SDNY Blocks Part of New York’s Algorithmic Rent Law on First Amendment Grounds in RealPage, Inc. v. James

Southern District of New York • No. 25-CV-09847 (VEC) • September 29, 2026

On September 29, 2026, Judge Valerie Caproni preliminarily enjoined enforcement of the provision of New York General Business Law § 340-b that treats landlords’ reliance on certain software-generated rental recommendations as an unlawful agreement. The court left the separate prohibition on facilitating agreements among competing landlords outside the injunction and denied Attorney General Letitia James’s motion to dismiss. The decision recognizes constitutional protection for algorithmic pricing advice while preserving the State’s authority to prohibit actual anticompetitive agreements.[1]

The ruling is provisional. The court described RealPage as “marginally, likely to succeed on the merits” and expressly allowed that a stronger explanation and record could sustain the challenged provision. Its central concern was the State’s justification for reaching recommendations derived from public market information. It applied the intermediate scrutiny governing commercial speech and rejected RealPage’s request for strict scrutiny.[2]

New York treats reliance on covered rental recommendations as an unlawful agreement

RealPage licenses revenue management software to residential landlords and property managers. According to the complaint and declarations summarized in the opinion, the software evaluates customer-specific property information alongside market data and recommends rents and occupancy levels. RealPage represented that users can customize recommendations and frequently reject them. New York disputed the degree of independence in practice and alleged that RealPage pressures customers to follow its recommendations. The opinion did not resolve that factual disagreement.[3]

The sources of the software’s data were central to the decision. The opinion describes RealPage’s transition from a blend of public and nonpublic information to customer-provided information and public market data following its federal antitrust settlement. It identifies limited exceptions for software development and historical data from a different market when suitable customer or nearby public data are unavailable. The court reported that the federal final judgment was entered on May 19, 2026 and that RealPage had agreed to comply before its November 15, 2026 effective date. Other providers are not bound by that judgment. These are the deciding court’s descriptions of the settlement and RealPage’s operations.[4]

New York enacted § 340-b on October 16, 2025. Its definition of a “coordinating function” requires three elements: collecting specified rental information from at least two sufficiently independent owners or managers, computationally analyzing or processing that information and recommending rental prices or other lease terms. The definition includes algorithm training. It excludes products used to establish rent or income limits under specified rent-regulation laws or government-administered affordable-housing programs. The statutory text does not distinguish public information from competitors’ nonpublic information.[5]

Subdivision 2 prohibits knowingly or recklessly facilitating an agreement among two or more rental owners or managers not to compete. Its examples include operating or licensing software performing a coordinating function. Subdivision 3 separately deems it an unlawful agreement for an owner or manager knowingly or recklessly to set or adjust rental terms based on recommendations from such software. The court’s analysis turns on the difference between facilitating an actual agreement and treating reliance on advice as an agreement by statutory definition.[6]

RealPage sued on November 26, 2025 and moved for a preliminary injunction on December 5. New York agreed to hold enforcement pending the decision. James moved to dismiss on January 9, 2026. RealPage sought facial relief and alternative relief confined to itself and its customers. The September 29 order resolves the preliminary-injunction request and the dismissal motion. It does not enter final judgment declaring the law unconstitutional.[7]

Threatened self-censorship gives RealPage standing to challenge the law

The court found RealPage’s alleged need to withdraw or materially change its New York products sufficient to establish an imminent self-censorship injury. It also permitted RealPage to assert its customers’ interests in the facial challenge under the First Amendment exception to ordinary third-party-standing restrictions. The court considered the customer evidence barely sufficient. RealPage supplied an employee declaration without customer declarations or supporting facts showing that customers had actually refrained from receiving advice. It expressly invited better substantiation as the case develops.[8]

Because the court found the facial challenge likely to succeed, it did not decide whether RealPage could assert its customers’ rights through an as-applied challenge. It denied dismissal for lack of subject-matter jurisdiction because the constitutional claim was substantial enough to invoke federal-question jurisdiction. It also denied dismissal for failure to state a claim because the alleged operation of the software and the statutory restriction plausibly connected the law to protected expression. Those rulings allow litigation to continue without resolving the ultimate merits.[9]

