State of Nebraska v. First Street Technology, Inc.

The State of Nebraska filed a lawsuit under its Consumer Protection Act and Uniform Deceptive Trade Practices Act against First Street Technology, Inc. (First Street), a public benefit corporation whose business includes use of models to provide climate risk scores for individual properties. The complaint alleged that “Nebraskan home buyers have relied on First Street’s climate risk financial models to inform their decision on whether to buy a particular home” but that the models in many instances provided “faulty information” that “misled home buyers into thinking that, because of climate change, a particular home is a riskier purchase than it actually is.” The complaint stated that Nebraska “understands prediction models inherently will include error” but asserted that “First Street’s conduct rises to the level of unlawfulness by inducing consumer reliance on fundamentally flawed prediction models without communicating such limitations.” The complaint alleged that First Street’s models “suffer from at least two significant biases” that the company did not disclose to consumers. First, the complaint alleged that “the degree and extent to which climate change will increase loss events into the future is an inherently speculative endeavor on which climate experts and other climate modelers disagree” but that First Street did not disclose the disagreement. Second, the complaint alleged that First Street’s position as a “for-profit participant in a market that exists on the assumption that climate change has sufficiently destabilized existing climate and weather models such that new models are needed” gave First Street “a clear pecuniary incentive to overstate the effects of climate change and to understate the relevance of existing models.” Nebraska requested injunctive relief, civil penalties, restoration “to every person any money acquired by First Street” as a result of their violations of the Consumer Protection Act and the Uniform Deceptive Trade Practices Act, and costs and attorney fees.