LEVESQUE v. IBERDROLA SA

UNITED STATES DISTRICT COURT

DISTRICT OF MAINE

MARK LEVESQUE, et al., )

)

Plaintiffs, )

)

v. ) 2:19-cv-00389-JDL

)

IBERDROLA, S.A., et al., )

)

Defendants. )

ORDER ON MOTIONS TO DISMISS

Plaintiffs Mark Levesque, Christie Decker, Michael Platt, Sylvia Krainin, and

Sally Trussell (collectively, the “Plaintiffs”) filed their Third Amended Complaint—a

putative class action—against Defendants Iberdrola, S.A. (“Iberdrola”); Central

Maine Power Company (“CMP”); Avangrid, Inc. (“Avangrid”); and Douglas Herling

(“Herling”) (collectively, the “Defendants”) on January 31, 2020 (ECF No. 44). The

Third Amended Complaint alleges that the Defendants implemented a metering and

billing system that incorrectly measured and charged customers for electricity, and

that they then attempted to cover up problems that resulted from their

implementation of this allegedly defective system.

On August 7, 2020, Iberdrola filed a motion to dismiss for lack of personal

jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(1) or, in the alternative,

for failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6) (ECF

No. 84). On February 1, 2021, Avangrid and CMP jointly filed a motion to dismiss

for failure to state a claim (ECF No. 128). That same day, Herling also filed a motion

to dismiss for failure to state a claim (ECF No. 129). For the reasons that follow, I

grant the motions in part and deny them in part.

I. FACTUAL BACKGROUND

CMP is an electric utility headquartered in Augusta, Maine that transmits and

delivers electricity generated by various power suppliers to over 624,000 customers

in central and southern Maine. Herling is CMP’s Chief Executive Officer. CMP is a

subsidiary of Avangrid, a New York corporation headquartered in Connecticut.

Iberdrola is a Spanish corporation that owns the majority of outstanding shares of

Avangrid common stock.

In 2011, to dispense with the need for physical meter readings, CMP

introduced a system of “smart meters” designed to measure CMP customers’ use of

electricity and transmit those measurements remotely. In October 2017, CMP

switched to a new “SmartCare” meter and billing system that was designed to

interface with the smart meters. Beginning the following month, nearly 300,000

CMP customers saw their bills increase, many by 50% or more. These billing

increases allegedly occurred without any actual increased use of electricity by the

customers.

The Third Amended Complaint alleges that the Defendants failed to

adequately test the SmartCare system prior to rollout, including conducting “far

fewer weeks of testing than planned and recommended.” ECF No. 44 ¶ 72. CMP

allegedly billed customers despite knowing that the SmartCare system was defective

and inaccurate, and instructed CMP customer service representatives (who were

understaffed following the rollout) to tell customers that the spikes in their electricity

bills were caused by other factors. Following their complaints, some customers faced

issues such as: not receiving bills, not being able to access their online CMP accounts,

receiving disconnect notices, being placed on payment arrangements that they did

not agree to, having money withdrawn from their bank accounts without their

consent, being sent to debt collectors, receiving a high bill after months of no bills,

and simply continuing to pay allegedly erroneously high bills. Customers also

suffered indirect harm, such as paying electricians to investigate their energy usage,

purchasing new appliances, and severely limiting their energy usage.

According to the Third Amended Complaint, this was not the first time an

Iberdrola subsidiary had dealt with issues surrounding its billing system. In 2014,

another Iberdrola subsidiary, Scottish Power, was investigated by the United

Kingdom’s Office of Gas and Electricity Markets (“Ofgem”) after its rollout of a billing

system similar to SmartCare. Scottish Power customers received late or incorrect

bills and experienced bill delays followed by a sudden demand for high bills to be paid,

and Scottish Power call centers were overwhelmed by complaints and failed to

respond to customers’ issues. Ultimately, Ofgem fined Scottish Power.

The Third Amended Complaint also alleges that there was an overlap of key

employees between Iberdrola, Avangrid, and CMP. The SmartCare project was led

by a team that included Iberdrola employees, including employees located in Maine.

Iberdrola exercised significant influence over CMP and Avangrid, and the SmartCare

project was implemented at Iberdrola’s direction. At least one Avangrid employee

was also involved in the Scottish Power billing system rollout.

In response to complaints from CMP customers regarding their receipt of high

electricity bills following the SmartCare rollout, the Maine Public Utilities

Commission (“PUC”) retained the Liberty Consulting Group (“Liberty”) to conduct a

forensic audit of CMP’s metering, billing, and related systems.1 In December of 2018,

Liberty published a report of its audit. Ultimately, Liberty concluded that “CMP’s

meters produce accurate measurements of customer usage.” ECF No. 14-6 at 15.

Liberty found that SmartCare “introduced errors and significant delay into the billing

process,” but that these billing errors were “minimal in number and in dollar value.”

Id. Liberty criticized the “testing and training” surrounding the SmartCare

implementation, along with the personnel shortages that “unduly delayed fixes to the

errors, caused significant customer difficulty in reaching CMP representatives and in

getting answers to questions and concerns, and meant overly long delays in resolving

billing problems.” Id. It noted that “compressed timelines leading up to go-live”

adversely affected the rollout of SmartCare, id. at 77, and that “[l]ack of post go-live

planning and management for defect resolution and staff to manage these defects

created a large backlog, which still remain[ed]” as of the date of the report, id. at 81.

However, Liberty ultimately attributed CMP’s customers’ high bills to extreme cold

weather during the winter of 2017-2018 that coincided with an increase in the price

of electricity.

1 The information in this paragraph stems from the Liberty Consulting Group’s forensic audit of

CMP’s Metering and Billing System, ECF No. 14-6 at 5-111. See Watterson v. Page, 987 F.2d 1, 3 (1st

Cir. 1993) (noting that courts considering a motion to dismiss may look to documents that are “central

In January 2019, Herling sent a letter to CMP customers stating that the

Liberty audit concluded that “all systems from meter to bill are working as intended

and bills are accurate,” and that the only shortcoming identified by the Liberty audit

was CMP’s failure to dedicate enough “staff, training[,] or management oversight” to

ensure adequate customer service after the SmartCare rollout. ECF No. 44 ¶¶ 113,

115. The Third Amended Complaint alleges that this statement was false because

the Liberty audit also identified problems with CMP’s implementation of SmartCare,

and not merely its customer service following the rollout. In May 2018, before the

Liberty report was issued, Herling also made statements to the Portland Press

Herald and the Bangor Daily News indicating that CMP had found nothing about the

SmartCare system that would artificially increase customer’s usage. The Third

Amended Complaint alleges that these statements were also false, that Herling knew

or should have known that these statements would instill a false sense of security in

the minds of CMP customers and curtail their desire to challenge their bills, and that

customers relied on both statements to their detriment by making their electric

payments, purchasing new appliances, paying electricians, and travelling to observe

CMP’s meter testings.

II. PROCEDURAL HISTORY

In July 2018, Levesque commenced a class action lawsuit against CMP in the

Cumberland County Superior Court, alleging a single claim of unjust enrichment

based on CMP’s alleged cover-up of the SmartCare billing issues. Roughly a month

later, he added a number of additional plaintiffs and added Avangrid as a defendant.

The case was transferred to the Superior Court’s Business and Consumer Docket in

September 2018. In February 2019, the Superior Court stayed all proceedings in the

matter pending the resolution of an investigation into the overbilling claims by the

PUC. On July 30, 2019, the Plaintiffs filed a Second Amended Complaint, which

added new named plaintiffs, added Iberdrola and Herling as defendants, and added

additional claims. CMP and Avangrid filed a notice of removal to this court on August

23, 2019.

The Plaintiffs filed their Third Amended Complaint on January 31, 2020. The

Third Amended Complaint presents claims for (1) unjust enrichment; (2) breach of

contract; (3) failure to comply with the laws and regulations concerning the provision

and billing of electrical services pursuant to 35-A M.R.S.A. § 1501 (West 2021); (4)

fraud and intentional misrepresentation by the corporate defendants; (5) fraud and

intentional misrepresentation by Herling; and (6) violation of the Racketeer

Influenced and Corrupt Organizations Act (“RICO”), 18 U.S.C.A. §§ 1961-1968. On

February 26, 2020, the PUC issued the result of its investigation into CMP’s metering

and billing issues. CMP, Avangrid, and Herling then filed a motion to dismiss the

Third Amended Complaint without prejudice or to stay the proceedings pending the

Plaintiffs’ exhaustion of administrative remedies on February 28, 2020. Following a

hearing, I denied the motion on November 25, 2020 (ECF No. 104).

