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$100M Lawsuit Against LEED Dismissed by Federal Judge

Repeat performance unlikely
August 17, 2011

A lawsuit filed in October 2010 against the U.S. Green Building Council (USGBC) and its LEED rating systems has been dismissed in a strongly worded ruling issued August 16. Following a motion by USGBC to dismiss the case and a court hearing of oral arguments in July 2011 a judge in federal court in New York City ruled against Henry Gifford and the other plaintiffs, throwing out the case.

The suit, brought by Gifford, a New York-based mechanical systems consultant, centers around his critique that USGBC falsely advertises that LEED guarantees energy savings in LEED-certified buildings. Rather than issuing an opinion on that critique, however, the court focused on flaws in Gifford’s logic in bringing the case.

‘Plantiffs not losing customers’

First, the court ruled that Gifford and the other plaintiffs, a handful of other building professionals, cannot bring the suit because they cannot show that they have been harmed by USGBC. Gifford had alleged that he was unfairly losing work to LEED Accredited Professionals (LEED APs), whose credentials are unfairly boosted by USGBC’s alleged false claims.

However, as Judge Leonard Sand wrote in his ruling, “Plaintiffs plainly do not compete with USGBC in the certification of ‘green’ buildings or the accreditation of professionals. Rather, they purport to compete with USGBC in what they call the ‘market for energy-efficient building expertise.’ USGBC does not provide clients with advice about energy-efficient design; nor does it provide design services relating to any of the fields in which Plaintiffs specialize. Rather, it is a not-for-profit organization that reviews and rates designs created by others. While some of Plaintiffs’ competitors in their individual fields may be LEED accredited, Plaintiffs and USGBC operate in different arenas.”

Furthermore, Judge Sand said, “Because there is no requirement that a builder hire LEED-accredited professionals to attain LEED certification, it is not plausible that each customer who opts for LEED certification is a customer lost to Plaintiffs.”

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Energy claims “too speculative”

Judge Sand also stated that Gifford was not able to show that the alleged false claim by USGBC, which stems from a 2008 study by the New Buildings Institute, had made an impact on the marketplace. “Whatever the merits of Plaintiffs’ claim that the conclusion of the study was false,” said the judge, any claims to that effect were “too speculative.” Calling the claim a “last-ditch effort” to save their case, Judge Sand also dismissed as “too vague and speculative” the idea submitted by Gifford that USGBC is harming the entire field of green building, and that consumers “will discount all claims of energy saving through design and construction” as a result of USGBC’s false advertising.

While dismissing the entire suit, Judge Sand also dismissed the federal false advertising claims “with prejudice,” meaning that the Court’s dismissal of those claims is final and that plaintiffs are barred from filing a new suit based on those claims.


A sequel not more likely to succeed

When I talked to him, Gifford told me he is “pretty discouraged” by the ruling. While he didn’t rule out appealing, saying “I’ll look at the papers first to see if it looks ripe for it,” he said he is “sick and tired” of spending time and money on the lawsuit. While the main lawyer on the case, Norah Hart, was working on spec, Gifford told me he had spent $5,000–$10,000 in hiring other lawyers and professionals to build the case. (In a later conversation Gifford said that he has heard from another potential plaintiff: an architect who would be better able to show standing in a case against USGBC. In light of that, Gifford said, “I am sure thinking about” an appeal.)

According to Gifford, Judge Sand asked Gifford in oral arguments why he didn’t sue the New Buildings Institute, which created the allegedly false study quoted by USGBC in a press release. The judge also suggested that Gifford sue other LEED APs, against whom Gifford competes more directly. However, Gifford said that was impractical, and in any case, his ire is focused on USGBC. Continuing his pattern of ignoring the existence of the LEED for Existing Buildings program, he said: “LEED is my industry’s way of postponing the day of measurement,” when all buildings will be judged on actual energy use.

Larry Weinstein, the lead counsel for USGBC in the lawsuit, told EBN  that the judge’s decision was “absolutely correct” and that an appeal would have no more legitimacy. “We hope that Gifford will continue to lend his voice to the issues that concern him, but the courts just aren’t the right place for this,” said Weinstein. “His grievance clearly appears to be with how the LEED rating system works, but that has got nothing to do with false advertising.”

USGBC, meanwhile, is hopeful that this distraction is over. In a statement, Rick Fedrizzi, president, CEO, and founding chair of USGBC, said in a press release, “This successful outcome is a testament to our process and to our commitment to do what is right. Thousands of people around the world use LEED because it’s a proven tool for achieving our mission of transforming the built environment. We’re grateful that the Court found in our favor so we can give our full attention to the important work before us.”

What do you think about the lawsuit, its dismissal, and where LEED is going on energy performance? Please comment below!

