For several years, Mobile and Manufactured Home Living News (MHLivingNews) and our MHProNews sister site have been laying out the evidence of from a range of sources that pointed to serious allegations of antitrust, possible RICO, and others who are often either members of the Manufactured Housing Institute (MHI) and/or an MHI linked manufactured housing state association. While several cases involving various issues have emerged, the new case information provided below appears to be a possible big step forward in pursuing antitrust, RICO, or other market-manipulating and harmful to consumers matters that routinely trace back to what we’ve called before “the Usual Suspects” in manufactured housing. In Part I of this report will be extended sections from the suit plus the public version of the pleadings obtained from the public relations firm Baretz+Brunelle in the case which lists DiCello Levitt, Hausfeld, and Myron M. Cherry & Associates as attorneys for the manufactured home community residents who are the plaintiffs.
Part II will provide additional information with more analysis and commentary by MHLivingNews.
Note some of the remarks have been redacted, presumably by the plaintiffs’ attorneys, in the information that follows. Where the reader sees an ellipsis … a series of dots that indicates an intentional omission of a word, sentence, or whole section from a text without altering its original meaning, that is where the text has been redacted.
UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION
|CARLA HAJEK and GREGORY
HAMMERLUND, individually and on
behalf of all others similarly situated,
DATACOMP APPRAISAL SYSTEMS, INC.;
EQUITY LIFESTYLE PROPERTIES, INC.;
HOMETOWN AMERICA MANAGEMENT,
L.L.C.; LAKESHORE COMMUNITIES,
INC.; SUN COMMUNITIES, INC.; RHP
PROPERTIES, INC.; YES! COMMUNITIES,
INC.; INSPIRE COMMUNITIES, L.L.C.;
KINGSLEY MANAGEMENT, CORP.; and
CAL-AM PROPERTIES, INC.,
Case No. 23-cv-6715
CLASS ACTION COMPLAINT
JURY TRIAL DEMANDED
Plaintiffs Carla Hajek (“Hajek”) and Gregory Hammerlund (“Hammerlund”) (together, “Plaintiffs”), individually and on behalf of all others similarly situated (the “Class,” as defined below), upon personal knowledge as to the facts pertaining to themselves and upon information and belief as to all other matters, and based on the investigation of counsel, bring this class action complaint to recover treble damages, injunctive relief, and other relief as appropriate, based on Defendants’ Datacomp Appraisal Systems, Inc. (“Datacomp”), Equity LifeStyle Properties, Inc. (“ELS”), Hometown America Management, L.L.C. (“Hometown America”), Lakeshore Communities, Inc. (“Lakeshore”), Sun Communities, Inc. (“Sun Communities”), RHP Properties, Inc. (“RHP”), YES! Communities, Inc. (“YES! Communities”), Inspire Communities, L.L.C. (“Inspire Communities”), Kingsley Management, Corp. (“Kingsley”) and Cal-Am Properties, Inc.’s (“Cal-Am”) (together, “Defendants”), violations of federal antitrust laws and common law.
I. NATURE OF THE ACTION
- This action arises from Defendants’ conspiracy to fix, raise, maintain, and/or stabilize manufactured home lot rental prices. Manufactured, or mobile, homes have long been one of the country’s most affordable housing options, particularly for people who do not receive government aid. According to federal data, about 20 million Americans live in manufactured homes, which make up about 6% of U.S. residences. And in 2022, nearly one-third of the 10.5 million adults living in manufactured homes were over the age of 60. The effect of Defendants’ conspiracy has been devasting to manufactured home residents. These individuals—whose median annual household income is approximately $35,000—are being overcharged for what used to be affordable housing. The consequence is that two of society’s most vulnerable groups—the elderly and low-income earners—face considerable financial pressures. Some residents are facing evictions.
- Manufactured home lots are plots of land where manufactured home residents set down their manufactured homes. Manufactured home lots are located in residential developments called “manufactured home communities” or “manufactured home parks.” Manufactured home communities are specifically designed to house manufactured homes and can range in size from a few lots to hundreds. Most manufactured home residents own their manufactured homes but rent the lots on which they set down their manufactured homes from the owners of manufactured home communities.
