Nieves v. Just Energy New York Corp.

UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF NEW YORK

MALTA NIEVES, Individually and on behalf of

All Others Similarly Situated,

Plaintiff,

v. DECISION AND ORDER

17-CV-561S

JUST ENERGY NEW YORK CORP,

Defendant.

I. Introduction

Plaintiff and her proposed class of New York electricity customers of Defendant

challenge improper pricing practices for electricity rates that Defendant imposed upon

them (Docket No. 1, Compl.). At issue here is the variable rate clause in Defendant’s

contract, which states:

“You will be charged at the Intro Price for the first 3 billing cycles from the

Start Date. After the Intro Price period expires, you will be charged a

Variable Rate per kWh. The Variable Rate will not change more than once

each monthly billing cycle. Changes to the Variable Rate will be determined

by Just Energy according to business and market conditions and will not

increase more than 35% over the rate from the previous billing cycle.”

(Docket No. 1, Compl. ¶ 24, Ex. A, Contract Terms & Conditions, Sec. 7.3 (emphasis

added). Before this Court is Defendant’s Motion to Dismiss (Docket No. 8)1 the

Complaint.

1In support of its motion, Defendant submits its attorney’s Declaration, with exhibit (the contract

executed by Plaintiff); Memorandum of Law, Docket No. 8. In response, Plaintiff submits her Memorandum

of Law, Docket No. 14; her attorney’s Declaration with exhibits (decisions in other cases), Docket No. 15.

In reply, Defendant submits a Reply Memorandum, Docket No. 16.

Both sides then supplemented authorities, Docket Nos. 29, 35, 44 (Plaintiff’s supplemental cases),

39, 43 (Defendant’s supplemental cases). Defendant objected to Plaintiff’s initial supplementation Docket

For the reasons stated herein, Defendant’s Motion to Dismiss is granted.

II. Background

This is a diversity2 jurisdiction class action under New York contract law

challenging terms of Defendant’s utility supply contract (see Docket No. 1, Compl., Ex. A,

Terms and Conditions Sec. 21, Governing Law, New York State law governs). Defendant

is an independent energy supply company (or “ESCO”). In 1996, New York State

deregulated the market for retail electricity supply, allowing ESCO, other than local utility

companies to supply electricity, while the utility delivered the electricity. (Docket No. 1,

Compl. ¶¶ 11, 13.) ESCOs do not need to file their rates for supplying electricity with the

New York State Public Service Commission (id. ¶ 12).

A. Pleadings

Plaintiff alleges that Defendant engaged in a bait and switch scheme wherein

Defendant charged low introductory per kilowatt hour rates for customers to sign with

Defendant, promising to charge variable rates for electricity then, months later, increases

the per kilowatt hour variable rate by exorbitant amounts (id. ¶ 15). Plaintiff signed with

Defendant in January 2011 and Defendant charged her the introductory rate (id. ¶¶ 21-

23). Plaintiff understood that the future variable rates would be based on market

conditions (id. ¶¶ 22, 24, Ex. A), which Defendant would set “according to business and

market conditions” (id. Ex. A, Sec. 7.3; see id. ¶ 24). Plaintiff contends that “any

reasonable consumer would understand and expect that a variable rate based on

Nos. 30-31; see Docket No. 33, Order granting leave, while Plaintiff later filed responses to defense

supplemental cases, Docket Nos. 40, 45.

2 Plaintiff is a New York State resident, and alleges a class of New Yorkers, while Defendant is a

Delaware corporation with its principal place of business in Toronto, Canada, Docket No. 1, Compl. ¶¶ 5,

6.

business and market conditions would be commensurate with the rates offered by the

local utility and other ESCOs,” that is the variable rate would be “reflective of the price of

electricity on the market and the rates afforded by Ms. Nieves’ former utility and other

competitors in the market” (id. ¶ 25). She argues that a reasonable consumer also would

expect that variable rate would reflect changes in the wholesale market price for electricity

(id. ¶ 26), essentially the amount Defendant pays to obtain the supply.

