IUE-CWA Local 901 v. Spark Energy Gas, LLC
Decision Date | 23 July 2021 |
Docket Number | 1:19-cv-00389-HAB-SLC |
Parties | IUE-CWA LOCAL 901, on behalf of itself and on behalf of itself and all others similarly situated, Plaintiff, v. SPARK ENERGY GAS, LLC, CT Corporation System, Defendant. |
Court | U.S. District Court — Northern District of Indiana |
On April 9, 2021, Plaintiff filed a motion (ECF 58) and an accompanying memorandum (ECF 59), seeking the Court's leave to file a proposed second amended complaint (ECF 59-1). On April 23, 2021, Defendant filed a response (ECF 61), to which Plaintiff replied on April 30, 2021, attaching a declaration and several new exhibits to its reply brief (ECF 64). On May 7, 2021, Defendant filed a motion to strike the declaration and exhibits, or in the alternative for leave to file a sur-reply to address such evidence. (ECF 67). On May 20, 2021, Plaintiff filed a response (ECF 68), and on May 27 2021, Defendant filed a reply (ECF 69).
Also before the Court is an interrelated motion for sanctions filed by Defendant on April 16, 2021, alleging that Plaintiff made material misrepresentations in its motion for leave to amend and its proposed second amended complaint. (ECF 60; ECF 60-1). Plaintiff filed a response to that motion on April 30 2021 (ECF 63), to which Defendant replied on May 7, 2021 (ECF 66).
Accordingly all three matters are fully briefed and ripe for adjudication. For the following reasons, Defendant's motion to strike or in the alternative for leave to file a sur-reply (ECF 67) is DENIED; Defendant's motion for sanctions (ECF 60) is DENIED WITHOUT PREJUDICE; and Plaintiff's motion for leave to amend (ECF 58) is GRANTED.
Plaintiff initiated this matter in state court on August 14, 2019, on behalf of itself and a class of others similarly situated, alleging that Defendant-an alternative energy supplier- engaged in “deceptive, bad faith, and unfair pricing practices that have caused businesses and consumers in Indiana to pay considerably more for their natural gas than they should have otherwise paid.” (ECF 3 ¶ 1). More specifically, Plaintiff brought an Indiana Deceptive Consumer Sales Act (“IDCSA”) claim, Ind. Code § 24-5-0.5-4, a breach of contract claim, and an unjust enrichment claim. (ECF 3). After a timely removal (ECF 1), Defendant filed a motion to dismiss for failure to state a claim upon which relief could be granted pursuant to Federal Rule of Civil Procedure 12(b)(6) (ECF 5), which District Judge Holly Brady denied (ECF 20). On March 10, 2020, the Court conducted a preliminary pretrial conference (ECF 29), where it set May 1, 2020, as the last date for Plaintiff to amend its pleadings without leave of Court (ECF 30 at 2). On March 24, 2020, Plaintiff filed its first amended complaint. (ECF 31). Plaintiff's deadline to seek the Court's leave to amend its pleading was subsequently extended to September 28, 2020. (ECF 49, 53).
Plaintiff now seeks to amend its complaint again to add two new sets of allegations. (ECF 59 at 4). First, while Plaintiff initially alleged that its 2004 customer agreement with Defendant required Defendant to base rates on “market prices, ” Plaintiff now seeks to allege that the parties' contract required Defendant to base its rates on “‘market prices' or ‘market conditions.'” (Id. at 4; see also ECF 31 ¶ 3; ECF 59-1 ¶ 3, ECF 59-2 ¶ 3 (red-line comparison of the first amended complaint and proposed second amended complaint)).[1] As Plaintiff explains in its response to the motion for sanctions, the “market prices” language initially used was drawn from a 2014[2] “form contract” received as a result of a public records request to the Indiana Utility Regulatory Commission (“IURC”).[3] (ECF 63 at 8; ECF 63-3 at 5 ()). Plaintiff seeks to add the “market conditions” language based upon contracts Defendant has produced ranging from 2010 to 2019 which reflect that the variable rate “may vary according to market conditions.” (ECF 63 at 9-10). Second, Plaintiff seeks to detail the ways Defendant allegedly based its Indiana rates on non-market rates, in contravention of its customer agreements, which Plaintiff discovered, at least in part, through Defendant's Rule 30(b)(6) deposition. (ECF 59 at 4; ECF 59-1 ¶¶ 51-54).
