Do Not Pass Go: Why The USGBC Is Probably Not An Illegal Monopoly

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.

America's Most Convenient Bank Goes Green

Frank Sherman, U.S. Green Officer at TD Bank sat down with GBLB to discuss TD Bank's announcement that it would be carbon neutral

GBLB:  What is the motivation behind TD Bank's green initiative? 

Frank Sherman: Lack of Federal leadership leaves it up to private enterprise. Right now, the private sector is going to have to pull us through in the short term.  Our green initiative is work we have been focusing on for a year and a half internally. The driver stems from TD Bank Financial Group in Toronto. Their senior leadership made the decision to become carbon neutral as a company. Their initial commitment early last year or late 2008 was to become carbon neutral by end of October of 2010. The US has follwed suit, and because the timing for the creation of TD Bank NA (the combination of Commerce Bank and Bank North) we were running a few steps behind.

GBLB: Were there any roadblocks to becoming carbon neutral? 

Frank Sherman:  We started analyzing the carbon neutral commitment over the past year, right at the time there was a lot of stress in the financial institutions. We had to look at "What is the impact this has on the company?" It made us try to really understand the company to figure out what can be achieved, to take action based on what we have done rather than just promises. It is as much a commitment going forward. We are fully aware that there is a lot we can continually do to improve, but you have to stake your claim and people can hold you accountable and we can hold ourselves accountable.

GBLB: What is TD Bank going to do going forward?

Frank Sherman: We are not doing anything now that is too far outside the norm for progressive corporations. We are making commitments to reduce carbon outputs. Given the trajectory we are on now, first and foremost is to reduce our carbon footprint and buying renewable energy credits and supporting renewable energy in US and Canada, and lastly to invest in carbon offsets.

We understand that we will always be judged by NGOs as not doing enough. It is not always useful to have a conversation when people think two different things. We accept the fact that others choose to go father or define environmental impacts differently. As we grow as a responsible corporate citizen, that is not to say we won’t take responsibility for secondary emissions. But, one step at a time was our way of approaching this.

GBLB:  What sustainable projects are you looking into as an investment for TD Bank?

Frank Sherman:  We are exploring how to balance the economics of buying carbon in quantity with investing in projects that effect our carbon footprints. For example, we bought a block of offsets from RGGI, we have balanced that with one landfill gas capture projects in New Jersey and a waste incineration project in Florida, both in areas where we do business. We are considering getting involved in projects protecting forests. We are looking at a potential carbon sequestration project in Pennsylvania. I look at carbon offsets as an investment project. We are looking to avoid emissions, and the investments we have made are ideally placed in the places where we do business.

We offset 203 million KwH, or 203,000 RECs. We purchased 31,000 metric tons of carbon offsets. That is based our 2008 greenhouse gas inventory. Our 2008 emissions equalled 121,000 metric tons of GHG emissions.

We measured our GHG emissions based on direct emissions of fossil fuels, electricity, fleet vehicles, fossil fuel impact of biz travel, leased space. We used a similar approach based on scope of emission we can control.

GBLB:  What are you doing in terms of green building? 

Frank Sherman: We identified green building as one way of addressing some of our sustainable goals right out of the gate. We began to thign about high performing green buildings as we started the process of reimaging our brand as America’s most convenient bank. We are doing all of our new branches green—but 2010 is a transition year with some in the pipeline. By the end of 2010 and going into 2011 we will be building green buildings almost exclusively.