Martinez v. Agway Energy Servs.
| Decision Date | 02 February 2022 |
| Docket Number | 5:18-CV-00235 (MAD/ATB) |
| Parties | ANTONIO MARTINEZ, in his capacity as executor of Naomi Gonzales' estate, Plaintiff, v. AGWAY ENERGY SERVICES, LLC, Defendant. |
| Court | U.S. District Court — Northern District of New York |
APPEARANCES:OF COUNSEL: FINKELSTEIN, BLANKINSHIP, TODD S GARBER, ESQ. FREI-PEARSON & GARBER, LLPCHANTAL KHALIL ESQ. DOUGLAS G. BLANKINSHIP, ESQ. Attorneys for Plaintiff
BOND SCHOENECK & KING, PLLCBRENDAN M. SHEEHAN, ESQ. SHARON M PORCELLIO, ESQ. Attorneys for Defendant
COYLE LAW GROUP LLPJOHN D. COYLE, ESQ. Attorney for Defendant
Naomi Gonzales ("Decedent") commenced this putative class action against Defendant Agway Energy Services, LLC, on December 6, 2017, in the United States District Court for the District of Delaware. See Dkt. No. 1. Decedent purported to bring this action on her own behalf and on behalf of (1) a class consisting of Defendant's New York and Pennsylvania customers charged a variable rate for residential electricity services from November 2011 to the present (the "New York/Pennsylvania Class"); and (2) a sub-class of Defendant's New York customers charged a variable rate for residential electricity services from November 2011 to the present (the "New York Sub-Class"). See Id. at 13. Plaintiff asserted five claims against Defendant: (1) violations of New York General Business Law ("GBL") § 349 on behalf of the New York Sub-Class; (2) violations GBL § 349-d on behalf of the New York Sub-Class; (3) breach of contract on behalf of the New York/Pennsylvania Class; (4) breach of implied covenant of good faith and fair dealing on behalf of the New York/Pennsylvania Class; and (5) unjust enrichment on behalf of the New York/Pennsylvania Class. See Id. at 15-21.
On January 29, 2018, Defendant filed a motion to dismiss and the case was transferred to the United States District Court for the Northern District of New York by stipulation of the parties. On October 22, 2018, this Court granted Defendant's motion to dismiss in part and denied it in part, dismissing Plaintiff's breach of implied covenant of good faith and fair dealing and unjust enrichment claims. See Dkt. No. 81. Decedent subsequently passed away and, on April 1, 2021, U.S. Magistrate Judge Andrew T. Baxter granted a motion to substitute Antonio Martinez, in his capacity as the executor of Decedent's estate, as Plaintiff. See Dkt. No. 125.
Currently before the Court is (1) Plaintiff's motion for class certification, see Dkt. No. 136; (2) Defendant's motion for summary judgment or, in the alternative, to strike Plaintiff's proposed expert, see Dkt. No. 137; (3) Defendant's motion to deny class certification, see Dkt. No. 138; (4) Plaintiff's motion to strike Defendant's motion to deny class certification, see Dkt. No. 139; and (5) Defendant's motion to strike Plaintiff's statement of additional material facts, see Dkt. No. 156. For the reasons that follow, Plaintiff's motion for class certification is granted in part and denied in part and Defendant's motion to deny class certification is granted in part and denied in part; Plaintiff's motion to strike Defendant's motion to deny class certification is denied; Defendant's motion for summary judgment is granted in part and denied in part; Defendant's motion to strike Plaintiff's proposed expert is granted; and Defendant's motion to strike Plaintiff's statement of additional material facts is denied.
In the electricity industry, traditionally, local incumbent utilities maintained monopoly control over electricity distribution systems within set geographic zones. However, in the late 1990s, regulators in New York and Pennsylvania deregulated the electricity market and allowed Energy Supply Companies ("ESCOs") to buy or generate electricity wholesale for resale or sale to customers by, for example, owning electricity production facilities, purchasing electricity from wholesale brokers, or purchasing futures contracts for the delivery of electricity at a predetermined price. Many ESCOs offer variable prices, promotional rates, guarantees that energy will come from renewables, and incentives like cash rebates and gift cards. Utilities are still delivered to customers using the incumbent utilities' transmission or distribution systems, but customers pay the cost of the utility to the ESCO. Defendant is a limited liability Delaware corporation and an ESCO eligible to sell electricity to residential and commercial customers in New York and Pennsylvania.
