Last year several individuals, including a green building consultant, an architect, and an engineer, sued the U.S. Green Building Council (USGBC) in federal court in New York, alleging that the organization made false or misleading statements in connection with its Leadership in Energy and Environmental Design (LEED) certification system for green buildings.
Specifically, Henry Gifford and the other plaintiffs accused the USGBC of making false statements regarding the energy and money-saving aspects of LEED certification in a 2008 press release, which says the results of a 2008 study:
indicate that new buildings certified under the [USGBC’s] LEED certification system are, on average, performing 25-30% better than non-LEED certified buildings in terms of energy use
The plaintiffs brought a federal false advertising claim under the Lanham Act and state claims under the New York Deceptive Trade Practices Act.Â
Both the federal and state claims were based on the premise that the plaintiffs were harmed by the allegedly misleading statement because it diverted customers from the plaintiffs’ business to LEED-accredited professionals.
The court disagreed and last month dismissed the suit.Â
In a 9-page Order (Gifford-USGBC_Order), Judge Leonard B. Sand held that the plaintiffs lacked standing to sue the USGBC for the alleged false advertising because they could not demonstrate that their businesses were damaged by the statements at issue.
To show standing for a claim of false advertising under the Lanham Act in the Second Circuit (which includes New York federal courts), a plaintiff must (1) be a competitor of the defendant, or (2) show a reasonable interest to be protected against the alleged false advertising and that the interest is likely to be damaged by the alleged false advertising.
The court held that the plaintiffs are not competitors of the USGBC because plaintiffs provide advice on the design and construction of energy efficient buildings while the USGBC reviews and rates designs created by others.
As to the reasonable interest prong, the court held the plaintiffs had failed to establish a causal nexus between the USGBC’s alleged false statement and clients of the plaintiffs supposedly lost to LEED-accredited professionals:
With the exception of Gifford, each Plaintiff designs and consults on specific elements of individual buildings, including heating and cooling systems, moisture and mold remediation, and architectural design. Plaintiffs do not allege that LEED certified buildings do not require such services or that those services must be provided by a LEED-accredited professional in order to attain certification. 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.
While the plaintiffs here took on a certifiying organization directly, most greenwashing cases are brought against manufacturers and sellers of products for alleged false or misleading acts or statements made in connection with their own products.
This decision should keep it that way, at least for organizations that certify green skills and services, because it makes establishing the requisite standing to get into court very difficult for putative challengers. Â
For green skills certifiers the universe of direct competitors is rather small, and non-competing plaintiffs are likely to have a hard time showing causal links between false or misleading statements and damage to their businesses.
