Google’s sister firm Nest ‘misled’ buyers on savings: $350 million lawsuit

A lawsuit against Google’s troubled sister company Nest is revolving around one of the oldest advertising gambits in the book: claims of savings “up to” an enticing amount. If the savings fall short of the promised maximum, was the advertising deceptive?

Nest’s own data showed that advertised energy savings from its sleek, pricey thermostat were overblown, plaintiffs told Northern California U.S. District Court in San Jose on June 3.

“Nest claimed that the $250 smartphone-controlled thermostats saved about $175 per year, but scrutiny of actual bills showed savings of up to 12 percent on heating and 15 percent on cooling, or $145 a year at most,” lead plaintiff Justin Darisse told court, according to reporting by Law360.

Nest has been beset with tumult in recent weeks. On Friday, the firm announced its CEO Tony Fadell, the subject of public complaints from within the company about his management style, was leaving to work for parent company Alphabet. On May 18, a former Nest employee filed a U.S. labor board complaint claiming to have been fired for posting employees’ complaints about Fadell on Facebook. The complaint also alleges that Nest and Google conducted illegal surveillance of employees via their electronic devices, to prevent workers from speaking out about workplace conditions.

In the advertising-claims lawsuit, plaintiffs want class-action status, and seek $350 million in damages for all buyers of first and second generation Nest thermostats, court filings show. The suit calls Nest’s thermostat “a fancy, overpriced gadget” that “fails at even the most basic function of a thermostat: accurately gauging and controlling temperature.”

But the quality of the device does not appear to be the focus of the lawsuit. At issue are Nest’s reputed advertising claims, which plaintiffs contend promised 20 percent savings on energy bills. “Depositions of Nest employees have shown that its website and advertising were ‘undeniably saturated with the 20 percent claim,'” Darisse said in a filing, according to Law360.

In an April filing obtained by SiliconBeat, Nest argued that Darisse had rushed into court after just three months with the thermostat, based only on a “feeling” the device hadn’t delivered the savings he says he believed he’d been promised. The company also noted in the filing that Darisse’s proposed lead lawyer for the class action is his brother-in-law.

Nest contends that the claims made in some of its advertising referred to “potential savings.” The company said its advertising described the thermostat as “capable of” saving customers up to 20 percent in heating and cooling costs and an average of $173 per year.

“There were at least nine versions of the 20 percent claim and three versions of the $173 per year claim on Nest’s website during the class period, some of which were followed by a disclaimer that individual savings levels varied,” Nest’s filing said.

Nest denied that a later set of claims it issued touting an average of 10 percent to 15 percent savings on heating and cooling, and average savings of $131 to $145 per year, showed it had made false and misleading claims, because both sets of numbers are “well supported,” the filing said. A U.S. Environmental Protection Agency finding that a correctly programmed thermostat can bring savings up to 20 percent still stands, the firm said.

Nest said its analysis of select user data, plus two independent studies, showed an average savings of 10 percent to 12 percent on heating and 15 percent on cooling, and the company estimates average savings at $131 to $145 per year. Then the firm goes back to its main argument, around “potential” savings:

“The studies do not change the fact that (Nest thermostat) users can and do save 20 percent or more, and save on average 10 percent to 15 percent,” the filing said.

Darisse’s wife bought the thermostat via Amazon in November 2013, and he filed the lawsuit without bothering to verify whether or not he’d saved money, Nest’s filing said. The company said it analyzed energy bills Darisse had submitted and found he’d saved “considerably more than 20 percent.”

Nest argues further that Darisse has no standing to represent the class of Nest buyers because his wife bought the thermostat and he is therefore not a “purchaser.”

A class-certification hearing is scheduled for June 23, according to Law360.

Photo: Wikimedia Commons (Raysonho @Open Grid Scheduler/Grid Engine)


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  • Matthew

    I had one in my last house in New England, and it saved me way more then 20% on heating bills in the winter. It was useless in the summer but it paid for itself in the two winters I had the home.