I now address three additional motions to dismiss. Iberdrola has filed a motion

to dismiss for lack of personal jurisdiction or, in the alternative, for failure to state a

claim. CMP and Avangrid have also filed a motion to dismiss for failure to state a

claim, as has Herling. I held a consolidated hearing on all three motions on May 20,

2021.

III. LEGAL STANDARDS

A. Rule 12(b)(1): Lack of Personal Jurisdiction

“To hear a case, a court must have personal jurisdiction over the parties, that

is, the power to require the parties to obey its decrees.” Daynard v. Ness, Motley,

Loadholt, Richardson & Poole, P.A., 290 F.3d 42, 50 (1st Cir. 2002) (internal citation

and quotation marks omitted). “The plaintiff bears the burden of proving the court’s

personal jurisdiction over the defendant.” Id. However, this burden is “not a heavy

one.” In re Lupron Mktg. and Sales Practices Litig., 245 F. Supp. 2d 280, 289 (D.

Mass. 2003). While “[t]he plaintiff must go beyond the pleadings and make

affirmative proof,” Negrón-Torres v. Verizon Commc'ns, Inc., 478 F.3d 19, 23 (1st Cir.

2007) (quoting Boit v. Gar–Tec Prods., Inc., 967 F.2d 671, 675 (1st Cir. 1992)), under

the prima facie standard, a court “must accept the plaintiff’s (properly documented)

evidentiary proffers as true,” and construe those facts “in the light most congenial to

the plaintiff’s jurisdictional claim.” Daynard, 290 F.3d at 51 (citations and quotation

marks omitted). Facts put forth by the plaintiff must be accepted as true “irrespective

of whether the defendant disputes them,” and “facts put forward by the defendant

‘become part of the mix only to the extent they are uncontradicted.’” Astro-Med, Inc.

v. Nihon Kohden Am., Inc., 591 F.3d 1, 8 (1st Cir. 2009) (quoting Adelson v. Hananel,

510 F.3d 43, 48 (1st Cir. 2007)).

B. Rule 12(b)(6): Failure to State a Claim

A court reviewing a motion to dismiss for failure to state a claim must “accept

as true all well-pleaded facts alleged in the complaint and draw all reasonable

inferences therefrom in the pleader’s favor.” Rodríguez-Reyes v. Molina-Rodriguez,

711 F.3d 49, 52-53 (1st Cir. 2013) (quoting Santiago v. Puerto Rico, 655 F.3d 61, 72

(1st Cir. 2011)). To survive a motion to dismiss under Fed. R. Civ. P. 12(b)(6), the

complaint “must contain sufficient factual matter to state a claim to relief that is

plausible on its face.” Id. at 53 (quoting Grajales v. P.R. Ports Auth., 682 F.3d 40, 44

(1st Cir. 2012)).

Courts apply a two-pronged approach in resolving a motion to dismiss under

Rule 12(b)(6). Ocasio-Hernández v. Fortuño-Burset, 640 F.3d 1, 12 (1st Cir. 2011).

First, courts must identify and disregard statements in the complaint that merely

offer legal conclusions couched as factual allegations. Id. (citing Ashcroft v. Iqbal,

556 U.S. 662, 678 (2009)). Second, courts “must determine whether the remaining

factual content allows a reasonable inference that the defendant is liable for the

misconduct alleged.” A.G. ex rel. Maddox v. Elsevier, Inc., 732 F.3d 77, 80 (1st Cir.

2013) (quotation marks and citation omitted). Determining the plausibility of a claim

is “a context-specific task that requires the reviewing court to draw on its judicial

experience and common sense.” Id. (quoting Iqbal, 556 U.S. at 679).

IV. LEGAL ANALYSIS

Because Iberdrola raises the threshold issue of personal jurisdiction, I address

this question first. I then address the various parties’ arguments as to whether the

Third Amended Complaint states a claim for unjust enrichment, fraud and

misrepresentation, violation of 35-A M.R.S.A. § 1501, or violation of RICO, as

applicable, beginning with the broad argument that all state law claims against

Avangrid must be dismissed.2

A. Personal Jurisdiction over Iberdrola

The parties have engaged in a lengthy discovery process with respect to

Iberdrola’s motion. Accordingly, their factual submissions are extensive and detailed.

I summarize the facts specific to jurisdiction here, presenting them in the light most

favorable to the plaintiffs, as I must, and giving deference to the plaintiffs where

Iberdrola has presented conflicting factual allegations. I then analyze the parties’

jurisdictional arguments.

1. Factual Allegations

Iberdrola, a corporation organized and headquartered in Spain, owns 81.5% of

the shares of its American brand Avangrid, which in turn owns 100% of the shares of

CMP. Iberdrola does not have any offices, property, or bank accounts in the United

States, is not licensed to do business in the United States, and does not have any

permanent employees in the United States. However, certain Iberdrola officers are

also officers of Avangrid. Ignacio Galán is chairman of both Iberdrola and Avangrid.

Avangrid’s Board of Directors includes Pedro Azagra Blázquez, who is Iberdrola’s

Corporate Development Director; José Sainz Armada, who serves in a senior financial

management role at Iberdrola; and Santiago Martínez Garrido, who serves in a senior

legal role for Iberdrola. Several of these individuals have travelled to Maine multiple

2 No party has challenged the claim for breach of contract alleged in Count Two of the Third Amended

Complaint, except for Avangrid in the context of its argument that all claims against it must fail.

Additionally, the Plaintiffs have voluntarily dismissed their 35-A M.R.S.A. § 1501 and RICO claims

times since 2015 to speak about, promote, conduct, and advocate for Iberdrola’s

business interests in Maine. In a Securities and Exchange Commission filing,

Avangrid explained that “Iberdrola exercises significant influence over [Avangrid],

and its interests may be different than [other shareholders’].” ECF No. 16-21 at 47.

It further stated that Iberdrola “exercise[s] significant influence over [Avangrid’s]

business policies and affairs, including the composition of [its] board of directors.” Id.

A former employee of Avangrid’s treasury department, Valery Harris, states

that, during the implementation of the SmartCare project, at least six Iberdrola

employees were based in Maine at any given time to work on the project, particularly

in the lead up to SmartCare’s go-live in October 2017.3 Avangrid reimbursed

Iberdrola for the payroll and housing costs for each employee’s time spent working at

CMP/Avangrid. Iberdrola had an account in the Netherlands where its subsidiaries

deposited their revenues, and CMP/Avangrid could draw from that account if

Iberdrola found it necessary. Iberdrola selected the technical consultant for the

SmartCare project, and for the similar project in Scotland. Additionally,

CMP/Avangrid were required to complete and submit request forms for the purchase

of, among other things, equipment, software, supplies, software add-ons, and

firmware for Iberdrola’s approval. This included approval for expenditures on the

SmartCare project. The necessity of Iberdrola’s approval led to delays with the

SmartCare project. Additionally, Fernando Lucero, Iberdrola’s Chief Information

3 In a procedural order dated April 28, 2021 (ECF No. 157), Magistrate Judge John C. Nivison ruled

that the sworn declaration of Valery Harris, a 2015 Capital Expenditure Plan, and the pleadings and

order regarding the Plaintiff’s motion for sanctions against Iberdrola shall be included in the record

for the Court’s consideration of Iberdrola’s motion to dismiss. No objections to the Magistrate Judge’s

order have been filed. Accordingly, Iberdrola’s Response to Plaintiffs’ Notice of New Developments

Officer, was “deeply involved with Avangrid’s Information Technology assets and

programs including the SmartCare project in Maine.” ECF No. 120-1 ¶ 21.

A 2015 Capital Expenditure Plan, entitled “CMP Customer Relationship

Management & Billing Project,” states that the SmartCare project was “proposed by”

Lucero and Sainz Armada. ECF No. 120-2 at 1. It also states that, following approval

by the PUC, the plan was to “be updated and re-presented to the Iberdrola Operating

Committee for full approval before project launch.” Id. at 9. A SmartCare “Project

Kickoff Meeting” handout states that “[t]he Operating Committee of Iberdrola’s

Group approved in 2015 the implementation” of SmartCare. ECF No. 118-5 at 7.

In addition to its more overarching role, Iberdrola was involved at several

points of the SmartCare rollout. For instance, when SmartCare was delayed in June

2016, an Avangrid executive told another executive that they were “being directed by

global IT to get bids from other vendors” which “would cause at least a month’s delay,

possibly more.” ECF No. 125 at 4. He further explained that concerns about the

project could be “escalated” to “Armando Martinez [of Iberdrola] so it could blow up

at a very senior level. Fernando [Lucero] is very concerned about this.” Id. A few

weeks later, after being informed about a potential delay with SmartCare’s

implementation, Lucero wrote in an email: “We have never talked about any delay

impacting the go-live. I [do] not accept it. Please, provide me this week a plan with

options for infrastructure workstreams in order to recover the delay and keep the

agreed go-live.” Id. at 7. Lucero later informed a CMP project manager that “[w]e

must solve all the issues asap.” Id. at 8.

