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Mirkin v. Viridian Energy, Inc.

United States District Court, D. Connecticut

July 5, 2016

SUSANNA MIRKIN, et al., Plaintiffs,
v.
VIRIDIAN ENERGY, INC., Defendant.

          RULING AND ORDER

          Stefan R. Underhill United States District Judge

         On July 10, 2015, the plaintiffs, Susana and Boris Mirkin, filed a putative class action against the defendant, Viridian Energy, Inc., alleging violations of N.Y. G.B.L. §§ 349-d(7), 349-d(3), and 349, and unjust enrichment, and asserting that they represented a class that met the requirements of the Class Action Fairness Act, 28 U.S.C. §§ 1332, et seq. (doc. 1) The Mirkins filed a First-Amended Complaint ("FAC") on December 18, 2015 (doc. 47), replacing the unjust enrichment claim with claims for breach of contract and of the implied covenant of good faith and fair dealing. On January 8, 2016, Viridian filed the instant motion to dismiss. (doc. 48) I held a hearing on Viridian's motion on April 19, 2016. (doc. 70)

         For the following reasons, I now grant the motion to dismiss the section 349-d(7) claim (Count One) because the disclosures were adequate. I grant the motion to dismiss the implied covenant claim (Count Five) because the parties appear to agree that it is subsumed under the breach of contract claim under New York law. I deny the motion to dismiss the section 349 and 349-d(3) claims (Counts Two and Three), which are largely identical, because the plaintiffs have alleged sufficiently specific and quantifiable misstatements, and have further alleged that those misstatements caused them to pay more money on electricity than they otherwise would have done. Finally, I deny the motion to dismiss the breach of contract claim (Count Four), because the plaintiffs have adequately alleged that Viridian either did not set variable rates in the manner to which it agreed, or exercised the discretion to do so in bad faith.

         I. Standard of Review

         A. Motion to Dismiss for Failure to State a Claim Upon Which Relief May Be Granted

         A motion to dismiss for failure to state a claim pursuant to Rule 12(b)(6) is designed "merely to assess the legal feasibility of a complaint, not to assay the weight of evidence which might be offered in support thereof." Ryder Energy Distribution Corp. v. Merrill Lynch Commodities, Inc., 748 F.2d 774, 779 (2d Cir. 1984) (quoting Geisler v. Petrocelli, 616 F.2d 636, 639 (2d Cir. 1980)).

         When deciding a motion to dismiss pursuant to Rule 12(b)(6), the court must accept the material facts alleged in the complaint as true, draw all reasonable inferences in favor of the plaintiffs, and decide whether it is plausible that plaintiffs have a valid claim for relief. Ashcroft v. Iqbal, 556 U.S. 662, 678-79 (2009); Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555-56 (2007); Leeds v. Meltz, 85 F.3d 51, 53 (2d Cir. 1996).

         Under Twombly, "[f]actual allegations must be enough to raise a right to relief above the speculative level, " and assert a cause of action with enough heft to show entitlement to relief and "enough facts to state a claim to relief that is plausible on its face." 550 U.S. at 555, 570; see also Iqbal, 556 U.S. at 679 ("While legal conclusions can provide the framework of a complaint, they must be supported by factual allegations."). The plausibility standard set forth in Twombly and Iqbal obligates the plaintiff to "provide the grounds of his entitlement to relief" through more than "labels and conclusions, and a formulaic recitation of the elements of a cause of action." Twombly, 550 U.S. at 555 (quotation marks omitted). Plausibility at the pleading stage is nonetheless distinct from probability, and "a well-pleaded complaint may proceed even if it strikes a savvy judge that actual proof of [the claims] is improbable, and . . . recovery is very remote and unlikely." Id. at 556 (quotation marks omitted).

         II. Background

         The following facts are alleged in the First-Amended Complaint: Viridian Energy, Inc. ("Viridian") is an Energy Service Company ("ESCO"), and a participant in the market that arose following the deregulation of New York's residential gas and electricity markets. FAC at ¶¶ 1, 4, 5. Relevant to this action, Viridian markets itself as providing "green" energy at "competitive" prices. Id. at ¶ 5. Viridian is incorporated under Nevada law and has its principal place of business in Stamford, Connecticut. Id. at ¶¶ 18, 31.

