In a written Memorandum and Order that was issued on Monday, U.S. District Court Judge Leonard Sand granted USGBC’s motion to dismiss Henry Gifford’s amended complaint in Gifford et al. v. USGBC. As you will recall, the motion was fully submitted to the Southern District of New York on May 6 and Judge Sand heard oral argument back on July 26. Again, the motion was based on Rule 12(b) of the Federal Rules of Civil Procedure and claimed that (1) Mr. Gifford and his fellow plaintiffs lacked standing to maintain their suit; and (2) the amended complaint failed to state a cause of action upon which the SDNY could grant relief to Mr. Gifford and his fellow plaintiffs.
Unfortunately for those of us who were hoping that the Southern District would analyze the 2008 NBI study – and USGBC’s dissemination thereof – as part of its analysis, Judge Sand’s decision rested squarely on his finding that Mr. Gifford and his fellow plaintiffs lacked standing to assert their claims under Section 43(a) of the Lanham Act. (In other words, the opinion does not address the underlying merits of Mr. Gifford’s claims against USGBC.)
Judge Sand identified two tests that Second Circuit courts have used to assess standing under the Lanham Act: the “strong categorical” and the “reasonable commercial interest” tests. The former requires a plaintiff to “be a competitor of the defendant and allege a competitive injury.” The latter requires a plaintiff to demonstrate “(1) a reasonable interest to be protected against the false advertising; and (2) a reasonable basis for believing that the interest is likely to be damaged by the alleged false advertising.”
After quickly disposing of any standing argument under this first test, Judge Sand turned to the second test:
Plaintiffs do not adequately allege a reasonable commercial interest that is likely to be damaged by USGBC’s alleged false statement: the press release indicating that new LEED-certified buildings perform on average “25-30% better than non-LEED-certified buildings in terms of energy use.” The “reasonable basis” prong requires the plaintiff to show “both likely injury and a causal nexus to the false advertising.” As to likely injury, Plaintiffs’ allegation that “LEED has begun to subsume the Plaintiffs’ roles’ is entirely speculative.” . . . Because there is no requirement that a builder hire LEED-accredited professionals at any level, let alone every level, to attain LEED certification, it is not plausible that each customer who opts for LEED certification is a customer lost to Plaintiffs. . . . Whatever the merits of Plaintiffs’ claim that the conclusion of the [NBI study] was false, their allegation that their “sales are specifically affected by [USGBC's] behavior” is too speculative to permit recovery under the Lanham Act.
By dismissing Mr. Gifford’s federal claims, Judge Sand was also able to dismiss his state law claims (alleging false advertising and deceptive trade practices) on jurisdictional grounds.
Earlier today, USGBC issued a press release with comments on the decision from Rick Fedrizzi. We’ve reached out to Mr. Gifford’s attorneys – who could still, among other things, appeal the decision up to the Second Circuit – for a reaction and will follow up here at GRELJ as warranted.
A copy of the decision is available for download here.