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SDNY Enjoins Landlord Provision Of New York’s Algorithmic Pricing Law On First Amendment Grounds
11/03/2026On September 29, 2026, Judge Valerie Caproni of the U.S. District Court for the Southern District of New York sided in part with RealPage, a rental-pricing software provider and recent antitrust defendant, in its challenge to N.Y. Gen. Bus. Law Section 340-B—a new amendment to the Donnelly Act, New York’s state antitrust statute. RealPage, Inc. v. James, No. 1:25-cv-09847 (VEC) (S.D.N.Y. Sept. 29, 2026). The Court preliminarily enjoined enforcement of subsection B3, the provision directed at landlords, and denied the New York Attorney General’s motion to dismiss. The Court found that plaintiff RealPage is likely to succeed on its claim that part of the statute violates the First Amendment by restricting the algorithm-generated pricing recommendations the company provides to landlords.
Plaintiff licenses AI-powered software that recommends rents to residential landlords based on user-supplied and publicly available data. In October 2025, New York enacted Section 340-B, which has two operative provisions. The first, Section 340-B(2) (“Section B2”), targets software providers and other facilitators: it bars anyone from facilitating agreements between competing landlords not to compete on rental pricing, including by operating software that performs a “coordinating function.” The second, Section 340-B(3) (“Section B3”), targets landlords themselves: it treats a landlord’s setting or adjusting of rents or other lease terms based on that software’s recommendations as an unlawful agreement. Plaintiff challenged the statute on First Amendment grounds, facially and as applied, and moved for a preliminary injunction.
The SDNY standard to obtain a preliminary injunction requires a plaintiff to show (1) a likelihood of success on the merits, (2) irreparable injury, (3) that the balance of hardships favors the plaintiff, and (4) that an injunction serves the public interest. In First Amendment cases, likelihood of success is the dominant, if not the dispositive, factor. Commercial speech restrictions face intermediate scrutiny, which asks whether the speech concerns lawful activity, whether the government interest is substantial, whether the regulation directly advances it, and whether it is more extensive than necessary.
Plaintiff argued that the statute treats its recommendations as an unlawful agreement and is a “textbook” example of an overbroad, content-based speech restriction that fails both strict and intermediate scrutiny. The Attorney General responded that the statute regulates antitrust conduct, not speech, and, alternatively, that if it regulates speech, it regulates commercial speech which survives intermediate scrutiny.
The Court found that plaintiff is “marginally” likely to succeed on the merits of its challenge to Section B3, but not its challenge to Section B2. The Court held that Section B2 survives because it only “clarifies” that facilitating price-fixing through software is illegal, and unlawful activity receives no First Amendment protection. By contrast, Section B3 applies to lawful activity: taking as true plaintiff’s allegation that the statute effectively bars its price recommendations, which are built almost entirely from public data, the Court held that Section B3 regulates protected commercial speech.
The Court accepted that the State’s interest is substantial, but it found the State’s showing on reasonable fit insufficient because less restrictive means—such as limiting the ban to software that uses competitors’ nonpublic data—were available. Because Section B3 treats all pricing software the same, whether it relies on public data or on competitors’ nonpublic data, the Court concluded that it is likely unconstitutional on its face. The Court also found that plaintiff had standing to sue on behalf of itself and, under the First Amendment overbreadth exception, its customers.
The ruling leaves Section B2’s ban on software-facilitated price-fixing in place, while barring the State from enforcing Section B3 against landlords who set or adjust rents based on recommendations from coordinating software. The Court signaled the State could still prevail on Section B3 with a better explanation of the harm from algorithms relying mainly on public data. Plaintiff continues to face state enforcement actions and multidistrict litigation brought by renters.
Antitrust Litigation