The court treats the restriction on using advice as a burden on speech

New York’s threshold position was that the statute regulates commercial conduct. Subdivision 3 addresses the act of setting rental terms after consulting software. The court acknowledged that the provision does not expressly prohibit communication. Nevertheless, it accepted RealPage’s allegation that the provision effectively prevents the company from making recommendations. On that assumption, it treated the resulting recommendations as speech despite their delivery through software or an algorithm.[10]

This reasoning concerns the communicated pricing recommendation. The opinion does not establish that every computational operation is expression or that software has an independent constitutional entitlement to operate. Its focus is RealPage’s communication of advice to landlords and the practical burden imposed when the law prohibits acting on that advice. The conditional phrasing matters because the speech-versus-conduct determination supplies the premise for every later scrutiny question.

There is a substantial argument on each side of that characterization. New York can point to the distinction between regulating an economic transaction and restricting what a consultant may say. In Rumsfeld v. Forum for Academic & Institutional Rights, Inc., the Supreme Court upheld an access requirement governing military recruiters despite its incidental effects on law schools’ communications. RealPage can point to Sorrell v. IMS Health Inc., where restrictions on selling, disclosing and using prescribing information burdened protected expression even though they formed part of commercial regulation. The relevant inquiry is how this law burdens communication and independent economic decisionmaking. Its placement in an antitrust statute cannot by itself answer that inquiry.[11]

The opinion leaves statutory ambiguities that could affect that analysis. It questions whether subdivision 3 reaches only exclusive reliance on a software recommendation or also a landlord’s consideration of that recommendation among several inputs. It also questions the reach of subdivision 2 when a provider requires customers to remain independent competitors. A definitive construction of those provisions could change both the amount of speech affected and the fit between the restriction and the asserted harm.[12]

The court applies intermediate scrutiny to RealPage’s pricing advice

The court classified RealPage’s recommendations as commercial speech because they concern the economic interests of both the provider and its landlord customers. RealPage seeks to increase the usefulness and value of its product. Landlords use the recommendations to optimize revenue. Applying Central Hudson Gas & Electric Corp. v. Public Service Commission, the court therefore required New York to justify restrictions on lawful and nonmisleading advice under intermediate scrutiny.[13]

The classification is consequential and warrants a qualification. A financial motive alone does not make expression commercial speech. Bolger v. Youngs Drug Products Corp. treats economic motivation as one consideration within a broader inquiry. RealPage’s individualized recommendations concern specific lease transactions and business decisions. That context strengthens the commercial-speech characterization beyond the mere fact that advice is sold. The opinion’s brief discussion, however, does not closely examine the boundary between commercial proposals and paid analysis. It should not be generalized to all economically valuable information.[14]

RealPage sought strict scrutiny on three grounds. It alleged discrimination by subject matter because the law targets rental advice, discrimination by speaker because it targets landlords and software providers and discrimination by viewpoint because the affordable-housing exception favors advice consistent with the State’s policy preferences. The court summarized these theories but declined to resolve them individually. Relying on the Second Circuit’s commercial-speech decisions, particularly Council for Responsible Nutrition v. James, it held that intermediate scrutiny remained appropriate even assuming content discrimination.[15]

Content discrimination and viewpoint discrimination should remain distinct in describing that result. A law may select a commercial subject without selecting an ideological position within it. The statutory exception can be understood as a distinction between regulatory-compliance services and market-pricing recommendations. RealPage characterized it as suppression of profit-oriented advice. The court did not expressly find that characterization correct. Its ruling therefore supplies no affirmative finding that New York engaged in viewpoint discrimination and no general holding that proven viewpoint discrimination always receives only intermediate scrutiny.

Sorrell reinforces this caution. It treated content and speaker discrimination as constitutionally significant while concluding that the restriction failed even under the commercial-speech test. A court’s use of intermediate scrutiny does not make discriminatory design irrelevant. Here the preliminary outcome did not require adopting RealPage’s broader strict-scrutiny theory because subdivision 3 failed the less demanding test on the existing record.[16]

The Supreme Court’s 2026 decision in Chiles v. Salazar sharpens the distinction between content and viewpoint. The Court required stricter review of a restriction selecting permissible viewpoints in voluntary talk therapy and rejected reliance on professional-conduct labels. It preserved the ability to regulate speech integral to independently unlawful conduct. Chiles did not classify rental-pricing advice or displace Central Hudson for commercial speech. The district court noted supplemental briefing on Chiles but did not separately analyze its implications. Whether the affordable-housing exception constitutes genuine viewpoint discrimination remains a question for a more developed analysis.[17]

