Green Building Law Blog : Green Building Lawyer & Attorney : Shari Shapiro: Calliope Communications, LLC

While I was in New Orleans for the Green Matters Conference, I met the most extraordinary woman. Simone Bruni, better known in the Crescent City as the “Demo Diva,”  took her personal tragedy from Hurricane Katrina and turned it into a woman-owned and run demolition business, complete with hot pink front loader and giant dumpster.

I have written and spoken extensively on the lack of women in green. There are many reasons for it, I suppose. Green, particularly Green Building, is really a version of construction, and women represent only 3-6% of the building trades as a whole. But the lesson from the Demo Diva is that there is nothing really stopping women from becoming involved, even in the male dominated fields like demolition and construction! On the softer side, there is certainly no reason that women cannot be green building lawyers, sustainable investment advisors or involved in the marketing and selling of green products. Given that the economy is in a fragile recovery, green and sustainable businesses are leading the areas of growth. There are many programs specifically designed to help women acquire these skills. (A listing is available here.) Green Business Women is a nice site with resources for women looking to turn their business green.

But the hard truth is that this is a time with little demand and few jobs. What should women who have a passion or interest in sustainability do?

The first thing is to upgrade their skills—while the pressure is off, pursue training and education. If you were always tinkering or have a head for math, now is a great time to become an engineer. Villanova even has an online Master's in Sustainable Engineering and Control Engineering. 

The second is to have chutzpah. No job? Start a new company, like the Demo Diva did. There are programs which are designed to help women entrepreneurs, though I would argue that there are far too few of them. The Small Business Association has a Women-Owned Business section.

 As a country, we should look at what we can do to support women in green. One Horatio Alger story, even one as inspiring at the Demo Diva, is not enough. Small business loans for women starting green businesses would be a good start. These loans could come either from the government, of course. Or they could come from more established green businesses and businesses interested in becoming more green with a clear idea of the types of goods and services they need.

 WalMart has done this to some extent through the WalMart Foundation. WalMart awarded a grant of $400,000 to the Business and Professional Women’s (BPW) Foundation to launch the “Moving from Red to Green: Working Women in the Green Economy” initiative. The initiative, aimed at connecting women to the green economy by providing green job training established a pilot program by awarding $60,000 grants to four organizations to expand their capacity to train women for green jobs. But $400,000 is a small sum, and training women for green jobs is not the only way to invest in women’s green future. WalMart, or a company like it, could create a revolving loan fund, in which entrepreneurial grants are given to women-owned green businesses, and the interest from the loans goes back into the fund to loan to new women-owned green businesses.

 Women comprise 51% of the population and make most of the family purchasing decisions. According to a study by Aaron M. McCright from Michigan State University, women are more concerned than men with global warming.  Women in green business thus presents a potentially a fertile opportunity (forgive the pun) for employment, economic sucess and saving the planet. I hope that writing about these issues starts a conversation among women who are already involved in green and sustainability. We should be supporting each other to succeed in green and in business.

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NOTE: The opinions expressed in this post are entirely those of the author, and do not represent the position of the USGBC or the Delaware Valley Green Building Council.

As almost anyone in the green community knows, last week LEED Critic Henry Gifford sued the USGBC for, essentially, a few different flavors of fraud.  Mr. Gifford sued the USGBC as an alleged representative of a class of people who had been duped by the USGBC.  I posted last week that I did not think that the class action would survive class certification.  In that post, I provided a 30-second manager version of Advanced Civil Procedure.  Today, it is Anti-Trust 101.

 The causes of action Mr. Gifford brought against the USGBC are the following:

1. Monopolization through Fraud--Sherman Anti-Trust Act 15 USC Sec. 2
2. Unfair Competition--Lanham Act 15 U.S.C. Sec. 1125(a)(1)(B)
3. Deceptive Trade Practices--New York General Business Law Sec. 349 (a) and (h)
4. False Advertising--New York State General Business Law Sec. 350-a(1) and Sec. 350-a(3)
5. Wire Fraud--RICO--18 USC Sec. 1962(C)
6. Unjust Enrichment

[To avoid confusion, I will note here that the Complaint has two Fourth Causes Of Action.]

I will address the various causes of action in different posts this week, starting with Monopolization.

The Sherman Act  is intended to prevent the combination of entities that could potentially harm competition, such as monopolies or cartels.

Section 2 of the Sherman Act, 26 Stat. 209, as amended, 15 U. S. C. § 2, makes it an offense for any person to “monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States . . . .”

To prove monoplization, the plaintiff must show  “(1) the possession of monopoly power in the
relevant market and (2) the willful acquisition or maintenance of that power as distinguished
from growth or development as a consequence of a superior product, business acumen, or
historic accident.” United States v. Grinnell Corp., 384 U.S. 563, 570-71 (1966).

