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Henry Gifford Files Opposition to USGBC’s Motion to Dismiss Amended Complaint

SDNY - GRELJ - Henry Gifford

Late Tuesday, Henry Gifford and his attorneys filed their opposition papers to the USGBC’s motion to dismiss the amended complaint in Gifford et al. v. USGBC, the much-ballyhooed lawsuit that is currently pending in the Southern District of New York (Case No. 1:10-CV-07747).

The original return date for the motion was April 21, but the court granted Mr. Gifford an adjournment to May 2, with USGBC’s reply papers due by midnight tomorrow, May 6. The court noted in a separate filing that it will grant no further adjournments on this motion, and it is likely that a decision will not come down for, at the very least, several months after the motion is fully submitted later this week. (Note that, right now, it is unclear whether the court will require oral argument).

As you will recall, the USGBC’s motion to dismiss is based on Rule 12(b) of the Federal Rules of Civil Procedure and claimed that (1) Mr. Gifford and his fellow plaintiffs lack standing to maintain their suit; and (2) the amended complaint fails to state a cause of action upon which relief can be granted.

Among other things, with respect to this second claim, USGBC’s moving papers argued that Mr. Gifford’s amended complaint fails to “plausibly allege” a Lanham Act claim for false advertising. In addressing the 2008 New Buildings Institute study that is essentially the gravamen of the allegations in the amended complaint, USGBC’s papers argued that “the 2008 [press] release [describing the results of the NBI study, concluding that new LEED-certified buildings are on average performing 25 percent to 30 percent better than non-LEED buildings in terms of energy use] does nothing more than accurately report the conclusion of the NBI study and provide a link to the study itself, so that persons in the building industry could make their own judgments about that study.”

Whether or not those conclusions were misleading will be an interesting question for the Southern District to consider and may ultimately decide the motion. However, Mr. Gifford’s opposition squarely addresses this issue:

[t]he NBI study simply does not support the central premise of the LEED myth, that LEED saves energy. . . . USGBC hails the results of the NBI study far and wide . . . . In truth, the data collected for the 66 page study reveals that LEED buildings use 29 percent more energy. . . . [B]alancing the age of the compared buildings would show that the LEED sample has an average (mean) energy use index of 105,000 BTUs per square foot per year, and the CBECS buildings of the same age had an average (mean) energy use index of 81,600 BTUs per square foot per year. To be anything but intentionally misleading, the Defendant [USGBC] would have to qualify the study thus: “by comparing new LEED buildings to older non-LEED buildings, and by comparing the median average of one dataset to the mean average of another dataset, and by carving out a sample of only 22 percent of all the LEED-certified buildings, we arrived at the conclusion that LEED-certified buildings perform better than non-LEED buildings in terms of energy use.” The Plaintiffs can easily meet their burden of proving the study is not sufficiently reliable to conclude that the Defendant’s LEED-certified buildings save energy.

Opposing Memorandum of Law, at 13.

The NBI study has been a long-standing lightning rod for both proponents and critics of LEED, and my hope is that the Southern District provides some measure of guidance and/or closure on how the study was conducted and its conclusions distributed to the green building community.

Mr. Gifford’s papers also dispute that, in order to have standing under the federal false advertising statute (Section 43(a) of the Lanham Act), it is necessary for a plaintiff to be a competitor of the defendant. They cite to a series of cases that “note that the requirement is not set forth in the text of Section 43(a).” (citing Fashion Boutique of Short Hills, Inc. v. Fendi USA, Inc., 314 F.3d 48, 56-58 (2d Cir. 2002)). “Because Plaintiffs are competitors of USGBC with a very real stake in the market for energy efficient building expertise . . . the USGBC’s assertions are simply incorrect as a matter of law,” Gifford’s attorneys argue. Although USGBC acknowledged in its moving papers that the law in the Second Circuit on this point is not clear, it will be interesting to see how the Southern District handles these arguments – and the ambiguous case law – in its decision.

When reading Mr. Gifford’s papers, I was also reminded that Shari Shapiro questioned the wisdom of USGBC raising the argument in its moving papers that New York’s consumer fraud statutes should be inapplicable to its alleged conduct on the basis that “USGBC’s marketing . . . is directed at businesses and professionals. . . . The mere fact that the USGBC website is publicly accessible does not convert USGBC’s promotion and marketing into ‘consumer-oriented’ conduct.” Moving Memorandum of Law, at 20. At the time, she wrote “it’s pretty clear that the USGBC is marketing directly to consumers, contrary to the Memorandum of Law in support of the USGBC’s Motion to Dismiss.”

Kudos to Ms. Shapiro, because this is exactly what Mr. Gifford’s attorneys argue in their opposition. “If the USGBC website were password protected for professional members only, that assertion would be more convincing,” Mr. Gifford’s attorneys write. “But the USGBC website is aimed at giving the general public an overview of LEED, with ‘What LEED Is’ on the masthead. USGBC’s website explains to the layman consumer: ‘By using less energy, LEED-certified buildings save money for families, business, and taxpayers. . . It’s absurd to think USGBC is not directing its marketing at the tenant-consumer.” Opposing Memorandum of Law, at 14-15.

Finally, Mr. Gifford’s attorneys also acknowledge that the relief sought by the plaintiffs is “primarily injunctive,” and that the relief they “most wish for is full disclosure, compelling USGBC to release actual utility rates in its buildings, in order to foster a healthy marketplace of ideas, as some progressive municipalities have started to require.” Opposing Memorandum of Law, at 16.

We’ll keep an eye out for USGBC’s reply papers and update you accordingly once the motion has been fully submitted for the Southern District’s consideration.

A copy of the opposing memorandum of law is available for download here.

USGBC filed its reply memorandum of law on Friday afternoon, and a copy is available for download here.

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