In an opinion Tuesday, Judge Caproni preliminarily enjoined New York’s Attorney General from enforcing a new law that bars landlords from setting rents based on recommendations from algorithmic pricing software, finding that RealPage, which licenses such software, is likely to succeed on its First Amendment challenge.
New York General Business Law § 340-B, enacted in 2025 to address rising rents and lengthy apartment vacancy periods, contains two operative provisions. Section 2 bars facilitating agreements among competing landlords not to compete on price, including through software. Section 3 separately makes it unlawful for residential landlords to set or adjust rents based on recommendations from software that performs a “coordinating function.” RealPage licenses AI-powered software that generates rent and occupancy recommendations for residential landlords. Since settling with the Department of Justice, RealPage transitioned away from using non-public data, except in limited circumstances. RealPage argued that the Statute violates the First Amendment by restricting protected speech in the form of algorithmically generated pricing recommendations.
Judge Caproni called it a “close call,” but concluded that, on the current record, RealPage was likely to succeed on its challenge to Section 3. Although the court recognized New York’s substantial interests in combatting algorithmic price-fixing, strengthening its antitrust laws, and addressing the affordable-housing crisis, it found that the Statute likely “‘prohibits a substantial amount of protected speech’ relative to its legitimate sweep.” In the court’s view, Section 3 targets software-generated pricing recommendations in an “undiscerning” manner, without regard to whether they are based on public or non-public data:
As written, under the rubric of preventing price fixing, the Statute prohibits normal commercial conduct just because it is facilitated by software. Whether one is considering a residential landlord or a manufacturer of widgets, there is nothing untoward about considering prices charged by competitors when deciding how to price one’s own product. Nevertheless, as written, Section 3 makes it unlawful for a residential landlord to accept the recommendation of a consultant hired to: collect public data regarding rental prices in the area, evaluate that data using software, and make a recommendation about optimal rent prices.
The court reached a different conclusion as to Section 2, reasoning that it merely clarifies that existing prohibitions on price-fixing apply when unlawful coordination is carried out through software.