Top Navigation

Update: What’s Next for Henry Gifford’s Class Action Suit Against USGBC?

Late last week, I had the opportunity to speak with Norah Hart, counsel for Henry Gifford in his class action suit against the USGBC in the Southern District of New York, which has elicited some very strong reactions throughout the green building community. According to Ms. Hart, USGBC has retained outside counsel to defend it in the action, and is currently working with Mr. Gifford (through Ms. Hart’s office) to understand Mr. Gifford’s intentions in filing the suit. Here’s, specifically, what Ms. Hart told me she has communicated to USGBC through its attorneys:

USGBC has said that its goal is ‘market transformation’ and indeed they have achieved remarkable results and are in the fortunate position to be able to truly effect change.  We believe that the disclosure of utility bills – which some districts are already requiring – is the fastest way to bring an energy efficiency premium into the market. Markets are most efficient when accurate information is available. If buyers can see the past energy use bills of a property, they can weigh its energy efficiency into the price they will pay. If developers and planning officials see the actual energy bills of existing buildings in their region, they can choose design and construction techniques that are proven to work, and inevitably, will begin to adopt practices that save fuel and money. The disclosure of actual energy use bills will transform the market.

According to Ms. Hart, the plaintiffs are also currently “formulating a list of the injunctive measures [they] want to see, namely, that actual energy bills for all [LEED-certified buildings] are available, databased in an accessible, meaningful way, so information is available with which honest assessment can be done.”

It’s interesting that the parties seem to be – at least on the surface – engaged in these discussions at such an early stage in the litigation. However, the negotiations raise a number of questions, particularly with respect to the building performance data that Ms. Hart hopes to obtain. First, as Larry Spielvogel has pointed out, that raw data is not particularly useful without other pertinent information about each building (such as its occupancy levels, user types, etc.). Second, much building performance data is highly proprietary; as attorney Brian Anderson noted in an email to me, what would be the implications for that raw data becoming public knowledge? “Can USGBC really force building tenants and owners to give information if they have not signed off on such disclosures in their leases?” Anderson asks.

Independent from this latest development, I have also been getting quite a few inquiries over the past few weeks about next legal steps in the action and, assuming something isn’t worked out between the parties in the interim, here’s a rough outline of how the action could move forward:

  • The Federal Rules of Civil Procedure require a party to respond to a complaint within twenty (20) days, unless the time to respond is extended by mutual consent of the parties’ attorneys (which it has been here for USGBC, according to Ms. Hart).
  • Unless the parties are able to reach some sort of resolution, I expect that USGBC will move to dismiss the complaint under Rule 12 of the Federal Rules of Civil Procedure (which permit a party to make such a motion in lieu of answering on a number of bases); 
  • Finally, my guess is that such a motion would not be successful (at least with respect to all of the causes of action in the complaint). At that point, the parties could go back to the negotiation table, or the plaintiffs could move to certify the class under Rule 23(a). In deciding that type of motion (which USGBC would oppose), a court is permitted to order limited discovery, which might (or might not) create a pressure point encouraging settlement. It’s also important to note that the timeframe during which these procedural mechanisms will play out are significant (months, if not years), so this is a story that we will likely be tracking for some time.

 As always, we’ll stay on top of any further developments in the suit and keep you posted here at GRELJ.

, , , , , , , , , ,

4 Responses to Update: What’s Next for Henry Gifford’s Class Action Suit Against USGBC?

  1. Larry Schnapf November 10, 2010 at 10:17 pm #

    Im not surprised. This lawsuit has screamed settlement since it was filed. It has achieved its purpose-publicity on the energy efficiency problem.I dont see this getting class certification.

  2. Ujjval Vyas, Ph.D., J.D. November 11, 2010 at 2:49 am #

    Stephen,

    It is important to keep an even keel about this suit as you are clearly doing. It is rather distressing to see all the rather silly condemnations of Gifford and the immediate view that this suit has no merit. Hart is an entrepreneurial attorney seeking to right a perceived wrong with what she believes (after some significant analysis, since this in on a contingency basis) is a cognizable claim. Those of us who are attorneys know full well that just such entrepreneurial attorneys have been crucial to many important environmental and social justice causes whatever one may think regarding the intellectual advisability of the substance of the claims or even the aggregate value of class-action claims themselves. At the least, Ms. Hart has done a cost-benefit analysis of some kind to proceed.