Decedent was a resident of New York and received electricity from her local utility, Central Hudson. In December 2015, Decedent decided to switch her electricity provider to Defendant, who confirmed her enrollment via a recorded Third-Party Verification ("TPV") call. See Dkt. No. 152-6 at ¶ 29. During the TPV call, Defendant's representative informed Decedent that she would "be placed on [Defendant's] monthly variable rate Electricity Program with [her] first month introductory price being 4.4 cents per kilowatt hour." Dkt. No. 137-9 at 7.
Defendant's representative explained that she would "continue to receive [Defendant's] competitive market based monthly variable rate until [she] notif[ied] [Defendant] of [her] wish to cancel" and that, as part of the electricity program, she would "also automatically receive the ... Energy Guard Repair Program that provides coverage for [the] [central] air conditioning unit and electric wiring in [her] home." Id. Finally, the representative informed her that participation in Defendant's electricity program was "not a guarantee of future savings." Id.
Dkt. No. 137-10 at 3. The Customer Disclosure Statement further provided that "Savings are NOT guaranteed." Id. Decedent's Welcome Letter stated as follows:
For being an ... electricity customer, [Defendant] also include[s] the peace of mind and added value of [the] Energy Services EnergyGuard Repair Program. ... EnergyGuard provides you with protection in the event of a breakdown of your residential central air conditioning unit or a problem with the electrical wiring in your home. It provides up to a maximum of $1000 for parts and labor per each service plan every calendar year that you're a customer.
Id. at 2. The EnergyGuard brochure stated that, "[a]s an ... Energy Services electricity customer[, ] you automatically receive all the benefits of our ... EnergyGuard repair program" and provided further specifics on the program. Id. at 5. Decedent's enrollment in Defendant's electricity program commenced in February 2016 and continued until October 2017, when Decedent cancelled her contract. See Dkt. No. 152-6 at ¶ 31; Dkt. No. 137-12 at ¶ 26. Decedent had been provided an introductory rate of $0.044 per kilowatt hour for her first two months in the electricity program, and then she was switched to Defendant's variable rate for the remainder of her time.
The New York Public Service Commission ("NYPSC") is the New York regulatory agency with supervisory authority over all ESCOs in New York. In December 2019, the NYPSC issued an "Order Adopting Changes to the Retail Access Energy Market and Establishing Further Process" ("NYPSC order") to "strengthen[] protections for residential and small commercial customers (mass-market customers) in the retail energy market." Dkt. No. 137-5 at 2, 3. The NYPSC order was the result of a ten-day evidentiary hearing before two administrative law judges and involved the testimony and cross-examination of twenty-two witnesses and panels of witnesses. See Id. at 5-6. The NYPSC ultimately determined that:
any product marketed by an ESCO after the effective date of ... this Order must meet at least one of three criteria, with one exception noted below: (a) it must include guaranteed savings; (b) it must be a fixed-rate product compliant with a price limit; or, (c) it must be a renewably sourced product compliant with rules regarding content, sourcing, and transparency.
Id. at 17. The single exception to this rule was Defendant, who was provided with "a limited opportunity to continue to offer its EnergyGuard service" because it was the only ESCO to provide "detailed evidence" demonstrating that its value-added and energy related product or service "provide[d] a unique benefit that may be reasonably comparable to its costs." Id. at 21. As an ESCO validly offering an value-added energy related product or service, Defendant was "permitted to charge prices higher than the utility default supply rate." Id. at 22. Other ESCOs had a "limited opportunity" to apply for a similar exception. Id. at 19.
Plaintiff now argues that his motion for class certification should be granted because he has satisfied all of the requirements under Rule 23(a) of the Federal Rules of Civil Procedure, as well as the requirements of Rule 23(b)(2) and 23(b)(3). See Dkt. Nos. 136, 149, 155. Defendant opposes class certification, arguing that Plaintiff cannot show by a preponderance of the evidence that the commonality, typicality, or adequacy requirements of Rule 23(a), or the requirements of Rule 23(b)(2) and 23(b)(3), have been...
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