In April 2017, Ignacio Canales, an Iberdrola employee assigned to the

SmartCare project, informed a CMP executive that Jaime Macias Gonzalez

(Iberdrola’s SmartCare emissary based in Maine and a member of the SmartCare

project lead team) would provide her with key performance indicators that Iberdrola

used in other projects to identify and understand the “potential bottlenecks in the

system after the go-live,” including integration and billing errors. Id. at 32. And in

August 2017, in response to reports of likely delays, Iberdrola executive Armando

Martinez emailed Avangrid Chief Executive Officer Robert Kump the following:

What are the regulatory consequences of any delay? And the economic

impac[t] (which must be transfer[ed] to ITRON)? This project should

have finished last July. Delays [from] September are not acceptable.

The team must work on a[] scenario of September completion, unless

non regulatory, economic or reputational impact.

Id. at 1.

For its part, Iberdrola states that only two of its employees—Macias Gonzalez

and Canales—had a notable connection to the SmartCare project, and states that

their roles were limited to “back office” integration of SmartCare with Iberdrola’s

global platform. ECF No. 84-1 ¶ 16. It states that Macias Gonzalez moved to Maine

for a period of time to assist with the project, but that Macias Gonzalez only reported

to Canales at Iberdrola, and that with respect to SmartCare he reported to superiors

at CMP, rather than CMP employees reporting to him. Iberdrola claims that Macias

Gonzalez was the local resource for CMP to interface with a software development

team located in Spain to ensure that the team was devoting the proper resources to

the SmartCare project.

While Iberdrola acknowledges that Iberdrola employees were on the

SmartCare Steering Committee, it states that the Steering Committee was only

“tasked with monitoring strategic priorities for the [SmartCare] project,

demonstrating project sponsorship, reviewing and accepting project status updates

at regular intervals, and securing appropriate project resources,” and notes that

“[t]he Steering Committee did not exercise decision-making authority and instead

provided a forum for the project team to provide informational status updates to

various stakeholders on the progress of the SmartCare project.” Id. ¶ 21. Canales

was the only Iberdrola employee to participate in a Steering Committee meeting and

he did so remotely from Spain and “infrequently.” Id. ¶ 23. Other Iberdrola

employees served on the committee for only “a couple of months” and did not

participate. Id. ¶ 22. Macias Gonzalez was not on the Steering Committee, but, as a

member of the SmartCare project lead team, he did participate in Steering

Committee meetings “infrequently” in “an information-providing role.” Id. ¶ 29.

Iberdrola claims that the services of Canales and Macias Gonzalez were

consistent with Iberdrola’s “Framework Agreement for the Provision of Corporate

Services for Iberdrola and the Companies of Its Group,” which states that “without

detriment to the autonomous decision-making of all such companies,” Iberdrola may

provide “efficient, flexible corporate services” at the request of any subsidiary

company in order to assist with “the global integration of [Iberdrola’s] businesses.”

Id. ¶ 17 (emphasis omitted). The Agreement expressly provides that all services

“shall be provided by [Iberdrola] . . . without detriment to the effective decision-

making capacity of the Client Companies.” Id.

2. Analysis

The Plaintiffs have essentially set forth two theories of jurisdiction. First, they

argue that this court has personal jurisdiction over Iberdrola as a parent company

because of its “general level of control,” ECF No. 118 at 19, over its subsidiaries CMP

and Avangrid—essentially, an argument that CMP/Avangrid, neither of which have

contested jurisdiction, are the “domestic alter ego” of Iberdrola.4 City of Bangor v.

Citizens Commc'ns Co., No. CIV. 02-183-B-S, 2003 WL 22183205, at *5 n.5 (D. Me.

Sept. 22, 2003), report and recommendation adopted, No. CIV. 02-183-B-S, 2003 WL

22913423 (D. Me. Dec. 1, 2003). Next, they argue that Iberdrola itself had the

requisite minimum contacts necessary to establish specific personal jurisdiction.

a. The “Domestic Alter Ego” Theory

For a court to assert personal jurisdiction over a parent company on a

“domestic alter ego” theory, a plaintiff “must produce ‘strong and robust’ evidence of

control by the parent company over the subsidiary, rendering the latter a ‘mere

shell.’” Negrón-Torres, 478 F.3d at 24 (quoting DeCastro v. Sanifill, Inc., 198 F.3d

282, 283-84 (1st Cir. 1989)).

In City of Bangor, Magistrate Judge Margaret J. Kravchuk explained the

“sometimes overlapping scenarios” where courts will exercise jurisdiction over a

parent based on the forum activities of its subsidiaries:

4 While “[d]ue process requires the plaintiff to prove the existence of either general or specific

jurisdiction,” Negrón-Torres, 478 F.3d at 24, in a “domestic alter ego” inquiry “the general versus

specific jurisdiction issue may be of little significance because [CMP/Avangrid’s] forum contacts are

more than sufficient to support an exercise of either specific or general jurisdiction.” City of Bangor,

(1) the parent exercises pervasive or complete control over the

subsidiary, either in regard to its day-to-day operations or in regard to

the specific, claim-related conduct; (2) the subsidiary is the parent’s in-

state agent, instrumentality or a mere department of the parent; (3) the

parent and subsidiary engage in a common undertaking in a manner

that substantially disregards the separate nature of the corporate

entities or creates serious ambiguity about the same; (4) the parent’s

representatives maintain a near constant presence in the state in order

to deal directly with those entities the subsidiary conducts business with

coupled with other factors reflecting a systematic pattern of in-state

activity comparable to the conduct of a domestic corporation; or (5)

traditional veil-piercing factors, including failure to observe corporate

formalities, inadequate capitalization, commingling of funds,

overlapping ownership, officers, directors and personnel, and so forth.

City of Bangor, 2003 WL 22183205, at *3. In that case, among other factors, the

foreign corporation was a holding company that owned 100% of the stock of a Maine

corporation. See id. at *3-4. The holding company’s four owners were the only

members of the Maine corporation’s board of directors, and an individual who held

himself out to be the Vice President of the Maine corporation was in reality the Vice

President of the foreign corporation. See id. at *4-5. The Maine company failed to

file its annual report in Maine as required by law, and the foreign company had

previously been found to have disregarded corporate formalities in a separate lawsuit.

See id. Finally, the foreign company had “active, repeat participation . . . in brokering

its subsidiary’s Maine real estate transactions.” Id. at *5.

The facts of this case do not rise to the level of the facts in City of Bangor.

While there was some overlap between the Boards of Directors of Iberdrola and

Avangrid, Iberdrola did not constitute the entirety—or even the majority—of the

Avangrid Board of Directors. While the Third Amended Complaint references a

metering system rollout in Scotland with similar failures as the SmartCare rollout,

the Plaintiffs have not alleged that there has been any formal finding that Iberdrola

has disregarded its corporate formalities in the past or that it otherwise exercised

“pervasive or complete control” over Scottish Power. City of Bangor, 2003 WL

22183205, at *3. Although, as I will discuss below, Iberdrola was involved in the

SmartCare rollout, that involvement does not appear to rise to the level of rendering

CMP/Avangrid a “mere shell” of Iberdrola. Accordingly, the argument that Iberdrola

is subject to this Court’s personal jurisdiction on a “domestic alter ego” theory is

unpersuasive.

b. The Minimum Contacts Theory

Even if CMP/ Avangrid are not the “domestic alter ego” of Iberdrola, Iberdrola’s

direct contacts with Maine may be sufficient to give rise to specific personal

jurisdiction. “Specific personal jurisdiction may be asserted where the cause of

action arises directly out of, or relates to, the defendant’s forum-based contacts.”

United Elec., Radio & Mach. Workers of Am. v. 163 Pleasant St. Corp. (United Elec.),

960 F.2d 1080, 1088-89 (1st Cir. 1992). “To determine whether [a] plaintiff has

alleged facts sufficient to support a finding of specific personal jurisdiction, this

circuit divides the constitutional analysis into three categories: relatedness,

purposeful availment, and reasonableness. Critically, an affirmative finding on each

of the three elements of the test is required to support a finding of specific

jurisdiction.” Negrón-Torres, 478 F.3d at 24–25 (internal citations, quotation marks,

and alterations omitted). I address each element in turn.

i. Relatedness

The First Circuit has explained that “[c]ausation is central” in determining

whether the plaintiff’s claims are related to the defendant’s forum state activities.

