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USGBC, LEED Targeted by Class-Action Suit

October 22, 2010

By Tristan Roberts
This article originally appeared on BuildingGreen.com

Henry Gifford
Photo © Travis Roozee
Henry Gifford, whose lawyer filed a class-action lawsuit against USGBC, has been an outspoken LEED critic since 2008.

The U.S. Green Building Council (USGBC) and its founders have been named as defendants in a class action lawsuit filed in federal court. Filed on behalf of mechanical systems designer Henry Gifford, owner of Gifford Fuel Saving, the lawsuit was stamped on October 8, 2010, at the U.S. District Court for the Southern District of New York. Among other allegations, the suit argues that USGBC is fraudulently misleading consumers and fraudulently misrepresenting energy performance of buildings certified under its LEED rating systems, and that LEED is harming the environment by leading consumers away from using proven energy-saving strategies.

Alleged fraud and deceptive practices

The suit alleges that USGBC’s claim that it verifies efficient design and construction is “false and intended to mislead the consumer and monopolize the market for energy-efficient building design.” To support this allegation Gifford relies heavily on his critique of a 2008 study from New Buildings Institute (NBI) and USGBC that is, to date, the most comprehensive look at the actual energy performance of buildings certified under LEED for New Construction and Major Renovations (LEED-NC). While the NBI study makes the case that LEED buildings are, on average, 25–30 percent more efficient than the national average, Gifford published his own analysis in 2008 concluding that LEED buildings are, on average, 29 percent less efficient. A subsequent analysis of the NBI data by National Research Council Canada supported NBI’s findings, if not its methods. (Commentary questioning the respective statistical approaches of both the original study and Gifford’s analysis appears in this BuildingGreen blog post by Nadav Malin, president of EBN’s publisher BuildingGreen)

Using that study and USGBC’s promotion of it, the suit alleges fraud under the Sherman Anti-Trust Act, among other statutes. Gifford’s suit demands that USGBC cease deceptive practices and pay $100 million in compensation to victims, in addition to legal fees. Under the Lanham Act, the suit repeats the same concerns in alleging deceptive marketing and unfair competition. Other allegations include deceptive business practices and false advertising under New York State law, as well as wire fraud and unjust enrichment.

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Class-action suit

By having his lawyer, Norah Hart of Treuhaft and Zakarin, file a class-action lawsuit, Gifford is not only claiming that he has been harmed by USGBC, but that he is one of a class of plaintiffs that have been harmed. According to the suit, those plaintiffs include owners who paid for LEED certification on false premises, professionals like Gifford whose livelihoods have allegedly been harmed by LEED, and taxpayers whose money has subsidized LEED buildings.

The class action approach may be technically difficult to pursue in this case, says lawyer Shari Shapiro in an article on her green building law blog. Among other things, Shapiro notes that in a class action suit it is relevant whether, among other things, “the plaintiffs are enough alike so that their claims can be adjudicated together” and “whether the lead plaintiffs adequately represent members of the class.” Given the variety of plaintiffs Gifford is trying to represent, that may be hard, she says.

Shapiro, assuming that Gifford has benefited from the green building wave, even questions whether Gifford has even been harmed, as he would have to be to take part in the lawsuit. However, Gifford says that there’s no question about that. “Nobody hires me to fix their buildings,” he says. Though not an engineer, Gifford is respected in energy efficiency circles for his technical knowledge. He explains that he has lost out because owners are fixated on earning LEED points, and he doesn’t participate: “Unless you’re a LEED AP you're not going to get work.” That’s unfair, he claims, because while USGBC says that its product saves energy, it doesn’t. Gifford says that his services actually save energy, and he’s prepared to prove it by sharing energy bills from buildings he has worked on.

Whether many other building professionals feel the way Gifford does, and whether they’re willing to go on the record, will be one aspect of this case to watch. Gifford indicated that the response so far has been mixed. As he says, “Everybody has the same response: thank you, thank you… let me know how it goes.”

Was there fraud?