Plaintiff alleges that in or around December 2010, Defendant’s representative

solicited Plaintiff to switch her electricity supplier to Defendant “with promises that

Ms. Nieves would save money if she switched to Just Energy” (id. ¶ 21). Defendant

charged Plaintiff with the contractual introductory rate and after the third billing period

charged her a variable rate (see id. ¶¶ 23, 28). Plaintiff contends that Defendant charged

variable rates that were not commensurate with the rates available in the market or with

changes in the wholesale rates (id. ¶ 27). Plaintiff stayed with Defendant and paid higher

variable rates until terminating her contract in April 2012 (id. ¶ 28).

She presents a comparison of the per kilowatt hour rate Defendant charged and

the rates of her former utility supplier, National Grid from September 2011 to April 2012

(id.). Plaintiff, however, did not present the rates charged by Defendant’s competitor

ESCOs.

She makes claims for a class of Defendant’s New York customers who were also

charged variable rates from 2011 to the present (id. ¶ 39).

The First Cause of Action alleges Defendant breached its contract with Plaintiff

(and other class members) in charging variable rates “that were not based on business

and market conditions” (id. ¶¶ 44-49, 47). The Second Cause of Action alleges a breach

of the implied covenant of good faith and fair dealing in not basing Defendant’s variable

rates on changes in business and market conditions (id. ¶¶ 51-56). Plaintiff concedes

here that Defendant had “unilateral discretion to set the variable rates for electricity based

on market conditions” (id. ¶ 52). The Third Cause of Action alternatively alleges

Defendant with unjust enrichment by setting variable rates Defendant “unjustly enriched

itself and received a benefit beyond what was contemplated in the contract, at the

expense of Plaintiff and other members of the Class” (id. ¶¶ 58-60, 58).

B. Procedural History

Defendant eventually moved to dismiss (Docket No. 8). Responses to the motion

was due on October 9, 2017, and replies by October 23, 2017 (Docket No. 10). The

motion then was deemed submitted without oral argument. Defendant also moved to

stay discovery during the pendency of this motion to dismiss (Docket No. 17) and this

Court granted that stay (Docket No. 46, Order of Nov. 16, 2020).

III. Discussion

A. Applicable Standards

1. Motion to Dismiss

Defendant has moved to dismiss the Complaint on the grounds that it states a

claim for which relief cannot be granted. Under Rule 12(b)(6) of the Federal Rules of Civil

Procedure, the Court cannot dismiss a Complaint unless it appears “beyond doubt that

the plaintiff can prove no set of facts in support of his claim which would entitle him to

relief.” Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957). As the

Supreme Court held in Bell Atlantic Corp. v. Twombly, 550 U.S. 554, 127 S.Ct. 1955,

167 L.Ed.2d 929 (2007), a Complaint must be dismissed pursuant to Rule 12(b)(6) for

failure to state a claim upon which relief can be granted if it does not plead “enough facts

to state a claim to relief that is plausible on its face,” id. at 570 (rejecting longstanding

precedent of Conley, supra, 355 U.S. at 45-46); Hicks v. Association of Am. Med.

Colleges, No. 07-00123, 2007 U.S. Dist. LEXIS 39163, at *4 (D.D.C. May 31, 2007). To

survive a motion to dismiss, the factual allegations in the Complaint “must be enough to

raise a right to relief above the speculative level,” Twombly, supra, 550 U.S. at 555; Hicks,

supra, 2007 U.S. Dist. LEXIS 39163, at *5. As reaffirmed by the Court in Ashcroft v. Iqbal,

556 U.S. 662, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009),

“To survive a motion to dismiss, a complaint must contain sufficient factual

matter, accepted as true, to ‘state a claim to relief that is plausible on its

face.’ [Twombly, supra, 550 U.S.] at 570 . . . . A claim has facial plausibility

when the plaintiff pleads factual content that allows the court to draw the

reasonable inference that the defendant is liable for the misconduct alleged.

Id., at 556 . . . . The plausibility standard is not akin to a ‘probability

requirement,’ but it asks for more than a sheer possibility that a defendant

has acted unlawfully. Ibid. Where a complaint pleads facts that are ‘merely

consistent with’ a defendant’s liability, it ‘stops short of the line between

possibility and plausibility of “entitlement to relief.”’ Id., at 557 . . . (brackets

omitted).”

