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Silvis v. Ambit Energy, L.P.

United States District Court, E.D. Pennsylvania

March 13, 2015

AMY SILVIS, on behalf of herself and all others similarly situated, Plaintiff,
v.
AMBIT ENERGY, L.P. et al., Defendants

Page 394

For AMY SILVIS, ON BEHALF OF HERSELF AND ALL OTHERS SIMILARLY SITUATED, Plaintiff: JONATHAN SHUB, LEAD ATTORNEY, SEEGER WEISS LLP, PHILADELPHIA, PA; SCOTT A. GEORGE, SEEGER WEISS, ADELPHIA, PA; TROY M. FREDERICK, MARCUS & MACK PC, INDIANA, PA.

For AMBIT ENERGY, L.P., doing business as AMBIT TEXAS, LLC, AMBIT TEXAS, LLC, AMBIT NORTHEAST, LLC, AMBIT NORTHEAST, LLC, doing business as AMBIT ENERGY, AMBIT ENERGY, AMBIT ENERGY HOLDINGS, AMBIT ENERGY HOLDINGS, doing business as AMBIT NORTHEAST, LLC, AMBIT HOLDINGS, LLC, AMBIT HOLDINGS, LLC, doing business as AMBIT ENERGY HOLDINGS, LLC, AMBIT ENERGY HOLDINGS, LLC, doing business as AMBIT ENERGY, AMBIT ENERGY HOLDINGS, LLC, doing business as AMBIT, Defendants: JOANNA J. CLINE, LEAD ATTORNEY, CHRISTINA O. HUD, PEPPER HAMILTON LLP, PHILADELPHIA, PA; STEPHEN C. RASCH, LEAD ATTORNEY, PRO HAC VICE, THOMPSON & KNIGHT LLC, DALLAS, TX; MICHAEL W. STOCKHAM, PRO HAC VICE, THOMPSON & KNIGHT LLC, DALLAS, TX.

Page 395

MEMORANDUM

EDUARDO C. ROBRENO, J.

Plaintiff Amy Silvis brings this class action against her residential energy supplier, Defendant Ambit Energy, L.P., and a host of related entities, alleging breach of contract, breach of the covenant of good faith and fair dealing, and unjust enrichment. Defendants have moved to transfer venue. For the reasons that follow, the Court will deny the motion.

I. BACKGROUND AND PROCEDURAL HISTORY

Plaintiff, a Pennsylvania resident, contracted with Defendant Ambit Northeast, LLC,[1] a Delaware company with a Energy, L.P., Ambit Texas, LLC, Ambit Energy, Ambit Energy Holdings, LLC, Ambit Energy Holdings, and Ambit Holdings, LLC, as Defendants. Plaintiff asserts that all Defendants " were collectively engaged in the business of marketing, advertising principal place of business in Dallas, Texas, to supply her electricity. According to Plaintiff, Defendants' marketing campaign promised savings over other energy suppliers and competitive variable rates " keyed to market factors." Am. Compl. ¶ 17. In reliance on these representations, Plaintiff opted for a variable rate plan, under which she would pay a " teaser" rate for an initial one-month term, and then

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pay a rate " dependent upon price fluctuations in the energy and capacity markets, plus all applicable taxes" thereafter. Residential Disclosure Statement, Id. Ex. C. Although there is some disagreement between the parties about which documents represent the agreement at issue here, both the Residential Disclosure Statement (the " Disclosure" ) and the Sales Agreement & Terms of Service (the " Terms of Service" ) became operative during the course of the parties' dealings. See Am. Compl. ¶ ¶ 27, 32. Included within the " Governing Law" section of the Terms of Service is the following language: " Venue for any lawsuit brought to enforce any term or condition contained herein shall be exclusively in the State of Texas." Terms of Service, id. Ex. B, at 3.

On February 17, 2013, at the beginning of the contract term, the " teaser" rate was $0.0699 per kilowatt hour (kWh). Id. Ex. C. Plaintiff alleges that, by April 15, 2014, the charge increased to $0.1369 per kWh, which was " almost twice the rate that Plaintiff's local energy provider, Penelec, would have charged . . . during the same time period." Am. Compl. ¶ 30. Plaintiff claims Defendants breached her contract, as well as those of all class members, by not providing the promised " competitive rate based on market factors." Id. ¶ 50.

On these allegations, Plaintiff brings the following claims[2]: breach of contract, breach of the covenant of good faith and fair dealing, unjust enrichment, and declaratory relief. Plaintiff requests that the Court certify the class, designate Plaintiff as class representative, award each class member individual damages, impose a constructive trust on Defendants pending resolution of these claims, and issue declaratory and injunctive relief.

II. PROCEDURAL HISTORY

On August 27, 2014, Plaintiff commenced this action by filing a Complaint in federal court. ECF No. 1. On November 11, 2014, Defendants filed a Motion to Dismiss (ECF No. 9), and Plaintiff filed her Amended Complaint on November 24, 2014 (ECF No. 16). Defendants filed a Motion to Transfer Venue on January 21, 2015 (ECF No. 21), to which Plaintiff has responded (ECF No. 22). On January 27, 2015, Defendants filed a motion for leave to file a reply brief (ECF No. 24), which the Court will grant. Defendants' Motion to Transfer Venue is ripe for disposition.

