Brito v. Major Energy Electric Services, LLC
MEMORANDUM OPINION. Signed by Judge Ellen L. Hollander on 1/8/2021. (bas, Deputy Clerk)
Case 1:20-cv-00230-ELH Document 36 Filed 01/08/21 Page 1 of 33
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
Civil Action No. ELH-20-0230
MAJOR ENERGY ELECTRIC
In this putative class action, plaintiff Patricia Brito has sued defendant Major Energy
Electric Services, LLC (“Major” or “Major Energy”), an electricity provider. ECF 1. The suit
concerns Major’s methods of soliciting and acquiring new residential customers as well as the
rates Major charges for electricity.
In an “Amended Class Action Complaint” (ECF 20, the “Amended Complaint”), Ms. Brito
asserts four counts, each founded on Maryland law and lodged on behalf of a putative class and a
putative subclass. Count I alleges violation of the Maryland Consumer Protection Act (“MCPA”),
Md. Code (2013 Repl. Vol.), § 13-101 et seq. of the Commercial Law Article (“C.L.”). ECF 20,
¶ 45. In Count II, plaintiff alleges unjust enrichment. Id. ¶ 59. Count III lodges a claim for
“Common Law Fraud, Including Fraudulent Inducement, and Fraudulent Concealment.” Id. ¶ 64.
And, in Count IV, plaintiff asserts negligent misrepresentation. Id. ¶ 72.
The Amended Complaints asserts subject matter jurisdiction pursuant to the Class Action
Fairness Act of 2005 (“CAFA”), 28 U.S.C. § 1332(d)(2). Id. ¶ 9. Plaintiff seeks class certification
as well as declaratory relief, disgorgement, compensatory and actual damages, attorney’s fees, and
costs. Id. ¶ 82.
Case 1:20-cv-00230-ELH Document 36 Filed 01/08/21 Page 2 of 33
Major has moved to dismiss (ECF 21), supported by a memorandum of law. ECF 21-1
(collectively, the “Motion to Dismiss”). Defendant asserts that dismissal is warranted for lack of
subject matter jurisdiction, pursuant to Fed. R. Civ. P. 12(b)(1), and for improper venue, pursuant
to Rule 12(b)(3). According to Major, the Court lacks subject matter jurisdiction because Brito
has not exhausted her administrative remedies with the Maryland Public Service Commission (the
“Commission” or “PSC”). ECF 21 at 2. And, Major contends that venue is improper because
Brito is bound by the arbitration clause in her contract with Major. ECF 21-1 at 18. In addition,
Major opposes class certification and argues that all of plaintiff’s claims fail under Rule 12(b)(6).
Id. at 2. The Motion to Dismiss is supported by exhibits. ECF 21-2.
Defendant has also filed a motion to stay or to dismiss plaintiff’s suit, pursuant to § 3 of
the Federal Arbitration Act (“FAA”), 9 U.S.C. § 3. ECF 22. The motion is supported by a
memorandum of law. ECF 22-1 (collectively, the “FAA Motion”). The exhibits supporting the
FAA Motion are identical to those appended to the Motion to Dismiss. See ECF 22-2.
Plaintiff opposes the Motion to Dismiss (ECF 31) and the FAA Motion (ECF 30)
(collectively, the “Opposition”). Defendant has replied to both submissions. See ECF 32 (Reply
in support of the Motion to Dismiss; ECF 33 (Reply in support of the FAA Motion).
Ms. Brito has also moved for leave to file two surreplies. ECF 34. The proposed surreply
supporting her opposition to the Motion to Dismiss is docketed at ECF 34-1. The proposed
surreply supporting plaintiff’s opposition to the FAA Motion is docketed at ECF 34-2. The two
proposed surreplies are virtually identical, and each is accompanied by plaintiff’s Declaration. See
ECF 34-1 at 7; ECF 34-2 at 7.
Case 1:20-cv-00230-ELH Document 36 Filed 01/08/21 Page 3 of 33
The motions are fully briefed and no hearing is necessary to resolve them. See Local Rule
105.6. For the reasons that follow, I shall grant defendant’s Motion to Dismiss, grant defendant’s
FAA Motion, and deny plaintiff’s motion for leave to file a surreply.
Maryland is one of several states that has deregulated the market for electricity. ECF 20,
¶ 2; ECF 21-1 at 10; see Md. Code (2020 Repl. Vol.), §§ 7-501 to 7-516 of the Public Utilities
Article (“P.U.”) (subtitle on “Electric Industry Restructuring”).1
Before deregulation, local
utilities sold and delivered electricity to consumers. See ECF 21-1 at 10. Deregulation enabled
“[r]etail energy suppliers [to] sell directly to consumers, using the local utility’s distribution system
https://www.mdelectricchoice.com/how-it-worrks/ (last accessed December 13, 2020).2 As a
result of deregulation, residential consumers may now elect to purchase electricity from a supplier
other than their local utility. Id. However, suppliers must be licensed by the Commission. Electric
https://www.psc.state.md.us/electricchoice/frequently-asked-questions/ (last accessed December
According to the Commission’s website, if a consumer chooses an electricity supplier other
than his/her local utility, the consumer “may be able to receive a single monthly bill from [her]
utility that details the retail electricity supplier’s charges separately.” Id. The website also
The Court may take judicial notice of “adjudicative facts” pursuant to Fed. R. Evid. 201.
http://www.mdelectricchoice.com is the Commission’s “Official Shopping Website.” Id.
Case 1:20-cv-00230-ELH Document 36 Filed 01/08/21 Page 4 of 33
indicates that “[s]ome retail electricity suppliers have the ability to bill you separately.” Id. But,
the website does not specify which suppliers have the ability to do so. See id.
During the relevant period, Ms. Brito was a resident of Baltimore. ECF 20,
¶ 24. She
alleges that Major, a New York corporation, sells electricity to consumers in Maryland, New York,
Pennsylvania, New Jersey, Illinois, Massachusetts, Connecticut, Ohio and Washington, D.C.,
“through a network of both Major Energy’s internal employees and external third-party vendors,”
which the Complaint refers to as “sales representatives.” Id. ¶¶ 3, 7. According to plaintiff,
Major’s sales representatives are paid by commission and “use standardized marketing and
training materials to carry out door-to-door and telephone solicitations, in-person solicitations at
retail establishments, and direct mail and online advertisements in an effort to switch consumers
to Major.” Id. ¶ 4.
The core of the suit concerns how Major solicits and acquires new customers, and what it
charges for electricity. Ms. Brito alleges, id. ¶ 1:
Major Energy obtains many of its customers without even gaining their actual
agreement or authorization to switch to its electrical services, a practice known as
“slamming.” Second, it falsely promises lower electric bills compared to what
consumers currently pay their electric provider but then places much higher charges
on the bill, a practice known as “cramming.”
Further, plaintiff alleges that in February 2017, a Major sales representative conducting a
door-to-door marketing campaign arrived at her doorstep. Id. ¶ 25. The sales representative asked
plaintiff “if he could see her Baltimore Gas and Electric bill, which is a routine practice asked to
all potential Major Energy customers. Plaintiff agreed to let him look at it.” Id. ¶ 26.3 The sales
Baltimore Gas and Electric Company, a subsidiary of Exelon Corporation, is a local utility
provider. See About Us, BGE, https://www.bge.com/AboutUs (last accessed January 7, 2021).
Case 1:20-cv-00230-ELH Document 36 Filed 01/08/21 Page 5 of 33
representative then “represented to Plaintiff that her electric bill would be lower each month if she
switched to Major Energy.” Id. ¶ 27.
Ms. Brito asserts that she “never signed any door-to-door sales agreement and never
actually gave consent to switching her electricity provider.” Id. ¶ 28. But, she adds: “After the
Major Energy sale’s representative left Plaintiff’s residence, Major Energy switched Plaintiff’s
electric from Baltimore Gas & Electric to Major Energy.” Id.
Plaintiff did not notice any changes in her electricity bill “for a period of many months.”
Id. ¶ 29. According to plaintiff, her bill “appeared substantially the same as before the switch and
she did not notice the small, inconspicuous notation that Major Energy was now her designated
provider.” Id. Moreover, “her monthly charges were not immediately excessive.” Id. However,
she alleges: “At some point after the switch to Major Energy, Plaintiff’s electric costs were
significantly higher than what they were for Baltimore Gas & Electric for the same historical
electrical usage that Plaintiff usually utilized.” Id. ¶ 30.