- Defendants are Datacomp—the nation’s largest provider of manufactured and mobile home data—and several large owners of manufactured home communities that use information about manufactured home lot rental prices and occupancy, among other things, throughout the United States.
- Defendants ELS, Hometown America, Lakeshore, Sun Communities, RHP, YES! Communities, Inspire Communities, Kingsley, and Cal-Am (together referred to as “Manufactured Home Community Defendants”) are manufactured home community owners. They are part of a recent wave of large corporate owners who have acquired manufactured home communities across the United States to grow large portfolios of home sites. After acquiring the communities, these buyers have implemented steep, annual rent increases on their manufactured home lots, which have caused significant burdens on manufactured home residents.
- Manufactured home community owners, including the Manufactured Home Community Defendants, have coordinated with each other to increase manufactured home lot rents systematically and unlawfully by purchasing and using market reports published by Defendant Datacomp. Datacomp’s reports, known as JLT Market Reports, …
- Having access to this non-public, competitively sensitive information, and knowing that one’s competitors have access to and are using the same information, allows manufactured home community owners, including the Manufactured Home Community Defendants, to reduce or eliminate competition amongst themselves on price, services, and quality for manufactured home lots. …
- In recent years, manufactured home lot rents paid by manufactured home residents have increased significantly. For example, manufactured home lot rental prices increased by approximately 2.3% per year between 2010 and 2018, which is approximately in line with the average annual inflation of 1.8% during this period. However, consistent with Plaintiffs’ conspiracy allegations, manufactured home lot rental prices increased at a significantly higher rate between 2019 and 2021—9.1% per year (while inflation was only 3%). The Manufactured Home Community Defendants could never have demanded these rental price increases unilaterally. To implement the increases, they needed to conspire. They did this by exchanging non-public, competitively sensitive information through Datacomp’s JLT Market Reports. In the words of Ross Partrich, CEO of Defendant RHP: “We find the JLT Market Reports to be . . . extremely helpful for rent increases across our portfolio throughout the country.”
- The exchange of non-public, competitively sensitive information through Datacomp’s JLT Market Reports allowed Defendants to carry out a price fixing conspiracy to artificially inflate manufactured home lot rents in violation of Section 1 of the Sherman Act and common law. The exchange of information through the JLT Market Reports is also separately unlawful under Section 1 of the Sherman Act as an unlawful information exchange. The supracompetitively-inflated manufactured home lot rent increases would not have been possible but for the conduct described herein.
- Plaintiffs bring this antitrust class action lawsuit on behalf of themselves and a nationwide Class of all similarly situated persons and entities who paid rent for a manufactured home lot located in a manufactured home community that was included in a JLT Market Report between August 31, 2019 and the present (the “Relevant Time Period”). Because of Defendants’ violations of Section 1 of the Sherman Act and common law, Plaintiffs and members of the Class were injured by paying significant overcharges on manufactured home lot rents throughout the United States.
- If Defendants are permitted to continue their anticompetitive scheme, Plaintiffs and members of the Class will continue to pay supracompetitive rents for manufactured home lots. Plaintiffs bring this action to seek damages and permanently enjoin Defendants’ ongoing efforts to coordinate their prices by sharing competitively sensitive information for manufactured home lots.
II. JURISDICTION, VENUE, AND EFFECT ON INTERSTATE COMMERCE
- Plaintiffs bring this antitrust class action lawsuit pursuant to Sections 4 and 16 of the Clayton Act (15 U.S.C. §§ 15 and 26), to (i) recover treble damages and the costs of suit, including reasonable attorneys’ fees, for the injuries sustained by Plaintiffs and members of the Class; (ii) enjoin Defendants’ anticompetitive conduct; and (iii) for such other relief as is afforded under the laws of the United States for Defendants’ violations of Section 1 of the Sherman Act (15 U.S.C. § 1).
- This Court has subject matter jurisdiction pursuant to 28 U.S.C. §§ 1331, 1337, and Sections 4 and 16 of the Clayton Act (15 U.S.C. §§ 15(a), 26).
- Venue is proper in this District pursuant to Sections 4, 12, and 16 of the Clayton Act (15 U.S.C. §§ 15, 22, and 26), and pursuant to 28 U.S.C. § 1391(b), (c), and (d), because, at all relevant times, one or more Defendants resided, transacted business, was found, is licensed to do business, and/or had agents in this District.