Iqbal, supra, 556 U.S. at 678 (citations omitted).

A Rule 12(b)(6) motion is addressed to the face of the pleading. The pleading is

deemed to include any document attached to it as an exhibit, Fed. R. Civ. P. 10(c), or any

document incorporated in it by reference. Goldman v. Belden, 754 F.2d 1059 (2d Cir.

1985), such as Plaintiff’s contract with Defendant (Docket No. 1, Compl., Ex. A; see

Docket No. 20, Def. Atty. Decl. Ex. 1). In considering such a motion, the Court must

accept as true all of the well pleaded facts alleged in the Complaint. Bloor v. Carro,

Spanbock, Londin, Rodman & Fass, 754 F.2d 57 (2d Cir. 1985). However, conclusory

allegations that merely state the general legal conclusions necessary to prevail on the

merits and are unsupported by factual averments will not be accepted as true. New York

State Teamsters Council Health and Hosp. Fund v. Centrus Pharmacy Solutions, 235 F.

Supp. 2d 123 (N.D.N.Y. 2002).

2. New York Contract Law and Unjust Enrichment

Briefly, under applicable New York law (see Docket No. 1, Compl, Ex. A, Sec. 21),

a claim for breach of contract requires allegation of the existence of a valid agreement,

adequate performance by the plaintiff, breach of that agreement by the defendant, and

damages arising from that breach, see Harsco Corp. v. Segui, 91 F.3d 337, 348 (2d Cir.

1996) (Docket No. 14, Pl. Memo. at 6). The only element at issue is allegation of breach

of the agreement by Defendant.

The implied covenant of good faith and fair dealing is contained in all contracts,

“under which neither party shall do anything which will have the effect of destroying or

injuring the right of the other party to receive the fruits of the contract,” Claridge v. N. Am.

Power & Gas, LLC, No. 15-1261, 2015 WL 5155934, at *6 (S.D.N.Y. Sept. 2, 2015) (id.

at 10).

Unjust enrichment is based upon the “equitable principle that person must not be

enriched unjustly at the expense of another,” 22A N.Y. Jur. 2d Contracts § 521 (2020).

Under New York law, the plaintiff must allege that the defendant was actually enriched

and possessed the property of the plaintiff. This is not a catchall cause of action but

arises only in the absence of a breach of contract or other tort where “circumstances

create an equitable obligation running from the defendant to the plaintiff,” id. This cause

of action is not viable where a valid contract exists between the parties or if the claim is

duplicative of a breach of contract claim, id.

B. Motion to Dismiss Contentions

Defendant argues that Plaintiff fails to allege plausible claims for breach of contract

and her other contract claims (Docket No. 8, Def. Memo. at 7-11). Although Plaintiff

alleges in her Complaint Defendant’s variable rates and National Grid’s rates, Plaintiff

fails to present the comparable rates of other ESCOs (id. at 7). In its Memorandum,

Defendant lists the rates it charged and those of its ESCO competitors in September

2011, providing a per kilowatt hour range of $.0559 to $.0799 (with Defendant charging

$.0595) (Docket No. 8, Def. Memo. at 5). Plaintiff thus failed to allege that Defendant’s

rate was “substantially higher” than the competitions and made conclusory statements

about Defendant’s rate (id. at 7-8). Plaintiff did not allege that Defendant’s variable rate

exceeded 35% of the prior billing cycle’s rate, the only limit on the rate Defendant could

charge under the contract (id. at 8).

Defendant next argues that Plaintiff misconstrues the contract, reading “market

prices” into the term “business and market conditions” in setting variable rates (id.). Under

the plain language of section 7.3, Defendant enjoyed the broad discretion to set variable

rates (id.). Defendant argues that Plaintiff’s theory would read the phrase “business

conditions” out of the agreement (id. at 9).