The ban on facilitating anticompetitive agreements remains outside the injunction

The first Central Hudson question asks whether the communication concerns lawful activity and is nonmisleading. The district court read subdivision 2 as clarifying that an existing prohibition on anticompetitive agreements extends to software-assisted facilitation. Speech integral to an actual price-fixing agreement does not acquire constitutional immunity because software carries the communication. The court therefore ended its inquiry into subdivision 2 at this threshold and declined to enjoin it.[18]

Subdivision 3 required a different analysis because a recommendation can exist independently of any agreement among competing landlords. The court treated advice derived largely from public data as capable of supporting ordinary independent pricing decisions. The statute’s designation of reliance as an unlawful agreement could not itself resolve whether the underlying recommendation concerned constitutionally protected activity. Otherwise, the legislature could determine the speech question simply by attaching an illegality label to the practice being challenged. This is an analytical implication of the court’s separation of the two provisions.[19]

The opinion’s language that subdivision 2 “survives intermediate scrutiny” should be read in that context. It did not conduct and uphold a full four-part balancing analysis for that provision. Its conclusion was that the activity it understood subdivision 2 to prohibit fell outside the protected commercial-speech threshold. That reading also limits the apparent breadth of its approval if a future enforcement theory extends subdivision 2 beyond actual facilitation of an agreement.[20]

The court accepts competition and housing affordability as substantial state interests

The second question asks whether the government’s interests are substantial. The court accepted New York’s interests in maintaining competition and addressing housing affordability. It did not require New York to prove that pricing software is the sole cause of rent increases. It also rejected the premise that the State must address every cause of housing costs before addressing algorithmic pricing.[21]

The third question asks whether the restriction directly advances those interests. The court expressly assumed this element for purposes of decision. It discussed the legislature’s reliance on investigations and economic literature concerning algorithmic coordination. Its later discussion describes legitimate harms and potential benefits from regulation. Read together, those passages support treating direct advancement as accepted provisionally rather than as an adjudicated empirical finding that RealPage’s present products increase rents.[22]

Footnote 10 identifies the evidentiary problem that carries into the tailoring analysis. The court viewed the existing justification as relatively thin when applied to RealPage’s changed product. It called for an explanation of harms from recommendations based almost entirely on public information without nonpublic data from horizontal competitors. Evidence about a prior version of a product can establish a legislative concern while leaving unanswered whether the same concern justifies the present restriction.

New York’s preliminary showing does not justify restrictions on public-data recommendations

The fourth question asks whether the restriction is more extensive than necessary. Under Board of Trustees of the State University of New York v. Fox, the government must establish a reasonable fit between its objective and the chosen means. It need not prove that it selected the least restrictive possible approach. The district court recognized that standard and placed the justificatory burden on New York.[23]

The Second Circuit’s August 2026 decision in DoorDash, Inc. v. City of New York provides a recent illustration of that burden. It invalidated a compelled customer-data disclosure requirement after assuming that intermediate scrutiny applied. The city had failed to justify the burdens of its consent design in light of less burdensome alternatives. That decision supports scrutiny of New York’s explanation here. It does not establish that public-data pricing algorithms are harmless. The contrast with Council for Responsible Nutrition is also instructive: there the State supplied evidence matching the regulated marketing categories and a reason for rejecting a proposed alternative.[24]

New York argued that the three components of a coordinating function already target the relevant competitive danger. The court found that explanation inadequate on the preliminary record. Subdivision 3 reaches a consultant who gathers public rental prices, analyzes them with software and recommends a rent. The court regarded that example as ordinary commercial activity. Because the statute draws no distinction based on the public or nonpublic source of the data, it reaches that example along with conduct presenting more evident coordination concerns.[25]

The court identified a possible narrower measure: limiting the restriction to recommendations based on nonpublic information from competing landlords. That alternative illustrates the burden on protected advice under the existing law. It is not a judicial amendment to the statute or an order requiring the legislature to adopt that precise language. The injunction blocks enforcement of subdivision 3 as written.[26]

