Green Lawsuits: Fertile Soil or Barren Ground?
by David C. Kent
More than 40 years ago, Kermit the Frog lamented “it’s not easy being green.” Today, he might say “it’s not easy being anything other than green.” Fueled by government regulations mandating energy efficiency, marketers wanting to cash in on environmental awareness and concerns about global warming and climate change, the “green movement” has become big business. With big business comes big money. And with big money comes the specter of big lawsuits. Much has been written about the rise of “green litigation.” So far, it’s been more hype than reality. But there are several areas where “green litigation” is likely to grow.
Construction performance in the context of breach of contract claims. Discussions of “green litigation” most commonly focus on construction litigation because of the dizzying growth of green certifying organizations, such as the United States Green Building Council’s LEED (Leadership in Energy and Environmental Design) rating system, the Green Building Initiative’s “Green Globes” environmental assessment and rating system, and the EPA’s Energy Star building and appliance rating program, not to mention the release in 2012 of the International Code Council’s International Green Construction Code. Insofar as “green litigation” is concerned, these new certification standards and building codes do not change traditional legal theories and causes of action for breach of contract because they provide the evidentiary framework for proving what the standards say and establishing whether they were met.
Evolving standards of care for design professionals. As adoption of green building codes and standards becomes more widespread, the design professional’s obligation to understand them, advise the project owner about their pros and cons and incorporate them into the design will become part of the accepted standard of care. The 2007 edition of the American Institute of Architects’ standard-form contract contains clauses directing architects to evaluate and discuss “environmentally responsible design approaches” with the project owner. Although a well-written contract can define the limits of these responsibilities, the standard of care for design professionals will progressively become “greener.”
Misrepresentation and fraud claims. The perceived benefits of being “green” offer tantalizing sales and marketing opportunities. But the marketing department may tout a project’s “green” status as an existing achievement before the project is fully designed, much less built, even though many green certifications cannot be awarded until after construction. Other promised benefits may not be achieved and cannot be determined until the project has been operating for years. A 2009 USGBC study found that as many as one quarter of all LEED-certified buildings did not provide the energy savings predicted by their designers. The broader the marketing claim, the greater the opportunity for fraud and misrepresentation claims by disappointed project owners.
Damages. Damage claims are likely to be one area where “green litigation” fulfills the promise of novel theories. Commonly touted “green” benefits include lower energy costs, improved product performance, increased real estate sales prices and rental rates, improved worker productivity and even lower workforce health care costs. The problem is that many “green” certifications are standards for product or building design, not performance. Yet, the promised benefits flow from performance, which can be highly dependent on consumer behavior, occupancy and use of the product or building. Quantifying these types of damages and causally linking them to a defendant’s alleged “green” misconduct will provide fertile ground for ingenious claims, defenses and factual disputes.
Consumer class action “greenwashing” claims. One active form of “green litigation” is the consumer class action “greenwashing” suit, which typically alleges that manufacturers use false, misleading and deceptive advertising to promote products as environmentally friendly. Examples from the last two years include suits disputing “all natural” advertising claims by Ben & Jerry’s ice cream, Tropicana orange juice, Campbell’s Soup, and Frito-Lay’s Tostitos and Sun Chips because the products contain genetically modified organisms or processed ingredients such as high fructose corn syrup. Nissan was sued in the fall of 2012 for allegedly false claims about the Leaf electric vehicle’s battery capacity and driving range. Whirlpool has been sued for claiming its home appliances meet Energy Star ratings, and Fiji bottled water was sued for allegedly using misleading symbols and slogans to suggest endorsement by an independent environmental organization. Although widely publicized when filed, less known is the fact that many of these cases have been dismissed on a variety of grounds, such as lack of standing.
This decade’s “Y2K” fizzle? With the exception of consumer class action “greenwashing” suits, the promised bounty of “green litigation” has not yet materialized. Some speculate it never will and instead will be this decade’s version of “Y2K” litigation that went bust before it ever went boom. More likely, “green litigation” just hasn’t ripened yet. So much money is being spent on the “green” movement that litigation is sure to follow.
David C. Kent is a special counsel at Sedgwick, LLP. He can be reached at David.Kent@sedgwicklaw.com.