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Edwards v. North American Power & Gas, LLC

United States District Court, D. Connecticut

March 30, 2018

PAUL EDWARDS, GERRY WENDROVSKY, SANDRA DESROSIERS, and LINDA SOFFRON, on behalf of themselves and all others similarly situated, Plaintiffs,
v.
NORTH AMERICAN POWER & GAS, LLC, Defendants.

          RULING AND ORDER

          VICTOR A. BOLDEN UNITED STATES DISTRICT JUDGE.

         Paul Edwards, on behalf of himself and all persons similarly situated (collectively “Plaintiffs”), filed the initial Class Action Complaint in this case on November 18, 2014. This case is one of several class actions pending in this District and throughout the country, alleging that North American Power & Gas, LLC (“NAPG” or “Defendant”) falsely advertised low rates in order to induce customers into switching their energy provider. Plaintiffs claim that NAPG expressly breached its contracts with class members, as well as the covenant of good faith and fair dealing, by allegedly advertising its variable rates would fluctuate with the market but failing to do so. See Second Am. Compl. ¶¶ 65-76, ECF No. 63. Additionally, several of the plaintiffs allege violations of the Connecticut Unfair Trade Practices Act (CUTPA) on behalf of a putative sub-class.

         Following settlement discussions between the parties in this action and those pending elsewhere, the parties have reached a settlement under which they intend to resolve five cases involving NAPG's alleged misrepresentations. See generally Class Action Settlement Agreement (“Settlement Agreement”), ECF No. 116-1. The proposed settlement would involve the claims of class members in eleven states for breach of contract and alleged violation of state consumer protection laws. After notifying the Court of the proposed settlement, Plaintiffs moved for preliminary approval on January 16, 2018. ECF No. 114.

         Plaintiffs' motion seeks the following: (1) preliminary certification of a class under 23(b)(3) for settlement purposes; (2) preliminary approval of the Settlement; (3) authorization to disseminate the proposed Class Notice to members of the Settlement Class; and (4) a date and time for the Final Fairness Hearing.[1]

         Upon reviewing the Settlement Agreement, all the filings submitted in connection with the motion, the information presented at the hearing, the Motion is GRANTED. The Court FINDS, CONCLUDES, AND ORDERS as follows

         I. FACTUAL AND PROCEDURAL BACKGROUND

         A. The Edwards Action

         Mr. Edwards filed the initial Complaint in this lawsuit on November 18, 2014, as the sole named plaintiff. See Compl., ECF No. 1. He sought to bring the lawsuit “on behalf of himself and all class of all similarly situated customers . . . in Connecticut, Rhode Island, New Hampshire, and Maine, arising out of [NAPG's] unfair, deceptive, unconscionable and bad faith billing . . . .” Id. ¶ 2.

         NAPG moved to dismiss the complaint. The Court granted the motion in part. See Ruling on Motion to Dismiss, ECF No. 39. The Court found that Mr. Edwards lacked standing to bring claims under Maine's Unfair Trade Practices Act, New Hampshire's Consumer Protection Act, and Rhode Island's Unfair Trade Practice and Consumer Protection Act. Id. at 2. The Court denied the motion to dismiss as to the CUTPA claims and the breach of the covenant of good faith and fair dealing. Id. The dismissal of the other claims was without prejudice, and Edwards subsequently moved to amend the complaint.

         The current operative complaint, the Second Amended Complaint, was filed on June 3, 2016. See Second Am. Compl. (“SAC”), ECF No. 63. The Second Amended Complaint was filed on behalf of Edwards (a Connecticut citizen), Gerry Wendrovsky (a citizen of New York who owns property in Connecticut), Sandra Desrosiers and Linda Soffron (both citizens of New Hampshire). SAC ¶¶ 8-12. They allege that North American Power was an electric supplier, purchasing power on the wholesale market and selling it to consumers. Id. ¶ 21. They allege that NAPG charged a low promotional rate, fixed for several months, which then changed to a variable rate following the end of the introductory period. Id. ¶ 24. NAPG allegedly represented that the variable rate following the introductory rate would be based on the wholesale market rate, id. ¶ 25; instead, Plaintiffs claim, NAPG “increase[ed] the rates charged to class members when wholesale prices rose” and kept rates “at a level as much as double, triple or quadruple the wholesale market rates when the wholesale prices fell.” Id. ¶ 31 (emphasis in original).