Harlow v. Children’s Hosp., 432 F.3d 50, 62 (1st Cir. 2005).5

The relatedness requirement is not an open door; it is closely read, and

it requires a showing of a material connection. [The First Circuit]

steadfastly rejects the exercise of personal jurisdiction whenever the

connection between the cause of action and the defendant’s forum-state

contacts seems attenuated and indirect. . . . A broad ‘but-for’ argument

is generally insufficient. Because ‘but for’ events can be very remote,

due process demands something like a proximate cause nexus.

Id. at 61 (internal citations, quotation marks, and alterations omitted). In other

words, “[t]here must be more than just an attenuated connection between the contacts

and the claim; ‘the defendant's in-state conduct must form an important, or [at least]

material, element of proof in the plaintiff's case.’” Phillips v. Prairie Eye Ctr., 530

F.3d 22, 27 (1st Cir. 2008) (quoting Harlow, 432 F.3d at 61).

Iberdrola focuses primarily on this element, arguing that the “Plaintiffs fail to

establish even ‘but for’ causation,” ECF No. 84 at 17, much less the proximate cause-

like “nexus” needed to meet the relatedness requirement, Harlow, 432 F.3d at 61.

Iberdrola leans heavily on the First Circuit’s decision in Negrón-Torres, 478 F.3d 19.

5 In March of 2021—the month after Iberdrola’s motion to dismiss was fully briefed—the Supreme

Court issued Ford Motor Co. v. Montana Eighth Judicial Dist., 141 S. Ct. 1017 (2021). The Court

explained that the plaintiff’s proposed “causation-only approach finds no support” in the relatedness

inquiry, and that “[n]one of [its] precedents ha[ve] suggested that only a strict causal relationship

between the defendant’s in-state activity and the litigation will do.” Id. at 1026. Accordingly, the

Court noted that “some relationships will support jurisdiction without a causal showing.” Id.

Because the First Circuit has yet to address what Ford Motor Co. means for the test articulated in

Harlow—and because, even applying this stricter relatedness standard, I conclude that this Court has

personal jurisdiction over Iberdrola—I analyze the parties’ arguments under the Harlow standard.

In that case, a plaintiff who had unsuccessfully attempted to dial 9-1-1 during her

husband’s medical crisis filed a wrongful death suit against Verizon Communications

after its subsidiary inadvertently disconnected the 9-1-1 system of Puerto Rico while

attempting to address a customer service complaint. See id. at 22. The plaintiff

argued that Verizon directed the management and policies of its subsidiary, however,

the only evidence the plaintiff put forward was a licensing agreement which

purported to show that Verizon gave its subsidiary advice as to how to maintain its

9-1-1 system. See id. at 25. The court found that Verizon was not actually a party to

this agreement, and noted that the plaintiff’s “conclusory allegations” of control were

not enough to meet the relatedness requirement. Id.

Iberdrola claims that it is similarly situated to Verizon—in other words, that

it is merely “a holding company that did not provide advice or direction related to the

[SmartCare project].” ECF No. 84 at 18. However, the Plaintiffs in this case have

asserted substantially more than conclusory allegations. The Plaintiffs have put

forth “affirmative proof,” Negrón-Torres, 478 F.3d at 23, that multiple Iberdrola

employees were involved with the SmartCare rollout, including employees in Maine;

that Iberdrola sought to integrate SmartCare into its global system, and that a

previous SmartCare project by an Iberdrola subsidiary in Scotland had been saddled

with similar issues as those alleged to have occurred in Maine; and, most crucially,

that Iberdrola employees directed its Maine subsidiaries, CMP and Avangrid, to

avoid any further delays with SmartCare’s go-live. An Iberdrola executive directly

told the SmartCare executive team that “[d]elays . . . are not acceptable,” and that

the team had to work toward a September completion of the project. ECF No. 118-1

at 1. Taking as true the Plaintiffs’ contention that the SmartCare rollout was flawed

and led to erroneously high billing of some of CMP’s customers, there appears to be a

direct line of causation between Iberdrola’s executive oversight of the SmartCare

project and the ultimate harm alleged by the Plaintiffs. While Iberdrola may not

have had as large of a role in SmartCare’s alleged problems as CMP/Avangrid, its

role was at least material to SmartCare’s allegedly rushed rollout.

ii. Purposeful Availment

For a court to have specific jurisdiction over a defendant, the defendant must

have “purposefully availed itself of ‘the privilege of conducting activities in the forum

state, thereby invoking the benefits and protections of that state’s laws and making

the defendant’s involuntary presence before the state’s courts foreseeable.’” Phillips,

530 F.3d at 28 (quoting Daynard, 290 F.3d at 61).

[P]urposeful availment involves both voluntariness and

foreseeability. Voluntariness requires that the defendant’s contacts

with the forum state proximately result from actions by the

defendant himself. The contacts must be deliberate, and not based on

the unilateral actions of another party. Foreseeability requires that the

contacts also must be of a nature that the defendant could reasonably

anticipate being hailed into court there.

Id. (internal citations and quotation marks omitted).

Iberdrola addresses this factor only in a footnote, citing cases from other

circuits where parent companies that did not conduct any business or maintain any

offices in the forums were found not to have purposefully availed themselves of those

forums. See Dean v. Motel 6 Operating L.P., 134 F.3d 1269, 1274 (6th Cir. 1998); Am.

Tel. & Tel. Co. v. Compagnie Bruxelles Lambert S.A., 94 F.3d 586, 590 (9th Cir. 1996).

However, much like the relatedness analysis, this case is different from the

case of a parent company that merely owns a subsidiary in the forum but conducts no

business in that forum. Here, multiple Iberdrola employees worked on the

SmartCare project, including at least one employee that partially relocated to Maine

for the task. It was certainly the voluntary, deliberate act of Iberdrola to send its

employees to Maine to work on the SmartCare project, to incorporate the SmartCare

project in Maine into its global system, and to direct CMP/Avangrid employees as to

the timing of the SmartCare rollout. Accordingly, I conclude that Iberdrola did

purposefully avail itself of this forum.

iii. Reasonableness

Finally, the exercise of personal jurisdiction over a defendant must be

reasonable. The Supreme Court has identified a series of “gestalt factors” that the

court should consider in determining reasonableness:

(1) the defendant’s burden of appearing, (2) the forum state’s interest in

adjudicating the dispute, (3) the plaintiff’s interest in obtaining

convenient and effective relief, (4) the judicial system’s interest in

obtaining the most effective resolution of the controversy, and (5) the

common interests of all sovereigns in promoting substantive social

policies.

Ticketmaster-N.Y., Inc. v. Alioto, 26 F.3d 201, 209 (1st Cir. 1994) (citing Burger King

v. Rudzewicz, 471 U.S. 462, 477 (1985)). “The gestalt factors are not ends in

themselves, but they are, collectively, a means of assisting courts in achieving

substantial justice.” Id.

Iberdrola argues that because it is based in Spain, the burden of defending this

case in Maine would be substantial. It further argues that Maine “has a relatively

weak interest in an adjudication of a foreign company’s potential liability vis-à-vis its

own subsidiaries.” ECF No. 84 at 19 (citation and internal quotation marks omitted).

It states that its inclusion in this case is not necessary for the Plaintiffs to obtain

relief, and that its inclusion “would only create a parallel litigation concerning

Iberdrola’s role that has no ultimate relevance to whether Plaintiffs were harmed and

whether they are entitled to recover.” Id. at 20. As I will explain, these arguments

are not persuasive.

While Iberdrola is located in Spain, it clearly has the resources to have its

representatives travel to Maine, as it is a global energy company that has sent its

executives and employees to Maine on many occasions. As the Plaintiffs note, the

judiciary’s response to the COVID-19 pandemic has also demonstrated that many

preliminary stages of civil proceedings can effectively be conducted by video or

telephone when travel is not possible. In addition, this is a case in which Maine has

an exceptional interest in adjudicating this case, as Iberdrola owns and influences

the largest public utility in the state, which is alleged to have harmed thousands of

Maine customers. Maine is where all of the Plaintiffs and CMP are located, and is

clearly the forum best-suited to resolve this dispute.

Ultimately, I conclude that this Court has the authority to exercise specific

personal jurisdiction over Iberdrola based on its active, targeted involvement in the

SmartCare rollout in Maine.

B. All State Law Claims Pertaining to Avangrid

Avangrid argue that all state law claims against Avangrid must fail because

the Third Amended Complaint does not allege any wrongdoing by the company. They

note that the Third Amended Complaint makes no allegation that Avangrid had a

contract with the Plaintiffs, made statements to the Plaintiffs, or was enriched by the

Plaintiffs in any way.

The Plaintiffs argue that Avangrid is liable for the actions of CMP on the

theories of both veil-piercing and agency.6 I address both arguments.