The State retains a meaningful response. A reasonable fit can exist even when another measure would burden less speech. New York could seek to explain why algorithmic coordination remains harmful when market inputs are public or why the proposed data distinction would inadequately address the identified mechanism. The district court expressly acknowledged that a better explanation could sustain subdivision 3 and that its three-part definition already provides some tailoring. This possibility is part of the opinion’s stated reasoning. Whether the necessary evidence exists remains unresolved.[27]

Public data do not shield actual anticompetitive agreements

The public-data distinction is central to this decision’s assessment of fit. It does not establish a general First Amendment exemption for every business practice that uses public information. Subdivision 2 remains outside the injunction. Under the court’s reading, an actual agreement not to compete would remain regulable even if its participants consulted public prices. Conversely, identifying some nonpublic input would not alone resolve every element of a separate antitrust claim. The decision evaluated a constitutional challenge to this statute on a preliminary record.[28]

The description of RealPage’s current model also requires precision. Customer-specific operational information is not necessarily public. The opinion distinguishes a customer’s own information from nonpublic information supplied by horizontal competitors and identifies limited exceptions to the settlement restrictions. Referring to the software as exclusively public-data software would overstate the record. The operative concern is the State’s justification for treating the range of covered recommendations as unlawful coordination.[29]

The facial injunction leaves the commercial speech limit on overbreadth unexplained

The court found RealPage likely to establish facial invalidity because subdivision 3 reaches a substantial amount of protected speech relative to its legitimate applications. It used that overbreadth formulation to extend its reasoning beyond RealPage’s own present product. The resulting injunction is not textually confined to enforcement against RealPage or its customers.[30]

A significant doctrinal tension arises from the court’s simultaneous classification of the affected expression as commercial speech. Fox explains that the special First Amendment overbreadth doctrine generally does not apply to commercial speech. That doctrine permits a litigant to rely on unconstitutional applications to others even when its own activity could lawfully be regulated. The district court cited Fox for reasonable fit and the relative resistance of commercial speech to chilling effects. It did not explain how its facial-overbreadth analysis fits the commercial-speech limitation. Its use of relaxed standing rules to assert customers’ rights raises a related question.[31]

That tension does not mean that every facial challenge involving commercial speech is foreclosed. A plaintiff may challenge a restriction on its own protected expression. As Fox explains, an own-speech holding based on inadequate tailoring may have a rationale broad enough to render a statute effectively unenforceable. A law reaching noncommercial expression can also present a different overbreadth question. The concern here is the route from the particular public-data applications identified by the court to relief against enforcement of the entire subdivision, including applications the opinion recognizes as legitimate. An as-applied injury, a defect in the statutory rule and the special overbreadth doctrine involve distinct inquiries.

A fuller merits analysis would benefit from specifying which route supports facial relief and identifying the relevant universe of statutory applications. Moody v. NetChoice, LLC requires attention to the law’s full range of applications when assessing a First Amendment facial challenge. The district court’s public-data consultant example provides a concrete illustration of protected activity. Its opinion offers limited analysis of how those protected applications compare with legitimate restrictions on coordination across the provision’s full reach. These are questions about the justification and breadth of relief, separate from whether RealPage has a substantial claim concerning its own recommendations.[32]

Likely First Amendment injury supports preliminary relief against enforcement

The court found likely irreparable injury in the threatened deprivation of First Amendment rights. It separately rejected anticipated business losses as a sufficient basis on the record presented. RealPage had not shown that the losses threatened its viability or would be difficult to quantify. The court also recognized commercial speech’s relative resistance to chilling while concluding that this consideration did not eliminate the constitutional injury. It found that the equities and public interest favored preliminary protection given its merits assessment.[33]

The operative order prohibits James and those acting in concert with her or at her direction from enforcing or causing enforcement of § 340-b(3). Subdivision 2 is not enjoined. The order does not adjudicate liability under other antitrust laws or displace the federal settlement described in the opinion. Its practical reach is broad within subdivision 3 because the injunction contains no plaintiff-specific limitation. Its duration and final scope remain subject to further proceedings.[34]

The central unresolved issues are the actual competitive effects of the covered software, the consequences of its data sources, the practical independence of landlords’ pricing decisions and the evidentiary basis for restricting reliance on the advice. Further proceedings may also require clarification of the statutory construction and the basis for facial relief. The September 29 order scheduled a joint submission for October 22, 2026 and an initial pretrial conference for October 30, 2026 at 10 a.m.[35]

Endnotes

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[1]   RealPage, Inc. v. James, No. 25-CV-09847 (VEC), slip op. at 1, 16–17, 25–27 (S.D.N.Y. Sept. 29, 2026), ECF No. 52 (granting preliminary relief as to subdivision 3 and denying the motion to dismiss). Page references throughout correspond to the opinion’s printed pages.