         Plaintiffs argue that this pricing scheme represents a breach of the contracts signed between themselves and NAPG, id. ¶¶ 65-68, as well as a breach of the implied convenient of good faith and fair dealings. Id. ¶¶ 69-76. They allege these violations on behalf of a class of those similarly situated in Connecticut and New Hampshire. Id. ¶ 54. Additionally, the plaintiffs seek to certify a subclass of NAPG's Connecticut customers, alleging violations of the Connecticut Unfair Trade Practices Act (CUTPA). Id. ¶¶ 55, 77-84.

         Discovery began, and Plaintiffs moved for class certification on May 24, 2017. See Pl. Mot. Class Cert., ECF No. 82. Before the Court could rule on the motion, however, both NAPG and the Plaintiffs moved to stay the proceedings. See Def. Mot. to Stay, ECF No. 98. The motion stated that “the Parties have agreed to a global mediation” to attempt to resolve several similar matters pending against NAPG, including the Edwards matter. Id. at 1. The Court granted a stay. Order, ECF No. 99.

         On October 31, 2017, the parties informed the Court they were unable to reach a settlement. See Joint Status Rep., ECF No. 102. The Court lifted the stay, Order, ECF No. 103, and NAPG moved for summary judgment. See Def. Mot. Summ. J., ECF No. 105.

         B. Other Actions

         The Edwards action is not the only case currently pending that involves NAPG's alleged misconduct. Three similar lawsuits are currently pending in the District of Connecticut. Arcano v. North American Power & Gas, LLC, No. 3:16-cv-1921-WWE (D. Conn. filed October 31, 2016) (“Arcano Action”); Tully v. North American Power & Gas, LLC, No. 15-cv-00469-WWE (D. Conn. filed March 31, 2015) (“Tully Action”); Fritz v. North American Power & Gas, LLC, No. 3:14-cv-0634-WWE (D. Conn. filed May 6, 2014) (“Fritz Action”). In addition, another case is currently pending in the Northern District of Illinois, Zahn v. North American Power & Gas, LLC, No. 14-cv-8370 (N.D. Ill., filed October 24, 2014) (“Zahn Action”) and the Southern District of New York. Claridge v. North American Power & Gas, LLC, 15-cv-1261 (PKC) (S.D.N.Y. filed February 20, 2015) (“Claridge Action”).

         The Fritz Action pertained to alleged violations of New Jersey's Consumer Fraud Act, as well as contractual claims. The Tully Action pertained to alleged violations of the Rhode Island Deceptive Trade Practices Act, the New Jersey Consumer Fraud Act, the Maryland Consumer Protection Act, the Connecticut Unfair Trade Practices Act, the Maine Unfair Trade Practices Act, the New Hampshire Consumer Protection Act, the Georgia Fair Business Practices Act, the Ohio Consumer Sales Practices Act, the Pennsylvania Unfair Trade Practices and Consumer Protection Law, and the Texas Deceptive Trade Practices Act, among state law claims. The Arcano action alleged violations of the Rhode Island Unfair Trade Practices and Consumer Protection Act, as well as contractual claims. The Tully and Fitz cases were consolidated on June 23, 2015. The Arcano case was originally consolidated on June 20, 2016. The court formally severed the Arcano case from the other two, but stayed it on request of the parties pending the resolution of the Tully and Fritz actions. The court then stayed the consolidated Tully and Fritz actions pending settlement negotiations, and then administratively closed the cases.

         The Claridge Action, filed on behalf of New York consumers, alleged violations of New York's deceptive trade practices law. See Claridge v. N. Am. Power & Gas, LLC, No. 15-cv-1261 (PKC), 2016 WL 7009062, at *1 (S.D.N.Y. Nov. 30, 2016). On November 30, the court in Claridge certified a class of “all New York North American Power & Gas, LLC customers who paid North American Power & Gas, LLC's variable rate” on or after February 20, 2012. Id. The parties in Claridge also sought the court's preliminary approval of a settlement that would resolve all the pending NAPG actions and certify a nation-wide class of NAPG customers. The court rejected that proposal, but approved a later settlement agreement pertaining to New York customers. See Order, Claridge v. N. Am. Power & Gas, LLC, No. 15-cv-1261 (PKC), ECF No. 139 (S.D.N.Y. March 13, 2018).

         The Zahn Action appears to assert causes of action on behalf of Illinois consumers. Pls. Mem. at 6. The district court initially granted NAPG's motion to dismiss, but on appeal the Seventh Circuit chose to certify a question to the Illinois Supreme Court and requested that the court determine if the Illinois Commerce Commission (“ICC”) would have exclusive jurisdiction over the claim. Id. The Illinois Supreme Court held that the ICC did not have exclusive jurisdiction and the Seventh Circuit then reversed the district court decision. The Zahn Action is currently stayed pending approval of the settlement at issue here. Id.