According to Ms. Brito, her experience is part of Major’s “fraudulent scheme,” which
affects consumers “everywhere that Major Energy offer its services.” Id. ¶ 31. There are two main
components to this scheme: “slamming” and “cramming.” Id. ¶ 1. As to the former, plaintiff
asserts, id. ¶ 5:
Major Energy’s sales representatives always ask consumers to see their utility bills,
often under false pretenses, and copy down the information. Frequently, the sales
representatives simply switched many customer’s [sic] without consent. Major
Energy created a system that incentives [sic] document forgery and creates practical
barriers for consumers to know that they have been slammed . . . .
Moreover, Major “does not have a workable policy or practice to ensure that an agreement to
switch providers is authentic.” Id. ¶ 18.
Case 1:20-cv-00230-ELH Document 36 Filed 01/08/21 Page 6 of 33
However, Ms. Brito adds that even where Major acquires new customers with consent,
Major engages in unlawful cramming. Id. ¶¶ 5, 18. Plaintiff asserts, id. ¶ 18:
Upon information and belief, Major Energy . . . trains . . . “sales representatives”
through substantively uniform selling scripts and other marketing materials to lure
consumers to switch from their current electric company to Major Energy, with the
false promise that they will receive lower competitive rates resulting in savings in
their monthly bills.
According to plaintiff, Major’s website is also implicated in its “deceptive marketing
practices.” Id. ¶ 21. The Amended Complaint includes two images allegedly taken from
majorenergy.com. One image displays text that states: “You do have a choice in who supplies
your electricity…PROTECT YOURSELF HERE! Get a Low Fixed Rate on Your Utility Bills.
All Year. Guaranteed.” Id. (capitalization and emphasis in original). The other image contains
the words: “Take the fear out of rising utility rates…GET ONE LOW RATE FOR 12 MONTHS!”
Id. (capitalization in original). Plaintiff avers that these advertisements resulted in “unlawful
cramming by falsely promising consumers energy rates and savings which Major Energy
knowingly fails to deliver.” Id. ¶ 18.
In sum, Ms. Brito avers, id. ¶ 34:
34. Major Energy’s misrepresentations and omissions caused injury to [p]laintiff
and the members of the Class because they were either unlawfully slammed and/or
unjustifiably induced to believe that they would receive energy costs savings on
their monthly bills when, in actuality, Plaintiff and Class members were charged
substantially more for their energy needs after Major Energy switched to its
The Amended Complaint defines the putative “National Class” as follows, id. ¶ 37:
All persons who are or have been Major Energy customers in New York,
Pennsylvania, Maryland, New Jersey, Illinois, Massachusetts, Connecticut, Ohio
and Washington DC and any other locations where Major Energy markets its
services who used Major Energy as their electricity supplier.
Case 1:20-cv-00230-ELH Document 36 Filed 01/08/21 Page 7 of 33
And, the Amended Complaint defines the putative “Maryland subclass” as: “All persons who are
or have been Major Energy customers in Maryland who used Major Energy as their electricity
Major tells a different story.4 It submitted a Declaration of the Chief Operating Officer for
Spark Energy Inc., Kevin McMinn. ECF 21-2 at 2-6; ECF 22-2 at 2-6 (collectively, the “McMinn
Declaration” or “Declaration”).5 According to the Declaration, McMinn has access to Major’s
records, which are maintained in the regular course of business. Id. at 2, ¶ 2.
McMinn avers that in February 2017, Major contracted with third-party salespersons “to
conduct door-to-door solicitations” in Baltimore and other locations. Id. at 3, ¶ 8. Major provided
the salespersons with “training materials . . . to ensure compliance with all applicable state laws
and regulations.” Id.
A salesperson solicited Ms. Brito at her residence on or about February 1, 2017. Id. at 4,
¶ 9. The Declaration states the following about that solicitation, id. at 4, ¶ 10:
Following a sales representative’s solicitation of a customer, it was standard
procedure for that sales representative to notify Major Energy of the solicitation
and relevant information regarding the customer, including his or her name,
address, and current electricity account information. Thereafter, Major Energy, in
accordance with its standard procedures for confirming the enrollment of new
customers, would mail enrollment letters and its Terms & Conditions to the
customers who were solicited by the sales representatives.
As discussed, infra, given the nature of Major’s pending motions, the Court may consider
the evidence presented, in addition to the pleadings.
Identical copies of the Declaration are appended to the Motion to Dismiss and to the FAA
Motion. For convenience, I shall cite to ECF 21-2.
Case 1:20-cv-00230-ELH Document 36 Filed 01/08/21 Page 8 of 33
In accordance with that procedure, Major subsequently mailed an “Enrollment Letter” to
Ms. Brito at her residence. Id. at 4, ¶ 11. According to McMinn, nothing in Major’s records
indicates that the letter was returned to sender as undeliverable. Id. at 4, ¶ 13.
A copy of the Enrollment Letter is included with the Declaration. See id. at 8. The
Enrollment Letter, which is not dated, begins: “Dear Patricia Brito . . . Welcome to Major Energy
. . . . We wanted to take a moment to let you know about some of the terrific benefits and
advantages of being our customer.” Id. It also states, id.:
Your Price Protection Plan for Electric at 0.1317/kWh is now locked in for the next
12 Months no matter how hot, cold or extreme the weather gets. Additionally,
please keep in mind that you are not leaving Baltimore Gas And Electric Company.
They will still service and deliver your energy and continue to . . . send you bills.
According to the Declaration, a copy of Major’s “Terms & Conditions” (ECF 21-2 at 1011, also referred to as the “Agreement”) accompanied the Enrollment Letter. Id. at 4, ¶ 12.
Paragraph 1 of the Terms & Conditions states that the document constitutes an agreement between
the customer and Major to sell and purchase electricity. Id. at 10, ¶ 1. Paragraph 7, titled
“Cancellation,” provides: “A residential Customer may rescind this Agreement within 3 business
days after the signing or receipt of this Agreement, whichever comes first, by contacting Major . .
. .” Id. at 10, ¶ 7.
Paragraph 14, the Agreement’s dispute resolution provision, provides, in relevant part, id.
at 11, ¶ 14 (capitalization in original; internal boldface added):
14. Dispute Resolution. In the event of a billing dispute or a disagreement
involving Major’s service hereunder, the parties will use their best efforts to resolve
the dispute. Customer should contact Major by telephone or in writing as provided
above. The dispute or complaint relating to a residential customer may be
submitted by either party at any time to the Maryland PSC’s Office of External
Relations . . . . Any claim by customer (except for a claim challenging the
validity or enforceability of this arbitration clause, including the Class Action
Waiver) must be resolved by the PSC or arbitration. THIS MEANS YOU
SHALL NOT HAVE THE RIGHT TO LITIGATE SUCH CLAIM IN COURT OR
TO HAVE A JURY TRIAL. ALSO DISCOVERY AND APPEAL RIGHTS ARE
Case 1:20-cv-00230-ELH Document 36 Filed 01/08/21 Page 9 of 33
LIMITED IN ARBITRATION. Class Action Waiver – ARBITRATION MUST
BE ON AN INDIVIDUAL BASIS. THIS MEANS YOU MAY NOT JOIN OR
CONSOLIDATE CLAIMS IN ARBITRATION OR LITIGATE IN COURT AS A
REPRESENTATIVE OR MEMBER OF A CLASS OR IN A PRIVATE
ATTORNEY GENERAL CAPACITY.
McMinn avers that plaintiff never contacted Major to rescind the Agreement. Id. at 5, ¶
16. Months later, Major mailed Ms. Brito a “Renewal Letter,” dated December 16, 2017. Id. at
5, ¶ 18. Nothing in Major’s records indicates that the letter was returned to sender as undeliverable.
A copy of the Renewal Letter is included with the Declaration. ECF 21-2 at 13. The letter,
addressed to Ms. Brito, begins: “Thank you for being a loyal customer of Major Energy . . . .” Id.
Further, it sets forth information about “new variable rate pricing” and provides that the “variable
rate contract” may be terminated without penalty. Id. A set of “Terms & Conditions” identical to
those that accompanied the Enrollment Letter were included with the Renewal Letter. See id. at
McMinn asserts that plaintiff did not contact Major in response to the Renewal Letter. Id.
at 6, ¶ 22. Therefore, plaintiff’s account with Major was terminated on January 15, 2019. Id. at
6, ¶ 23. Nothing in Major’s records indicates that plaintiff filed an inquiry or grievance with the
Commission regarding the allegations in the Amended Complaint. Id. ¶ 24.
II. Motion for Surreplies
At the outset, I address Ms. Brito’s motion for leave to file two surreplies.