Plaintiff responds that the entire phrase “business and market conditions” needs

to be given full effect, with “market conditions” meaning to her Defendant’s wholesale

price and competitors’ pricing (Docket No. 15, Pl. Memo. at 8). She points to a number

of cases (federal and state) that rejected similar motions to dismiss for defendant ESCOs

challenged in setting their variable rates (id. at 4 & n.3; Docket No. 15, Pl. Atty. Decl.; see

Docket Nos. 29, 35, 44 (Plaintiff’s supplemental authorities)).

This Court initially considers the first two contractual causes of action, then the

third cause of action alternatively alleging unjust enrichment. The first two causes of

action arise from the existence of Defendant’s contract, while the unjust enrichment is

precluded where a valid contract exists, Adams v. Labaton, Sucharow & Rudoff LLP,

No. 07 Civ. 7017, 2009 WL 928143, at *7 (S.D.N.Y. Mar. 20, 2009); Brown v. Brown,

12 A.D.3d 176, 176, 785 N.Y.S.2d 417, 419 (1st Dep’t 2004) (Docket No. 8, Def. Memo.

at 11). A breach of contract may not be considered an unjust enrichment “unless a legal

duty independent of the contract—i.e., one arising out of circumstances extraneous to,

and not constituting elements of, the contract itself—has been violated,” Brown, supra,

12 A.D.3d at 176-77, 785 N.Y.S.2d at 419, citing Clark-Fitzpatrick, Inc. v. Long Is. R.R.,

70 N.Y.2d 382, 389, 521 N.Y.S.2d 653, 656-57 (1987).

C. Variable Rate Provision

Each of the three causes of action required Defendant to breach its duty to Plaintiff

in how it imposed variable rates. The key clause is Section 7.3, Electricity Charge, of the

Terms and Conditions of the contract, specifically declaring that

“Changes to the Variable Rate will be determined by Just Energy according

to business and market conditions and will not increase more than 35% over

the rate from the previous billing cycle.”

(Docket No. 1, Compl. Ex. A, Contract Terms & Conditions, Sec. 7.3 (emphasis added)).

For her claims to survive dismissal, Plaintiff needs to allege plausibly that Defendant

breached its duty in setting rates consistent with business and market conditions.

The parties disagree about the source and scope of “business and market

conditions” to guide Defendant in setting its variable rates. Defendant appears to

emphasize “business conditions” while Plaintiff focuses on “market conditions” as she

defines them to be determined from wholesale prices paid by Defendant and its

competitors’ charges. Plaintiff’s definition of “market conditions” is a conclusory

allegation. The text of Section 7.3 nowhere defines “business and market conditions”

based upon wholesale prices paid by Defendant or the retail rates charged by its

competitors.

The entire phrase “business and market conditions” is not defined in the contract

and it is not a term of art. The absence of definition, however, does not render the

agreement ambiguous. By its terms, Defendant determines the relevant business and

market conditions and sets the variable rate accordingly. These conditions may include

wholesale electricity costs and what Defendant’s competitors are charging, but these

conditions may also include incidental expenses, marketing, and the desired profit margin

for Defendant’s investors. Nothing in the text of the provision mandates particular items

as business or market conditions. The agreement is silent as to what those conditions

might be, or which ones are relevant for Defendant to use in setting rates. Plaintiff also

does not allege representations made by Defendant in selling this program or negotiating

the contract that defined or limited business and market conditions beyond the express

terms of the contract.

The Second Circuit, in Richards v. Direct Energy Services, 915 F.3d 88 (2d Cir.

2019), addressed challenges to a similar variable rate provision. The defendant Direct

Energy supplied electricity at an introductory rate which, if the plaintiff did not cancel,

converted into a monthly variable rate, id. at 92, 94. That rate “may be higher or lower

each month based upon business and market conditions,” id. at 94, with no express

factors for setting the variable rate. Plaintiff Gary Richards complained that the absence

of a standard violated Connecticut unfair and deceptive trade practice law by not pegging

that rate to the defendant’s procurement costs, id. at 92. The Second Circuit disagreed,

affirming the district court’s grant of summary judgment for dismissal of claims of unfair

trade practices and breach of contract by breaching the covenant of good faith and fair

dealing, id. at 963.

