United States District Court, D. New Jersey
RAY MARSHALL, individually and on behalf of all others similarly situated, Plaintiff,
VERDE ENERGY USA, INC., Defendant.
Michael Vazquez, U.S.D.J.
putative class action alleges deceptive and bad faith
practices that resulted in consumers paying more for
electricity. Presently before the Court is a motion to
dismiss the Complaint pursuant to Federal Rule of Civil
Procedure 12(b)(6) by Defendant Verde Energy USA, Inc.
("Verde" or "Defendant"). D.E. 13.
Plaintiff Ray Marshall ("Marshall" or
"Plaintiff) filed a brief in opposition (D.E. 29), to
which Defendant replied (D.E. 30). After briefing on the motion
was complete, both parties filed notices of supplemental
authority and responses. D.E. 31-33, 42-47. Plaintiff then
filed a motion to strike Defendant's response to its July
5, 2018 notice of supplemental authority, D.E. 34, which
Defendant opposed. D.E. 35. The Court reviewed the
parties' submissions and decided the motions without oral
argument pursuant to Fed.R.Civ.P. 78(b) and L. Civ. R.
78.1(b). For the reasons set forth below, Defendant's
motion to dismiss is GRANTED and Plaintiffs
motion to strike is DENIED.
FACTUAL BACKGROUND & PROCEDURAL
Jersey, a utility company cannot profit from buying and
selling energy; it can only profit from delivery. Compl. at
¶ 13, D.E. 1. Following energy deregulation in New
Jersey, however, an independent energy supply company
("ESCO") can profit by buying and selling energy to
customers. Id. ¶ 14. ESCOs compete to supply
energy services in deregulated states, but local utility
companies continue to actually deliver the supply.
Id. ¶ 15. Local utility companies may also
supply "metering, billing, and related administrative
services to the consumer" regardless of whether an ESCO
supplies the energy. Id.
is an ESCO that supplies power to residents in New Jersey.
Id. at ¶¶ 19, 21. Plaintiff decided to
switch from his local utility, PSE&G, to Discount Power,
an ESCO, because of Discount Power's representations that
Plaintiff would save money on his electricity bill.
Id. ¶ 25. A few months after making the switch,
Plaintiff was notified that his electricity service was being
assigned from Discount Power to Defendant. Id.
¶ 26. Shortly after, Plaintiff received a "Welcome
Letter" from Defendant, which stated that it
"look[ed] forward to saving you money on your monthly
electric bills in the months to come." Id.
¶ 27, Ex. A. The Welcome Letter adds that Defendant has
"a strong focus on enabling our customers to save money
on their monthly electric bills and in the past three years
have helped our over 250, 000 customers save an estimated $17
million on their bills." Id., Ex A. Plaintiff
does not allege that the representation about past savings
Terms of Service for Discount Energy Group Variable Rate
Customers (the "Terms of Service" or
"Agreement") was contained on the back of the
Welcome Letter. In the Terms of Service, Defendant explained
that Plaintiff would "receive electricity from Verde at
a variable generation rate." The Agreement added that
"the rate may fluctuate monthly with market
conditions." Id. ¶ 28, Ex. B. The
Agreement continued that Plaintiff "may compare price
terms by looking at the rates posted on Verde's website
and on Customer's monthly bill." Id., Ex.
B. In fact, Plaintiffs billing invoices appeared to include a
"Price to Compare" section that compared
Verde's current rate with PSE&G's rate for the
month. Id. ¶ 33 n. 5. The Agreement further
directed Plaintiff to visit Defendant's website "for
current rates and updates." Id. Plaintiff was
also informed that his monthly electric bill would still be
provided by PSE&G. Id. Finally, the Agreement
provided that either Plaintiff or Defendant "may cancel
this Agreement at any time and for any reason without
penalty." Id., Ex. B ¶ 3. Based on these
representations, Plaintiff switched to Defendant for
electricity in August 2012 and was placed on Defendant's
variable rate plan. Id. ¶ 29. Plaintiff was a
Verde customer from August 2012 to December 2017.
Id. ¶ 33.
asserts that "[a] reasonable consumer... would
understand that Verde's [v]ariable rates fluctuate in a
manner correlated with the underlying wholesale market rate,
and that although prices would go up when wholesale prices
rose, they would also go down when wholesale prices
decreased." Id. ¶ 31. Plaintiff alleges
that Verde customers are actually charged rates that are
"untethered from the market conditions."
Id. ¶ 39. Specifically, Plaintiff maintains
that Defendant increased the rates charged to Plaintiff and
class members when wholesale prices rose but kept prices
level when wholesale prices fell. Id. ¶ 32.
Plaintiff alleges that "there are numerous months where
Defendant's rate was more than triple the wholesale
rate." Id. ¶ 34. In addition, Plaintiff
contends that Verde's rates were, at times, more than
eighty percent higher than PSE&G's rates.
