LEED Avoids Class Action, Energy Savings Claim Left Untested

There’s big news in the battle between consultants in the green building industry and the U.S. Green Building Council (“USGBC”). Following almost a year of litigation, it appears that the USGBC may have defeated a $100 million class action lawsuit brought by engineers and designers, according to a court order issued last week. The plaintiffs’ complaint filed last October argued that USGBC made false claims about the energy efficiency of buildings certified under its LEED program. According to plaintiffs, who were not LEED accredited professionals, the USGBC’s allegedly false claims about energy saving and energy efficiency deceived consumers into pursuing LEED certification, and along with it, hiring LEED accredited consultants. But the veracity of USGBC’s energy efficiency claims remains undecided for now, as the federal district court for the Southern District of New York has ruled that the plaintiffs lacked “standing” to pursue their case under both federal and state false advertising laws.

More precisely, the court found that engineers and designers were not in a position to claim that the alleged false advertising could have harmed them.  The court rejected the plaintiffs’ injury claims. For one thing, engineers and designers are not direct competitors of USGBC – the Council certifies buildings, while the plaintiffs provide construction and design consulting services. Also, according to the court, the engineers and designers could not show that any alleged false advertising by USGBC caused them to lose clients, because the LEED building certification program does not require builders to use LEED accredited engineers or designers. Even if the USGBC deceived builders about the LEED program, the court reasoned, LEED didn’t preclude them from hiring plaintiffs.

 

 

Naturally, energy use is a critical component of the LEED program. And while the class of dejected New York plaintiffs may never get to challenge the truth of LEED’s past advertising, stakeholders involved in green building can draw some valuable lessons from this skirmish when it comes to green building certification and energy efficiency. 

 

The court’s order briefly touched on the most important of these lessons. Citing USGBC’s own filing in the case, the court noted that green building certification doesn’t necessarily address energy performance so much as the potential for energy efficiency. In other words, LEED certification may establish the potential for energy saving, but it doesn’t prove it. Then again, the LEED program does award points for the use of renewable energy, for on-site generation of renewable energy, and for monitoring and reporting energy use. Bottom line – because so many different factors go into a green building score, a clean/renewable energy claim about a green building can be potentially misleading.

 

So what does this mean? For one thing, one shouldn’t discount the value of a green building certification, whether from LEED, National Association of Home Builders, Green Globes, or any other comparable program. Certifications provide a nice, simple way to prove the green credentials of a building. On the other hand, additional disclosure may be prudent, particularly for those who market or advertise certain green attributes of a building. Architects, builders, owners – and anyone else who might profit from such claims – must be careful to not overstate or misstate the significance of a green building certification. With respect to energy efficiency, for example, a good LEED score may be the result of significant energy efficiency, or it may not. 

 

Finally, what about the New York plaintiffs and their $100 million claim against USGBC? While the merits of their case remain unproved, don’t be surprised if the plaintiffs appeal the district court’s order. If they can convince a higher authority that they may have lost business to the LEED program, they may get a second chance to go after USGBC’s energy efficiency claims.

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Jim G - August 25, 2011 1:10 PM

In working in the field, I can attest that LEED is a credential that is used to market individuals and businesses in going after A/E work. Any tool that is used for marketing in theory should provide some boost in terms of landing projects and revenue, so it sounds crazy that the suit was dismissed on those grounds. However, I'm not in the legal field nor do I know the true marketing value of the LEED credential in building owners' decision making.

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