Local Rule 105.2(a) provides that a party is not permitted to file a surreply without
permission of the court. Although the filing of a surreply “is within the Court's discretion, see
Local Rule 105.2(a), ... they are generally disfavored.” EEOC v. Freeman, 961 F.Supp.2d 783,
801 (D. Md. 2013), aff'd in part, 778 F.3d 463 (4th Cir. 2015); see also, e.g., Chubb & Son v. C &
C Complete Servs., LLC, 919 F.Supp.2d 666, 679 (D. Md. 2013). However, a surreply may be
Case 1:20-cv-00230-ELH Document 36 Filed 01/08/21 Page 10 of 33
permitted when the party seeking to file the surreply “would be unable to contest matters presented
to the court for the first time” in the opposing party’s reply. Clear Channel Outdoor, Inc. v. Mayor
& City Council of Baltimore, 22 F.Supp.3d 519, 529 (D. Md. 2014) (quotations and citations
omitted). Conversely, a surreply is generally not permitted where the reply is merely responsive
to an issue raised in the opposition. See Khoury v. Meserve, 268 F.Supp.2d 600, 605-06 (D. Md.
Ms. Brito asserts that Major raised “several new arguments” for the first time in its replies.
ECF 34 at 1. But, the only purportedly new argument that she actually identifies is Major’s
contention that plaintiff failed to present any evidence in her Opposition regarding the existence
of an arbitration agreement. Id.
Plaintiff is attempting to recast defendant’s characterization of plaintiff’s Opposition as a
new argument. The Court is not persuaded. Major presented all of its substantive arguments
regarding arbitration, along with the evidence supporting those arguments, in its Motion to Dismiss
and in the FAA Motion. Defendant’s observation in its replies that plaintiff did not include any
evidence in her Opposition does not rise to the level of argument that warrants the filing of a
Accordingly, I shall deny plaintiff’s motion for leave to file surreplies.6
As noted, Major has moved to dismiss or stay the suit on several grounds, including a lack
of subject matter jurisdiction. Major does not challenge plaintiff’s assertion of subject matter
jurisdiction pursuant to CAFA, 28 U.S.C. § 1332(d)(2). Rather, defendant contends that subject
Although I shall deny the motion for leave to file surreplies, I refer to the content, infra.
Case 1:20-cv-00230-ELH Document 36 Filed 01/08/21 Page 11 of 33
matter jurisdiction is lacking because plaintiff has failed to exhaust her administrative remedies
with the Commission. See ECF 21-1 at 15.
In support of its position, Major cites McCoy v. Pepco Holdings, Inc., GJH-15-2487, 2016
WL 8678000, at *2 (D. Md. June 10, 2016), which stated: “Motions to dismiss for failure to
exhaust administrative remedies are governed by [Federal Rule of Civil Procedure] 12(b)(1) for
lack of subject matter jurisdiction.” (quoting Clarke v. DynCorp Int’l LLC, 962 F. Supp. 2d 781,
786 (D. Md. 2013)) (brackets in Clarke). However, neither Clarke nor the case on which it relied,
Khoury v. Meserve, 268 F. Supp. 2d 600, 606 (D. Md. 2003), concerned exhaustion arguments
pertaining to the Commission. Rather, they were employment discrimination cases and involved
claims brought under Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq. Clarke,
962 F. Supp. 2d at 784; Khoury, 268 F. Supp. 2d at 603.
Notably, the Supreme Court recently held that a plaintiff's failure to exhaust administrative
remedies does not divest the court of jurisdiction over Title VII claims. Fort Bend Cty v. Davis,
___ U.S. ___, 139 S. Ct. 1843, 1846 (2019). Rather, exhaustion is a “claim-processing rule,” and
it is “‘mandatory’ in the sense that a court must enforce the rule if a party ‘properly raises it.’” Id.
(cleaned up) (quoting Eberhart v. United States, 546 U.S. 12, 19, 126 S.Ct. 403 (2005) (per
curiam)). Although a defendant may waive arguments related to administrative exhaustion, if
asserted in a timely fashion such objections may warrant dismissal under Rule 12(b)(6), rather than
Rule 12(b)(1). See Kenion v. Skanska USA Bldg., Inc., RBD-18-3344, 2019 WL 4393296, at *4
(D. Md. Sept. 13, 2019) (discussing the import of Davis).
There must be an “independent jurisdictional basis” for suit in federal court. Hall St.
Assocs., LLC v. Mattel, Inc., 552 U.S. 576, 581-82 (2008). For example, “diversity jurisdiction
would authorize a federal court to resolve disputes concerning the arbitration process. . . .”
Case 1:20-cv-00230-ELH Document 36 Filed 01/08/21 Page 12 of 33
McCormick v Am. Online, Inc., 909 F.3d 677, 681 (4th Cir. 2018). Here, it is not entirely clear
whether Major’s exhaustion argument is in fact jurisdictional or, instead, whether it is cognizable
under Rule 12(b)(6).
Ordinarily, a court first addresses challenges to subject matter jurisdiction. “[B]efore a
federal court can decide the merits of a claim, the claim must invoke the jurisdiction of the court.”
Miller v. Brown, 462 F.3d 312, 316 (4th Cir. 2006) (citing Whitmore v. Arkansas, 495 U.S. 149,
155 (1990)). A federal district court may only adjudicate a case if it possesses the “‘power
authorized by Constitution and statute.’” Exxon Mobil Corp. v. Allapattah Servs., Inc., 545 U.S.
546, 552 (2007) (citation omitted).
Under the circumstances of this case, however, I turn first to Major’s FAA Motion and its
motion under Rule 12(b)(3), which concern the enforceability of the Agreement’s arbitration
clause. If Ms. Brito is bound by the arbitration clause, as Major contends, then she may only bring
her claims in the PSC or in arbitration—not in court. See 21-2 at 11, ¶ 14. In other words, the
Court would be unable to adjudicate Ms. Brito’s suit, regardless of whether she exhausted her
A. Legal Standards
1. The Federal Arbitration Act, 9 U.S.C. § 1 et seq.
Major moves to dismiss or stay this action pursuant to 9 U.S.C. § 3. Enacted in 1925, the
FAA “requires courts to enforce covered arbitration agreements according to their terms.” Lamps
Plus, Inc. v. Varela, ___ U.S. ___, 139 S. Ct. 1407, 1412 (2019); see McCormick, 909 F.3d at 679
(the FAA “provides for the enforceability of arbitration agreements and specifies procedures for
conducting arbitrations and enforcing arbitration awards”).
Case 1:20-cv-00230-ELH Document 36 Filed 01/08/21 Page 13 of 33
Under § 2 of the FAA, an arbitration contract is “valid, irrevocable, and enforceable, save
upon such grounds as exist at law or in equity for the revocation of any contract.” Thus, the FAA
“establishes ‘a liberal federal policy favoring arbitration agreements.’” Epic Sys. Corp. v. Lewis,
___ U.S. ___, 138 S. Ct. 1612, 1621 (2018) (quoting Moses H. Cone Mem’l Hosp. v. Mercury
Constr. Corp., 460 U.S. 1, 24 (1983)); see also McCormick, 909 F.3d at 680 (“[T]he FAA elevates
the arbitration of claims as a favored alternative to litigation when the parties agree in writing to
Section 3 of the FAA provides, 9 U.S.C. § 3:
If any suit or proceeding be brought in any of the courts of the United States upon
any issue referable to arbitration under an agreement in writing for such arbitration,
the court in which such suit is pending, upon being satisfied that the issue involved
in such suit or proceeding is referable to arbitration under such an agreement, shall
on application of one of the parties stay the trial of the action until such arbitration
has been had in accordance with the terms of the agreement, providing the applicant
for the stay is not in default in proceeding with such arbitration.
Thus, the Fourth Circuit has said: “The FAA requires a court to stay ‘any suit or
proceeding’ pending arbitration of ‘any issue referable to arbitration under an agreement in writing
for such arbitration.’ This stay-of-litigation provision is mandatory.” Adkins v. Labor Ready, Inc.,
303 F.3d 496, 500 (4th Cir. 2002) (quoting 9 U.S.C. § 3)). Nevertheless, in lieu of a stay, some
courts have determined that “dismissal is a proper remedy when all of the issues presented in a
lawsuit are arbitrable.” Choice Hotels Int’l, Inc. v. BSR Tropicana Resort, Inc., 252 F.3d 707, 70910 (4th Cir. 2001); see Willcock v. My Goodness! Games, Inc., PWG-16-4020, 2018 WL 3970474,
at *4 (D. Md. Aug. 20, 2018); Kabba v. Ctr., PWG-17-211, 2017 WL 1508829, at *2 (D. Md. Apr.
27, 2017) (same), aff’d, 730 F. App’x 141 (4th Cir. 2018).