The variable rate provision in that agreement gave that defendant discretion to set

it based upon “business and market conditions,” defined by the Second Circuit to include

“achiev[ing] a target profit margin, match[ing] competitors’ prices, and reduc[ing] customer

losses, among other objectives. As a matter of plain meaning, these sorts of

considerations constitute ‘business and market conditions,’” id. at 98 (citing Black’s Law

Dictionary (10th ed. 2014), defining “business” and “market”; U.C.C. § 2-723(1)). The

Second Circuit held that factors influencing variable rates “minimizing customer losses,

reaching a target profit margin,” were “ordinary business considerations,” id. at 99 (citing

Marcus Dairy, Inc. v. Rollin Dairy Corp., No. 05-cv-589, 2008 WL 4425954, at *7 (D. Conn.

Sept. 24, 2008)). The variable rate provision in Richards’ contract did not suggest that it

bore a direct relationship with that defendant’s procurement costs, id. at 98. The Second

Circuit then acknowledged that the defendant had to exercise that discretion in good faith,

id. at 99, quoting 23 Williston on Contracts § 63:22 (4th ed. 2018). The court then rejected

Richards’ argument that the state regulated rates were the proper comparator; doing so

would render electricity deregulation a nullity, id. Despite arising from the motion for

summary judgment (but cf. Docket No. 40, Pl. Response to Def.’s Notice of Supplemental

Authority [Richards]), this Court finds persuasive the Circuit Court’s analysis of business

and market conditions contained in Richards. The Second Circuit also noted other courts

3The Second Circuit also affirmed the grant of Direct Energy’s motion to dismiss Richards’ unjust

enrichment claim, id. at 915 F.3d at 95-96.

had dismissed claims like Plaintiff’s at the pleading phase, Richards, supra, 915 F.3d at

98 & n.6 (citing cases), and distinguished three cases4 Plaintiff here cites (Docket No. 14,

Pl. Memo. at 4 & n.3) because the absence of representations to Richards that “business

and market conditions” would guarantee below-market rates, Richards, supra, 915 F.3d

at 99 n.6.

Plaintiff, however, cites to numerous cases from federal and state courts with

allegedly similar facts to this case in which motions to dismiss were denied (Docket

No. 14, Pl. Memo. at 4 & n.3; Docket No. 15, Pl. Atty. Decl.; Docket Nos. 29, 35, 44

(supplemental authorities)), as did Defendant supplementing with authorities that

dismissed or upheld the dismissal of claims similar to Plaintiff’s (Docket Nos. 39, 43). As

noted by the Southern District of New York in Claridge v. North American Power & Gas,

LLC, supra, 2015 WL 5155934, at *5, however, these cases have limited persuasive value

because each case turns on the terms and representations in that case (Docket No. 16,

Def. Reply Memo. at 6). Some of those cases defined business or market conditions to

include consideration of wholesale prices for electricity, Landau, supra, 223 F. Supp.3d

401 (variable rate tied specifically to wholesale market); Fritz v. North American Power &

Gas, LLC, No. 14-634 (D. Conn. Jan. 29, 2015); Tully v. N. Am. Power & Gas, LLC, No.

14-634 (D. Conn. Oct. 29, 2015); Steketee v. Viridian Energy, Inc., No. 15-585 (D. Conn.

Apr. 14, 2016); Sanborn v. Virdian Energy, Inc., No. 14-1731 (D. Conn. Apr. 1, 2015),

including another case pending before this Court, Jordet v. Just Energy Solution, Inc.,

No. 18CV953 (W.D.N.Y.), Docket No. 1, Compl. ¶ 19 (variable rate set “according to

4Melville v. Spark Energy, Inc., No. 15-8706, 2016 WL 6775635, at *4 (D.N.J. Nov. 15, 2016);

Landau v. Viridian Energy PA LLC, 223 F. Supp.3d 401, 418-19 (E.D. Pa. 2016); Mirkin v. Viridian Energy,

Inc., No. 3:15-CV-1057, 2016 WL 3661106, at *6-7 (D. Conn. July 5, 2016).