1. Veil-Piercing

“[B]efore a court may pierce the corporate veil, a plaintiff must establish that:

(1) the defendant abused the privilege of a separate corporate identity; and (2) an

unjust or inequitable result would occur if the court recognized the separate corporate

existence.” Johnson v. Exclusive Props. Unlimited, 1998 ME 244, ¶ 6, 720 A.2d 568,

571. The Law Court has pointed toward several factors which may indicate that the

corporate form has been abused and should be disregarded:

(1) common ownership; (2) pervasive control; (3) confused intermingling

of business activity, assets, or management; (4) thin capitalization; (5)

nonobservance of corporate formalities; (6) absence of corporate records;

(7) no payment of dividends; (8) insolvency at the time of the litigated

transaction; (9) siphoning away of corporate assets by the dominant

shareholders; (10) nonfunctioning of officers and directors; (11) use of

the corporation for transactions of the dominant shareholders; and (12)

use of the corporation in promoting fraud.

Johnson, 1998 ME 244, ¶ 7, 720 A.2d at 571 (alterations omitted) (quoting George

Hyman Constr. Co. v. Gateman, 16 F. Supp. 2d 129, 149-50 (D. Mass. 1998)).

6 On March 3, 2021, five days before the reply deadline, the Plaintiffs filed an unopposed motion to

file a thirty-page reply to CMP/Avangrid’s motion to dismiss, which is ten pages in excess of the

twenty-page limit (ECF No. 144). The Court, by an administrative oversight, did not address the

motion before the reply deadline, and the Plaintiffs ultimately filed a twenty-two page reply (excluding

the signature block and certificate of service). Because the issue is no longer live, I deny the motion

The Third Amended Complaint alleges that “[f]rom the time that Iberdrola

acquired [Avangrid] moving forward, there was a continuous team of people in

[Avangrid’s] New Gloucester, Maine corporate office from Iberdrola’s home office in

Spain.” ECF No. 44 ¶¶ 45. It states that meetings were held in Avangrid’s New

Gloucester, Maine offices with Iberdrola representatives in or around 2008 informing

Avangrid and CMP employees that Avangrid was selling the company to Iberdrola,

but that employees were not to share this information. “All of the regulated assets,

accounting for all investments, vendor payments, payroll, and virtually everything

involving money, was processed through the New Gloucester, Maine corporate office.”

Id. ¶¶ 48-50. According to the Third Amended Complaint, the employees working at

the New Gloucester, Maine office “knew no distinction” between Iberdrola, CMP, and

Avangrid. Id. ¶ 62. CMP implemented SmartCare “at the direction of Iberdrola and

with the full cooperation of Avangrid.” Id. ¶ 69. Avangrid employees—as well as

Iberdrola employees placed in Avangrid’s New Gloucester office—were part of the

team that led the SmartCare rollout.

While the Third Amended Complaint paints a picture of an involved parent

company, it does not allege the abuses of the corporate form that a veil-piercing theory

would require. While Avangrid may have been involved in the SmartCare rollout—

and while it may have at times been difficult for employees to distinguish the various

corporate identities of CMP and its parent companies from one another—the

Plaintiffs have not alleged the lack of corporate formalities, improper record-keeping,

financial distress, or confused intermingling of business activities that would allow

this court to impute CMP’s actions to Avangrid on a veil-piercing theory. Accordingly,

I do not find that Avangrid has abused the privilege of its separate corporate identity

to the extent that it should be held liable for CMP’s actions on a veil-piercing theory.

2. Agency

The Plaintiffs also argue that Avangrid is liable for the acts of CMP on an

agency theory.

The District of Massachusetts has explained that:

Generally, for an agency relationship to exist, there must be an

agreement between two people that one will act on the other’s behalf

and subject to his or her control. Restatement (Second) of Agency § 1

(Am. Law Inst. 1958). “Whether such an agency is formed depends on

the actual interaction between the putative principal and agent, not on

any perception a third party may have of the relationship.” Itel

Containers Int'l Corp. v. Atlanttrafik Express Serv. Ltd., 909 F.2d 698,

702 (2d Cir. 1990). Although subsidiaries do not always act as agents of

the parents, in some cases the facts establish an agency

relationship. See In re Am. Bank Note Holographics Sec. Litig., 93 F.

Supp. 2d 424, 443–44 (S.D.N.Y. 2000) (finding agency relationship based

in part upon “allegations of interlocking financial, managerial, and

business relationships” between the parent and subsidiary).

Quaak v. Dexia, S.A., 445 F. Supp. 2d 130, 144 (D. Mass. 2006).7

In Quaak, where the court ultimately found that an agency relationship

existed between a parent and its subsidiary, the parent owned 100% of its

subsidiary’s shares, exercised complete control over its day-to-day operations by

placing a member of the parent’s executive committee as the head of the subsidiary,

required the subsidiary to seek parent approval of any significant actions, and was

located in the same building, used the same branding, and operated under uniform

policies as the subsidiary. See id. The Third Amended Complaint, on the other hand,

7 Maine law applies to this matter. See Restatement (Second) of Conflict of Laws § 291 (Am. Law.

Inst. June 2021 Update). However, the parties have not identified any Maine law regarding agency

does not paint the same picture of heavy-handed control of CMP by Avangrid. While

the Third Amended Complaint alleges that Avangrid wholly owns CMP, processed its

finances, and cooperated in the implementation of SmartCare, it alleges very little

about Avangrid’s level of control over CMP. Ultimately, the Third Amended

Complaint fails to allege such an “interlocking of financial, managerial, and business

relationships” as to render CMP an agent of Avangrid. Quaak, 445 F. Supp. 2d at

144.

Accordingly, I conclude that all state law claims against Avangrid must be

dismissed. Because I reach this conclusion, I do not address the additional arguments

raised regarding the state law claims against Avangrid. I now turn to the other

Defendants’ arguments regarding the Plaintiffs’ state law claims.

C. Unjust Enrichment

The Third Amended Complaint alleges a claim for unjust enrichment

collectively against the “corporate defendants.” ECF No. 44 ¶¶ 281, 283-84.

“To establish a claim for unjust enrichment, a party must prove (1) that it

conferred a benefit on the other party; (2) that the other party had appreciation or

knowledge of the benefit; and (3) that the acceptance or retention of the benefit was

under such circumstances as to make it inequitable for it to retain the benefit without

payment of its value.” Howard & Bowie, P.A. v. Collins, 2000 ME 148, ¶ 13, 759 A.2d

707, 710 (internal quotation marks omitted).

“Unjust enrichment describes recovery for the value of the benefit

retained when there is no contractual relationship, but when, on the grounds of

fairness and justice, the law compels performance of a legal and moral duty to

pay.” Lynch v. Ouellette, 670 A.2d 948, 950 (Me. 1996) (quoting A.F.A.B., Inc. v. Town

of Old Orchard Beach, 639 A.2d 103, 105 n.3 (Me. 1994) (emphasis added)).

Therefore, “the existence of a contractual relationship precludes recovery on a theory

of unjust enrichment.” Stine v. Bank of Am., N.A., No. 2:16-CV-109-GZS, 2016 WL

5135607, at *5 (D. Me. Sept. 21, 2016) (alterations omitted) (quoting Nadeau v.

Pitman, 731 A.2d 863, 867 (Me. 1999)).

Here, CMP and Iberdrola both argue that the binding terms and conditions

of a contract govern the dispute between the parties and therefore preclude recovery

on an unjust enrichment theory. I first address this argument as to CMP, and then

as to Iberdrola.

1. CMP

The existence of a contractual relationship between CMP and the Plaintiffs is

not in doubt. The Third Amended Complaint states that “CMP enters into a

contractual relationship with its customers when it renders services to customers.”

ECF No. 44 ¶ 287. CMP agrees that “a PUC-approved set of terms and conditions . .

. governs the relationship between CMP and [the] Plaintiffs.” ECF No. 128 at 15.

With respect to the unjust enrichment claim against CMP, the Plaintiffs agree

that they cannot recover on both their breach of contract and their unjust enrichment

claims; rather they argue that they are entitled to plead unjust enrichment in the

alternative to their breach of contract claim. See Lass v. Bank of Am., N.A., 695 F.3d

129, 140 (1st Cir. 2012) (“[I]t is accepted practice to pursue both [breach of contract

and unjust enrichment] theories at the pleading stage.”); Workgroup Tech. Partners,

Inc. v. Anthem, Inc., 2:15-cv-00002-JAW, 2016 U.S. Dist. LEXIS 14007, at *65 (D. Me.

Feb. 3, 2016) (“[T]he notion that a plaintiff may not plead both breach of contract and

unjust enrichment in the alternative has no legs.” (quotation marks and citation

omitted)). The Defendants argue that, in light of the undisputed contractual

relationship between CMP and the Plaintiffs, the unjust enrichment count must be

dismissed.

