Friday, April 08, 2011

Company lacks state or federal claims against standards organization

Thermal Design, Inc. v. American Society of Heating, Refrigerating and Air-Conditioning Engineers, Inc., --- F.Supp.2d ----, 2011 WL 1235742 (E.D. Wis.)

Thermal Design makes ceiling and wall insulation systems. ASHRAE “publishes and distributes over 100 technical manuals covering a broad range of areas, including energy efficiency. Its publications provide technical information about how to achieve its standards.” It uses consensus to promulgate its standards and guidelines. Its Standard 90.1, setting forth the minimum standard for state building energy codes, has been established by the Department of Energy as the minimum energy conservation standard “for all non-residential metal buildings in the United States that are heated or cooled. This means that if the insulated roof system of a metal building does not meet the minimum requirements set forth in ASHRAE's Standard 90.1, it does not pass the state and federal building/energy code.”

Thermal Design disagreed with the U-Values/U-Factors in the recently revised Standard 90.1, “which reflect the overall thermal efficiency of a roof structure.” It argued that the methodology was “inaccurate, incomplete, deceptive and misleading as it leads the public to believe that if they purchase and install the Assemblies using the ASHRAE Methodology, those Assemblies will meet the intended thermal performance claimed by ASHRAE, using current building practices, when they may not.” It alleged that it lost sales to competitors and market share because of these misleading representations.

The court first held that Thermal Design was unlikely to succeed under Wisconsin’s Deceptive Trade Practices Act. The point of the statute is to protect consumers in commercial transactions. It doesn’t apply to all false statements, but to statements relating to purchase (etc.) of the seller’s goods (etc.). Thermal Design didn’t show a link between the allegedly false statements and the purchase (etc.) of defendant’s merchandise or services—ASHRAE didn’t make the statements in connection with any commercial transaction. In addition, the case law suggests that the misrepresentations must be made to the plaintiff, who relies on them, for the plaintiff to have a claim. Here, the parties aren’t competitors, but the principle is the same as that in cases finding that competitors don’t have a cause of action under the Wisconsin DTPA.

Under the Lanham Act, plaintiffs must assert a “discernible competitive injury.” District courts in the Seventh Circuit have repeatedly required competition—a “categorical approach.” Given that Thermal Design’s standing was in doubt, it couldn’t show likely success on the merits.

Even if Thermal Design did have standing, it failed to show “commercial advertising or promotion.” Moreover, ASHRAE disclaims responsibility for its standards and guidelines. It states that it "does not guarantee, certify, or assure the safety or performance of any products, components, or systems tested, installed, or operated in accordance with ASHRAE's Standards or Guidelines...." Thus, “it is not reasonably likely that Thermal Design would succeed on a claim that ASHRAE's publication of 90.1 promotes certain Assemblies over others.” I’m not sure how that follows, especially if the Department of Energy has required people to follow ASHRAE’s standards.

The space for this gap in coverage (plaintiff is not a consumer and not a competitor) is filled by general defamation law, with its extremely high standards for liability; it seems beyond peradventure that plaintiff would be unable to make out a defamation claim here.  And that's not an accident.

One final note of possible interest: Thermal Design moved to file certain exhibits under seal “because they are copyrighted materials of ASHRAE.” The court found this insufficient and the motion was denied.

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