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August 18, 2011 - 1:13 pm

The judge only said the plaintiffs have no standing to file a lawsuit.

He never made any ruling on the content of the lawsuit.

Some of the most famous lawsuits in our country have come from lawyers extensively searching for the "right" plaintiff.

I hope USGBC takes this as a warning rather than vindication. Time to tie all versions of LEED to actual energy savings.

August 18, 2011 - 1:35 pm

I would refer you to "entirely too vague and speculative". "In a last-ditch effort to save their claims, Plaintiffs assert, for the first time in their Opposition brief, damage to the reputation of “green” building sciences. Plaintiffs claim that consumers who learn that Defendant’s claim is false will discount all claims of energy saving through design and construction. Even if this allegation were contained in the FAC, it is entirely too vague and speculative to serve as a basis for standing."

August 18, 2011 - 1:25 pm

Bill, that's correct. The judge basically said to Gifford that on your best day, if everything you're saying about false advertising is true, you still can't show that you were harmed or have standing to bring this suit. So because of the legal procedures involved, the actual issue of the alleged false claim was not considered by the court.

If you look at the Building Performance Partnership, the MPRs on energy reporting, and where LEED 2012 is going on commissioning, monitoring, and performance reporting, it seems as though LEED is going in this direction, and has been for a while.

August 18, 2011 - 11:42 am

Judge Sand said, “Because there is no requirement that a builder hire LEED-accredited professionals to attain LEED certification".
However in LEED 2012 it would appear that to complete a LEED program on a building in any of the rating systems 'you' would need to hold the LEED AP in that rating system:
[At least one (1) principal participant of the project team shall be a LEED Accredited Professional (AP) with a specialty most appropriate for the project.
In addition, two (2) individuals representing primary disciplines on the project are required to be LEED APs (any specialty) or Green Associates.] taken from LEED 2012 draft.
Might this prove to be the loophole that the plaintiff would need?

August 18, 2011 - 12:47 pm

I would bet against it becoming a prereq. If USGBC doesn't like the backlash they have already been getting on the LEED AP exam, LEED AP specialy, opt-ins, CE requirements, and now requiring a specialty for the LEED AP credit, how much worse would all that be if it were a prereq in LEED?

My opinion, which I've submitted to USGBC as a public comment, is to end the LEED AP credit, since the intent of it is better addressed through the Integrated Process credit. But I don't see them going in that direction soon, either.

August 18, 2011 - 12:24 pm

Thanks Tristan. I noticed the softening from the first round, still I wonder how many revisions it will be before this moves to a prereq? Fancy a bet on it?

August 18, 2011 - 12:01 pm

Barry, the LEED AP credit is and would remain a credit, not a prerequisite. And since that credit has been around since the beginning of LEED, I can't imagine it changing anything about this case now.

Also, check out the second public comment draft of LEED 2012. They have softened the requirement of additional personnel.

August 18, 2011 - 11:19 am

For international users of LEED rating systems, this ruling is a huge relief, and help us implement sustainable practices in our countries.

August 18, 2011 - 10:47 am

" Gifford had alleged that he was unfairly losing work to LEED Accredited Professionals (LEED APs) "

You don't have to be an LEED AP do you? You just have to have your company registered with the USGBC to submit projects ?

August 18, 2011 - 11:17 am

That's right, you don't have to be a LEED-AP to carry out the certification process, although it helps a lot.
Your company does not have to be registered with USGBC, just the project. Having said that, I must add that team members (not companies) must be registered to use LEED Online.

August 18, 2011 - 10:46 am

Mr. Gifford's arguments were seriously flawed from the outset. Per se, LEED certification makes no guarantees. It is a rating system (and better practices) for building Designers, Owners and Operators who wish to employ sustainable practices. Ultimately the efficiency of a building comes down to the manner in which it is operated. LEED is not a "plug-n-play product".

August 18, 2011 - 4:51 am

The case: Everyone's time would be better spent on actually creating better performing buildings than clogging up the court system with frivolous lawsuits.
Where LEED is going: As they (USGBC) say it's a case of continuous improvement and through various measures I think LEED is addressing the projected and actual energy usage problem.

August 18, 2011 - 2:47 pm

I think this is unfortunately one of several of these sorts of issues with LEED that people will try to sort out through litigation. I certainly don't think it will be the last one.

This process is changing our industry. There will be winners and losers. Some of those losers will have been winners in the old paradigm and they will try to protect their turf, because they have too much vested not to act. The ruling just addressed a narrow issue, and I am fairly certain from some of the other publications I read that there are lawyers that see LEED as an increasingly profitable venue for them. Whether they attack the USGBC as Gifford did, or attack practitioners remains to be seen. I think it will tend more toward the latter.