business and market conditions, including but not limited to, the wholesale cost of natural

gas supply, transportation, distribution and storage,” emphasis added). In another case,

the defendant supplier set its variable rate based upon its “actual and estimated supply

costs which may include but not be limited to prior period adjustments, inventory and

balancing costs,” Mirkin v. Xoom Energy, LLC, 931 F.3d 173, 175 (2d Cir. 2019)

(reversing dismissal) (Docket No. 44, Pl. Supp’al Authority). Other cases involve capped

prices that the vendor could not exceed, e.g., Donnerfeld v. Petro, Inc., No. 17-2310, 2018

WL 4356727 (E.D.N.Y. Sept. 12, 2018) (Docket No. 36, Def. Response at 1, citing First

Amended Complaint ¶ 9, reproduced at 2017 WL 6817368). Still other cases involve

other provisions of utility sales and service contracts, e.g., Rovner v. Just Energy Group,

Inc., No. 18-cv-2159 (E.D.N.Y. July 31, 2019) (Docket No. 43, Def. Supp’al Auth.; see

also Docket No. 45, Pl. Response to Def.’s Notice of Supp’al Auth. [Rovner], at 2-3).

These contracts are factually distinguishable from the one present in this case where

business and market conditions are not limited by source.

D. Breach of Contract and Breach of Implied Covenant of Good Faith

1. Breach of Contract

As for the alleged breach of contract and applying the language used by the parties

in this contract, Defendant has not breached that agreement. What constituted “business

and market conditions” was left to Defendant’s discretion in setting the variable rates.

Those conditions were not defined merely to Defendant’s wholesale costs or competitors’

pricing. As discussed in Richards, supra, 915 F.3d at 98-99, business and market

conditions are not so confined absent language in the contract to the contrary. The only

restriction on that rate in the contract was that it could not exceed 35% of the previous

billing cycle rate. Nowhere did that provision require the variable rate not exceed what

Plaintiff’s prior utility charged.

The Complaint also does not allege contract negotiations or other representations

that would lead Plaintiff to believe that the variable rate was tied either to the rate charged

by competing ESCOs or utilities or to what Defendant’s actual wholesale costs for

acquiring electricity were, see Richards, supra, 915 F.3d at 99 n.6, despite her arguments

that such “representations” clearly indicated that business and market conditions meant

wholesale prices and competitors’ pricing to her (or to a reasonable consumer) (cf. Docket

No. 14, Pl. Memo. at 7-8 & n.4). She does not allege that Defendant represented that

business and market conditions would guarantee below market variable rates, id.

(distinguishing, e.g., Landau, supra, 223 F. Supp.3d at 418-19; Mirkin, supra, 2016 WL

3661106, at *6-7) (see Docket No. 14, Pl. Memo. at 4), or made any representation

regarding variable rates once the discounted introductory rate expired. The only alleged

representation was the sales presentation made around December 2010 that Plaintiff

would save money if she switched to Defendant as her supplier (Docket No. 1, Compl.

¶ 21). Plaintiff did save money at least under the introductory rate. The express

protection against so-called price gouging in the contract was the 35% maximum that any

monthly increase could be from each billing cycle.

Therefore, Defendant’s Motion to Dismiss (Docket No. 8) the First Cause of Action

(alleging breach of contract) is granted.

2. Implied Covenant of Good Faith and Fair Dealing

As for the Second Cause of Action for breach of implied covenant of good faith,

Plaintiff concedes that Defendant had unilateral discretion in setting the variable rate

(Docket No. 1, Compl. ¶ 52). Plaintiff then makes conclusory allegations that Defendant’s

rates were “substantially higher” than the rates of its competitors or the rates “actually

based on business and market conditions” (id. ¶ 55), without alleging (1) what the

competition’s rates were (save comparison with her former utility), (2) what were the

factors for business and market conditions, aside from claiming wholesale electrical rates,

or (3) what the wholesale rates were. The fairness of the rates can be established only if

the terms of the contract include that Defendant could charge only as much as its

competition; the contract here, however, does not state this.