         C. Settlement Agreement

         On December 20, 2017, the parties informed the Court at a telephonic status conference that they had reached a preliminary agreement to settle the case. See Order, ECF No. 113. Plaintiffs then moved for preliminary settlement approval. See Pls. Mot. for Prelim. Approval, ECF No. 114.

         In their filing, Plaintiffs noted that the parties began discussing settlement of the Fritz Action in 2015. Pls. Mem in Support (Pls. Mem.) at 7, ECF No. 115. The parties attempted mediation in December 2015 and, again in February 2016, but neither resulted in a settlement. Id. They tried again, unsuccessfully, to mediate settlement in February 2017. Id. Likewise, the Edwards Action attempted to mediation a month later and the parties also were unsuccessful. Id.

         On June 27, 2017, the parties appeared to reach a settlement for the Fritz and Claridge cases, and sought preliminary approval in the Southern District of New York, where Claridge was then pending. Id. at 8. Edwards counsel opposed; the Court ultimately denied the motion for preliminary approval. Id. Finally, the parties in all actions agreed to mediate jointly and, after two mediation sessions, entered into a settlement on January 16, 2018. Id. See also Class Action Settlement Agreement (“Settlement Agreement”), ECF No. 116-1.

         The settlement seeks to resolve five separate cases: Edwards v. North American Power & Gas, No. 3:14-cv-01724 (D. Conn. filed November 18, 2014); Arcaro v. North American Power & Gas, LLC, No. 3:16-cv01921-WWE (D. Conn. filed October 31, 2016); Tully v. North American Power & Gas, LLC, No. 15-cv-00469-WWE (D. Conn. filed March 31, 2015); Fritz v. North American Power & Gas, LLC, No. 3:14-cv-0634-WWE (D. Conn. filed May 6, 2014); and Zahn v. North American Power & Gas, LLC, No. 14-cv-8370 (N.D. Ill., filed February 20, 2015). See Settlement Agreement § I. The parties stated that they “recognize and acknowledge the benefits of settling these cases” and defined the class as “all Persons who were NAPG Variable Rate Customers during the Class Period in Connecticut, Illinois, Maryland, Maine, New Hampshire, New Jersey, Ohio, Pennsylvania, Rhode Island, Georgia or Texas.” Settlement Agreement ¶ 2.11. The class period is defined as between February 20, 2012 through June 5, 2017. Id. ¶ 2.13. The settlement agreement sets out a series of procedures for its approval, and noted that, while a class should be certified for settlement purposes, Defendants would reserve the right to challenge class certification if the Court denied preliminary approval of the agreement. Id. § IV.

         The agreement provides that NAPG customers who properly file a claim will be given $.00351 per kilowatt hour if they are variable rate customers receiving electric supply or $.0195 per therm if they receive natural gas supply, with a minimum benefit of $2.00. Id. ¶ 5.1. The total benefit, however, “payable by NAPG shall be subject to a $16, 053, 000 cap. In the event that the value of the Benefits claimed exceeds $16, 053, 000, the Benefit payable to each NAPG Variable Rate Customer will be reduced pro rata based on the individual's electric supply and/or natural gas supply use while on a variable rate plan.” Id. Named plaintiffs would receive up to $5, 000 as class representatives, and attorney's fees would be capped at $3, 699, 000. Id. ¶ 7.5.

         Parties also agreed to release claims, defined as:

any and all claims, demands, rights, damages, obligations, suits, debts, liens, contracts, agreements, judgments, expenses, costs, liabilities, and causes of action of every nature and description, including claims for attorneys' fees, expenses and costs, whether known or unknown, suspected or unsuspected, existing now or arising in the future that (a) is or are based on any act, omission, inadequacy, misstatement, representation, harm, matter, cause or event whatsoever that has occurred at any time from the beginning of time up to and including the end of the Class Period and (b) arise from or are related in any way to this lawsuit or class action.

Id. ¶ 2.34.

         II. STANDARD OF REVIEW

         Rule 23(e) requires that “[t]he claims, issues, or defenses of a certified class may be settled, voluntarily dismissed, or compromised only with the court's approval.” Fed.R.Civ.P. 23(e). Thus, “[b]efore reaching the merits of the proposed settlement, ” this Court “must first ensure that the settlement class, as defined by the parties, is certifiable under the standards of Rule 23(a) and (b).” Bourlas v. Davis Law Associates, 237 F.R.D. 345, 349 (E.D.N.Y. 2006); see also Denney v. ...


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