Gifford v. U.S. Green Building Council – The Color of Money

A February 7, 20011 motion filed to amend the complaint in Henry Gifford, et al. v. U. S. Green Building Council, a lawsuit pending in Federal Court in the Southern District of New York, brings light to a novel claim alleging that the industry wide “green” building standards are nothing more than a marketing ruse profiting the U.S. Green Building Council (“USGBC”).
In 2010 four individuals – an energy consultant, architect, mechanical engineer, and mold remediation expert, brought suit against the USGBC alleging  that the Leadership in Energy and Environmental Design (“LEED”) certification system developed by USGBC, contrary to its claims, does not objectively measure energy use and savings. The complaint cites, for example, that under the current LEED rating system:

“[A] bike rack earns one point, an electric vehicle charging station point, installing a floor grate to trap debris earns [a] point,  use of  ‘non-emitting materials’ in certain materials earns one point . . . [and ] the hiring of a USGBC sales representative to prepare a certification application earns on point.”  (Amended Complaint, Paragraphs 18 and 19).

The lawsuit is loaded with specific allegations of misconduct on the part of USGBC, including:

  • The LEED rating system is not based on objective scientific criteria, e.g., BTU’s of energy consumed per square foot per year, but rather on computer modeling of anticipated energy use levels of a building’s performance in terms of energy use, toxicity of building materials;
  • USGBC claims that use of LEED standards  result in dramatic energy savings with nominal increase in construction costs are false and misleading;
  • Supposed findings in a study cited by USGBC supporting LEED buildings as having lower energy costs were “literally false on several grounds,” and that the study was in fact sponsored by USGBC; and
  • The LEED certification process is deceptive because the certification applications are not verified, certification does not require actual energy use data, and USGBC does not have the staff or expertise to evaluate the applications.

The complaint lists several pointed and detailed examples of false statements made by USGBC, and seeks recovery under theories of false advertising, deceptive trade practices, and unfair competition under the federal Lanham Act as well as New York statutory and common law.  The proposed amendment to the lawsuit filed this month in New York includes allegations that the plaintiffs are losing business to LEED certified competitors because USGBC falsely advertises that paying for LEED accredited professional designation will result in a higher quality of work.  The amended complaint goes on to say:

“USGBC’s false advertising has a massive impact on interstate commerce becaus billions of dollars have been spent on LEED-certified buildings that would not have been spent had USGBC told the truth about LEED certification.”  (Amended Complaint, Paragraph 59).

Practice Pointer:  At this stage in the proceedings the Gifford lawsuit is nothing more than a claim, no doubt subject to a rigorous defense from USGBC and critical analysis by the judiciary and a jury. Until the case is concluded and published as an opinion, it is difficult to determine how to make use of Gifford in managing risk.  At minimum, Architects and Developers should be mindful of potential claims by clients and/or contractors that LEED certification standards are false and misleading. I can envision, for example, a bid challenge on a public project requiring LEED certification alleging that that the contract standards are arbitrary and capricious. Appropriate disclaimers may be in line when specifying or adopting LEED standards in light of the very serious allegations made in this litigation. And stay tuned for developments.

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