USGBC AND ITS FOUNDERS SUED OVER THE LEED™ GREEN BUILDING RATINGS SYSTEM

Posted on December 26, 2010 by Jesse Lipcius

A federal lawsuit in New York that involves Racketeer Influenced Corrupt Organizations Act ("RICO") claims is one of the latest developments in the United States Green Building Council's ("USGBC") development and administration of the LEED™ building ratings system.  The lawsuit appears highly contentious to say the least.  Plaintiffs Henry Gifford and Gifford Fuel Saving, Inc. initiated a class action lawsuit against USGBC, USGBC's founders (David Gottfried and Richard Fedrizzi), and the designer (Rob Watson) of the Leadership in Energy and Environmental Design ("LEED™") green building ratings system.  The alleged class members include consumers and taxpayers whose dollars have been used to obtain LEED™ certification. 

 

The lawsuit paints LEED™ as a farce that is not based on supportable science.  Plaintiffs set forth six claims: (1) violation of the Sherman Antitrust Act for an alleged fraudulent monopoly of the green building market; (2) violation of the Lanham Act for alleged unfair competition by deceptive marketing; (3) deceptive trade practices and (4) false advertising for alleged misrepresentations and concealments in advertising; (5) RICO claims for defendants' alleged deceptive scheme; and (6) unjust enrichment for alleged fraudulently induced profits.  

 

We will update the blog as we receive more information concerning this lawsuit.    

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Chinese Drywall Developments

Posted on December 21, 2010 by John Weber

To follow up on a series of prior posts, the Internal Revenue Service will now allow taxpayers with defective drywall to deduct the cost of repairs and replacement of damaged appliances in the year in which the loss occurred.  In Revenue Procedure 2010-36, the IRS has, however, imposed certain restrictions which include that the losses are not compensated by insurance or other parties and the taxpayer must itemize their federal returns to claim the deductions (which are allowed only on amounts that exceed $500 and ten percent of the taxpayer’s gross income for the year).

A taxpayer can claim the full tax break, provided they have no pending claims for reimbursement (and do not intend to file for any). For those taxpayers with pending claims, a loss for 75% of the unreimbursed amount can be claimed.

 

In related news, the importers, manufacturers and distributors of Knauff Plasterboard Tianjin drywall have entered into a settlement with over 300 homeowners in four states. The Agreement, approved by a New Orleans federal judge, will cause Knauff and related firms to remove and replace the company’s drywall, the electrical wiring, gas tubing and appliances, as well as paying relocation expenses while the homes are being repaired (which repairs are expected to take several months to complete). The cost of such repairs is estimated to be about $150,000 for a 2,500 square foot home. This settlement (a product of a special committee appointed by a federal judge) is seen as a possible model for the resolution of other pending state and federal lawsuits. 

 

One area to watch going forward, however, is the possibility of additional claims regarding health concerns. The settlement does not preclude future suits concerning potential adverse health effects of the drywall on residents, as the parties agreed to table that issue to resolve the home repair aspects of the lawsuits.

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