         Susana and Boris Mirkin are married and reside in Brooklyn, New York. Id. at ¶ 17. In the fall of 2013, one of Viridian's direct-marketing associates showed the Mirkins standardized Viridian marketing materials including a brochure about Viridian's commitment to sustainability, id. at ¶ 39, Ex. 3, and a brochure entitled "Affordable Green Energy, " id. at ¶ 39, Ex. 4.[1] The Sustainability Brochure does not make any direct references to Viridian's rate plans, but does describe the company's "mission" as follows: "Viridian was built on the idea that customers should never have to choose between affordability and sustainability." Id. at Ex. 3. The "Affordable Green Energy" Brochure also does not directly lay out Viridian's rates. It states that Viridian provides green energy at "competitive prices, " and that "[i]n fact, the average Everyday Green customer saves money on energy costs over time." Id. at Ex. 4. In smaller font on the back of the brochure, following a list of Viridian's licensing numbers, it also states: "Viridian may offer two rate plans: variable rates which are subject to change based on market conditions and fixed rates which are fixed for an agreed upon number of billing cycles. Current rates should not be construed as a guarantee of future rates or savings." Id. The Viridian associate, using those materials, "convinced the Mirkins that Viridian's green energy was less expensive than conventional energy and was competitively-priced." Id. at ¶ 38. As a result, Susana Mirkin signed up with Viridian for the couple's joint energy bills.[2] Id.

         On October 16, 2013, [3] Viridian mailed Ms. Mirkin the aforementioned Sustainability Brochure, a "Welcome Letter, " Id. at ¶ 40, Ex. 2, and a copy of its Terms and Conditions, Id. at ¶ 40, Ex. 8. The main body of the Welcome Letter states that once Viridian service begins, Ms. Mirkin will be "doing your part to do something better for the environment while saving money on your energy costs at the same time." Id. at Ex. 2. In slightly smaller text in a box on the side of the page, the letter also states that Ms. Mirkin had enrolled in a "6-Month Fixed Rate plan" for 8.99 cents per kilowatt hour during that period with a "$50 Early Termination Fee." Id. The letter goes on to state that "[a]t the end of your term, your service will continue on a month-to-month basis on a variable rate." Id.

         The Terms and Conditions document ("T&C"), which consists of three pages of relatively small font, makes the following relevant statements:

• The T&C and welcome letter "supersede any oral or written statements made in connection with the Agreement or the Service."
• For customers with a fixed-term plan, it states in four locations that at the end of the fixed number of billing cycles set out in the welcome letter and/or any other Renewal term to which the parties agree, "the Agreement will continue with respect to such Service month-to-month with a variable rate" until the Agreement is terminated by either party.
• The variable rate under Viridian's "Everyday Green" plan, in which Ms. Mirkin apparently enrolled, is described as follows: "Your price may fluctuate from month-to-month based on wholesale market conditions applicable to the LDU's [Local Distribution Utility] service territory. The variable price for Electric Service each month will be calculated by multiplying the variable price of electricity per kilowatt hour (kWh) that month by the amount of electricity you use in the billing cycle plus any applicable fees, charges or taxes."
• "Viridian's prices may be higher or lower than the LDU's rate in any given month."
• "This Agreement offers no guaranteed savings."
• In two locations, the T&C provides a rescission clause, stating: "You have the right to cancel the Agreement, without fees or penalties of any kind, within three (3) business days of receiving the Agreement."

         Ms. Mirkin apparently did not cancel the agreement following receipt of those documents. She received six months of Viridian service at the fixed-term rate of 8.99 cents per kilowatt hour. Id. at ¶ 41. For the billing period from June 11, 2014 through July 10, 2014, Viridian charged Ms. Mirkin 15.4889 cents per kilowatt hour. Id. at ¶ 42. For the billing periods ending in August and September 2014, Viridian charged Ms. Mirkin 16.49 cents per kilowatt hour. Id. Ms. Mirkin then apparently terminated her Agreement with Viridian. See Id. at ¶ 43. During that three-month period, Ms. Mirkin paid $60.28 more than she would have paid based on her local utility's rate. Id. at ¶ 43. The Mirkins also allege that Viridian's rates increased or stayed the same even when the average wholesale market price for the region decreased. Id. at ¶ 47.[4] Apparently as a result of that discrepancy, the plaintiffs allege that Viridian's variable-rate plan is not based on "wholesale market conditions." Id. at ¶ 95.

         The plaintiffs seek certification of the class of similarly situated Viridian customers in New York, monetary relief under N.Y. G.B.L. §§ 349-d and 349, compensatory and punitive damages, and an injunction prohibiting Viridian from continuing the allegedly deceptive marketing practices described in the complaint.

         III. ...


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