[2]   RealPage, slip op. at 13, 19–22 (finding only a marginal likelihood of success under intermediate scrutiny and allowing for a different result on a fuller justification).

[3]   RealPage, slip op. at 2–3 (describing the products and the parties’ competing accounts of customers’ independence).

[4]   RealPage, slip op. at 3 (describing the federal judgment, interim compliance and exceptions to restrictions on nonpublic information). The settlement is summarized here through this opinion. Its separate implementation record has not been independently examined.

[5]   N.Y. Gen. Bus. Law § 340-b(1)(c) (2026) (defining a coordinating function and excluding specified uses to establish rent or income limits). 2025 N.Y. Laws ch. 437, §§ 1–2 (adding the section and providing for effectiveness on the sixtieth day after enactment).

[6]   N.Y. Gen. Bus. Law § 340-b(2)–(3) (2026) (prohibiting facilitation of noncompetition agreements and separately treating reliance on covered recommendations as an unlawful agreement). RealPage, slip op. at 16–21 (analyzing the two provisions separately).

[7]   RealPage, slip op. at 1, 4–5, 26 (describing the filings and deciding the preliminary motions). Page 1 gives November 26 as the filing date. Page 4 inconsistently gives November 11. The public docket mirror (recording the complaint’s filing on November 26, 2025) corroborates page 1.

[8]   RealPage, slip op. at 11–13 & n.5 (finding standing while identifying the limited evidentiary support for customers’ asserted chilling).

[9]   RealPage, slip op. at 12 n.4, 25–26 (reserving third-party standing for an as-applied challenge and rejecting dismissal on jurisdictional and pleading grounds).

[10]  RealPage, slip op. at 13–15 & n.7 (accepting for purposes of its analysis that the restriction effectively prohibits recommendations and treating software-delivered recommendations as speech).

[11]  Rumsfeld v. F. for Acad. & Institutional Rts., Inc., 547 U.S. 47, 60–62 (2006) (upholding regulation of recruiter access despite incidental effects on communications). Sorrell v. IMS Health Inc., 564 U.S. 552, 563–71 (2011) (finding a speech burden from restrictions on prescribing information while preserving regulation of conduct and agreements in restraint of trade).

[12]  RealPage, slip op. at 14 n.6 (identifying uncertainty about independent competition and reliance on multiple sources of advice).

[13]  RealPage, slip op. at 15–16 (classifying the recommendations as commercial speech). Cent. Hudson Gas & Elec. Corp. v. Pub. Serv. Comm’n, 447 U.S. 557, 561–66 (1980) (establishing the four-part inquiry for restrictions on commercial speech).

[14]  Bolger v. Youngs Drug Prods. Corp., 463 U.S. 60, 66–68 & n.14 (1983) (considering the cumulative context and rejecting economic motivation alone as sufficient). Bd. of Trs. of State Univ. of N.Y. v. Fox, 492 U.S. 469, 482 (1989) (distinguishing commercial speech from compensated counseling, tutoring and legal or medical advice).

[15]  RealPage, slip op. at 21–22 (summarizing the discrimination theories and declining strict scrutiny). Council for Responsible Nutrition v. James, 159 F.4th 155, 163 (2d Cir. 2025) (applying intermediate scrutiny while assuming a content-based commercial-speech restriction). The Supreme Court docket in No. 25-1145 (recording a pending certiorari petition distributed for the September 28, 2026 conference) displayed no disposition when checked on September 30, 2026.

[16]  Sorrell, 564 U.S. at 565–66, 571–72 (addressing discriminatory burdens and finding the restriction unconstitutional without choosing between commercial and stricter scrutiny). RealPage, slip op. at 21–22 (declining strict scrutiny after concluding that intermediate scrutiny affords preliminary relief).