- This Court has personal jurisdiction over each Defendant pursuant to Section 12 of the Clayton Act (15 U.S.C. §§ 22), because, among other things, each Defendant: (a) transacted business throughout the United States, including in this District; (b) leased manufactured home lots to individuals throughout the United States, including in this District; and/or (c) engaged in an antitrust conspiracy that was directed at and had a direct, foreseeable, and intended effect of causing injury to the business or property of persons residing in, located in, or doing business throughout the United States, including in this District. Each Defendant has purposefully availed itself of the privilege of conducting business activities within the United States and has the requisite minimum contacts therein because each Defendant committed intentional acts that were intended to cause and did cause injury within the United States.
- The activities of Defendants and their co-conspirators, as described herein, were within the flow of, were intended to, and did have direct, substantial, and reasonably foreseeable effects on the interstate commerce of the United States.
- This action is also instituted to secure injunctive relief against Defendants to prevent them from further violations of Section 1 and 3 of the Sherman Act as hereinafter alleged.
- No other forum would be more convenient for the parties and witnesses to litigate this case.
III. THE PARTIES
- Plaintiff Carla Hajek is a resident of Justice, Illinois. During the Relevant Time Period, Hajek rented a manufactured home lot located in a manufactured home community named Sterling Estates, which is owned and managed by Defendant RHP. During the Relevant Time Period, Hajek paid monthly rent to RHP for this manufactured home lot. Hajek paid higher rental prices by reason of the violation alleged herein.
- Plaintiff Gregory Hammerlund is a resident of Monee, Illinois. During the Relevant Time Period, Hammerlund rented a manufactured home lot located in a manufactured home community named Golf Vista Estates, which is owned and managed by Defendant ELS. During the Relevant Time Period, Hammerlund paid monthly rent to ELS for this manufactured home lot. Hammerlund paid higher rental prices by reason of the violation alleged herein.
- Defendant Datacomp Appraisal Systems, Inc. is a Michigan corporation, headquartered in Grand Rapids, Michigan. Datacomp is the nation’s largest provider of manufactured and mobile home valuations, inspections, and market data. Datacomp’s client list includes the top 10 largest manufactured home community owners, regional property management companies, developers, lenders, appraisers, homeowner associations and real estate brokers. Datacomp was purchased by Defendant Equity LifeStyle Properties, Inc. in December 2021 for $43 million.
- Defendant Equity LifeStyle Properties, Inc. is a Maryland corporation, headquartered in Chicago, Illinois. ELS owns, operates, or has a controlling interest in more than 200 manufactured home communities across the United States, including three in this District, with approximately 70,000 manufactured home sites nationwide. Datacomp lists ELS as one of its clients on its website. Upon information and belief, ELS uses Datacomp’s JLT Market
- Defendant Hometown America Management, L.L.C. is a Delaware corporation, headquartered in Chicago, Illinois. Hometown America owns, operates, or has a controlling interest in 66 manufactured home communities across the United States, including one in this District. Datacomp lists Hometown America as one of its clients on its website. Upon information and belief, Hometown America uses Datacomp’s JLT Market Reports to price manufactured home lot rents.
- Defendant Lakeshore Communities, Inc. is an Illinois corporation, headquartered in Skokie, Illinois. Lakeshore is one of the largest privately held owner/operators of manufactured home communities in the United States and owns manufactured home communities across the United States. Datacomp lists Lakeshore Communities as one of its clients on its website. Upon information and belief, Lakeshore uses Datacomp’s JLT Market Reports to price manufactured home lot rents.
- Sun Communities, Inc. is a Michigan corporation headquartered in Southfield, Michigan. Sun Communities owns, operates, or has a controlling interest in 353 manufactured home communities across the United States, including two in this District, with approximately 120,000 manufactured home sites nationwide. Datacomp lists Sun Communities as one of its clients on its website. Upon information and belief, Sun Communities uses Datacomp’s JLT Market Reports to price manufactured home lot rents.
- RHP Properties, Inc., is a Michigan corporation, headquartered in Farmington Hills, Michigan. RHP is the largest privately held manufactured home community owner in the United States. RHP owns, operates, or has a controlling interest in more than 370 communities across the United States, including three in this District, with approximately 80,000 manufactured home sites nationwide. Datacomp lists RHP as one of its clients on its website. Upon information and belief, RHP uses Datacomp’s JLT Market Reports to price manufactured home lot rents.
