to establish nationwide jurisdiction, does not apply to limited liability companies. By its plain terms, Section 12 authorizes nationwide service of process only in proceedings "against a corporation," and every court to have squarely considered the question has declined to extend that provision to LLCs and other non-corporate entities.

The Outcome

The Court granted the motion and dismissed all claims against our client and the other non-resident LLC defendants. The ruling is a straightforward and correct application of constitutional due process principles and the plain language of the Clayton Act.

Our Commitment

Lee Schwalb LLC regularly represents businesses facing complex commercial and regulatory litigation. We are proud to have achieved this result for our client and welcome inquiries from companies navigating similar challenges.