First, it is not entirely clear what market  the plaintiffs are alleging USGBC has a monopoly.  

A monopoly is a form of market structure where only one or very few companies dominate the total sales of a particular product or service. Monopoly power is defined as the ability to control price or to exclude competitors from the marketplace. The courts look to several criteria in determining market power but primarily focus on market share (the company's fractional share of the total relevant product and geographic market). A market share greater than 75 percent indicates monopoly power, a share less than 50 percent does not, and shares between 50 and 75 percent are inconclusive in and of themselves. In focusing on market shares, courts will include not only products that are exactly the same but also those that may be substituted for the company's product based on price, quality, and adaptability for other purposes. For example, an oat-based, round-shaped breakfast cereal may be considered a substitutable product for a rice-based, square-shaped breakfast cereal, or possibly even a granola breakfast bar.

Green Globes, Energy Star, Passive Haus, BREEM, and others exist in the realm of green building evaluation, but LEED certainly has the dominant market share.  But is this really the market? If building evaluation in general is the market, than surely the International Construction Code, which is the model code for most states and municipalities, has a broader market share and usage than LEED.  If energy performance is the market, then the ASHRAE codes which provide standards for energy performance and are used almost universally have a far more dominant market share.

 If professional certification of builders and design professionals is the market, than certifying to become a Registered Architect or a Professional Engineer must also compete with becoming a LEED accredited professional. 

Second, even assuming that LEED has a "monopoly" on some undefined market, Mr. Gifford must prove specific intent to acquire or maintain the monopoly position.  Mr. Gifford alleges a significant number of bad acts on the part of the USGBC, mostly centering around the USGBC's alleged misrepresentation of the energy performance of LEED buildings.  In the recitation of the claim, Mr. Gifford states that misrepresentation of energy performance of LEED buildings "is false and intended to mislead the consumer and monopolize the market for energy-efficient building design." 

The problem is, Mr. Gifford does not demonstrate how this false representation is conspiratorial or predatory.  The USGBC's actions, even if fraudulent, are not  intentionally prohibiting other rating systems from coming into existence or preventing other systems from proving they result in more energy efficient buildings. 

 So, Mr. Gifford's Anti-Trust Claim should go directly to jail--what a court may actually do is another matter entirely.

NOTE: The opinions expressed in this post are entirely those of the author, and do not represent the position of the USGBC or the Delaware Valley Green Building Council.

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I don’t know when I decided to become a “green building” lawyer. I saw the field was coming, almost four years ago. Green building on the rise, construction disputes emerge in almost any building project, why wouldn’t green building simply exacerbate an already fraught collaboration? My husband is an architect, so I knew about LEED accreditation, and it couldn’t possibly be as bad as the Bar Exam, so I took the test. Passed, no problem. Not nearly as hard as the Bar Exam.

I determined to give a talk at my local Whole Foods about green building. “You can’t do that,” my husband said, “You don’t know anything about green buildings.” He was right, of course, but why let that stop me?

On my “to do” list for 2007 was “start a blog.” Months went by, no blog. As I got more and more furious at myself for procrastination, one day I just started a Blogger blog. Creatively, I called it “Green Building Law Blog.” I put up a post or two and waited. I don’t know what I was expecting.
Then…hits. Lloyd Alter, at Treehugger, reposted one of my first blog posts, “Pink is the New Green” about insulation. BuildingGreen.TV liked a post I did on McMansion taxes, and soon we were off to the races.

In my early blogging days, I “met,” virtually of course, Steve Del Percio of Green Real Estate Law Journal. “Are you getting clients out of this?” I asked him. “No,” he reported. And yet, we kept doing it.

I was in on the first Twitter wave. By then Chris Cheatham of Green Building Law Update had joined us. At this point, a year or so in, I decided to move from a Blogger platform to a LexBlog custom blog.

 Chris, Steve and I competed for the green building law story of the day. Steve broke the Shaw Development v. Southern Builders case. Then I broke AHRI v. City of Albuquerque. Chris followed with Washington DC’s failed performance bond. I looked forward every day to seeing who had come up with something new, both appreciating and despairing when my doppelgangers broke something first.

Others joined us in the “cabal”—Douglas Reiser, Scott Wolfe, Chris Hill, Tim Hughes, Matt Devries. We would comment on each others’ stories, with good natured rivalry as we tried to outdo one another with our insights on this new field. We communicated with rival blog posts and twitter conversations.

I had not met many of these people, yet we were corresponding nearly every day, my modern day Pen Pals. During the course of our correspondence, both Steve and Chris Cheatham got married and I had two children.

