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Edwards v. North American Power & Gas, LLC

United States District Court, D. Connecticut

August 3, 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, 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 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. The Court granted preliminary approval on March 30, 2018. See Order, ECF No. 126.

         Plaintiffs now move for final approval of the class action settlement. See Pls. Mot. for Final Approval of Class Action Settlement, ECF No. 130. They seek the following:

1. certification of the settlement class;
2. appointment of Plaintiffs as representatives of the class;
3. appointment of their lawyers as class counsel;
4. approval of the Class Action Settlement; and,
5. approval of their proposed attorneys' fees and expenses.

Id. at 1-2. The Court took the motion under advisement at a final fairness hearing, held on August 1, 2018. See Min. Entry, ECF No. 132.

         Upon reviewing the Settlement Agreement, all the filings submitted in connection with the motion, and the information presented at the hearing, the motion is GRANTED.

         I. FACTUAL AND PROCEDURAL BACKGROUND

         This settlement agreement seeks global resolution of several different putative class actions, currently pending against NAPG in this Court and elsewhere.

         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 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 convenant 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 Pls. Mot. Class Certification, 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 Report, 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 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 involves alleged violations of New Jersey's Consumer Fraud Act, as well as contractual claims. The Tully Action involves 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 other state law claims. The Arcano action involves alleged violations of the Rhode Island Unfair Trade Practices and Consumer Protection Act, as well as contractual claims. The Tully and Fritz 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 Supp. (“Pls. Preliminary Certification 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. In February 2017, they tried again, unsuccessfully, to mediate a settlement. Id. Likewise, the Edwards Action went 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, ” id. ¶ 1.5, 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 $0.00351 per kilowatt hour, if they are variable rate customers receiving electric supply or $0.0195 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.

         D. Preliminary Approval of the Settlement Agreement

         Following the initial motion for preliminary approval, the Court held a hearing on January 29, 2018. See Min. Entry, ECF No. 118. The Court requested supplemental briefing addressing three questions:

1. Does the Court have jurisdiction to approve a class action settlement that addresses the state law claims of states where the named representatives may lack standing to bring those claims?
2. If the Court possesses jurisdiction, can the named representatives fairly and adequately protect the interests of class members from other states and whose claims would be subject to state laws different from that of the named representatives? See Fed. R. Civ. P. 23(a)(4).
3. Do the statutory and contractual state law claims included under the settlement "differ in a material manner that precludes the predominance of common issues" under Fed.R.Civ.P. 23(b)(3)? See In re U.S. Foodservice Inc. Pricing Litigation, 729 F.3d 108, 127 (2d Cir. 2013).

See Order, ECF No. 119.

         The Court then granted preliminary approval on March 30, 2018. See Ruling and Order, ECF No. 126. In response to its initial questions, the Court found that “preliminary certification is appropriate because claims here would ‘focus predominantly [sic] on common evidence' to determine whether NAPG was liable and rest on breach of contract claims where there is not significant variation.” Id. at 10 n.2 (quoting In re U.S. Foodservice Inc. Pricing Litig., 729 F.3d 108, 125 (2d Cir. 2013)). The Court held that, for the purposes of preliminary approval, the class met the requirements of Rule 23(a) and (b)(3) of the Federal Rules of Civil Procedure. Id. at 11-12. The Court appointed the named plaintiffs as representatives of the settlement class and their counsel as class counsel. Id. at 13.

         The Court granted preliminary approval of the Settlement Agreement's terms, while noting that preliminary approval required only at most “a determination that there is what might be termed ‘probable cause' to submit the proposal to class members and hold a full-scale hearing as to its fairness, ” Id. at 13-14 (quoting Menkes v. Stolt-Nielsen S.A., 270 F.R.D. 80, 101 (D. Conn. 2010)). The Court held that the proposed settlement met both the substantive and procedural requirements. Id.at 16.

         The Court also approved the form and content of the notice to be provided to the class, set a schedule for final approval and the date of the final fairness hearing. Id. 16-18. Finally, it also approved a claims administration plan and procedure through which class members could opt-out. Id. at 18.