Defendant, in support of its motion for sanctions, asserts that Plaintiff is attempting to mislead the Court. As Defendant explains, Plaintiff has failed to locate its original customer agreement or anyone who remembers its actual terms. (ECF 60-1 at 2). Defendant contends that the purported term in Plaintiff's customer agreement fixing natural gas rates to “market factors” is fictitious, and Plaintiff's reliance on later customer agreements-made years after Plaintiff's own customer agreement-is an intentional attempt to mislead the Court. (Id. at 2-3). Further, Defendant argues that Plaintiff's IDCSA claim should be dismissed because it is based on deposition evidence Plaintiff did not know of, and therefore could not have relied upon, when forming the terms of the contract. (Id. at 12). In its response to the motion for leave to amend, Defendant reiterates its argument that Plaintiff's case should be dismissed as a sanction. (ECF 61 at 5, 10). In opposition to Plaintiff's motion for leave, Defendant argues that Plaintiff has failed to establish good cause to modify the Court's Scheduling Order, and that-in any event- Plaintiff's second amended complaint would be futile. (Id. at 5-6).
Plaintiff, in its response to the motion for sanctions, contends that alternative gas suppliers like Defendant use uniform customer contracts and thus it is likely Plaintiff's contract contained similar terms to the Winona Contract and other consumer contracts received from Defendant through discovery. (ECF 63 at 9). Further, Plaintiff alleges that as discovery continues different and earlier drafts of the parties' contracts may be produced. (Id. at 10). Similarly, Plaintiff contends that pleading the supposed terms of the contract without producing it is not in and of itself improper. (Id. at 18-19). Rather, Plaintiff asserts that its counsel conducted a reasonable investigation before filing both the complaint and seeking leave to file the second amended complaint. (Id.).
In the alternative, Plaintiff contends that Defendant's motion should be denied on procedural grounds. First, Plaintiff argues Defendant violated Rule 11's “safe harbor” provision by moving for sanctions after Plaintiff had filed its motion for leave to amend. (Id.). Plaintiff next contends that Defendant was aware that it lacked a copy of the parties' contract as early as March 2020 and as a result, Defendant's motion for sanctions is untimely. (Id. at 26). Finally, Plaintiff alleges that the motion is improper under Rule 11 because it asserts there are multiple grounds for sanctions-as opposed to Rule 11 separately. (Id. at 27-31). Because Plaintiff contends it should prevail on the motion for sanctions, it also seeks its attorney fees pursuant to Rule 11(c). (Id. at 31-32).
In its reply to its motion for leave to amend, Plaintiff asserts that “good cause” exists to allow a belated amendment under Rule 16 because the proposed amended complaint is in response to new facts learned through discovery and in response to Defendant's threat of sanctions. (ECF 64 at 1-5). Further, Plaintiff urges that its second amended complaint plausibly alleges breach of contract and unjust enrichment claims and is not futile. (Id. at 5-16). Finally, Plaintiff alleges that Defendant would not be unduly prejudiced by the amendment. (Id. at 16).
In its reply to the motion for sanctions, Defendant primarily reiterates that the language in the first amended complaint that its rates “would be based on market prices, ” suggests that Plaintiff based its pleadings on the language of the parties' contract-which it did not know. (ECF 66 at 7). Defendant further alleges that the proposed second amended complaint-and the more expansive language used therein-fails to correct the various problems with Plaintiff's first amended complaint. (Id. at 16). Additionally, Defendant responds to Plaintiff's timeliness argument by asserting that under the totality of the circumstances Defendant was reasonable in waiting to seek sanctions until after it provided Plaintiff with multiple opportunities to cure the complaint's defects, and furthermore, that Rule 11 does not prevent it from advancing multiple grounds for sanctions. (Id. at 17-19).
Defendant also filed a motion seeking to strike the declaration and four exhibits (ECF 64-1 through ECF 64-5) that Plaintiff attached to its reply to the motion for leave to amend (ECF 64), or in the alternative, requesting the Court grant it leave to file a sur-reply to address such evidence (ECF 67). Plaintiff in response asserts that the declaration and exhibits and a sur-reply are unnecessary, in part because the first three exhibits were proffered in response to a contention raised in Defendant's reply-namely that the motion for leave to amend was untimely. (ECF 68 at 2-3). Defendant in its reply primarily seeks to distinguish the caselaw relied upon by Plaintiff in its response. (ECF 69).
As mentioned, Defendant seeks to strike five attachments to Plaintiff's reply to the motion for leave to amend, or alternatively seeks leave to file a sur-reply to address this evidence. (ECF 67). The first is a declaration by Plaintiff's counsel attesting to the accuracy of the remaining attachments. (ECF 64-1). The second is an email chain in which Plaintiff's counsel discusses the...
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