Courts have dismissed unjust enrichment counts in instances where a

contractual relationship between the parties is clearly shown. For instance, in Riley

v. Gilmore, the Maine Superior Court reasoned that where “the pleadings

establish[ed] a contractual relationship between the parties,” it was not proper to

allow a claim for unjust enrichment to stand as an alternative theory of liability. No.

CV-05-180, 2006 WL 521710, at *1 (Me. Super. Ct. Feb. 1, 2006). And in In re Wage

Payment Litigation, the Law Court noted that where “a contractual relationship

between [the parties] exists,” plaintiffs are “preclude[d] . . . from maintaining a cause

of action for unjust enrichment.” 2000 ME 162, ¶ 20, 759 A.2d 217, 224.

On the other hand, some courts allow a claim for unjust enrichment to stand

even where a contractual relationship between the parties is undisputed. In Lass,

for example, the First Circuit noted that “the parties agree that there is a valid

contract between them,” but nevertheless allowed an unjust enrichment claim to

move forward. 695 F.3d at 140. The First Circuit explained that “the district court

[would] be in a better position once the record [wa]s more developed to determine

whether the unjust enrichment claim should survive.” Id. at 141.

As to CMP, it is undisputed that the Plaintiffs and CMP have a contractual

relationship and that Plaintiffs, if successful in proving a breach of contract, will have

a basis to recover without any need to resort to unjust enrichment. Further, the

Plaintiffs have not put forth any argument as to how the development of the record

may alter this conclusion. Accordingly, because there is no sound reason to permit

the Plaintiffs to also seek remedies based on unjust enrichment the same will be

dismissed as to CMP.

2. Iberdrola

Iberdrola argues that the Plaintiffs’ contractual relationship with CMP bars

the Plaintiffs from maintaining an unjust enrichment action against Iberdrola.8 The

Plaintiffs do not meaningfully address this argument, nor do they point to any case

law—from Maine or any other jurisdiction—addressing the question of whether a

parent company may be held liable on an unjust enrichment theory based on its

subsidiary’s breach of contract. Instead, the Plaintiffs note only that they “did not

have a contract with Iberdrola.” ECF No. 118 at 31.

In general, a plaintiff may not bring an unjust enrichment action against a

parent corporation where the dispute is governed by the plaintiff’s express contract

with that corporation’s subsidiary. See Baroi v. Platinum Condo. Dev., LLC, 2012

WL 2847912, at *9 (D. Nev. July 11, 2012); Regal Ware, Inc. v. Vita Craft Corp., 653

F. Supp. 2d 1146, 1151-52 (D. Kan. 2006); Skidmore, Owings & Merrill v. Canada

8 Iberdrola also argues that the Plaintiffs fail to allege that they conferred a direct benefit on

Iberdrola, which Iberdrola contends is required pursuant to the Law Court’s decision in Platz Assocs.

v. Finley, and the Maine Superior Court’s decision in Rivers v. Amato. 2009 ME 55, ¶ 29, 973 A.2d

743, 751; No. CIV. A. CV-00-131, 2001 WL 1736498, at *4 (Me. Super. Ct. June 22, 2001). Because I

determine that the existence of a contractual relationship between the Plaintiffs and CMP precludes

the Plaintiffs from maintaining their unjust enrichment claim against Iberdrola, I do not decide the

extent to which Maine law requires a plaintiff to prove that a direct benefit was conferred on the

defendant to recover on the basis of unjust enrichment.

Life Assur. Co., 706 F. Supp. 758, 759 (D. Colo. 1989). To allow otherwise would

ignore the veil of corporate separateness that exists between a parent and its

subsidiary, and would result in a parent corporation being potentially liable on an

unjust enrichment theory any time its subsidiary breaches a contract. The general

rule is, however, not controlling where there is an allegation that the corporate veil

has been pierced. See Baroi, 2012 WL 2847912, at *9 (“[A] plaintiff may not pursue

an unjust enrichment claim against a parent corporation where the plaintiff has an

express written contract with a subsidiary absent a showing of alter ego or some other

theory of liability.” (emphasis added)); Regal Ware, 653 F. Supp. 2d at 1151-52;

Skidmore, 706 F. Supp. at 759.

Here, the Plaintiffs have made various arguments that Iberdrola used CMP as

its domestic alter ego and/or its agent, albeit not in the context of their unjust

enrichment argument. However, even assuming that CMP was Iberdrola’s alter ego

and/or its agent in the context of the unjust enrichment claim, I still conclude that

the unjust enrichment claim against Iberdrola must be dismissed because the claim

against Iberdrola is entirely derivative of the Plaintiffs’ breach of contract claim

against CMP. “To pursue unjust enrichment in equity, the plaintiff must lack an

adequate remedy at law.” Wahlcometroflex, Inc. v. Baldwin, 2010 ME 26, ¶ 22, 991

A.2d 44, 49. Here, the breach of contract claim against CMP provides the Plaintiffs

with an adequate remedy at law. Accordingly, the unjust enrichment claim against

Iberdrola is appropriately dismissed.

D. Fraud and Misrepresentation

Under Maine law, the elements of fraud are “(1) that the defendant made a

false representation, (2) of a material fact, (3) with knowledge of its falsity or in

reckless disregard of whether it is true or false, (4) for the purpose of inducing the

plaintiff to act in reliance upon it, and (5) the plaintiff justifiably relied upon the

representation as true and acted upon it to the plaintiff’s damage.” Rand v. Bath Iron

Works Corp., 2003 ME 122, ¶ 9, 832 A.2d 771, 773. Allegations of fraud are subject

to the heightened pleading standard of Federal Rule of Civil Procedure 9(b), which

requires that “[i]n alleging fraud or mistake, a party must state with particularity

the circumstances constituting fraud or mistake.” Ultimately, to state a claim for

fraud or misrepresentation, the pleader “must state the who, what, where, and when

of the allegedly misleading representation with particularity.” Ezell v. Lexington Ins.

Co., 926 F.3d 48, 51 (1st Cir. 2019) (internal quotation marks, alteration, and citation

omitted).

All of the Defendants ask this Court to dismiss at least some of the Plaintiffs’

fraud claims against them. Iberdrola and CMP both contend that the Plaintiffs have

failed to meet the heightened pleading standard for fraud. Herling raises arguments

distinct to the allegations regarding his 2018 statements. I address Iberdrola’s

argument first, followed by the arguments of CMP and Herling.

1. Iberdrola

Iberdrola contends that the Plaintiffs cannot meet the heightened pleading

standard for fraud because the Third Amended Complaint fails to allege that

Iberdrola—as opposed to CMP and/or Herling—made any representations to them,

fraudulent or otherwise. The Plaintiffs do not argue that the Third Amended

Complaint names Iberdrola in particular with respect to its fraudulent

misrepresentation claim—indeed, it does not. Rather, the Plaintiffs argue that their

fraud claim “thoroughly implicates Iberdrola under agency principles,” and that “the

other Defendants’ false claims about the accuracy of CMP billing statements and of

the SmartCare system are fairly attributable to Iberdrola, as they were acting as

Iberdrola’s agents in Maine throughout the SmartCare project.” ECF No. 118 at 34-

35.

As noted above, an agency relationship may exist absent a formal agreement

where there are “allegations of interlocking financial, managerial, and business

relationships” between the parent and subsidiary. Quaak, 445 F. Supp. 2d at 144

(quoting In re Am. Bank Note Holographics Sec. Litig., 93 F.Supp.2d at 443–44).

The Plaintiffs do not allege that an agency agreement between Iberdrola and

CMP existed, but rather that Iberdrola and CMP “have interlocking financial,

managerial, and business relationships.” ECF No. 118 at 35. The Plaintiffs cite

Quaak—discussed above in connection to the state law claims against Avangrid—for

the proposition that these interlocking relationships between Iberdrola and

CMP/Avangrid demonstrate an agency relationship.

This case presents a closer call than Quaak. It does not appear, at least at this

juncture, that Iberdrola ran the “day-to-day” operations of CMP/Avangrid. However,

the Plaintiffs have made allegations that Iberdrola “exercised significant influence”

over CMP/Avangrid, ECF No. 44 ¶ 59, and that SmartCare was implemented by

CMP/Avangrid “at the direction of Iberdrola,” id. ¶ 69. The Third Amended

Complaint alleges that the SmartCare rollout in Maine was led by a team that

consisted of both Iberdrola employees located in Spain and “Iberdrola employees

placed in [Avangrid’s] New Gloucester office.” Id. ¶ 71. It also alleges that there was

an “[o]verlap of [k]ey employees at Iberdrola/Avangrid/CMP.” Id. at 15. The

Plaintiffs allege that Iberdrola had a “boots on the ground” approach with respect to

CMP/Avangrid, that a “continuous team of people” from Iberdrola’s office flowed

through Avangrid’s Maine office, and that “[t]he Iberdrola team instructed corporate

office employees as to how the businesses, including CMP, should be run.” ECF No.