PSE&G's rates, Plaintiff alleges, are reflective of
market conditions because they are based on publicly held
auctions. Id. ¶ 34. As a result, "Verde
used its [v]ariable rates as a pure profit center."
Id. ¶ 32. Of note, although Plaintiff asserts
that PSE&G's rates are reflective of market
conditions, PSE&G's rates were usually at least twice
as high as the wholesale rate and often higher. Id.
¶ 33. Also, as noted, Plaintiff appears to assert that
PSE&G's rates were provided on his invoices, meaning
that he could perform an easy comparison between what he was
being charged and what PSE&G was charging. Id.
¶ 33 n. 5.
filed this putative class action complaint on January 31,
2018 on behalf of all Verde variable rate electric plan
customers in New Jersey within the applicable statute of
limitations. Id. at ¶ 46. The Complaint asserts
the following claims: (1) violation of the New Jersey
Consumer Fraud Act ("CFA" or the "Act");
(2) breach of contract; (3) breach of the implied covenant of
good faith and fair dealing; (4) violation of the
Truth-In-Consumer Contract, Warranty, and Notice Act
("TCCWNA"); and (5) unjust enrichment. Id.
¶¶ 51-90. Defendant filed the instant motion to
dismiss for failure to state a claim on April 16, 2018. D.E.
STANDARD OF REVIEW
Rule of Civil Procedure 12(b)(6) permits a motion to dismiss
when a complaint fails "to state a claim upon which
relief can be granted[.]" For a complaint to survive
dismissal under Rule 12(b)(6), it must contain sufficient
factual matter to state a claim that is plausible on its
face. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)
(quoting Bell Ail. Corp. v. Twombly, 550 U.S. 544,
570 (2007)). A claim is facially plausible "when the
plaintiff pleads factual content that allows the court to
draw the reasonable inference that the defendant is liable
for the misconduct alleged." Id. Further, a
plaintiff must "allege sufficient facts to raise a
reasonable expectation that discovery will uncover proof of
her claims." Connelly v. Lane Const. Corp., 809
F.3d 780, 789 (3d Cir. 2016). In evaluating the sufficiency
of a complaint, district courts must separate the factual and
legal elements. Fowler v. UPMC Shadyside, 578 F.3d
203, 210-211 (3d Cir. 2009). Restatements of the elements of
a claim are legal conclusions, and therefore, not entitled to
a presumption of truth. Burtch v. Milberg Factors,
Inc., 662 F.3d 212, 224 (3d Cir. 2011). The Court,
however, "must accept all of the complaint's
well-pleaded facts as true." Fowler, 578 F.3d
at 210. Even if plausibly pled, however, a complaint will not
withstand a motion to dismiss if the facts alleged do not
state "a legally cognizable cause of action."
Turner v. J.P. Morgan Chase & Co., No. 14-7148,
2015 WL 12826480, at *2 (D.N.J. Jan. 23, 2015).
The New Jersey Consumer Fraud Act (Count One)
"seeks to protect consumers who purchase goods or
services generally sold to the public at large."
Cetel v. Kirwan Fin. Grp., Inc., 460 F.3d 494, 514
(3d Cir. 2006). To state a CFA claim, a plaintiff must allege
"(1) unlawful conduct; (2) ascertainable loss; and (3) a
causal relationship between the unlawful conduct and the
ascertainable loss." Int'l Union of Operating
Eng'rs Local No. 68 Welfare Fund v. Merck & Co.,
Inc., 192 N.J. 372, 389 (2007). Unlawful conduct is
defined by the Act as "any unconscionable commercial
practice, deception, fraud, false pretense, false promise,
misrepresentation, or the knowing, concealment, suppression,
or omission of any material fact with intent that others rely
upon such concealment, suppression or omission."
N.J.S.A. 56:8-2. As "remedial legislation," the Act
"should be construed liberally." Int'l
Union of Operating Eng 'rs Local No. 68 Welfare
Fund, 192 N.J. at 3 89.
other things, Defendant argues that Plaintiffs CFA claim must
be dismissed because the alleged wrongful conduct is undercut
by the Terms of Service. Def. Br. at 13-18. When a CFA claim
is based on a valid, written contract, "a court will
dismiss [the] claim" if the conduct alleged is
"expressly authorized" by the terms of that
contract. Urbino v. Ambit Energy Holdings, LLC, No.
14-5184, 2015 WL 4510201, at *3 (D.N.J. July 24, 2015);
see also Hassler v. Sovereign Bank, 374 Fed.Appx.
341, 344 (3d Cir. 2010) (affirming dismissal of CFA where
alleged wrongful conduct was expressly permitted by agreement
at issue). Moreover, when a CFA claim is based on a breach of
contract, Plaintiff must allege a "substantial
aggravating circumstance," demonstrating that the
defendant's behavior "stands outside the norm of
reasonable business practice in that it will victimize the
average consumer." Suber v. Chrysler Corp., 104
F.3d 578, 587 (3d Cir. 1997). "Whether a business
practice is unfair is a question for the jury, but ...