Mary Marks stands outside her apartment building June. Marks, whose rent has increased 23% in the previous year and a half, noticed that her lease contained an addendum, a waiver baring her from participating in or bringing any class-action lawsuits against her landlords.
Jennifer Buchanan | Seattle Times/TNS
SEATTLE — In the wake of antitrust concerns about a rent-setting software used by some of the nation’s largest landlords, renters across the country have been joining dozens of class-action lawsuits against the companies involved.
Issaquah tenant Mary Marks, whose rent had shot up 23% in the previous year and a half, suspected the algorithm could be behind her rent increase.
Her property management company, Avenue5, was named along with the software maker RealPage in one of the lawsuits filed in Seattle. Late last year, Marks wondered if she could join a lawsuit against the property manager.
Then, she discovered something she had never noticed in her lease.
A one-page addendum buried in the agreement said she had waived her right to bring or join “any purported class-action lawsuit” against her landlord or the landlord’s “agents.” She could only sue individually.
“It means that we have no rights as a collective group,” Marks said in an interview. “As an individual, I don’t have the power or funding to go fight it head-on.”
Scores of renters may be in a similar position, as some large landlords required tenants to sign away their right to participate in class-action lawsuits even before the RealPage lawsuits. Experts say the agreements are less common in leases with landlords who only rent to a handful of tenants. They are likely to appear in leases with the country’s largest property owners and managers — players that have snapped up properties nationwide in recent years.
While tenants could theoretically refuse to sign a lease including a waiver, the prospect of having to find another rental is a tall order in expensive markets like Seattle.
When it was time for Marks to renew her lease this year, she tried to avoid signing the waiver, but she said the online leasing system wouldn’t allow her to proceed without her signature accepting the waiver.
“It’s all or nothing with the lease,” Marks said. “You either take everything they have or nothing — and (nothing) means you have to move.”
Local and national landlord groups, as well as property management companies using the waivers locally, either did not respond to interview requests or declined to make anyone available for an interview.
Behind the waivers
Marks’ lease and two others viewed by The Seattle Times bear the logo of the National Apartment Association, a 95,000-member landlord industry group. The NAA says its “click and lease” platform is used by 3,000 management companies at 25,000 properties and 6 million units.
NAA general counsel Ayiesha Beverly said in a statement that the organization’s lease is “meticulously reviewed to ensure compliance with all federal, state and local laws and strictly updated to reflect changes to legal precedent, laws and regulations.” The NAA declined to answer further questions.
The NAA appears to have added the class-action waiver in 2018, according to a presentation on its website. The language hadn’t appeared in Marks’ first lease in 2019, but has appeared in each lease renewal since.
It’s hard to say precisely how many tenants like Marks are subject to similar waivers. Steve Berman, the attorney representing Seattle tenants who sued RealPage, a data analytics and software company, says about three-quarters of the more than 100 leases his office has reviewed included the waivers.
“The reason they do these clauses is to avoid having to answer to anyone,” Berman said. Individual tenants likely won’t have enough at stake for an attorney to take their case, but a group of tenants can change the equation. “These clauses take the power away from the people to seek remedies for injustice. They’re just horrible.”
RealPage software gathers information about rental units and rent prices and uses an algorithm to recommend how much landlords should charge for a given apartment each day, according to lawsuits against the company and reporting by the nonprofit investigative news outlet ProPublica. RealPage also hosts a user group where property managers using the software, who might otherwise be competitors, can communicate with each other, the lawsuits allege.
The lawsuits filed against RealPage and some of the country’s largest landlords and property managers allege that cooperation among property owners and managers using the software to share “competitively sensitive” information amounted to a cartel that inflated rents. RealPage has denied the allegations. Many of the cases, which seek class-action status, have been moved to federal court in Tennessee.
Greystar and Avenue5, two property management companies that have used the waivers in Seattle, did not respond to requests for comment.
Binding waivers
The cases against RealPage could open the door for a debate on the waivers.
When attorneys representing RealPage and other companies named in the cases listed their defenses in court filings, they included the fact that tenants “are subject to binding class-action waivers.”
Indeed, some Seattle renters suing RealPage had waivers in their leases, Berman said, but he hopes to convince the court to find those waivers unenforceable. If that’s not successful, he argues that the renters can still sue the other companies named in the case, those they didn’t sign any lease with. Berman said that tactic has worked in cases against car manufacturers.
Class-action waivers have become widespread in recent years, from airlines, ride-hailing apps and cellphone carriers to workplaces, as businesses increasingly take steps to “try and protect” themselves from class-action lawsuits, said Jeff Feldman, a University of Washington law professor and attorney who has defended against class-action lawsuits.
Property leases in Washington can’t require tenants to waive rights and remedies they have under state landlord/tenant law, but the law doesn’t mention class-action waivers. Courts have weighed in on waivers in other contexts, but not those in property leases, Feldman said. In other words: There is no clear answer yet about whether these waivers are enforceable in court.
“From the landlord’s perspective, it’s just a little more ink. There’s no cost to including the waiver,” Feldman said. “Even if there’s only a 1 in 1,000 chance that you will get sued in a class action, there’s no reason not to at least try to get that protection built into the contract if you can.”
Courts have mostly sided with businesses and upheld class-action waivers, Feldman said. But last fall, a division of the Washington Court of Appeals sided with a Domino’s Pizza semitruck driver in Kent who filed a lawsuit against the company seeking class-action status even though he had signed an arbitration agreement with a class-action waiver when he started his job.
The court found the agreement unenforceable because it “frustrates our state’s public policy of protecting workers’ rights to undertake collective actions and ensure the proper payment of wages.”
That decision signals that some courts in Washington may be more willing to throw out class-action waivers than courts in other states or the U.S. Supreme Court, Feldman said. It is “highly suggestive about what the courts in Washington may do (on) this issue,” Feldman said.
“If I were a plaintiff’s class-action lawyer and a group of tenants came to me and asked me about this, I would tell them … the law in this area in Washington is unclear,” he said. “It might well be worth challenging them and getting a court determination. It seems likely that will happen at some point.”