44 ¶¶ 45-46, 48. “[T]he employees working at New Gloucester, Maine knew no

distinction” between Iberdrola and CMP/Avangrid. Id. ¶ 62. Finally, the Third

Amended Complaint alleges that Iberdrola’s approval was required for all monetary

requests.

While whether an individual has acted as an agent is a question of fact which

“may be disproved at a later stage of the proceeding,” Quaak, 445 F. Supp.2d at 145

(quoting Foisy v. Royal Maccabees Life Ins. Co., 356 F.3d 141, 150 (1st Cir. 2004)),

taking the facts in the light most favorable to the Plaintiffs, I conclude that the Third

Amended Complaint adequately pleads a fraud claim against Iberdrola, at least to

the extent that it states a fraud claim against CMP, which I turn to next.

2. CMP

CMP’s argument concerns only Plaintiffs Krainin and Platt.9 They contend

that Krainin and Platt have not pleaded that they made any payment on an incorrect

bill, and that they have therefore failed to plead detrimental reliance on a statement

that they believed to be true.

With respect to Platt, the Third Amended Complaint alleges that “[i]n

December 2017, due to CMP’s misrepresentations in the bills it sent to the Platt

family, Mr. Platt’s wife called CMP to pay part of the incorrect $700 bill ($400) and

to request a payment plan for the remaining balance.” ECF No. 44 ¶ 189. It also

alleges that in late May of 2018, Platt’s wife made a $400 payment to CMP to avoid

disconnection, but that the Platts later stopped the payment, and that a CMP

representative later confirmed that no payment had been made on the family’s

account since December.

With respect to Krainin, the Third Amended Complaint details the electricity

bills that she received beginning in February 2019, which were unexpectedly high. It

states that “[d]espite her misgivings, and in part due to Douglas Herling’s January

2019 letter, Ms. Krainin believed that she needed to pay the bills as presented.” Id.

¶ 214. It also states that “[f]rom September, 2017 to the present, Ms. Krainin and

her family have been overbilled at least $1,600.” Id. ¶ 236. The Third Amended

Complaint alleges that sometime after April 26, 2019, Krainin was advised by a CMP

employee not to pay any portion of her disputed bill. Id. ¶ 234.

The claims of both of the named Plaintiffs satisfy the particularity standard.

As to Platt, the Third Amended Complaint alleges that he and his wife paid $400 to

CMP in December 2017 in reliance on a bill that contained false or misleading

statements. While CMP argues that “[i]t would seem indisputable that []Platt has in

fact underpaid the amounts due,” ECF No. 128 at 17, I cannot reach that conclusion

based on the facts alleged in the Third Amended Complaint alone. As to Krainin, the

Third Amended Complaint alleges that she was overbilled beginning in September

2017, and that she believed she needed to pay the bills. While, with respect to

Krainin, the Third Amended Complaint does not specifically use the phrase, “she paid

the bills,” this can fairly be implied from the allegation that she was overbilled but

believed she needed to pay.10 Therefore, the Third Amended Complaint adequately

pleads a fraud claim by Krainin and Platt against CMP.

3. Herling

Herling makes two separate arguments with respect to the fraud claim alleged

against him. First, he argues that the Plaintiffs fail to plead reliance on his

statements in the newspapers in 2018 because none of the Plaintiffs allege seeing

those statements. Second, he argues that the Plaintiffs cannot base a fraud claim on

the letter sent by Herling to CMP customers in 2019 because the Liberty audit was

publicly available,11 the statements about the audit in the letter were accurate, and

only two of the Plaintiffs allege seeing the letter. The Plaintiffs argue that they

“justifiably relied on any number of the false representations that were a part of” a

scheme to mislead CMP customers, and that they “do not need to tether their reliance

10 The Plaintiffs also submit a supplemental declaration from Krainin indicating that she made

numerous payments in 2018 and 2019. CMP argues that the Court may not consider this document,

but they do not specifically dispute its authenticity. Courts may consider supplemental documents if

the parties do not dispute the authenticity of those documents. Watterson, 987 F.2d at 3. While it

seems likely that CMP could easily discover whether the document is accurate given the fact that the

document reflects payments made to CMP, I do not determine whether the document can be

considered, as I conclude that Krainin’s fraud claim against CMP/Avangrid is sufficient even without

considering the document.

11 Because I determine that the statements in the letter were accurate, I do not address the public

availability argument.

to each of Defendant Herling’s false statements that were also a part of the scheme.”

ECF No. 146 at 4-5.

The fraud claim against Herling cannot stand based on his statements to the

newspaper, which none of the Plaintiffs have alleged that they have read.12 Plaintiffs

Levesque, Decker, Platt also do not allege that they received or relied on the letter

sent by Herling in 2019. Therefore, I conclude that the fraud claims against Herling

by Levesque, Decker, and Platt must be dismissed for these reasons. Plaintiffs

Krainin and Trussell both allege that they received Herling’s 2019 letter, but only

Krainin alleges that she was affected by the letter. I therefore conclude that

Trussell’s fraud claim against Herling must also be dismissed.

As to Krainin, the Third Amended Complaint alleges that she “believed she

was being overcharged” but that, “[d]espite her misgivings, and in part due to Douglas

Herling’s January 2019 letter, [she] believed that she needed to pay the bills.” ECF

No. 44 ¶¶ 213-214. Herling argues that even if Krainin does sufficiently plead that

she relied on his letter, her claim must fail because the statements in the letter are

accurate.

The Plaintiffs take issue with two statements in Herling’s January 2019 letter.

First, Herling’s statement that the Liberty audit “concluded that all systems from

meter to bill are working as intended and bills are accurate,” id. ¶ 331, and second,

Herling’s statement that the Liberty audit concluded that CMP failed to dedicate

enough “staff, training[,] or management oversight,” id. ¶ 340. The Third Amended

12 Herling’s statements to the newspapers—issued before the Liberty audit—focus on CMP’s own

investigation into SmartCare’s billing issues. The Third Amended Complaint makes no allegations

Complaint alleges that the first statement is false, and that the second statement

falsely implies that the Liberty audit found no other shortcomings.

Contrary to the Plaintiffs’ assertions, the first statement—that the Liberty

audit concluded that “all systems from meter to bill are working as intended and bills

are accurate,” id. ¶ 331—is not inaccurate. The Liberty audit found that “CMP’s

meters produce accurate measurements of customer usage. Its meter-related

databases and communications systems accurately, completely, and timely collect

and store usage, and transmit it accurately, completely, and timely to the billing

systems of CMP’s customer information system, SmartCare. The meters, systems,

and databases have done so since November 1, 2017.” ECF No. 14-6 at 15. It further

found that “billing is on the whole accurate and has been since November 1, 2017,”

despite some inexplicable billing amounts and delays. Id. at 18. Herling’s assertion

that the Liberty audit “concluded that all systems from meter to bill are working as

intended and bills are accurate” does not conflict with the language of the Liberty

audit itself. ECF No. 44 ¶ 331. While the Liberty audit—a publicly available

document—goes into greater detail regarding certain inexplicable billing amounts,

Herling’s broad assertion that the Liberty audit concluded that SmartCare is working

as intended and producing accurate bills does not contradict the Liberty audit’s

overall findings.

Herling’s second statement—that the Liberty audit concluded that CMP failed

to dedicate enough “staff, training[,] or management oversight,” id. ¶ 340—is also an

accurate representation of the audit. While the Plaintiffs argue that this statement

implies that the Liberty audit found no other shortcomings with the SmartCare

system, I do not conclude that Herling had an affirmative duty to explain every

finding made by the Liberty audit. This is particularly true where the audit’s overall

conclusion was that the SmartCare system accurately measures energy usage and

that CMP’s bills were accurate on the whole.

For the preceding reasons, the Plaintiffs’ fraud claim against Herling must be

dismissed.13

E. Violation of 35-A M.R.S.A. § 1501

The Plaintiffs allege that CMP violated 35-A M.R.S.A. § 1501, which states

that “[i]f a public utility violates this Title, causes or permits a violation of this Title

or omits to do anything that this Title requires it to do it may be liable in damages to

the person injured as a result. Recovery under this section does not affect a recovery

by the State of the penalty prescribed for the violation.”

In a decision dated December 7, 2020, Justice Michaela Murphy of the Maine

Superior Court’s Business and Consumer Docket determined that section 1501 does

not “provid[e] a freestanding cause of action. It simply confirms that individual

persons are not deprived of pursuing common law causes of action . . . .” Deane v.

