The United States District Court for the Southern District of New York has dismissed Henry Gifford’s lawsuit (PDF) against the US Green Building Council.
Gifford originally filed a class action lawsuit for $100 million dollars based on the alleged false advertising by the USGBC. The lawsuit was later amended to only cover four plaintiffs but the allegations remained the same — the USGBC was falsely claiming that LEED certified buildings were energy efficient.
When Gifford filed his amended lawsuit, I questioned how he would prove he was harmed by the alleged false advertising. It turns out that this was one of the lawsuit’s fatal flaws.
A plaintiff that brings a lawsuit must show standing in order to prove that the right person is bringing the lawsuit. Since Gifford’s allegations of false advertising fell under the Latham Act, he had to satisfy two tests to show standing:
(1) The Strong Categorical Test
"The strong categorical test provides that ‘the plaintiff must be a competitor of the defendant and allege a competitive injury.’" The court held that Gifford, a building energy efficient consultant, and the USGBC, which certifies buildings, were not competitors because Gifford does not certify buidings.
(2) The Reasonable Commercial Interest Test
Under the reasonable commercial interest approach, a plaintiff must demonstrate "both likely injury and a causal nexus to the false advertising." Perosnally, I always believed this test would be Gifford’s downfall. In holding that Gifford failed this test, the court explained that owners could hire any consultant they wanted for a LEED building. Furthermore, the court posited that even if Gifford could show one owner that would only hire a LEED Accredited Professional consultant, it could not be proven that the owner’s decision was based on the alleged false advertising.
In short, the court deemed the lawsuit too speculative. I think the court got it right.
What say you?