A similar contention was rejected in Richards, supra, 915 F.3d at 99. There,

Richards argued that the defendant violated the implied covenant of good faith and fair

dealing by offering a so-called introductory teaser rate and then charging higher variable

rates. The Second Circuit held that Richards “received exactly what he bargained for,”

id. at 99-100, citing 23 Williston on Contracts § 63:22 (“there can be no breach of the

implied promise or covenant of good faith and fair dealing where the contract expressly

permits the actions being challenged, and the defendant acts in accordance with the

express terms of the contract”). Plaintiff in the present case received what she bargained

for; after the run of the introductory rate, Defendant set a variable rate, as expressed in

the contract, based upon business and market conditions as found by Defendant.

Defendant’s Motion to Dismiss (Docket No. 8) the Second Cause of Action also is

granted.

E. Unjust Enrichment

Under New York law, a plaintiff cannot allege an unjust enrichment where there is

an existing contract, Clark-Fitzpatrick, Inc., supra, 70 N.Y.2d at 389, 521 N.Y.S.2d at 656-

57. Plaintiff counters that she is alleging this cause of action in the alternative under

Federal Rule 8(d)(2) (Docket No. 14, Pl. Memo. at 13). Defendant replies that cases

Plaintiff cited did not support her unjust enrichment claim while a valid contract exists

(Docket No. 16, Def. Reply Memo. at 8, citing cases).

Rule 8(d)(2) allows for alternative pleading, either in a single count or in separate

ones, Fed. R. Civ. P. 8(d)(2). “If a party makes alternative statements, the pleading is

sufficient if any one of them is sufficient,” id.

Viewing Plaintiff’s unjust enrichment claim separately from the contract, Plaintiff

has not alleged that Defendant had a legal duty independent of that contract in setting its

variable rates. That rate setting (at whatever amount) solely arises from the contract.

Plaintiff’s failure to allege any representations outside of the contract about rate setting is

fatal to her claim for unjust enrichment. The legal duty Plaintiff invokes for her unjust

enrichment claim is the same duty under the implied covenant of good faith and fair

dealing that arises from the contract.

Plaintiff implies that the only reason a consumer would change from the electric

utility to an ESCO is if they represented that the variable rate would either track wholesale

costs or be competitive with other ESCOs’ and utility’s retail rates. This expectation

(however conclusory) does not create a duty upon Defendant to charge variable rates

consistent with this undocumented expectation. Any such duty arises from the underlying

contract. The existence of a contract destroys an unjust enrichment claim.

Defendant’s Motion to Dismiss (Docket No. 8) the Third Cause of Action for unjust

enrichment (and consequently the entire Complaint) is granted.

IV. Conclusion

Plaintiff’s understanding or what a reasonable customer might expect are not the

terms of the contract she signed with Defendant. That agreement gave Defendant

discretion to set variable rates according to business and market conditions, without

specifying business or market conditions to be considered. Deregulation of electricity

supply rates moved the marketplace from regulated monopoly (with rates set by National

Grid, for example, as approved by the New York State Public Service Commission) to

those set in the marketplace by ESCOs like Defendant. Defendant, as an ESCO, did not

have its rates set by a public agency or by its competitors (including utilities like National

Grid). Of course, Defendant could have set rates tied to its costs from the wholesale

market or tracking what its competitors charged but the terms of the contract do not

require this. Defendant could set its variable rates on any basis it chose. Its contract with

Plaintiff (and other potential class members) did not restrict the basis for this rate setting.

Defendant’s Motion to Dismiss (Docket No. 8) is granted. As noted in the Order

staying discovery (Docket No. 46, Decision and Order of Nov. 16, 2020, at 10), with this

dismissal of the case, any discovery is denied.

V. Orders

IT HEREBY IS ORDERED, that Defendant’s Motion to Dismiss (Docket No. 8) is

GRANTED.

FURTHER, the Clerk of Court is DIRECTED to close this case.

SO ORDERED.

Dated: November 19, 2020

Buffalo, New York

s/William M. Skretny

WILLIAM M. SKRETNY

United States District Judge