Central Maine Power Co., No. BCD-CV-20-20, Order on Defendant’s Motion to

Dismiss, slip op. at 14 (Me. Super. Ct. Dec. 7, 2020) (ECF No. 128-1). Justice Murphy

drew this conclusion from a statement by the Law Court in Smith v. Central Maine

Power Co., which noted that “[b]y statutes and by common law, violation of a safety

13 The Plaintiffs seek leave to amend the Third Amended Complaint to add one or more CMP

customers as plaintiffs who have expressly reviewed Herling’s statements and made a payment in

reliance on those statements. Because I conclude that Herling’s statements (both to the newspapers

and in the 2019 letter) were not inaccurate—and because, therefore, the proposed amendments would

statute or regulation may be evidence of negligence but does not constitute negligence

per se” and cited section 1501 as an example. 2010 ME 9, ¶ 10 n.3, 988 A.2d 968.

Justice Murphy noted that a reading of section 1501 as creating an individual cause

of action would render the Law Court’s statement in Smith superfluous. Deane at 14.

In “endeavor[ing] to predict how [a state’s highest] court would likely decide

[a] question,” a “federal court should consult the types of sources that the state’s

highest court would be apt to consult, including . . . decisions of lower courts in the

state.” Butler v. Balolia, 736 F.3d 609, 613 (1st Cir. 2013). While Deane is not binding

Law Court precedent, it is a recent, on-point decision from a specialized Maine

business and consumer court. Accordingly, I adopt Justice Murphy’s reasoning, and

conclude that the section 1501 claims against CMP must be dismissed because the

statute does not provide a cause of action.

F. Violation of RICO

CMP, Avangrid, and Herling contend that the RICO claim against them must

be dismissed for a number of reasons.14 First, they argue that a RICO defendant

must be “distinct” from the RICO enterprise. Second, they argue that the Plaintiffs

failed to plead facts from which the Court could find that CMP, Avangrid, or Herling

“conducted” the affairs of their corporate parent “through” racketeering activity.15 I

address each argument in turn.

14 As noted above, the Plaintiffs have voluntarily dismissed the RICO claim against Iberdrola.

15 The Defendants also argue that “[f]or the same reasons that certain Plaintiffs fail to plead injury

and reliance in connection with their fraud claim, they fail to allege any injury as required for a RICO

claim.” ECF No. 128 at 28. Because I dismiss the RICO claim on other grounds, I do not address this

1. Distinctness

Under section 1962(c) of RICO, it is unlawful for a “person employed by or

associated with any enterprise . . . to conduct or participate, directly or indirectly, in

the conduct of such enterprise’s affairs through a pattern of racketeering activity.”

18 U.S.C.A. § 1962(c). “[I]t is well settled in this circuit that the ‘person’ identified

under § 1962(c) must be distinct from the ‘enterprise.’” Bessette v. Avco Fin. Servs.,

Inc., 230 F.3d 439, 448 (1st Cir. 2000), as amended on denial of reh'g (Dec. 15, 2000).

“This circuit has consistently refrained from adopting a bright line rule that a

subsidiary can never be distinct from its parent corporation.” Id. at 449. Instead, a

court must “look to the allegations in the complaint to determine whether the parent’s

activities are sufficiently distinct from those of the subsidiary at the time that the

alleged RICO violations occurred.” Id. “In most cases, a subsidiary that is under the

complete control of the parent company is nothing more than a division of the one

entity. Without further allegations, the mere identification of a subsidiary and a

parent in a RICO claim fails the distinctiveness requirement.” Id. “[A] scheme does

not implicate RICO merely because it originated with someone connected to a

corporation.” Id.

The Plaintiffs argue that in this case, “CMP and Avangrid . . . used the

Iberdrola enterprise to facilitate their overbilling of Maine customers, and their

deceptive campaign to cover it up.” ECF No. 145 at 14. They contend that “Iberdrola

introduced the SmartCare system to CMP/Avangrid,” and “instructed what system to

use and designed and implemented the system,” and that “CMP/Avangrid then

managed the customer interfacing and many on-the-ground details.” Id. Ultimately,

the Plaintiffs argue that CMP/Avangrid and Herling are distinct “persons” who used

the Iberdrola “enterprise” to facilitate their fraudulent conduct.

The Defendants argue that the distinctiveness requirement is not satisfied in

this case because it involves legally separate parent and subsidiary corporate entities

carrying on their regular business. They contend that CMP/Avangrid’s management

of customer interfacing and on-the-ground details is typical of the relationship

between electric utilities and their parent companies. Ultimately, they argue that “a

plaintiff may not circumvent the distinctness requirement by alleging a RICO

enterprise that consists merely of a corporate defendant associated with its own

employees or agents carrying on the regular affairs of the defendant—that consists,

in other words, of a corporate defendant corrupting itself.” U1it4less, Inc. v. Fedex

Corp., 871 F.3d 199, 206 (2d Cir. 2017) (internal citation and quotation marks

omitted).

As the Defendants note, the Plaintiffs have failed to make any concrete

allegations that the Iberdrola “enterprise” was distinct from CMP/Avangrid/Herling.

In fact, much of the Third Amended Complaint lumps the actions of all of the

corporate defendants together, and seems designed to show that Iberdrola used CMP/

Avangrid as extensions of itself to implement the SmartCare project. Given the

persistent allegations throughout the Third Amended Complaint and throughout the

pleadings relating to the motions to dismiss that Iberdrola was a parent company

highly involved in the workings of its subsidiary, it is illogical to conclude that

Iberdrola and CMP/Avangrid were separate entities for the purposes of RICO. Thus,

the RICO claim must be dismissed on the grounds that it does not allege a “person”

distinct from the alleged “enterprise.”16

2. “Conducted” Affairs “Through” Racketeering Activity

The Defendants also argue that the RICO claims must fail because the

Plaintiffs do not allege that CMP, Avangrid, or Herling “participate[d] in the

operation or management of the enterprise itself,” which, as the Supreme Court has

explained, is necessary to meet the requirement that a person “conduct[ed] or

participat[ed] . . . in the conduct of such enterprise’s affairs.” Reves v. Ernst & Young,

507 U.S. 170, 185 (1993) (quoting 18 U.S.C.A. § 1962(c)). As the Defendants note, the

Third Amended Complaint does not allege that CMP, Avangrid, or Herling

participated in the operation or management of Iberdrola, but rather that Iberdrola

controlled the affairs of CMP. The Plaintiffs counter that the Supreme Court does

not require “significant control over or within an enterprise,” but they acknowledge

that the Court does require participation in the operation and management of the

enterprise. ECF No. 145 at 15 (quoting Reves, 507 U.S. at 179 n.4).

I conclude that the Plaintiffs do not sufficiently allege participation in the

operation or management of the enterprise by CMP, Avangrid, or Herling. The

Plaintiffs are clear that they believe Iberdrola is the alleged enterprise. The Third

Amended Complaint alleges that CMP/Avangrid participated heavily in the

SmartCare program, but that project is not the same as the Iberdrola “enterprise.”

16 While the Plaintiffs contend, in essence, that Iberdrola and CMP/Avangrid/Herling became

separate entities following SmartCare’s go-live when CMP/Avangrid began managing the response to

SmartCare’s alleged issues, this argument is not borne out in the Third Amended Complaint, which

seeks to hold all corporate Defendants—including Iberdrola—liable for the allegedly fraudulent

CMP/Avangrid’s participation in the SmartCare rollout does not mean that

CMP/Avangrid were participating in the operation or management of Iberdrola.

Accordingly, I conclude that the RICO claims against CMP, Avangrid, and

Herling must be dismissed.

V. CONCLUSION

For the foregoing reasons, Iberdrola’s Motion to Dismiss for Lack of Personal

Jurisdiction (ECF No. 84) is DENIED. Iberdrola’s Motion to Dismiss for Failure to

State a Claim (ECF No. 84) is GRANTED as to Count I, DENIED as to Count IV,

and DENIED AS MOOT as to Counts III and VI, which have been voluntarily

dismissed. CMP and Avangrid’s Motion to Dismiss for Failure to State a Claim (ECF

No. 128) is GRANTED as to Count I, GRANTED with respect to Avangrid only as

to Count II, GRANTED as to Count III, GRANTED with respect to Avangrid and

DENIED with respect to CMP as to Count IV, and GRANTED as to Count VI.

Herling’s Motion to Dismiss for Failure to State a Claim (ECF No. 129) is GRANTED

as to Counts V and VI. Iberdrola’s Response to Plaintiff’s Notice of New

Developments (ECF No. 126) and the Plaintiffs’ Unopposed Motion for Leave to File

in Excess of the Page Limit (ECF No. 144) are DENIED AS MOOT.

SO ORDERED.

Dated: August 6, 2021

/s/ JON D. LEVY

CHIEF U.S. DISTRICT JUDGE