    The importance of this suit (and other recent suits) is two-fold. First it indicates that the era of easy, breezy, beautiful green building is over (though the selling of products to this adolescent market will probably continue apace). Secondly, and of much greater importance, this suit calls us to try and distinguish between advocacy-based hoo-hah in green/sustainable building and the much harder work to be done. The suit, generally speaking, alleges that the USGBC makes a lot of money from telling people pleasant half-truths and marketing bunk while presenting themselves as the anointed protectors of the environment and consumer’s interest related to green building. They allegedly do this by representing their products and AP certification schemes in a questionable way in terms of ultimate building performance and relevant knowledge base which leads consumers to a detrimental reliance on these representations while doing so at the expense of the already licensed professionals and others who the government has given special purview over the built environment.

    It is clear that much of what passes as green “market transformation,” to use that much bandied term, is more like the self-help, vitamin or supplement market than a cure for what ails the built environment. It is difficult to engage in market transformation if one has a rather threadbare understanding of markets as seems to be the case with the USGBC in my estimation. One is more inclined to say that the USGBC and many other related organizations are not involved in market transformation so much as “marketing transformation”.

    Yet, as we know, to continue the analogy, there is a gigantic market for self-help regimens, supplements, and vitamins of all sorts with very questionable claims servicing a willing and often gullible consumer base. It is for good reason that the lobbyists for the vitamin and supplement sector spend a great deal of money to prevent vitamins and supplements from being examined too closely or regulated by the FDA. At the same time it is staggering the number of pseudo-scientific studies that are cited to suggest a therapeutic role for everything from fiber to Omega-3 to colonics. The world of green building, like self-help, supplements, and vitamins, clearly suffers from a massive case of “publication bias” as it is called in scientific circles. But these market sectors make staggering amounts of money on the basis of this publication bias while fulfilling some important desire of the consuming public.

    This suit begins to suggest (whether it will stick or not as a class-action is a different issue) that there is a strong market for making money off the lack of due diligence of many public sector and private sector consumers of green building rating products (the USGBC’s ever enlarging suite of products has encouraged copy cats of all types and pseudo-standards, some better, many much worse). In this arena at least, the desire to educate or to have an educated consumer still seems a long way off.

    For my part, I am looking forward to watching how this suit proceeds and learning more about the curious discussions already taking place between plaintiff’s counsel and USGBC counsel. The suggestion that requiring the reporting of utility data serve as a mechanism for appropriate pricing signals to the market seems odd and not just for the reasons you indicate.

    I recently had a discussion with the chairperson of a US real estate MBA program who recently met with the head of the primary real estate association in Greece where the new EU reporting rules for energy consumption of all buildings up for sale or lease had recently been put into place. The Grecian representative indicated that their whole real estate market had been turned upside down because of the additional transaction costs, valuation volatility and uncertainty imposed by the new regulations. This is purely anecdotal so of limited value, but still of some note. In the UK, which is subject to the same EU regulations, recent reports indicate that compliance with the required documentation and reporting of building energy efficiency was at a meager 40%. My own work with a number of colleagues demonstrated significant problems with the long-term claims of ENERGY STAR homes and the rigorous methodological care necessary to obtain meaningful results.

    One important part of human activity has always been to show that the emperor has no clothes, as it has always been a part of human activity to take advantage of the inability of many to accept that their particular emperor has no clothes. The USGBC’s rent-seeking as well as attempts to skew the market are quite banal in the marketplace-at-large (some might even say, its just good inside-the-beltway business), the real question is whether its disproportionate share of the market is a boon or hindrance to the development of a more robust market for higher-performing buildings. Even more, what does this suit portend for the ubiquitous attempts by the USGBC to get LEED included in legislation, regulations and codes of all types throughout the country. The jury is still out on these issues and the shadow cast by this suit may have some impact on the ultimate verdict.

Trackbacks/Pingbacks

  1. Green Building Cites: Green Litigation « LAW under CONSTRUCTION - November 17, 2010

    [...] Finally, an individual recently brought a class action against the U.S. Green Building Council, alleging, in essence, that LEED promises outcomes it can’t deliver.  Excellent coverage here and here.      [...]

  2. Defining the Upper Limit of “Green” | Ace Campaign - January 12, 2011

    [...] to feed yet another bureaucracy.In fact, objections to the program have grown so vociferous that a class action suit against the USGBC charges it with cheating customers and acting as a monopoly.Given that, it is [...]

Leave a Reply