Under 9 U.S.C. § 4, a “party aggrieved by the alleged failure, neglect, or refusal of another
to arbitrate under a written agreement for arbitration” may petition a district court “for an order
Case 1:20-cv-00230-ELH Document 36 Filed 01/08/21 Page 14 of 33
directing that such arbitration proceed in the manner provided for in such agreement.” Further, §
4 provides that, when presented with such a petition, a court
shall hear the parties, and upon being satisfied that the making of the agreement for
arbitration . . . is not in issue, the court shall make an order directing the parties to
proceed to arbitration in accordance with the terms of the agreement.
Conversely, § 4 provides that if the “making of the arbitration agreement . . . be in issue,” then
“the court shall proceed summarily to the trial thereof.”
“‘Sections 3 and 4 [of the FAA] ... provide two parallel devices for enforcing an arbitration
agreement: a stay of litigation in any case raising a dispute referable to arbitration, 9 U.S.C. § 3,
and an affirmative order to engage in arbitration, § 4.’” Galloway v. Santander Consumer USA,
Inc., 819 F.3d 79, 84 (4th Cir. 2016) (quoting Chorley Enters. v. Dickey's Barbecue Rests., Inc.,
807 F.3d 553, 563 (4th Cir. 2015) (brackets in Galloway). Here, Major has moved for a stay or
dismissal, pursuant to § 3; it has not moved to compel arbitration under § 4. ECF 22-1 at 7.
“Whether a party has agreed to arbitrate an issue is a matter of contract interpretation: ‘[A]
party cannot be required to submit to arbitration any dispute which he has not agreed so to
submit.’” Levin v. Alms and Assoc., Inc., 634 F.3d 260, 266 (4th Cir. 2011) (quoting Am. Recovery
Corp. v. Computerized Thermal Imaging, 96 F.3d 88, 92 (4th Cir. 1996) (citation omitted))
(alteration in Levin); see Berkeley v. Hub Int’l Ltd., 944 F.3d 225, 236 (4th Cir. 2019); Minnieland
Private Day Sch., Inc. v. Applied Underwriters Captive Risk Assurance Co., 913 F.3d 409, 415
(4th Cir. 2019). And, “where the dispute at issue concerns contract formation, the dispute is
generally for courts to decide.” Granite Rock Co. v. Int’l Brotherhood of Teamsters, 561 U.S. 287,
296 (2010); see also Berkeley Cty. Sch. Dist. v. Hub Int’l Ltd., 944 F.3d at 234 (4th Cir. 2019)
(stating that § 4 of the FAA “requires that the district court—rather than the arbitrator—decide
whether the parties have formed an agreement to arbitrate”); Snowden v. CheckPoint Check
Case 1:20-cv-00230-ELH Document 36 Filed 01/08/21 Page 15 of 33
Cashing, 290 F.3d 631, 637 (4th Cir. 2002). However, the Supreme Court has said “that parties
may agree to have an arbitrator decide not only the merits of a particular dispute but also gateway
questions of arbitrability.” Henry Schein, Inc. v. Archer & White Sales, Inc., ___ U.S. ___, 139 S.
Ct. 524, 529 (2019) (internal quotation marks omitted).
In sum, the Fourth Circuit has stated, Galloway, 819 F.3d at 84 (cleaned up) (citations
[A]pplication of the FAA requires demonstration of four elements: (1) the existence
of a dispute between the parties, (2) a written agreement that includes an arbitration
provision which purports to cover the dispute, (3) the relationship of the transaction,
which is evidenced by the agreement, to interstate or foreign commerce, and (4) the
failure, neglect or refusal of the defendant to arbitrate the dispute.
See also Adkins, 303 F.3d at 500-01; Whiteside v. Teltech Corp., 940 F.2d 99, 102 (4th Cir. 1991).
And, these requirements apply to motions brought under § 3 as well those brought under § 4 of the
FAA. See Noe v. City Nat’l Bank of W. Virginia, 828 F. App’x 163, 165 (4th Cir. 2020) (citing
Adkins, 303 F.3d at 500-01).
The Adkins Court also said, 303 F.3d at 500: “A district court . . . has no choice but to grant
a motion to compel arbitration where a valid arbitration agreement exists and the issues in a case
fall within its purview.” Accordingly, a court must “engage in a limited review to ensure that the
dispute is arbitrable—i.e., that a valid agreement exists between the parties and that the specific
dispute falls within the substantive scope of that agreement.” Murray v. United Food &
Commercial Workers Int’l Union, 289 F.3d 297, 302 (4th Cir. 2002).
To determine if there is a valid agreement, courts in the Fourth Circuit “‘apply ordinary
state-law principles that govern the formation of contracts and the federal substantive law of
arbitrability.’” Minnieland Private Day Sch., 913 F.3d at 415 (citation omitted). Notably, “[a]ny
uncertainty regarding the scope of arbitrable issues agreed to by the parties must be resolved in
Case 1:20-cv-00230-ELH Document 36 Filed 01/08/21 Page 16 of 33
favor of arbitration.” Muriithi v. Shuttle Exp., Inc., 712 F.3d 173, 179 (4th Cir. 2013) (citations
omitted); see also Levin, 634 F.3d at 266 (“The ‘heavy presumption of arbitrability requires that
when the scope of the arbitration clause is open to question, a court must decide the question in
favor of arbitration.’”); Adkins, 303 F.3d at 50.
2. Rule 12(b)(3)
The Supreme Court has observed that an arbitration clause is “a specialized kind of forumselection clause that posits not only the situs of suit but also the procedure to be used in resolving
Scherk v. Alberto-Culver Co., 417 U.S. 506, 519 (1974).
Pharmaceuticals, Inc. v. Astellas Pharma, Inc., 471 F.3d 544, 550 (4th Cir. 2006), the Fourth
Circuit determined that “a motion to dismiss based on a forum-selection clause,” such as an
arbitration provision, “should be properly treated under Rule 12(b)(3) as a motion to dismiss on
the basis of improper venue.” The Sucampo Court explained, id at 548 (internal and external
citations omitted) (my alteration):
[T]reating a motion to dismiss on the basis of a forum-selection clause under Rule
12(b)(1) presents practical difficulties that undercut the benefits gained from
enforcement of the clauses. For example, the court must raise the issue of subjectmatter jurisdiction sua sponte, if necessary. See Fed. R. Civ. P. 12(h)(3). Thus, in
cases involving forum-selection clauses, both district and circuit courts would be
under an obligation to confirm that the clause was not applicable before reaching
the merits of the action. . . . More importantly a motion to dismiss under Rule
12(b)(1) is non-waivable and may be brought at any time—even on appeal—
regardless of whether a litigant raised the issue in an initial pleading. Litigants,
therefore, could hold back forum-selection clause objections, until after
discovery—or even an adverse verdict.
Moreover, the Fourth Circuit has recognized that Rule 12(b)(6) “is not the appropriate
motion for enforcing a forum-selection clause.” Sucampo, 471 F.3d at 549. It explained that
“because a 12(b)(6) motion may be brought at any time prior to adjudication on the merits,
analyzing forum-selection clauses under Rule 12(b)(6) would present some of the same timing
concerns as in the 12(b)(1) context.” Id. (citations omitted). The Court reasoned: “Analyzing
Case 1:20-cv-00230-ELH Document 36 Filed 01/08/21 Page 17 of 33
forum-selection agreements under Rule 12(b)(3) would avoid the doctrinal and timing
disadvantages of utilizing Rule 12(b)(1) or (6) and be consistent with Supreme Court precedent.”
Id. (citing Lipcon v. Underwriters at Lloyd’s, London, 148 F.3d 1285 (11th Cir. 1998) (finding
that motions to dismiss based on forum-selection clause should be analyzed under Rule 12(b)(3)
based on the Supreme Court’s decision in Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22 (1988))).
Since Sucampo, the Fourth Circuit has reiterated that a challenge based on a forumselection clause, including an arbitration clause, should be addressed by way of a motion to dismiss
for improper venue under Rule 12(b)(3). See Aggarao v. MOL Ship Mgmt. Co., Ltd., 675 F.3d
355, 365 n.9 (4th Cir. 2012). Nevertheless, other judges of this court have considered motions to
dismiss in favor of arbitration under Rule 12(b)(1) and Rule 12(b)(6). See, e.g., Willcock, 2018
WL 3970474, *3 (D. Md. Aug. 20, 2018) (collecting cases); Garrett v. Monterey Fin. Servs., LLC,
JKB-18-325, 2018 WL 3579856, at *2 (D. Md. July 25, 2018) (“[M]otions to dismiss in connection
with a valid arbitration agreement are often brought under Rule 12(b)(6) based on the observation
that the existence of a valid arbitration clause does not technically deprive the Court of subject
matter jurisdiction. . . . However, courts have also found it proper to dismiss claims subject to
arbitration agreements under Rule 12(b)(1).” (citations omitted)); Lomax v. Weinstock, Friedman
& Friedman, P.A., CCB-13-1442, 2014 WL 176779, at *2 (D. Md. Jan. 15, 2014) (“Courts have
found it proper to dismiss claims subject to arbitration agreements under both Rule 12(b)(1) and
Rule 12(b)(6).”), aff’d, 583 F. App’x 100 (4th Cir. 2014).
