*The USGBC And The LEED Rating System: Are They Leading Or Misleading The Way To Energy Efficiency?
April, 2011
by Christopher R. Henson and Michael J. McSherry
Introduction
In October 2010, a group of design professionals led by Henry Gifford (“Gifford”) took aim at the United States Green Building Council (“USGBC”) and its founders in a class action lawsuit filed in federal court. Gifford v. U.S. Green Building Council, et al., No. 10-cv-7747 (S.D.N.Y. October 8, 2010). Gifford attacked the USGBC’s Leadership in Energy and Environmental Design (“LEED”) rating system, which certifies buildings as being designed and constructed in an environmentally friendly manner. Specifically, the lawsuit alleges that the USGBC deceived consumers by fraudulently misrepresenting that LEED certified buildings are more energy efficient than conventionally-built buildings. On February 8, 2011, in a strategic move, Gifford amended his lawsuit, removing the class status and monopolization allegations and instead focusing on claims of false advertising and consumer fraud under both federal and New York state law. Additionally, Gifford added several design professionals as plaintiffs whom he alleges suffered injuries as a result of the USGBC’s misrepresentations regarding the energy efficiency of LEED certified buildings.
Facts
The USGBC is a non-profit organization that owns the LEED certification systems and receives fees from building owners seeking LEED certification. According to the USGBC website, there are currently approximately 140,000 design professionals accredited by the USGBC to advise consumers on how to design LEED certified buildings.
In 2008, the New Buildings Institute (“NBI”) and the USGBC released a comprehensive study of LEED buildings, asserting that LEED accredited buildings are, on average, 25% to 35 % more energy efficient than non-LEED buildings. Cathy Turner and Mark Frankel, Energy Performance of LEED for New Construction Buildings, NEW BUILDINGS INSTITUTE, March 2008. Gifford, a mechanical systems designer and President of Gifford Fuel Saving, Inc., published his own article criticizing the USGBC and the LEED rating system. Henry Gifford, A Better Way to Rate Green Buildings, NORTHEAST SUN, Spring 2009. Gifford’s analysis concluded that the USGBC did not base its LEED rating on actual measurements of efficiency, but rather on anticipated energy levels. Gifford further determined that LEED buildings are, in fact, 29% less efficient than non-LEED buildings. Gifford relies heavily on this critique to support the allegations contained in his lawsuit.
The Lawsuit
Essentially, the suit alleges that the USGBC misleads consumers into paying for a product – the LEED certification – that is not what it purports to be. Moreover, the plaintiffs claim that as a result of USGBC diverting consumers on false pretenses to LEED accredited professionals, they are losing customers who desire design and construction techniques that achieve energy efficiency. In addition to money damages, the plaintiffs seek injunctive relief against the USGBC, enjoining it from promoting the energy efficiency of LEED certified buildings and compelling it to disclose the actual energy bills of existing LEED certified properties. Barring a settlement or dismissal, this litigation could force owners and tenants of LEED certified buildings to produce their energy bills and perhaps other highly proprietary data to determine if LEED certified buildings are more sustainable and conserve more energy than non-LEED buildings. However, at this time, it remains uncertain whether this lawsuit will even get that far.
On April 6, 2011, the USGBC filed a motion to dismiss Gifford's lawsuit for: (1) lack of subject matter jurisdiction; and (2) failure to state a claim upon which relief can be granted. Although the USGBC's motion refutes Gifford's allegations that the NBI study on LEED buildings constitutes false advertising, the motion primarily contends that Gifford and the other plaintiffs lack standing to sue the USGBC. The U.S. Constitution mandates that a party must demonstrate to the court it has suffered an injury-in-fact as a result of the conduct alleged. The USGBC challenges whether Gifford and the other plaintiffs can properly allege such injury to confer standing on them. Regardless of whether this litigation advances past its infant stages, the plaintiffs' allegations carry substantial implications for design professionals.
Practice Point
Gifford’s lawsuit raises significant issues with the LEED rating system that all design professionals must be cognizant of when contracting with building owners and developers to design and construct LEED certified buildings. First, design professionals can protect themselves from liability by assuming that LEED rating systems are imperfect. Seeking an independent opinion from experts in the energy efficiency field marks a safe and smart method to incorporate sustainability into a building’s design and construction. Second, design professionals should understand and communicate to their customers that simply achieving LEED certification may not automatically guarantee energy efficiency and therefore cost savings. Accordingly, design professionals should avoid contract provisions that guarantee energy efficiency and/or cost savings upon reaching LEED certification. In short, as the Gifford lawsuit languishes in federal court, design professionals should act to ensure they realize the promise of the LEED rating systems while keeping in mind their potential pitfalls.
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