III. LEGAL STANDARD

A district court may transfer an action to any other district " where it might have been brought," so long as the transfer is " [f]or the convenience of parties and witnesses" and " in the interest of justice." 28 U.S.C. § 1404(a). Federal law governs the determination of whether to transfer venue pursuant to § 1404(a), as the issue is procedural rather than substantive. See Jumara v. State Farm Ins. Co., 55 F.3d 873, 877 (3d Cir. 1995).

Ordinarily, in a case not involving a forum-selection clause, a court evaluates a § 1404(a) motion using such factors as the convenience of the parties and the relevant public interests. A. Marine Constr. Co. v. U.S. Dist. Ct. for W. Dist. Tex., 134 S.Ct. 568, 581, 187 L.Ed.2d 487 (2013). " The calculus changes, however, when the parties' contract contains a valid forum-selection clause, which 'represents the parties'

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agreement as to the most proper forum.'" Id. (quoting Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22, 31, 108 S.Ct. 2239, 101 L.Ed.2d 22 (1988)). Because forum-selection clauses are " bargained for by the parties," " a valid forum-selection clause [should be] given controlling weight in all but the most exceptional cases." Id. (alteration in original) (quoting Stewart, 487 U.S. at 33) (internal quotation marks omitted).

Accordingly, the Supreme Court's framework as set forth in Atlantic Marine requires a two-part analysis. First, a district court must determine whether the forum-selection clause is valid and enforceable.[3] Forum-selection clauses are " prima facie valid and should be enforced unless enforcement is shown by the resisting party to be 'unreasonable' under the circumstances," Foster v. Chesapeake Ins. Co., 933 F.2d 1207, 1219 (3d Cir. 1991) (quoting M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 10, 92 S.Ct. 1907, 32 L.Ed.2d 513 (1972)) (internal quotation marks omitted)--a showing, in other words, that the agreement is undermined by " fraud, undue influence, or overweening bargaining power." Id. (quoting Bremen, 407 U.S. at 12) (internal quotation marks omitted). Second, a court must consider whether, pursuant to § 1404(a), " extraordinary circumstances" militate against enforcing the forum-selection clause. A. Marine, 134 S.Ct. at 581.

In conducting the § 1404(a) analysis, a district court must bear in mind three directives from the Atlantic Marine Court: (1) " the plaintiff's choice of forum merits no weight" ; (2) a court " should not consider arguments about the parties' private interests" ; and (3) " a § 1404(a) transfer of venue will not carry with it the original venue's choice-of-law rules." Id. at 581-82. A district court may thus consider " arguments about public-interest factors only." Id. at 582. These factors include: " the administrative difficulties flowing from court congestion; the local interest in having localized controversies decided at home; [and] the interest in having the trial of a diversity case in a forum that is at home with the law." Id. at 581 n.6 (alteration in original) (quoting Piper Aircraft Co. v. Reyno, 454 U.S. 235, 241 n.6, 102 S.Ct. 252, 70 L.Ed.2d 419 (1981)) (internal quotation marks omitted). Finally, " the party defying the forum-selection clause . . . bears the burden of establishing that transfer to the forum for which the parties bargained is unwarranted." Id. at 581.

IV. DISCUSSION

Defendants argue that the Court should enforce the forum-selection clause contained in the Terms of Service, and ransfer the case to the United States District Court for the Northern District of Texas. Defs.' Br. 15. In deciding the motion to transfer, the Court therefore proceeds under the Atlantic Marine framework.

First, the Court considers the validity and enforceability of the forum-selection clause. Here, although Defendants argue that the clause is valid as part of the Terms of Service, Plaintiff disagrees. According to Plaintiff, the Disclosure is a fully integrated agreement in its own right and forms the exclusive basis of this lawsuit; the Terms of Service is, if anything, a separate, later-executed agreement. See Pl.'s Br. 4-5.[4] Plaintiff also argues that,

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even if the forum-selection clause is part of the agreement at issue, it is nonetheless both procedurally and substantively unconscionable as an adhesion contract that " effectively immunize[s] Defendants from the threat of litigation." Id. at 8; see also id. at 5-9.