From 2007 to 2010, the blog grew in prominence.  I appeared on MSNBC and the Philadelphia Inquirer did a full page spread. The field grew—suits were filed and different controversies emerged.

Honors connected directly to the blog’s prominence developed in 2009. I was appointed to the USGBC’s Legal Advisory Board. Awarded one of the top 40 lawyers under 40 in Pennsylvania. And, highest of the high honors, my “Blawg” made the ABA Journal’s list of the top 100 Law Blogs for 2009. It just so happened that I found this out on the same day that my second daughter was born. Now that was a good day.

I got a call one day last year—we are doing a conference on green building law, would you like to speak?  Why not?  By now my husband had decided I knew something about green building, so the only objection I got was leaving him at home for two days with the kids.

I soon learned that most of the Green Building Law cabal would be there, as well as Stuart Kaplow, who, behind the scenes, was doing more green building law practice than the rest of us combined and Susan Dorn, General Counsel for the USGBC. In short, the best minds in the business.

When we all got together, I discovered that these people I had been virtual colleagues with for years were even better in person. Warm, outgoing, smart and, above all, good humored. If I had a case which I needed help on or a referral to another jurisdiction, I know I could refer without hesitation on any of these people.

If you had told me when I began this endeavor that it would lead me to this place, I would never have believed you. But I am so grateful to these colleagues—no, friends---who push me every day to be more diligent, search longer and try harder to be at the top of my game. It is a pleasure and an honor to work beside you, and I cannot wait to see what we will do together.
 

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NOTE: The opinions expressed in this post are entirely those of the author, and do not represent the position of the USGBC or the Delaware Valley Green Building Council.

You had to know this was coming. I even predicted a Lanham Act and Consumer Fraud Act claim would be part of a good green litigation.

Yesterday, Henry Gifford, public critic of LEED (you may have read his Op-Eds in the New York Times) filed a class action law suit against the USGBC and its founders personally on behalf of "consumers, taxpayers, building design and construction professionals."  The allegations are essentially fraud and false advertising, an anti-trust claim and a RICO claim thrown in for good measure.  His theory is that the USGBC has falsely claimed that its rating system makes buildings save energy, and that building owners have spent more money to have their buildings certified, that professionals have gotten worthless professional credentials and people in general have been duped into thinking LEED has meaning. The Complaint can be downloaded here.

There will be a lot written on this suit--blog posts, client alerts, articles will dissect the wrongness or the rightness of the claims. Real estate and construction lawyers, including me, lit up at the sound of the stamp of the clerk in the Southern District of New York where the case was filed.

My initial take (hey--I have to get in my fair share of the follow-on publication) is that the case may have merit, but it has a bad plaintiff.  Rosa Parks was not the only person to object to segregated buses by refusing to give up their seat. She was chosen by the NAACP because she made a good plaintiff.

The plaintiffs in this case are Mr. Gifford, his company, and a resident of the state of Arizona, presumably representing the taxpayer, as nothing is stated in the Complaint about his occupation or other way he might have been harmed personally. 

I don't think that, as alleged, this suit will survive class certification.  In a class action suit, you must consider (among other things) whether the plaintiffs are enough alike so that their claims can be adjudicated together, whether the questions of fact and law are sufficiently similar, and whether the lead plaintiffs adquately represent members of the class.

Here, the Plaintiffs are purporting to file suit on behalf of a whole range of plaintiffs with all different harms--harms to building and design professionals who sought educational certifications, building owners who paid additional money to have their buildings certified and other unspecified "consumers", and taxpayers.

Let's put aside the fact that, as a general proposition, taxpayers do not have standing to sue.  There is a commonality problem and a causation problem for the class--did the USGBC's false statements cause the same type of harm to the same type of plaintiff.  Indeed, did the false statements cause any harm at all to these plaintiffs.

Why go through this academic class certification exercise, except to prove to Professor Burbank, the professor of my Advance Civil Procedure Class on Class Actions at the University of Pennsylvania that, despite the fact that I rarely got up for his 8 am class, I did, in fact, learn something?

It matters because the allegations in the suit matter.  Is the USGBC engaging in intentional, fraudulent actions? Or was it a good organization seeking to benefit the world by promoting more ecologically friendly building practices? Or a little from column A and a little from Column B.

A good lawsuit would elucidate this--through the discovery process, emails might come to light showing that the USGBC did or did not intentionally defraud its constituent groups.  But if the class is not certified, it will be Mr. Gifford, suing on his own behalf.  Was Mr. Gifford harmed by USGBC's actions? Probably not.