In this case, Major has moved to dismiss, pursuant to Rule 12(b)(3).7 In the Fourth Circuit,
when a challenge to venue is raised under this rule, the plaintiff bears the burden of demonstrating
Major does not rely on ¶ 15 of the Agreement, titled “Choice of Laws,” which provides:
“Venue for any lawsuit brought to enforce any term or condition of this Agreement or to construe
the terms hereof shall lie exclusively in the State of New York.” ECF 21-1 at 11.
Case 1:20-cv-00230-ELH Document 36 Filed 01/08/21 Page 18 of 33
that venue is appropriate. Bartholomew v. Va. Chiropractors Ass’n, 612 F.2d 812, 816 (4th Cir.
1979), cert. denied, 446 U.S. 938 (1980), overruled on other grounds by Union Labor Life Ins.
Co. v. Pireno, 458 U.S. 119 (1982); accord Tinoco v. Thesis Painting, Inc., GJH-16-752, 2017
WL 52554, at *2 (D. Md. Jan. 3, 2017); Jones v. Koons Auto. Inc., 752 F. Supp. 2d 670, 679 (D.
Md. 2010). If the court does not hold an evidentiary hearing, “the plaintiff need only make
a prima facie showing that venue is proper.” CareFirst, Inc. v. Taylor, 235 F. Supp. 3d 724, 732
(D. Md. 2017) (citing Mitrano v. Hawes, 377 F.3d 402, 405 (4th Cir. 2004)). “In assessing whether
facie venue showing,
the light most favorable to the plaintiff.” Aggarao, 675 F.3d at 366. And, the court may “freely
consider evidence outside the pleadings . . . .” Sucampo, 471 F.3d at 550; see also Aggarao, 675
F.3d at 365-56 (“On a motion to dismiss under Rule 12(b)(3), a court is permitted to consider
evidence outside the pleadings.”); Taylor v. Shreeji Swami, Inc., PWG-16-3787, 2017 WL
1832206, at *1 (D. Md. May 8, 2017) (same); Convergence Mgmt. Assocs., Inc. v. Callender,
TDC-15-4015, 2016 WL 6662253, at *2 (D. Md. Nov. 10, 2016) (same).
Because “‘it is possible for venue to be proper in more than one judicial district,’ the
question is not whether a given district is the best venue, but whether the events or omissions that
occurred there are ‘sufficiently substantial.’” Carefirst, 235 F. Supp. 3d at 732 (quoting Mitrano,
377 F.3d at 405). And, in considering “whether events or omissions are sufficiently substantial to
support venue . . . , a court should not focus only on those matters that are in dispute or that directly
led to the filing of the action.” Mirtano, 377 F.3d at 406 (citation omitted). Instead, “it should
review ‘the entire sequence of events underlying the claim.’” Id.; accord Taylor, 2017 WL
1832206, at *1; Callender, 2016 WL 6662253, at *2.
Case 1:20-cv-00230-ELH Document 36 Filed 01/08/21 Page 19 of 33
As indicated, a motion to dismiss for improper venue, filed under Rule 12(b)(3), “allows
the court to freely consider evidence outside the pleadings . . . .” Sucampo, 471 F.3d at 550. Here,
the Court considers the exhibits submitted by Major: the McMinn Declaration (ECF 21-2 at 2-6);
the Enrollment Letter (id. at 8); the Agreement (id. at 10-11); and the Renewal Letter (id. at 13).
B. Choice of Law
“[I]nterpretation of private contracts is ordinarily a question of state law.” Volt Info. Scis.,
Inc. v. Bd. of Trustees of Leland Stanford Junior Univ., 489 U.S. 468, 474 (1989); accord James
v. Circuit City Stores, Inc., 370 F.3d 417, 421-22 (4th Cir. 2004). Because federal courts exercising
diversity jurisdiction “apply the choice of law rules of the forum state,” I must consult the choice
of law rules of Maryland, the state in which this Court is situated, to determine which state’s
substantive law applies to questions concerning contract formation in this case. CACI Int’l, Inc.
v. St. Paul Fire & Marine Ins. Co., 566 F.3d 150, 154 (4th Cir. 2009) (citing Klaxon v. Stentor
Elec. Mfg. Co., 313 U.S. 487, 496-97 (1941)); see also Colgan Air, Inc. v. Raytheon Aircraft Co.,
507 F.3d 270, 275 (4th Cir. 2007) (citing Erie R.R. Co. v. Tompkins, 304 U.S. 64, 79 (1938));
Ground Zero Museum Workshop v. Wilson, 813 F. Supp. 2d 678, 696 (D. Md. 2011) (“When
choosing the applicable state substantive law while exercising diversity or supplemental
jurisdiction, a federal district court applies the choice of law rules of the forum state.”).
When a contract contains a choice of law provision, Maryland courts apply § 187(2) of the
Restatement (Second) of Conflict of Laws (1971) (“Restatement”), which states: “The law of the
state chosen by the parties to govern their contractual rights will be applied.” See Ace American
Ins. Co. v. Grand Banks Yachts, Ltd., 587 F. Supp. 2d 697, 704 (D. Md. 2008) (applying
Restatement § 187(2)).
Notwithstanding this general rule, “[i]n Maryland, choice of law
provisions in contracts are enforceable unless the choice of law jurisdiction has no substantial
Case 1:20-cv-00230-ELH Document 36 Filed 01/08/21 Page 20 of 33
relationship to the transaction, or there is a fundamental policy difference in the laws of another
jurisdiction with a more substantial interest in the parties or the transaction.” United States for use
& benefit of Tusco, Inc. v. Clark Constr. Grp., 235 F. Supp. 3d 745, 752 n.9 (D. Md. 2016) (citing
Jackson v. Pasadena Receivables, Inc., 398 Md. 611, 921 A.2d 799, 803-05 (2011)); see
Restatement § 187.
The parties appear to agree that Maryland law controls, albeit for different reasons. Major
points to the Agreement’s choice of law clause. See, e.g., ECF 21-1 at 20. Paragraph 15 of the
Agreement provides: “This Agreement shall be construed under and shall be governed by the laws
of the State of Maryland without regard to the application of its conflicts of law principles.” ECF
21-2 at 11. Ms. Brito maintains that the Agreement is unenforceable and does not rely on its choice
of law clause. But, she does not dispute that Maryland law controls with respect to the issue of
arbitrability. Moreover, she relies on Maryland law to support her position that the Amended
Complaint’s four counts are not subject to dismissal for failure to state a claim. ECF 31 at 21-33.
Therefore, the Court will apply Maryland law to determine the enforceability of the arbitration
provision. See Berkeley Cty. Sch. Dist., 944 F.3d at 236 (applying state law agreed upon by parties
in deciding arbitration issues); Galloway, 819 F.3d at 85 (same).
As noted, application of the FAA requires, inter alia, a dispute between the parties.
Clearly, there is such a dispute here. See ECF 22-1 at 8; ECF 30 at 2. Thus, the first element
required for the application of the FAA is satisfied. See Galloway, 819 F.3d at 84.
The parties disagree as to the second element: whether there exists an enforceable “written
agreement that includes an arbitration provision which purports to cover the dispute.” Id. Major
contends that the Agreement is an enforceable contract and that its arbitration clause precludes
Case 1:20-cv-00230-ELH Document 36 Filed 01/08/21 Page 21 of 33
Ms. Brito from litigating her claims in this Court. ECF 21-1 at 18; ECF 22-1 at 1. Conversely,
Ms. Brito is firmly of the view that she is not bound by the arbitration clause, or by the Agreement
at all, because no contract was formed between her and Major. In this regard, she asserts that she
“never consented to Major Energy as her service provider,” ECF 31 at 19, and therefore “no
agreement exists.” ECF 30 at 3.
