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Gillis v. Respond Power, LLC

United States District Court, E.D. Pennsylvania

July 16, 2018

BARBARA GILLIS; THOMAS GILLIS; SCOTT MCCLELLAND; KIMBERLY MCCLELLAND; INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED, Plaintiffs,
v.
RESPOND POWER, LLC, Defendant.

          MEMORANDUM OPINION

          Goldberg, J.

         In this putative class action, Plaintiffs are consumers who purchased electricity from Defendant, Respond Power LLC, under a variable rate agreement. Plaintiffs allege that, in order to induce them to switch from their local utility company, Defendant misrepresented the rates that it would charge. Plaintiffs further allege that Defendant breached the variable rate agreement by charging them a higher rate for electricity than their local utility company would have charged them during the same time period.

         Defendant has moved to dismiss for failure to state a claim regarding both of Plaintiffs' two class claims-one for breach of contract and the implied covenant of good faith and fair dealing, and the other for a declaratory judgment regarding the variable rate agreement's meaning. For the reasons that follow, Defendant's Motion will be granted and Plaintiffs' class claims will be dismissed.

         I. FACTUAL & PROCEDURAL BACKGROUND

         A. Factual Background

         The following facts are derived from Plaintiffs' First Amended Class Action Complaint and the exhibits attached thereto.[1]

         In Pennsylvania's deregulated marketplace for electricity, consumers have the option of purchasing their electricity from the local utility company that services their location, such as PECO or Penelec, or from an “Electric Generation Supplier, ” such as Defendant. While the local utility companies may only sell electricity at fixed rates approved by the Pennsylvania Public Utility Commission, Electric Generation Suppliers may sell to consumers under fixed or variable rate contracts, without the Commission's approval or oversight. (1st Am. Class Action Compl. ¶¶ 6, 16, 17.)

         Named Plaintiffs are four Pennsylvania consumers who switched their electric service to Defendant from their local utility company in 2013, after being solicited by a door-to-door salesperson. Named Plaintiffs Barbara and Thomas Gillis, of Morrisville, Pennsylvania, switched from PECO in April 2013. Named Plaintiffs Scott and Kimberly McClelland, of Erie, Pennsylvania, switched from Penelec in May 2013. Both the Gillises and the McClellands allege that the door-to-door salesperson who visited them promised that they would save money on their electric bill by switching, and did not disclose that they could, in fact, pay a much higher rate for electricity than they would pay if they remained with their local utility company. (1st Am. Class Action Compl. ¶¶ 8, 10.)

         In making the switch to Defendant's service, the Gillises and McClellands executed an identical form agreement (titled “Sales Agreement”), indicating that Plaintiffs would receive electricity from Defendant at a variable rate. Included in the Sales Agreement was a “Disclosure Statement, ” which set out a number of terms, including the length of the agreement and the cancellation policy. Only one of the terms of the Disclosure Statement-a term discussing the variable rate that Defendant would charge-is relevant to this dispute. (This term is referred to hereinafter as the “Variable Rate Provision.”) The Variable Rate Provision reads, in its entirety, as follows:

Variable Rate. Your price may vary from month to month. This rate is set by [Defendant] and reflects their Generation Charge as reflected in the PJM Day-Ahead Market, [2] Installed capacity (the cost of reserve or standby power), electricity lost on the transmission system (“losses”), estimated state taxes, and any other costs that [Defendant] incurs to deliver your electricity to your electric Utility's Transmission System (where they receive the electricity). For their services, [Defendant] adds a profit margin to the electricity and [Defendant]'s goal each and every month is to deliver your power at a price that is less than what you would have paid had your [sic, read “you”] purchased your power from your local utility company, however, due to market fluctuations and conditions, [Defendant] cannot always guarantee that every month you will see savings. Commodity charges exclude Pennsylvania sales tax if applicable. You may contact [Defendant] for our current Variable Rate.

(1st Am. Class Compl., ¶¶ 8, 10; Id., Exs. A, B.)

         Following Plaintiffs' first month of service with Defendant, the variable rate that Defendant charged them for electricity began to exceed the rate that their local utility company was charging. The First Amended Class Action Complaint contains a table comparing the rates that the Gillises paid Defendant for their first nine months of service and the rates that their local utility company, PECO, charged consumers during the same time period.

         The Gillises

Month

PECO's Rate (in dollars per kilowatt-hour)

Defendant's Rate (in dollars per kilowatt-hour)

June 2013

0.0861

0.0825

July 2013

0.0861

0.1078

August 2013

0.0861

0.105

September 2013

0.0935

0.1072

October 2013

0.0935

0.10999

November 2013

0.0935

0.12562

December 2013

0.0977

0.13228

January 2014

0.0977

0.18983

February 2014

0.0977

0.3499

         The First Amended Class Action Complaint contains a similar table comparing the rates that Defendant charged the McClellands to the rates charged by Penelec, the McClellands' local utility company.

         The McClellands

Month

Penelec's Rate (in dollars per kilowatt-hour)

Defendant's Rate (in dollars per kilowatt-hour)

June 2013

[blank in original]

0.0849

July 2013

0.0870

0.1043

August 2013

0.0870

0.1069

September 2013

0.0805

0.1069

October 2013

0.0805

0.1099

November 2013

0.0805

0.1099

December 2013

0.0717

0.1098

January 2014

0.0717

0.1299

February 2014

0.0717

0.1499

March 2014

0.0771

0.2498

April 2014

0.0771

0.2699

(1st Am. Class Compl., ¶¶ 9, 11.)

         As the above tables indicate, the rates that Defendant charged the Gillises and McClellands exceeded the rates then being charged by their local utility providers, PECO and Penelec, in all but their first month of service. For the Gillises, Defendant's rate reached more than triple the local utility company's rate by February 2014. And for the McClellands, Defendant's rate reached more than triple the local utility company's rate by April 2014. (1st Am. Class Compl., ¶¶ 9, 11.)

         B. Procedural History

         Plaintiffs brought this putative class action on May 21, 2014, in the Philadelphia Court of Common Pleas. Defendant removed the action to this Court. Thereafter, Plaintiffs filed the currently operative First Amended Class Action Complaint.

         Defendant moved to dismiss or, in the alternative, strike Plaintiffs' class allegations. The Honorable Norma L. Shapiro, to whom this action was initially assigned, denied the motion without prejudice and directed Plaintiffs to move for class certification. Following a period of class discovery, Plaintiffs did so on February 2, 2015.

         On August 31, 2015, Judge Shapiro denied Plaintiffs' Motion for Class Certification. Plaintiffs took an interlocutory appeal of that decision, and, on February 1, 2017, the United States Court of Appeals for the Third Circuit reversed and remanded, concluding that “the putative class members' individual understandings and interpretations of the of the Variable Rate [P]rovision . . . should not have factored into the class certification analysis.” Gillis v. Respond Power, LLC, 677 Fed.Appx. 752, 755 (3d Cir. 2017).

         By the time of the remand, this case had been reassigned to my docket. On May 23, 2017, following a status conference to discuss how the case should proceed, I issued an order directing Defendant to respond to the First Amended Class Action Complaint. Defendant did so on June 30, 2017, ...


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