- YES! Communities, Inc. is a Delaware corporation, headquartered in Denver, Colorado. YES! Communities owns, operates, or has a controlling interest in more than 200 communities across the United States with approximately 55,000 home sites. YES! Communities is partially owned by Stockbridge Capital Group, LLC, a private equity firm with $33.7 billion of assets under management. The remainder of the company is owned by the Government of Singapore Investment Company and the Pennsylvania Public School Employees Retirement System. Datacomp lists YES! Communities as one of its clients on its website. Upon information and belief, YES! Communities uses Datacomp’s JLT Market Reports to price manufactured home lot rents.
- Inspire Communities, L.L.C. is a Delaware corporation, headquartered in Phoenix, Arizona. Inspire Communities owns, operates, or has a controlling interest in over 130 manufactured home communities across the United States, including three in this District. In 2017, Apollo Global Management, a private equity firm with over $500 billion of assets under management, acquired Inspire Communities. Datacomp lists Inspire Communities as one of its clients on its website. Upon information and belief, Inspire Communities uses Datacomp’s JLT Market Reports to price manufactured home lot rents.
- Kingsley Management, Corp. is a Utah corporation, headquartered in Provo, Utah. Kingsley is one of the largest privately held owner/operators of manufactured home communities in the United States and owns manufactured home communities across the United States. Datacomp lists Kingsley as one of its clients on its website. Upon information and belief, Kingsley uses Datacomp’s JLT Market Reports to price manufactured home lot rents.
- Cal-Am Properties, Inc., is a California corporation, headquartered in Costa Mesa, California. Cal-Am is one of the largest privately held owner/operators of manufactured home communities in the United States and owns manufactured home communities across the United States. Datacomp lists Cal-Am as one of its clients on its website. Upon information and belief, Cal-Am uses Datacomp’s JLT Market Reports to price manufactured home lot rents.
- Defendants are jointly and severally liable for the acts of the Unnamed Co-conspirators. Various other persons, firms, and corporations not named as Defendants use Datacomp’s JLT Market Reports to price manufactured home lot rents and have participated as co-conspirators with Defendants (the “Unnamed Co-conspirators”). The Unnamed Coconspirators have also performed acts and made statements in furtherance of the conspiracy.
- Whenever reference is made to any act of any corporation, the allegation means that the corporation engaged in the act by or through its officers, directors, agents, employees, or representatives while they were actively engaged in the management, direction, control, or transaction of the corporation’s business or affairs.
- Each Defendant named herein acted as the agent of or for the other Defendants with respect to the acts, violations, and common course of conduct alleged herein.
- Defendants are also liable for acts done in furtherance of the alleged conspiracy by companies they acquired through mergers and acquisitions.
IV. FACTUAL ALLEGATIONS
34. During the Relevant Time Period, the Manufactured Home Community Defendants conspired and coordinated with each other and Datacomp to systematically increase manufactured home lot rents and thus harm manufactured home residents who paid elevated rents as a result.
a. Manufactured Homes in the United States
- Unlike traditional site-built homes, which are constructed entirely on the homeowner’s property, manufactured homes are built in factories and then transported to the property, or lot, where they will be set up.
- Mobile homes and manufactured homes refer to the same type of home. The only difference between “mobile” and “manufactured” homes is the date they were built. In 1976, the Department of Housing and Urban Development (“HUD”) imposed new codes and standards for the construction of factory-built homes. With these codes, HUD stopped using the term “mobile home” and began using “manufactured home.” Therefore, a home built in a factory prior to June 15, 1976, is a “mobile” home, and one built after June 15, 1976, is a “manufactured” home. While the term “mobile home” is still commonly used, in this complaint the term “manufactured home” will refer to any factory-built home regardless of when it was built.
- Modular homes are another type of factory-built home. Modular homes consist of two or three components that are put together at the site of the home. Modular homes are then placed on a permanent foundation system. While manufactured homes are built to the national HUD code, modular homes are built to applicable state and local building codes. The owner of a modular home typically also owns the land on which the home is situated. For these and other reasons, modular homes are more akin to site-built homes than to manufactured homes and are not the subject of this complaint.