In the Amended Complaint Ms. Brito alleges that Major wrongfully acquired new
residential customers in two ways. In particular, plaintiff claims that Major “unlawfully slammed”
some customers, that is, enrolled them in its services without consent, and with others, Major
allegedly obtained their consent, but “unjustifiably induced [them] to believe that they would
receive energy costs savings on their monthly bills.” ECF 20, ¶ 34. In plaintiff’s Opposition,
however, she argues, as noted, that she is not bound by the Agreement’s arbitration clause because
she never consented to receive Major’s services, and thus no contract was ever formed. See ECF
30 at 3-4; ECF 31 at 18-2. She does not advance the alternative theory that a contract was created
between Major and plaintiff, but that it is unenforceable as to plaintiff because she was fraudulently
induced to enter into it.
Neither party addresses the distinction in these arguments.
But, the distinction is
significant. The Supreme Court has explained that the “question of whether an arbitration
agreement was ‘ever concluded’”—that is, formed—is generally not arbitrable, whereas “the
question whether a contract containing an arbitration clause was illegal when formed” may be
“arbitrable in certain circumstances.” Granite Rock, 561 U.S. at 296 (quoting Buckeye Check
Cashing, Inc. v. Cardegna, 546 U.S. 440, 444 n. 1 (2006)). Here, Ms. Brito’s opposition raises a
question as to the former category.
Case 1:20-cv-00230-ELH Document 36 Filed 01/08/21 Page 22 of 33
Maryland law governs on the issue of whether a contract was formed, as mentioned.8 In
general, a contract is defined as “a promise or set of promises for breach of which the law gives a
remedy, or the performance of which the law in some way recognizes as a duty.” RICHARD A.
LORD, 1 WILLISTON
CONTRACTS § 1:1 (4th ed. 1990); accord RESTATEMENT (SECOND)
CONTRACTS § 1 (1981); see also Maslow v. Vanguri, 168 Md. App. 298, 321, 896 A.2d 408, 42122, cert. denied, 393 Md. 478, 903 A.2d 416 (2006). “‘A contract is formed when an unrevoked
offer made by one person is accepted by another.’” Cty. Comm’rs for Carroll Cty. v. Forty W.
Builders, Inc., 178 Md. App. 328, 377, 941 A.2d 1181, 1209 (2008) (quoting Prince George’s Cty.
v. Silverman, 58 Md. App. 41, 57, 472 A.2d 104, 112 (1984)). Thus, mutual assent is an integral
component of every contract. See, e.g., Joseph Saveri Law Firm Inc. v. Michael E. Criden, P.A.,
759 F. App’x 170, 173 (4th Cir. 2019) (recognizing as a “bedrock principle of law” that an offeree
must accept an offer to form a contract); Cochran v. Norkunas, 398 Md. 1, 14, 919 A.2d 700, 708
(2007); Advance Telecom Process LLC v. DSFederal, Inc., 224 Md. App. 164, 177, 119 A.3d 175,
A contract may be oral or written, as well as express or implied. “‘An express contract has
been defined as an actual agreement of the parties, the terms of which are openly uttered or
declared at the time of making it, being stated in distinct and explicit language, either orally or in
Neither party has addressed whether the questions of contract law in this case are
governed by the Maryland Uniform Commercial Code (“UCC”), which “applies to transactions in
goods.” See Md. Code, C.L. §§ 2-102, 2-105(1). It appears that the Maryland courts have not
directly spoken to this issue. The Maryland Court of Appeals has held that “electricity which
remains in a utility company’s distribution system is not a good within . . . Maryland’s UCC.”
Singer Co., Link Simulation Sys. Div. v. Baltimore Gas & Elec. Co., 79 Md. App. 461, 471–72,
558 A.2d 419, 424 (1989). However, the Singer Court did not address “whether electricity
becomes a good when it is processed into a more marketable state.” Gorin v. Vivint Solar
Developer LLC, SAG-19-1207, 2019 WL 4735412, at *3 (D. Md. Sept. 27, 2019). Absent an
instruction from the Maryland courts to apply the UCC to electricity, I shall apply common law
contract principles here.
Case 1:20-cv-00230-ELH Document 36 Filed 01/08/21 Page 23 of 33
writing.’” Maryland Cas. Co. v. Blackstone Int'l Ltd., 442 Md. 685, 706, 114 A.3d 676, 688
(2015) (quoting Cnty. Comm'rs of Caroline Cnty v. Roland Dashiell & Sons, Inc., 358 Md. 83, 94,
747 A.2d 600, 606 (2000)). Whether oral or written, a contract must express with certainty the
nature and extent of the parties’ obligations and the essential terms of the agreement. Forty W.
Builders, Inc., 178 Md. App. at 377-78, 941 A.2d at 1209-10; see Canaras v. Lift Truck Services,
272 Md. 337, 346, 322 A.2d 866, 871 (1974). If an agreement omits an important term, or is
otherwise too vague or indefinite with respect to an essential term, it is not enforceable. Mogavero
v. Silverstein, 142 Md. App. 259, 272, 790 A.2d 43, 51 (2002); see L & L Corp. v. Ammendale,
248 Md. 380, 385, 236 A.2d 734, 737 (1967); Schloss v. Davis, 213 Md. 119, 123, 131 A.2d 287,
290 (1956) (stating that a “contract may be so vague and uncertain as to price or amount as to be
In determining whether there is an enforceable contract, courts begin the analysis “by
discussing the essential prerequisite of mutual assent to the formation of a contract . . . .” Falls
Garden Condo. Ass’n, Inc. v. Falls Homeowners Ass’n, Inc., 441 Md. 290, 302, 107 A.3d 1183,
1189 (2015); see also Mitchell v. AARP, 140 Md. App. 102, 116, 779 A.2d 1061, 1069 (2001)
(“An essential element with respect to the formation of a contract is ‘a manifestation of agreement
or mutual assent by the parties to the terms thereof; in other words, to establish a contract the minds
of the parties must be in agreement as to its terms.’” (citations omitted)). “Manifestation of mutual
assent includes two issues: (1) intent to be bound, and (2) definiteness of terms.” Cochran, 398
Md. at 14, 919 A.2d at 708. “Importantly, acceptance may be manifested by actions as well as
words.” Galloway, 819 F.3d at 87 (citing Porter v. General Boiler Casing Co., 284 Md. 402, 396
A.2d 1090, 1095 (1979) (“The purpose of a signature is to demonstrate ‘mutuality or assent’ which
could as well be shown by the conduct of the parties.”)); see also Restatement (Second) of
Case 1:20-cv-00230-ELH Document 36 Filed 01/08/21 Page 24 of 33
Contracts § 53(1) (“An offer can be accepted by the rendering of a performance only if the offer
invites such acceptance.”).
Major does not concede that Ms. Brito did not consent to enroll with Major during the
solicitation at her residence. ECF 22-1 at 9. But, it argues that even if Ms. Brito did not consent
to become a Major customer during her interaction with the Major salesperson, as she alleges, a
contract was nevertheless formed over the days or weeks that followed.
In defendant’s view, the question of contract formation here does not turn on what
happened on February 1, 2017. Rather, according to Major, the material facts are that plaintiff
presumptively received the Enrollment Letter and the Agreement in early 2017, followed by the
Renewal Letter and the Agreement in late 2017. And, it was not until 2019 that plaintiff contacted
Major to cancel her service with Major and otherwise inform Major that she did not want to be a
Major customer. In the interim, plaintiff received, accepted, and paid for electricity from Major.
See ECF 21-1 at 20-23; ECF 22-1 at 13-14.
In sum, Major argues that plaintiff received a proposed contract and effectively accepted
or assented to it by her conduct; she benefited from and paid for Major’s services. ECF 21-1 at
24; ECF 22-1 at 15. Under these facts, Major contends that a contract was formed under Maryland
Defendant argues correctly that the McMinn Declaration establishes a presumption that
Ms. Brito received both the Enrollment Letter and the Renewal Letter at her residence, each of
which included a copy of the Agreement. In the Declaration, McMinn avers that both letters were
mailed to plaintiff’s residence and that neither was returned to sender as undeliverable. ECF 21-2
at 4-5, ¶¶ 13, 18.
Case 1:20-cv-00230-ELH Document 36 Filed 01/08/21 Page 25 of 33
“It is an established rule of evidence that the testimony of a witness that he properly
addressed, stamped and mailed a letter raises a presumption that it reached its destination at the
regular time and was received by the person to whom it was addressed.” Kolker v. Biggs, 203 Md.
