Sometimes it’s good to have friends in Congress. According to The New York Times, two Congressmen with close ties to Whirlpool have introduced a bill that would prohibit customers from filing class action lawsuits against appliance makers that allegedly make misleading statements regarding the electricity consumption of Energy Star certified products.
The move by the appliance giant comes in response to a new wave of class action lawsuits that allege appliances and other products bearing the Energy Star label do not conform to the program’s energy efficiency requirements and, in some cases, use significantly more electricity than advertised.
Whirlpool currently faces class action lawsuits in federal courts in New Jersey and California, alleging that the company’s Maytag Centennial washing machines and certain refrigerator models are improperly labeled as Energy-Star compliant. In an unsuccessful attempt to dismiss the California class action, attorneys for Whirlpool argued that, “the adhesion of the Energy Star logo does not create an affirmation of fact or promise.”
Energy Star Class Action Leads to $23 Million Settlement
Whirlpool is not the only company facing Energy Star lawsuits. Samsung and Lowes are currently defending a class action filed in federal court in New Jersey, alleging that certain Samsung refrigerators are not Energy Star complaint as advertised. According to the lawsuit, Energy Star certified refrigerators are required to use 20% less energy than standard models. The lawsuit also notes that because of the savings associated with reduced energy consumption, customers are willing to pay higher prices for Energy Star certified models.
In 2011, LG Electronics and Sears agreed to pay $23 million to settle two class action lawsuits alleging that the companies falsely advertised French-door refrigerators as Energy Star compliant. The plaintiffs in these lawsuits alleged that the refrigerators use between 20 and 35 percent more electricity than advertised on the Energy-Star labels.
GAO Report Found Energy Star Program Vulnerable to Fraud and Abuse
Many of the Energy Star lawsuits were filed following a report issued by the Government Accountability Office (“GAO”) in March 2010, which found that the federal government’s Energy Star certification process is ineffective.
The GAO report, titled “Energy Star Program – Covert Testing Shows the Energy Star Program Certification Process Is Vulnerable to Fraud and Abuse,” concluded that the program’s internal controls were largely useless, because the government agencies tasked with administering the Energy Star program, the Environmental Protection Agency (“EPA”) and the Department of Energy (“DOE”), do not verify the electricity consumption data that manufacturers report to the agencies.
In response to the GAO report, the EPA and the DOE created a stricter certification process, requiring EPA staff to review all new Energy Star applications. In addition, appliance manufacturers must now provide the EPA and DOE with energy efficiency testing and lab results from a certified independent lab.
While it remains to be seen whether Congress will rewrite the law to protect Whirlpool and other appliance makers from Energy Star lawsuits, Whirlpool has threatened to withdraw from the Energy Star program if it doesn’t get its way.
Consumer advocates have praised the class actions as a much-needed remedy to compensate large numbers of individuals who have suffered relatively small financial injuries, such as the electricity costs associated with an appliance that uses more energy than advertised and the extra money paid for Energy Star compliant products. A spokesperson for Consumers Union, the non-profit organization that publishes Consumer Reports, told the New York Times that class action lawsuits are appropriate in case involving “lots of small injuries” and that, “consumers need that backstop of the courts to get redress.”