         E. Notice to the Class

         The parties engaged Heffler Claims Group (“Heffler”), a third party, to administer notice of the settlement to the class. See Decl. of Joseph F. Mahan (“Mahan Decl.”), ECF No. 130-7. Heffler identified 491, 126 unique records from a list of 531, 847 class members provided by the parties.[1] Mahan Decl. ¶ 5. Heffler then mailed postcards to the 491, 126 identified class members. The postcard directed class members to the website or Heffler for more information, and provided information on how to submit a written request for exclusion. Id. ¶ 10. The postcard also stated that exclusions, objections, and claim forms must be post-marked or submitted by June 26, 2018. Id. Additionally, Heffler conducted additional research on any notices identified by the USPS as undeliverable. Id. ¶ 13. Heffler then sent a second, identical postcard to any updated addresses identified. Id.

         On April 3, 2018, Heffler also published the Settlement Agreement, notice, claim forms, and other case documents to a dedicated website available to the public at www.electricityandgassettlement.com. The website explained the litigation and the settlement, as well as the on-line claim form submission process. Id. ¶ 9.

         Heffler also set up a toll-free number, providing class members with general information about the litigation, the settlement, and the claim form process. Id. ¶ 7. Finally, under the Class Action Fairness Act, 28 U.S.C. § 1711, et. seq. (“CAFA”), the parties also sent a letter, on January 26, 2018, to the United States Attorney General and fifty-one states and territories. Id. ¶ 6. The notice provided a copy of the Complaint, notice of a hearing, copies of the notice forms, the proposed settlement, and the class definition. See 28 U.S.C. § 1715(b) (listing requirements).

         F. The Final Claims

         Plaintiffs now move for approval of the class settlement. They summarize the final results as of June 8, 2018. See Pls. Mem. at 18. A total of 16, 890[2] claims have been submitted and the average claimant will receive $50:

. Approximately 4, 700 will receive between $2.00 and $9.99;
. Approximately 4, 500 will receive between $10.00 and $29.99;
. Approximately 2, 900 will receive between $30.00 and $49.99;
. Approximately 2, 400 class members will receive over $100; and,
. Approximately 200 class members will receive over $300. Id.

         Additionally, no claimant has objected, and only seventeen plaintiffs opted out of the settlement. Status Report ¶ 2.

         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 Assocs., 237 F.R.D. 345, 349 (E.D.N.Y. 2006); see also Denney v. Deutsche Bank AG, 443 F.3d 253, 270 (2d Cir. 2006) (holding that Rule 23(a) and (b) analysis is independent of Rule 23(e) fairness review).

         “Rule 23(a) states four threshold requirements applicable to all class actions: (1) numerosity (a ‘class [so large] that joinder of all members is impracticable'); (2) commonality (‘questions of law or fact common to the class'); (3) typicality (named parties' claims or defenses ‘are typical ... of the class'); and (4) adequacy of representation (representatives ‘will fairly and adequately protect the interests of the class').” Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 613 (1997) (quoting Fed.R.Civ.P. 23(a)). “In addition to satisfying Rule 23(a)'s prerequisites, parties seeking class certification must show that the action is maintainable under Rule 23(b)(1), (2), or (3).” Id. at 614.

         These requirements apply equally to “conditional certification of a class for settlement purposes.” Cohen v. J.P. Morgan Chase & Co., 262 F.R.D. 153, 157 (E.D.N.Y. 2009); see also Reade-Alvarez v. Eltman, Eltman & Cooper, P.C., 237 F.R.D. 26, 31 (E.D.N.Y. 2006) (“Certification of a class for settlement purposes only is permissible and appropriate, provided these [Rule 23(a) and (b) ] standards are met.”). The settlement-only class certification inquiry requires this Court to “demand undiluted, even heightened, attention in the settlement context” to Rule 23's “specifications . . . designed to protect absentees by blocking unwarranted or overbroad class definitions.” Amchem Prods., Inc., 521 U.S. at 620.

         III. DISCUSSION

         Plaintiffs now move for final approval of the settlement agreement and seek the following: (1) the certification of the class for settlement purposes; (2) the approval of the settlement as procedurally and substantively fair, reasonable and adequate; (3) the appointment of the named Plaintiffs as representatives of the class and their counsel as class counsel; (4) the ...


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