[17]  Chiles v. Salazar, 607 U.S. ___, No. 24-539, slip op. at 10–17, 23 (Mar. 31, 2026) (requiring heightened scrutiny of a viewpoint-based talk-therapy restriction and distinguishing speech integral to independently unlawful conduct). RealPage, slip op. at 5 n.3 (recording the parties’ supplemental submissions concerning Chiles).

[18]  RealPage, slip op. at 15–17 (treating subdivision 2 as reaching facilitation of independently unlawful agreements). Cent. Hudson, 447 U.S. at 563–64, 566 (limiting the protected category to lawful and nonmisleading commercial expression).

[19]  RealPage, slip op. at 15, 17, 20–21 (distinguishing pricing recommendations apart from price fixing and applying scrutiny to subdivision 3). Sorrell, 564 U.S. at 567 (recognizing that an antitrust prohibition on agreements in restraint of trade can incidentally burden speech).

[20]  RealPage, slip op. at 16–17 (ending the analysis of subdivision 2 at the lawful-activity threshold).

[21]  RealPage, slip op. at 17–19 (recognizing competition and consumer-protection interests and rejecting a requirement to address every cause of rising housing costs).

[22]  RealPage, slip op. at 18–19 & n.10 (assuming direct advancement and identifying a need for support tied to RealPage’s current product).

[23]  Fox, 492 U.S. at 476–81 (requiring a reasonable fit while rejecting a least-restrictive-means requirement). RealPage, slip op. at 19–20 (placing the burden of establishing that fit on the State).

[24]  DoorDash, Inc. v. City of New York, No. 25-81, slip op. at 18–25 (2d Cir. Aug. 5, 2026) (assuming commercial speech and finding that the city failed to justify the burdens of its disclosure requirement). Council for Responsible Nutrition v. James, No. 24-1343, slip op. at 12–16 (2d Cir. Nov. 13, 2025) (finding support in evidence matching the regulated categories and in an explanation for rejecting an alternative).

[25]  RealPage, slip op. at 19–21 (finding the State’s existing explanation inadequate and using a public-data consultant to illustrate the provision’s reach).

[26]  RealPage, slip op. at 19–20, 26 (identifying a narrower alternative and enjoining subdivision 3 as written).

[27]  RealPage, slip op. at 20 (recognizing some tailoring in the definition and expressly allowing that a stronger explanation could establish a reasonable fit).

[28]  RealPage, slip op. at 16–21 & n.11, 26 (distinguishing actual anticompetitive agreements from lawful advice and limiting relief to subdivision 3). N.Y. Gen. Bus. Law § 340-b(4) (2026) (preserving the applicability of other provisions and state law).

[29]  RealPage, slip op. at 2–3, 18 n.10 (distinguishing customer information from competitors’ nonpublic information and describing limited exceptions).

[30]  RealPage, slip op. at 20–21, 26 (finding likely facial invalidity based on substantial protected applications and issuing relief without a plaintiff-specific limitation).

[31]  Fox, 492 U.S. at 481–83 (limiting overbreadth challenges based on commercial speech while distinguishing a challenge to restrictions on a plaintiff’s own expression). Cent. Hudson, 447 U.S. at 565 n.8 (disclaiming reliance on overbreadth and identifying the law’s suppression of the plaintiff’s protected speech).

[32]  Moody v. NetChoice, LLC, 603 U.S. 707, 723–26 (2024) (requiring analysis of a law’s full range of applications in a First Amendment facial challenge). Fox, 492 U.S. at 482–85 (distinguishing an own-speech narrow-tailoring challenge from overbreadth). RealPage, slip op. at 3, 20–21 & n.11 (recognizing both the breadth of the regulated market and legitimate applications of the challenged provision).

[33]  RealPage, slip op. at 22–24 (finding the remaining preliminary-injunction factors satisfied through the likely constitutional injury while rejecting the asserted business losses as independently sufficient).

[34]  RealPage, slip op. at 3, 26 (describing the separate federal judgment and specifying the persons and provision covered by the injunction).

[35]  RealPage, slip op. at 26–27 (setting the joint submission deadline and pretrial conference). These are the dates specified in the September 29 order. A current complete docket was not available for verification of later changes.