- Manufactured homes are generally less expensive than site-built and modular homes. It is estimated that manufactured home construction costs 40-50% less per square foot than site-built homes.
- Following substantial cuts to federal housing budgets in the 1980s, people sought out different sources of affordable housing, and many moved into manufactured homes. Indeed, these federal housing cuts made manufactured homes the fastest-growing type of residence in the 1980 In the 1990s, manufactured homes were responsible for 66% of new affordable housing produced in the United States. Today, manufactured homes are the largest source of unsubsidized affordable housing in the United States (and in most cases the cheapest). According to Esther Sullivan in Manufactured Insecurity: Mobile Home Parks and Americans’ Tenuous Right to Place, due to the lack of other forms of affordable housing, manufactured homes are a crucial national affordable housing infrastructure and a primary pathway to low-income homeownership. Nearly one in four homes purchased by a first-time, low-income household is a manufactured home.
- Accordingly, manufactured homes provide an important source of affordable housing to a large swath of the U.S. population. Approximately 20 million Americans, or 6% of the U.S. population, live in manufactured homes. And, while all types of people live in manufactured homes, there is a high concentration of various vulnerable groups, including the elderly, low-income earners, and veterans. There is also a high concentration of people with disabilities or mobility issues living in manufactured homes, since these homes are one-story, low-maintenance, and easily ramped.
… (This section is available in the PDF document, which is linked further below).
50. For decades, the manufactured home community industry was highly fragmented with many operators each owning only a single community. More recently, and particularly within the past decade, the industry experienced considerable consolidation with large corporate owners, including the Manufactured Home Community Defendants, buying up communities across the United States. This consolidation facilitated the conspiracy alleged herein.
51. The following is a sampling of recent large acquisitions made by the
Manufactured Home Community Defendants:
i. ELS: In 2018, ELS purchased two manufactured home communities in South Florida for $50.35 million and $49.5 million respectively. These two purchases added another 1,534 manufactured home lots to ELS’s portfolio. In 2020, ELS purchased a 484-lot manufactured home community in Arizona with entitlements to an additional 228 lots for development.
ii. Hometown America: In 2019, Hometown America paid $237.4 million for Plaza del Rey, an 800-lot manufactured home community in Sunnyvale, California. In 2021, Hometown America spent over $100 million purchasing two manufactured home communities in California with a combined 410 manufactured home lots and a community in Claverton, New York with over 200 lots.
iii. Lakeshore: In 2022, Lakeshore purchased a 150-lot community in Northfield, Minnesota.
iv. Sun Communities: In 2019, Sun Communities spent over a billion dollars to acquire over 12,000 new or redeveloped lots. Among its purchases was a 31-communitiy portfolio from a Connecticut-based manager for $346.6 million. In 2022, Sun Communities purchased two manufactured home communities in Riverside County for $40 million with a total of 379 manufactured home lots. That same year it bought a community outside of Houston for $29.7 million with 255 manufactured lots.
v. RHP: In 2021, RHP purchased 29 manufactured home communities in Illinois, Indiana, and Michigan containing more than 4,200 manufactured home lots for $184 million. In 2022, RHP purchased 50 manufactured home communities, composed of 41 communities in Wisconsin, seven in Minnesota, and two in Michigan. The acquisition added 5,232 manufactured home lots to RHP’s portfolio. That same year, RHP purchased three manufactured home communities in Delaware.
vi. YES! Communities: In 2018, YES! Communities purchased 24 manufactured home communities comprising over 6,800 residential home sites in the states of Michigan, Indiana, Illinois, and Texas. In 2019, YES! Communities purchased five manufactured home communities in Indiana and Michigan, comprised of 1,460 manufactured home lots. In 2021, it purchased two manufactured home communities outside of Chicago for $43 million. The acquisitions added another 366 manufactured home lots to YES! Communities portfolio.
vii. Inspire Communities: During the Relevant Time Period, Inspire Communities has acquired over 100 manufactured home communities across the United States.
viii. Kingsley: In 2015, Kingsley purchased a manufactured home community in Palm Harbor, Florida with 213 lots for nearly $20 million.
ix. Cal-Am: In 2017, Cal-Am purchased Far Horizon East Mobile Home Park in Tucson, Arizona, for $33 million, gaining 415 new manufactured home lots.