137, 144, 99 A.2d 743, 746 (1953); see also Rockwood Cas. Ins. Co. v. Uninsured Employers’
Fund, 385 Md. 99, 115, 867 A.2d 1026, 1035 (2005) (citing Kolker to support proposition that if
an insurer demonstrates that it mailed a particular kind of notice to an insured by certified mail,
then the insurer “enjoys a presumption that the notice actually arrived”); Rosenthal v. Walker, 111
U.S. 185, 193 (1884) (“The rule is well settled that if a letter properly directed is proved to have
been either put into the post-office or delivered to the postman, it is presumed, from the known
course of business in the post-office department, that it reached its destination at the regular time,
and was received by the person to whom it was addressed.”) (citing British and State court
In her Opposition, plaintiff does not directly challenge either the evidence or the case law
cited by Major to establish the presumption of receipt. Thus, Ms. Brito has not rebutted the
presumption that she received the Enrollment Letter or the Renewal Letter, along with the
Agreement. As noted, plaintiff takes a different tack in her Opposition, insisting that a contract
was never formed because she never consented to become Major’s customer, notwithstanding
Although Major properly relies on Kolker, 203 Md. at 144, 99 A.2d at 746, it incorrectly
labels the principle articulated therein as the “mailbox rule.” ECF 21-1 at 21. The common law
mailbox rule, which Maryland follows, instructs that “‘the mailed acceptance of an offer is
effective when mailed, not when received or acknowledged.’” U.S. Life Ins. Co. in City of New
York v. Wilson, 198 Md. App. 452, 477, 18 A.3d 110, 124 (2011) (citation omitted). In other
words, the rule determines when an offer was accepted and, by extension, when a contract was
formed. In contrast, Kolker merely establishes when evidence of dispatch establishes a
presumption of receipt. Moreover, the mailbox rule concerns circumstances where an acceptance
was communicated by mail, rather than by conduct or silence, as is relevant here.
Case 1:20-cv-00230-ELH Document 36 Filed 01/08/21 Page 26 of 33
Major’s evidence demonstrating that she received the Agreement and benefited from Major’s
services for approximately two years.
Plaintiff attempted to change course with her proposed surreplies. Her Declaration,
appended to both proposed surreplies, states: “I do not recall ever receiving the Terms &
Conditions, the Enrollment Letter, or the Renewal Letter . . . . If these had been mailed to me, I
would have considered them junk mail and I would have thrown them out unopened with all the
other junk mail, including junk mail solicitations from other energy providers.” ECF 34-1 at 8, ¶
9. However, I do not consider this Declaration as evidence, because I have resolved to deny
plaintiff’s motion for leave to file surreplies. And, in any event, the proposed surreplies do not
discuss the legal implications of plaintiff’s averment that if the documents had been mailed to her,
she would have “considered them junk mail” and discarded them.
As indicated, Major also contends that a contract was formed when Ms. Brito paid for and
benefited from Major’s provision of electricity, after twice receiving the Agreement in the mail.
Major notes that the Agreement provides that a customer may rescind the Agreement within three
business days of receiving or signing it by contacting Major, which plaintiff did not do. See ECF
21-2 at 10, ¶ 7. For that reason alone, Major asserts, the Agreement took effect. See ECF 21-1 at
23; ECF 22-1 at 12. Moreover, Major underscores that under well settled principles of Maryland
contract law, plaintiff’s payment for and receipt of electricity from Major for nearly two years
constitutes acceptance of the Agreement.
Defendant asserts that, under Maryland law, “[a]cceptance can be accomplished by acts as
well as words; no formal acceptance is required. . . . Notification of acceptance is not essential to
the formation of a contract.” Porter, 284 Md. 409-10, 396 A.2d at 1094; see ECF 21-1 at 24; ECF
22-1 at 13. In support of its position, defendant also cites Att’y Grievance Comm’n of Md. v.
Case 1:20-cv-00230-ELH Document 36 Filed 01/08/21 Page 27 of 33
Donnelly, 458 Md. 237, 283, 182 A.3d 743, 769 (2018), in which the Maryland Court of Appeals
said: “A person accepts an offer of services through silence where the person knows the terms on
which the services are offered, receives the benefit of the services, and does not reject the offer
despite having a reasonable opportunity to do so.” See ECF 21-1 at 24; ECF 22-1 at 13.
Major also draws on three cases from other jurisdictions to support its contention that a
contract was formed here. Each case involved a consumer who affirmatively contacted or initiated
a transaction with a vendor or service provider, whereas Ms. Brito was solicited by Major. Despite
this distinction, the cases are informative.
In Wold v. Dell Fin. Servs., L.P., 598 F. Supp. 2d 984, 985-87 (D. Minn. 2009), plaintiff
Eric Wold applied by phone for financing for the purchase of a computer. The defendant lender
employed its standard practice of mailing a credit agreement, along with a “Welcome Package,”
to consumers who applied for financing by phone. Id. The credit agreement contained an
arbitration clause. Id. Thereafter, Wold sued the lender for alleged “violation of the Fair Credit
Reporting Act and credit defamation.” Id. at 986. The lender sought to compel arbitration. Wold
opposed, arguing that he never received the credit agreement and therefore no arbitration
agreement was formed. Id. Applying Utah law, the court determined that an enforceable
arbitration agreement had been formed because the defendant established an unrebutted
presumption that Wold received the credit agreement in the mail and because Wold paid off his
debt. Id. at 987. Moreover, the court noted: “Courts routinely enforce so-called ‘shrinkwrap’
accept-or-return arbitration agreements.” Id. at 987 (citing, inter alia, Hill v. Gateway 2000, Inc.,
105 F.3d 1147, 1148-49 (7th Cir. 1997)).
Hill, 105 F.3d at 1147, also arose from a purchase of a computer by phone, followed by
the shipment of the computer in the mail along with a list of terms, including an arbitration clause.
Case 1:20-cv-00230-ELH Document 36 Filed 01/08/21 Page 28 of 33
The plaintiffs sued, alleging the computer was defective. In an opinion by Judge Easterbrook, the
Seventh Circuit held that the arbitration clause was enforceable. Id. The court noted that “[a]
contract need not be read to be effective,” and that the formation of a contract in those
circumstances merely required “the opportunity” for the customer to read the terms and return the
product. Id. As to the practice of sending a proposed contract along with the purchased product,
the court reasoned: “‘A vendor, as master of the offer, may invite acceptance by conduct, and may
propose limitations on the kind of conduct that constitutes acceptance. A buyer may accept by
performing the acts the vendor proposes to treat as acceptance.’” Id. at 1149 (citation omitted).
Major also cites Vernon v. Quest Communication International, Inc., 857 F. Supp. 2d 1135
(D. Colo. 2012). The case primarily concerned whether existing customers of an internet service
provider were sufficiently put on notice of the terms of a new agreement to govern their services.
See id. at 1150-51. Applying Colorado law, the court concluded that the customers’ assent to the
new agreement could be “gleaned from the totality of the circumstances.” Id. at 1150. Of
relevance here, the court noted that the fact that some of the plaintiffs continued using the service
for several months after receiving a “Welcome Letter” was evidence of their manifestation of
assent. Id. at 1152.
As indicated, the cases on which Major relies involve circumstances that differ from those
present in this case. See, e.g., Donnelly, 458 Md. at 283, 182 A.3d at 769 (discussing the formation
of an attorney-client relationship via correspondence); Porter, 284 Md. 414-15, 396 A.2d at 1097
(discussing the formation of a contract between an employer and a union, reasoning that the
employer’s conduct, including its contribution to fringe benefits for union members and
communication with union officials, “manifested its intention to be bound by” an unsigned
contract). For example, both Wold, 598 F. Supp. 2d 984, and Hill, 105 F.3d at 1147, offer analyses
Case 1:20-cv-00230-ELH Document 36 Filed 01/08/21 Page 29 of 33
of contract formation and the enforceability of arbitration agreements in circumstances where a
customer received a contract after electing to initiate a purchase.
Plaintiff does not cite any pertinent Maryland case law regarding contract formation.
Rather, she cites cases applying the law of other jurisdictions for the general proposition that an
arbitration agreement is unenforceable if one party never assented to the agreement or a contact
was otherwise not formed. See Sphere Drake Ins. Ltd. v. Clarendon Nat. Ins. Co., 263 F.3d 26,
31-32 (2d Cir. 2001) (stating that the issue of arbitrability may be litigated if evidence is produced
showing that the purported contract is void); Chastain v. Robinson-Humphrey Co., 957 F.2d 851,
854 (11th Cir. 1992) (stating that issues concerning “the making” of an arbitration agreement are
for a district court to decide), abrogated on other grounds by Larsen v. Citibank FSB, 871 F.3d
1295, 1303 (11th Cir. 2017); Matter of Arbitration Between Nuclear Elec. Ins. Ltd. (Cent. Power
& Light Co.), 926 F. Supp. 428, 434 (S.D.N.Y. 1996) (“Where, however, a party claims that it
never actually manifested assent to a contract containing an agreement to arbitrate . . . that party
cannot be forced to arbitrate . . . .”); Dougherty v. Mieczkowski, 661 F. Supp. 267, 274 (D. Del.
