Henry Gifford, a New York City building energy consultant and longtime critic of the energy efficiency of LEED®-certified buildings, caused a stir last October when he filed a class action lawsuit against the U.S. Green Building Council (USGBC), claiming, among other things, that the USGBC lied, engaged in false advertising, and participated in racketeering activities under RICO.
In a change of tactics, Gifford’s amended complaint, has dropped its more extreme allegations (such as the October complaint’s reference to “USGBC’s lies”) and the more exotic causes of action (such as monopolization through fraud under the Sherman Antitrust Act and RICO). The amended complaint retains its allegations of the USGBC’s false advertising under the Federal Lanham Act, and false advertising, deceptive trade practices, and similar claims under New York statutory and common law.
The amended complaint also no longer attempts to proceed as a class action. Rather, it introduces three new individual plaintiffs in addition to Gifford and his company: Matthew Arnold, a licensed architect in Sterling, Virginia; Andrew Ask, a professional engineer resident in Florida who is licensed in several states and characterized as “a well-known member of the building science community;” and Elisa Larkin, a resident of Norman, Oklahoma who specializes in moisture barrier design and mold remediation. On the defendants’ side, all of the individuals were dropped, leaving the USGBC as the only defendant.
The complaint as revised presents a more coherent picture of Gifford’s argument: that the USGBC is big business – with, according to the complaint, revenues of $64 million in 2008 and LEED-accredited professionals that it “represents” receiving “billions of dollars” for designing and constructing LEED buildings – and uses false advertising and other deceptive trade practices to promote LEED certification and to divert business to LEED-accredited professionals.
The essence of the complaint remains that the USGBC’s representations that LEED-certified buildings are more energy efficient are false, and that its “third-party verification” claims are also false, because they lead people to believe that LEED includes verification that certified buildings actually perform as predicted.
On the merits, other critics have argued that the USGBC overstates the energy efficiency benefits of LEED-certified buildings and conveniently overlooks contrary information. And it is easy to understand how a consumer not initiated in the intricacies of LEED might interpret “third-party verification” as confirmation that a building is performing as designed (although for new construction certification, it should not be surprising that certification does not require confirmation of actual performance since certification is awarded before the building has an operating history to verify any claims about its performance).
However, defenders of the USGBC will point out that this is a far cry from the complaint’s claims of the USGBC’s “intentionally, deliberately, willfully or knowingly deceiv[ing] the public and consumers” or demonstrating “an intentional, willful and bad-faith intent to harm the Plaintiffs,” justifying injunctive relief, treble damages and exemplary damages.
Issues about energy efficiency of LEED buildings and the failure to validate actual building performance are questions that the USGBC itself and others were already examining. For example, a proposed rule issued by the U.S. Department of Energy (DOE) last summer to implement various legislative sustainability mandates proposes to require that any green building standard used to evaluate buildings for federal purposes include a verification system for post-occupancy assessment of the rated buildings to periodically demonstrate continued environmental benefits and energy savings. DOE also went on to comment that it is considering a requirement that federal agencies demonstrate that the actual energy use is consistent with the target energy use identified as part of the certification process, and if the actual use is higher than projected, it would consider revocation of the green certification.
As with the original complaint, it is difficult to predict where this litigation will lead. The USGBC’s answer is due shortly. It will be interesting to see its strategy.