52. After purchasing manufactured home communities, these corporate buyers, including the Manufactured Home Community Defendants, have significantly raised manufactured home lot rents based on the unlawful conduct alleged herein, which has caused considerable financial pressure on manufactured home residents who are typically older, lower income, and less wealthy than residents of traditional site-built homes. ##
The balance of the plaintiffs’ pleadings are found at this link here.
Part II Additional Information with More MHLivingNews Analysis and Commentary
There are several companies that are in the land-lease community segment of the manufactured home industry that have developed a similar reputation as the firms named. That begs the question. Why aren’t Havenpark Capital, Flagship Communities, and some others known for aggressive hikes in site fees not (yet) named?
There are indications in the pleadings that some other firms may be named. Will they name the Manufactured Housing Institute (MHI)? Will certain MHI linked state associations, such as the Western Manufactured Housing Communities Association, be named?
On our MHProNews sister site, some data about MHI were laid out in a report that has several ties to this case and that report linked here said as follows.
The total pageviews on MHProNews primary cPanel on the date shown was already over 11.7 million with over 1.51 million visits. If SimilarWeb’s data is correct, MHI during that similar time period, per SimilarWeb on this date (9.9.2023), MHI’s website averaged 26,400 visits monthly or about 316,800 visit per year. So, MHProNews has some 5 times the visitors and many more times than that number in pageviews. Why? In a word, “Content.” More specifically, two words: relevant content.”
There may be reasons to believe that different, but nevertheless industry-linked cases may follow in the wake of this filing Case No. Case No. 23-cv-6715. Just as the Cavco Industries probe and subsequent suit by the Securities and Exchange Commission (SEC) resulted in several legal probes and actions on behalf of shareholders, something similar may occur in the wake of this filing on behalf of residents of land lease communities.
MHLivingNews noted about 4.5 years ago that every one of the firms exposed as “predatory” by HBO’s Last Week Tonight with John Oliver were members of the Manufactured Housing Institute (MHI).
Kingsley Management Corp, Provo, Utah & Maplewood Estates Manufactured Home Community in Omaha, Nebraska – Consumer Alert – Resident Outrage Against Kingsley “Mobile Home Parks”-Targeted by Multiple State Attorney General, Media Investigations
More are found in the report on this topic on our sister-site, MHProNews.com.
MHLivingNews led the charge for antitrust action in the manufactured housing industry with the exclusive report linked below.
MHLivingNews has reached out to MHI and one of their attorneys for comments late last week. So far, no formal response. We plan a follow-up on this topic, as this is likely to be a protracted battle, based on past experiences. So, stay tuned. ###
That’s a wrap on this installment of “News through the lens of manufactured homes and factory-built housing” © where “We Provide, You Decide.” © ## (Affordable housing, manufactured homes, reports, fact-checks, analysis, and commentary. Third-party images or content are provided under fair use guidelines for media.) (See Related Reports, further below. Text/image boxes often are hot-linked to other reports that can be access by clicking on them.)
By L.A. “Tony” Kovach – for MHLivingNews.com.
Tony earned a journalism scholarship and earned numerous awards in history and in manufactured housing. For example, he earned the prestigious Lottinville Award in history from the University of Oklahoma, where he studied history and business management. He’s a managing member and co-founder of LifeStyle Factory Homes, LLC, the parent company to MHProNews, and MHLivingNews.com. This article reflects the LLC’s and/or the writer’s position, and may or may not reflect the views of sponsors or supporters.
Connect on LinkedIn: http://www.linkedin.com/in/latonykovach
Recent and Related Reports:
The text/image boxes below are linked to other reports, which can be accessed by clicking on them.
Official U.S. Census Bureau Cost & Size Comparisons of New Manufactured Homes to New Single-Family Site-Built Homes – Facts for Shoppers, Affordable Housing Advocates, Public Officials, Investors & Researchers
DOJ-CFPB-Record Racial Discrimination-Redlining Case Settled by Warren Buffett-Led Berkshire Hathaway Owned Lender – Clayton Homes and Their Affiliated Lending Named by Seattle Times – Conventional and Manufactured Housing Claims