Since Plaintiff has disputed the validity of the forum-selection clause--and, indeed, the very contract of which it forms a part--it would ordinarily fall to the Court to resolve this question in the course of deciding the motion to transfer. However, as the Court notes in its separate order disposing of Defendants' Motion to Dismiss (ECF No. 19), the current record is insufficiently developed and, at this stage of the proceedings and in the light most favorable to Plaintiff, does not support the contention that the Terms of Service is part of the integrated contract. Because, as shown below, the Court can decide the motion to transfer by applying the § 1404(a) public-interest factors, it will proceed to that analysis and reserve the question of contract validity for a later stage in the proceedings.[5],[6]

Second, the Court considers whether the § 1404(a) public-interest factors would support transfer, or whether this is one of those cases in which " extraordinary circumstances" preclude enforcement of the forum-selection clause. To begin, the Court finds the judicial economy factor to be a neutral one, since neither the Court nor the parties see any reason why efficiency concerns would favor either the Eastern District of Pennsylvania or the Northern District of Texas.[7]

Regarding the local-interest factor, Defendants argue summarily that " this putative class action is not a localized controversy and no local interest is served by having it decided in Pennsylvania." Defs.' Br. 13. In their reply, Defendants concede, as they must, that " Pennsylvania may have an interest in regulating its electricity market," but they argue that " Texas likewise has an interest in protecting its citizens, and several Defendants are Texas citizens." Defs.' Reply Br. 10. Plaintiff, for her part, stresses that " Pennsylvania has a unique interest in the regulation of its electricity market in addition to ensuring that its citizens are protected in that market." Pl.'s Br. 12.

The Court agrees with Plaintiff that this case represents a unique situation where the Commonwealth's interests compel that this litigation be conducted in a Pennsylvania forum. It is true that courts considering the local-interest factor have refused to find an extraordinary circumstance where the local interest merely favors one forum over another, especially when that factor is balanced against others. See, e.g., Creative Commc'ns, LLC v. Iberiabank, No. 14-36,

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2014 WL 2111208, at *3-4 (N.D. W.Va. May 7, 2014) (upholding forum-selection clause and transferring case where, " [a]t best, West Virginia's interest and Florida's interest in the outcome of this action are approximately equal" ).[8] However, courts have given preference to fora that have deeper ties to the allegations--particularly when those fora have historically and actively regulated the conduct or parties at issue. See, e.g., Barilotti v. Island Hotel Co., No. 13-23672, 2014 WL 1803374, at *10 (S.D. Fla. May 6, 2014) (" The otherwise substantial weight accorded to the United States' interests in providing a forum for its Plaintiffs . . . is . . . outweighed by the Bahamian interests in settling a dispute arising out of conduct that occurred in its own territory and related to a vital Bahamian industry, and regulating the standards of conduct of the Bahamian Defendant." ).[9]

Here, Pennsylvania has historically regulated the supply of energy to its residents, and continues to do so actively in important ways even after partially deregulating the industry in 1996. See Am. Compl. ¶ 14. For example, the Pennsylvania Public Utility Commission (" PUC" ) mandates licensure for private energy suppliers, like Defendants, who wish to service the Commonwealth's market, and continues to regulate " distribution prices and services" provided by these suppliers. Disclosure, id. Ex. C. In addition, although the Commonwealth partially deregulated its energy industry, Pennsylvania consumers still have the option of purchasing energy from public utilities which compete with private suppliers like Defendants. Am. Compl. ¶ 14. Moreover, the contracts at issue were formed in Pennsylvania, the alleged breach occurred in Pennsylvania, and the proposed class is limited to current or former Pennsylvania residents. See id. ¶ 26. For these reasons, the Commonwealth (and, by extension, the Eastern District of Pennsylvania) has a decisive interest in this case--certainly a much stronger interest than fora in other states, including the Northern District of Texas.

The final public-interest factor is " the interest in having the trial of a diversity case in a forum that is at home with the law." A. Marine, 134 S.Ct. at 581 n.6 (quoting Piper Aircraft, 454 U.S. at 241 n.6). Here, the contract was formed in Pennsylvania and the parties agree that Pennsylvania law applies.[10],[11]

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Based on practice and experience, this Court is in a better position to apply Pennsylvania law than courts in the Northern District of Texas. Admittedly, this factor is not decisive, see id. at 584 (" [I]n any event, federal judges routinely apply the law of a State other than the State in which they sit." ), but it does provide additional support for retaining the case in this district.

In summary, the local-interest factor, along with the forum-law factor, strongly favor overriding the parties' forum-selection clause. The Court acknowledges that this should be done only in " the most unusual cases." Id. at 583. However, because this case implicates Pennsylvania's historical and ongoing regulation of the commodity at issue--one with substantial impact on Pennsylvania's citizens and economy--it is truly exceptional within the meaning of Atlantic Marine. Therefore, the Court finds that Plaintiff has met her burden of establishing that transfer of the case from the Eastern District of Pennsylvania to the Northern District of Texas is unwarranted, and will decline to enforce the forum-selection clause. See A. Marine, 134 S.Ct. at 581.

V. CONCLUSION

In light of the above, the Court will deny Defendants' Motion to Transfer Venue. An appropriate order follows.

ORDER

AND NOW, this 13th day of March, 2015, for the reasons stated in the accompanying memorandum opinion, it is hereby ORDERED that Defendants' Motion to Transfer Venue (ECF No. 21) is DENIED.

It is FURTHER ORDERED that Defendants' Motion for Leave to File a Reply Brief (ECF No. 24) is GRANTED.[1]

AND IT IS SO ORDERED.


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