If the case does move ahead, Stephen Del Percio, a lawyer and author of the blog GreenRealEstateLaw.com, says that it will be challenging to litigate. “You can’t prove fraud just by circumstantial evidence,” he says. Even if the NBI study is false, that may not be enough. “You have to intend to mislead people,” he says. Gifford saysthat he doesn’t have evidence that anyone at USGBC tried to mislead the public, but if the suit proceeds the discovery process could, in theory, turn up emails or other communications that support Gifford’s case.

USGBC performance initiatives

Gifford’s complaints focus on the 2008 study and how USGBC publicized it, but they don’t appear to account for other aspects of LEED. Gifford focuses on buildings certified under LEED for New Construction (LEED-NC), but the scope of LEED-NC and other LEED rating systems is clearly distinct. LEED for Existing Buildings, launched in 2004, looks at actual building performance, and in 2006, USGBC announced that buildings certified under LEED-NC would have the option of being enrolled at no charge in LEED for Existing Buildings. In 2007 USGBC launched LEED for Homes. While that system focuses on design and construction of new homes, it requires on-site verification including blower-door testing during construction, helping ensure that construction practices follow the design intent.

Although this final piece may be too late for Gifford and the contentions of his lawsuit, in 2009 USGBC began requiring reporting of energy and water data for new buildings certified under the newer LEED 2009, and it set up infrastructure to invite sharing of information from all LEED-certified buildings (see “USGBC Expands Data Collection from LEED Buildings”).

Through this effort, the Building Performance Partnership, USGBC hopes to offer special help to LEED-certified buildings that are not living up to expected performance, according to Brendan Owens, P.E., vice president for LEED technical development at USGBC. Although USGBC has generally played down the possibility because it doesn’t want to discourage participation in LEED, and energy reporting, CEO Rick Fedrizzi has suggested that non-performing buildings may lose LEED certification in one form or another.

Despite these efforts, Gifford complains that “the green label gives the designer, the developer, the contractor and the owner the right to hold a press conference saying that their building is energy-efficient, while the LEED system guarantees anonymity” when it comes to reporting actual energy use.

Why sue?

Asked why he is motivated to go to court, Gifford says, “I’m afraid that in a few years somebody really evil will publicize the fact that green buildings don't save energy and argue that the only solution [to resource constraints] is more guns to shoot at the people who have oil underneath their sand.” In other words, he says he's hoping to make the green building movement more honest so that it’s not embarrassed down the road.

USGBC says that it was reviewing the litigation and would respond in due course. In addition to USGBC, other named defendants are David Gottfried, a USGBC founder; Rob Watson, who helped start LEED in the 1990s while working for the Natural Resources Defense Council; and Rick Fedrizzi, a co-founder and current CEO. Responding to a request for comment, Watson says, “I can’t comment on ongoing litigation except to say that USGBC is examining the complaint. USGBC has confidence in LEED and in our role in stimulating positive market change.”

Michael Italiano, the only key USGBC founder not named as a defendant, says that while he hadn’t reviewed the case, “To me it sounds frivolous and it doesn’t have much chance.” He notes, “LEED doesn't guarantee anything, and I think LEED gives people the tools to understand that.” Owners who want to verify performance can enroll in LEED for Existing Buildings, monitor their energy bills, and take other actions, he adds. A lawyer and currently CEO of Market Transformation to Sustainability, a nonprofit behind green standards, Italiano says that lawsuits targeting standards that have allegedly constrained trade typically focus on lack of a bona fide consensus process of standard-setting. In the case of LEED, he says, a broad array of stakeholders has been involved in writing and reviewing LEED standards.

Russell Perry, FAIA, of SmithGroup, agreed that if anyone thinks LEED for New Construction guarantees higher energy performance, they have the wrong idea. “LEED-NC is saying that a building has been designed to meet a certain standard, but there are many variables that go into the actual performance, only one of which is design.” Perry also notes that LEED includes a broad array of topics, only one of which is energy. Referring to climate change and other environmental and health issues, Perry adds, “I don’t think that this kind of distraction helps us move the ball down the field.”

Copyright 2010 by BuildingGreen, LLC

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