Hello as your new AG

There’s so much to tell you

The last time you heard from me, I was a member of Congress. It was just before Christmas.

A few days later, I resigned.

Why? Because my congressional term was set to end on January 3rd, but my Attorney General term was set to begin on January 1st. So to avoid an overlap, I resigned from Congress a few days early.

On New Year’s Day, I took the oath in the county courthouse. It was just our family, Judge Cureton, and a state employee who brought the “oath book,” which apparently you have to sign upon taking office.

That night, during dinner, Owen asked if he could come with me for my first day at the office. I was a little surprised that he wanted to come, but I thought it’d be great. So we got to the NCDOJ building early the next morning, stood in the lobby, and together we greeted my new colleagues as they arrived.

Then we walked into my new office and Owen made himself at home:

Blitzing the learning curve

Here’s a quick overview of what it means to be AG in our state:

• The AG runs the NC Department of Justice, which has about 1,000 employees. About one-third are attorneys, which makes us the largest law firm in the state.

• Apart from special circumstances, we generally don’t handle front-line prosecutions, but we do handle criminal appeals. So once someone is convicted and they say, “I appeal,” we handle the case.

• We defend the state when it gets sued, but we also sue on behalf of the state. For example, if someone slips and falls on state property and sues the state, we would defend the state. But, on the other hand, if someone pollutes the water, contributes to an opioid epidemic, breaks its contract with the state, engages in price fixing for generic drugs, facilitates illegal mass robocalls into our state, engages in monopolistic behavior when selling tickets to major entertainment events, or uses artificial intelligence to unlawfully raise people’s rents (more on that below…), then we sue them. In many cases, we join with other states and make it a multi-state effort.

• The NCDOJ also includes the state crime lab (three buildings across the state), the main training center for law enforcement officers in the state (two campuses), and the training and standards commissions for police officers and sheriffs.

All of which means that I’ve got a steep learning curve. To address it, I’ve packed my schedule with everything I need to get up to speed: meeting with all the sections at NCDOJ, doing deep dives into ongoing litigation, and traveling the state to hear from as many people as possible. I’m basically trying to blitz the learning curve, and the reason I can do it is because I’ve got a great team around me that’s willing to help.

First major action

Here’s the short version:

There’s a company that sells a piece of software that uses artificial intelligence and private data from major landlords to tell those landlords what rents they should charge.

It’s called RealPage and it essentially tells major landlords, “Sign up with us, give us your private data every day about rental rates, occupancy, and trends, and we’ll tell all of you what rents you should charge.”

According to RealPage, the whole idea is about “driving every possible opportunity to increase price” and “avoid[ing] the race to the bottom in down markets.”

In other words, to replace competition with collusion.

One of their executives said that, “there is greater good in everybody succeeding versus essentially trying to compete against one another in a way that actually keeps the entire industry down.” Another said that this could help landlords to “have a $50 increase instead of a $10 increase for the day.”

And landlords responded. One of them said, “I always liked this product because your algorithm uses proprietary data from other subscribers to suggest rents and term. That’s classic price fixing…”

RealPage itself has already been sued by NCDOJ and many other states. My first major action was to expand that lawsuit to also include six mega-landlords who, we believe, used this software to unlawfully collude with each other to raise rents.

From the evidence, it appears North Carolina is the most impacted state in the country by the use of this software. So far, we estimate it applied to over 70,000 rental units across the state, with a very heavy presence in Charlotte metro and Research Triangle regions.

Basically, if a bunch of landlords met in a back room and said, “Let’s share data and raise our rents together,” that would be illegal. We’re saying that they were using a piece of software that was built to accomplish essentially the same effect, and North Carolinians suffered higher rents as a result.

Going forward

Many of you have asked that I continue sending email updates as AG like I did in Congress.

Got it - will do. But I’ll only email you when I have something meaningful to share. That means it won’t be on a set schedule; it’ll happen organically.

I’m really looking forward to bringing a higher degree of transparency to this position, and I think you’ll find it pretty interesting.

Best,

Jeff