To the best of my research, Mr. Gifford is not a LEED AP, and indeed, from his website and publications, he has outspokenly denounced the USGBC and LEED.  Mr. Gifford does not appear to own any property certified LEED.  In short--the USGBC's actions have not harmed him His career, if anything, has been enhanced by the USGBC's position.

Mr. Gifford is a self-proclaimed energy efficiency guru, his website does not provide any case studies on the buildings he has done, and a quick google search reveals Mr. Gifford is inolved in a number of PassiveHouse projects (passivhaus is a competing system for energy efficient buildings).  If Mr. Gifford is the last plaintiff left standing, it will be a much harder lawsuit to bring, let alone win.

It does beg the question, though, even if this law suit fails, are there other plaintiffs waiting in the wings?  For my next post--assuming the class is certified, do the claims have any merit?

 NOTE: The opinions expressed in this post are entirely those of the author, and do not represent the position of the USGBC or the Delaware Valley Green Building Council.

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The Natural Resources Defense Council (NRDC) sued the Feds today to reinstate the PACE program.  The PACE program was a component of ARRA (the Stimulus Bill for those of you non-lawyer geeky types who still choose to read my blog) which allowed the upfront costs of property owners’ clean energy and energy efficiency projects to be financed by local governments, and paid back by homeowners as an increase in  their property taxes. 

The concept behind the PACE program is that the energy savings from energy efficiency and clean energy projects would outstrip the costs over time, but that the upfront costs were a barrier to many people in implementing the badly needed changes. 

Several municipalities and states had implemented these programs, and it sounded like such a good idea that $150 million in the ARRA was dedicated to support them.

Homeowners are able to do the energy upgrades, local governments can take action to ameliorate climate change and the Federal government will help with the financing.  Everybody's happy, right?

Not so fast. The Federal Housing Finance Agency, which regulates government sponsored mortgage buyers Fannie Mae and Freddie Mac, and the Office of the Comptroller of the Currency, which regulates national banks stopped the PACE programs in their tracks.  According to the NRDC's complaint, available here, the Defendants refused to issue mortgages that had a PACE loan in first priority. 

According to the NRDC press release summary of the claims:

NRDC is suing the agencies for halting the programs without justification, and for doing so without following the proper protocol as required by law. This includes failing to conduct a review of the environmental impacts and to provide the public an opportunity to comment before taking this action.

The objections to the actions on PACE have mainly to do with statutory procedural requirements for administrative agency action, the suit serves to shed a light on what is essentially "greenlining"--a modern day equivalent of "redlining."    

 In 1935, the Federal Home Loan Bank Board (FHLBB) asked Home Owners' Loan Corporation (HOLC) to look at 239 cities and create "residential security maps" to indicate the level of security for real-estate investments in each surveyed city. Such maps defined many minority neighborhoods in cities as ineligible to receive financing. The maps were based on assumptions about the community, not accurate assessments of an individual's or household's ability to satisfy standard lending criteria. Since African-Americans were unwelcome in white neighborhoods, which frequently instituted racial restrictive covenants to keep them out, the policy effectively meant that blacks could not secure mortgage loans at all.

The foreclosure crisis that stemmed from complicated financial instruments legitimately scared the wits out of the Federally backed mortgage entities.  But now they are too scared to even do the right thing and support a new financial model that has the possibility of allowing millons of homeowners to make their homes more energy efficient--which will, in turn, create demand for green products and people to manufacture them and install them, which will enable those people to...pay their mortgages.

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Several events have occurred that will require further posts and analysis, but I want to keep my readers updated:

1.  Decision in AHRI v. City of Albuquerque: My friend Steve Del Percio did a nice job of summarizing the opinion here. I will have an analysis of the opinion from my perspective on Friday.

2. FTC Publishes Draft Environmental Claim Guidelines: today the FTC issued draft revisions to the "Green Guide" which advises companies on false green advertising.  These revisions have been in th works since 2007, and are designed to give companies more clarity on what environmental benefits they may claim.  Their impact may be limited, because the guides themselves are unenforceable and the FTC has done very few enforcement actions for environmental claims as "false advertising."  The proposed rule is available here, and a good EENews summary (subscription required) is available here.

3.  The Department of Labor issued its official definition and means of measuring green jobs. 

Green jobs are either: 

Jobs in businesses that produce goods or provide services that benefit the environment or conserve natural resources.
Jobs in which workers’ duties involve making their establishment’s production processes more environmentally friendly or use fewer natural resources.

 I find it particularly interesting that for advertising purposes, a generic statement about "benefitting the environment" is not acceptable, but that it is at the heart of the description of a "green job." 

I will provide more analysis on each of these interesting topics over the next few days. 

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