1987) (“[I]f no contract exists, there is no right to arbitration.”).
The principles of Maryland law regarding contract formation are capacious enough to shed
light on the facts of this case. “[A] manifestation of mutual assent is an essential prerequisite to
the creation or formation of a contract.” Cochran, 398 Md. at 14, 919 A.2d at 708. Generally,
“[s]ilence is . . . not to be considered an acceptance of an offer.” Id. at 23–24, 919 A.2d at 714.
But, as Major asserts, one can manifest assent through conduct and even, at times, through silence.
This proposition is firmly established in Maryland case law. See Donnelly, 458 Md. at 283, 182
A.3d at 769; Cochran, 398 Md. at 23–24, 919 A.2d at 714; Porter, 284 Md. at 411, 396 A.2d at
Case 1:20-cv-00230-ELH Document 36 Filed 01/08/21 Page 30 of 33
1095; Chesapeake, Etc. v. Manitowoc, 232 Md. 555, 567, 194 A.2d 624, 630 (1963); Duplex
Envelope Co. v. Balto. Post Co., 163 Md. 596, 605, 163 A. 688, 691 (1933)).
To illustrate, silence may be deemed an acceptance if “the parties had agreed previously
that silence would be an acceptance, the offeree has taken the benefit of the offer, or because of
previous dealings between the parties, it is reasonable that the offeree should notify the offeror if
she does not intend to accept.” Cochran, 398 Md. at 23-24, 919 A.2d at 714 (citing, inter alia,
Restatement (Second) of Contracts § 69); see also Kropfelder v. Snap-On Tools Corp., 859 F.
Supp. 952, 955 (D. Md. 1994) (concluding that payment for and acceptance of benefits after the
expiration of a contract reflected “an intent to continue the terms of the prior contract”). The
Fourth Circuit has explained that this rule “is a consequence of the doctrine of equitable estoppel.”
Edell & Assocs., P.C. v. Law Offices of Peter G. Angelos, 264 F.3d 424, 440 (4th Cir. 2001) (citing
Ganley v. G & W Ltd. Partnership, 44 Md. App. 568, 409 A.2d 761, 764 (1980)).
Applying these principles to the facts here compels the conclusion that Ms. Brito accepted
the Agreement when, by her own admission, she learned that Major was supplying her with
electricity and yet she took no action in response for an undue period. Indeed, it is undisputed that
plaintiff took the benefits of Major’s electricity services for a period of nearly two years, without
objection. Although plaintiff asserts that she did not knowingly take those benefits, she does not
rebut the presumption that she was put on notice of the change in her electricity supplier through
her receipt of the Agreement in the mail, together with the Enrollment Letter and the Renewal
Moreover, plaintiff’s own averments in the Amended Complaint undercut her contention
that she never agreed to become a customer of Major. Ms. Brito alleges: “For a period of many
months, Plaintiff did not notice any change in her electric bill because it appeared substantially the
Case 1:20-cv-00230-ELH Document 36 Filed 01/08/21 Page 31 of 33
same as before the switch and she did not notice the small, inconspicuous notation that Major
Energy was now her designated provider and because her monthly charges were not immediately
excessive.” ECF 20, ¶ 29. Although this allegation is light on detail, it nevertheless indicates that,
“many months” after February 1, 2017, plaintiff learned, through her electric bill, that Major was
her electricity supplier. Tellingly, plaintiff does not go on to allege that after that discovery, she
contacted Major to terminate her service.
Major has submitted evidence that plaintiff’s account was terminated on January 15, 2019.
ECF 21-2 at 6, ¶ 23. But, in her Opposition, plaintiff does not address how this evidence relates
to her pleading. She does not assert, for instance, that she discovered that Major was her supplier
in late 2018 or early 2019 and soon after terminated her account. Given the particular facts of this
case, taken from plaintiff’s allegations and defendant’s evidence, the principle regarding
acceptance articulated in Donnelly, 458 Md. at 283, 182 A.3d at 769, neatly applies here. Ms.
Brito accepted Major’s offer of services through her silence, because she came to know “the terms
on which the services [were] offered, receive[d] the benefit of the services, and [did] not reject the
offer despite having a reasonable opportunity to do so.” Id.
Moreover, the cases cited by plaintiff, referenced earlier, do not lead to a different
conclusion. The Supreme Court has made clear that issues of contract formation are generally for
courts, not arbitrators, to decide. See Granite Rock, 561 U.S. at 296; see also Berkeley Cty. Sch.
Dist., 944 F.3d at 234.
In sum, the determination that a contract was formed is supported by application of
principles Maryland contract law. Therefore, it follows that plaintiff is bound by the arbitration
Case 1:20-cv-00230-ELH Document 36 Filed 01/08/21 Page 32 of 33
Having determined that two elements required for application of the FAA are satisfied,
there remain two more to address. The third element requires that the transaction, as evidenced by
an arbitration agreement, have a relationship to interstate or foreign commerce. See Galloway, 819
F.3d at 84. And, the fourth element requires that the target of a motion brought under the FAA
has failed, neglected, or refused to arbitrate the dispute. See id. Both remaining elements are
plainly satisfied here: the third because plaintiff has filed suit on behalf of a putative nationwide
class, where it is undisputed that Major supplies residential electricity in multiple states; and, the
fourth because plaintiff has filed suit in this Court, rather than proceeding through arbitration.
Accordingly, all elements required for application of the FAA are satisfied.
The final question concerns whether to stay or dismiss the suit. Major asks for a stay or
dismissal, but points the Court toward dismissal, contending that all of plaintiff’s claims are
arbitrable. ECF 22-1 at 19. Ordinarily, the “‘proper course of action when a party seeks to invoke
an arbitration clause is to stay the proceedings pending arbitration,’” under Section 3 of the FAA,
“‘rather than to dismiss outright.’” Aggaro v. MOL Ship Mgmt. Co., Ltd., 675 F.3d 355, 376 n. 18
(4th Cir. 2012). However, Fourth Circuit case law indicates that dismissal, rather than a stay, may
be “a proper remedy when all of the issues presented in a lawsuit are arbitrable.” Choice Hotels
Int’l, 252 F.3d at 709-10 (emphasis added); see also Aggaro, 675 F.3d at 376 n.18 (discussing
Choice Hotels and status of circuit split as to “whether a district court has discretion to dismiss
rather than stay an action subject to arbitration”).
As Judge Chasnow noted in Taylor v. Santander Consumer USA, Inc., DKC-15-0442, 2015
WL 5178018, at *7 (D. Md. Sept 3, 2015), despite the “disagreement within the Fourth Circuit as
to [whether] dismissal is appropriate, . . . district courts within the Fourth Circuit have continued
to find dismissal appropriate.” See, e.g., Willcock, 2018 WL 3970474, at *5; Garrett, 2018 WL
Case 1:20-cv-00230-ELH Document 36 Filed 01/08/21 Page 33 of 33
3579856, at *4 (“The FAA requires a district court to stay judicial proceedings involving issues
covered by arbitration agreements. Dismissal is also a proper remedy under the circumstances.”
(citation omitted)); Bracey v. Lancaster Foods, LLC, RDB-17-1826, 2018 WL 1570239, at *7 (D.
Md. Mar. 30, 2018) (“Having determined that Bracey is bound by the Arbitration claims.”) (citing
Choice Hotels)); Washington v. Lennar Corp., TDC-17-0079, 2018 WL 722418, at *3 (D. Md.
Feb. 5, 2018) (“While the FAA further requires only that this Court stay the proceedings pending
that arbitration, ‘dismissal is prober when all of the issues presented in a lawsuit are arbitrable.’
Choice Hotels . . . . Here, all of Washington’s claims against Lennar are within the scope of the
parties’ arbitration clause. The Court will thus dismiss Washington’s claims.”).
Each count of the Amended Complaint falls within the scope of the Agreement’s arbitration
clause, which states that “[a]ny claim by customer,” except for one challenging the validity or
enforceability of the arbitration clause, “must be resolved by the PSC or arbitration.” ECF 21-2 at
11, ¶ 14. Accordingly, I shall dismiss plaintiff’s suit. And, I need not address the parties’
arguments regarding exhaustion of administrative remedies or the sufficiency of plaintiff’s claims.
For the reasons set forth above, I shall grant Major’s Motion to Dismiss (ECF 21) and the
FAA Motion (ECF 22), and deny plaintiff’s motion for leave to file surreplies (ECF 34). An Order
Date: January 8, 2021
Ellen L. Hollander
United States District Judge
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?