Adesina et al v. XOOM Energy Maryland, LLC et al

Filing 67

MEMORANDUM OPINION. Signed by Judge George Jarrod Hazel on 2/16/2017. (kns, Deputy Clerk)

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IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
SOlltllem Dh';s;oll

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I.,

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MICHAEL

TODD, ('t :/1.,

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Pia in tiffs,

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v.

Casc No.: G.JH-IS-OIS.t

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XOOM ENERGY MARYLAND,

LLC

ef al.,

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Dcfcndants.

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MEMORANDUM

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OPINION

Plaintiffs Michael Todd. J.:romc 130nicos. and Elizabeth Donncllon (collectively.
"PlaintifTs") bring this purported elass action for an allcgcd "bait-and-switch marketing schcmc"
pcrpctratcd by Defcndants XOOM Encrgy. LLC ("XOOM Energy" or "XOOM''j. XOOM
Energy Maryland ("XOOM Maryland"). and ACN. Inc.. ("ACN") (collcctively. "Defendants").
In thc Court's previous Mcmorandum Opinion. ECF No. 50. the Court grantcd. in part. and
denied. in part. Defendants' Motion to Dismiss fl)r Failurc to State a Claim. ECF No. 37. but
allowed Plaintiffs to amend their Complaint. Plaintiffs filed a Second Amcndcd Complaint on
March 21. 2016. Now pending befl)re thc Court is Defendants' Motion to Dismiss Second
Amended Complaint for Failure to State a Claim. ECF No. 59. A hearing on the motion was hcld
on January 11.20 17. Local Rulc 105.6 (D. Md.). For thc following reasons. Defendant's Motion
to Dismiss is granted. in part. and denied. in part.

I.

BACKGROUND
A. Factual Background

Delendant XOOM Energy is "a Delaware Limited Liability Company ti.mned on March
15.2011. with its principal place of business inlluntersville.

North Carolina:' ECI' No, 57'110,

XOOM Energy is an "unregulated retail electricity and natural gas provider, which, together with
its wholly-owned state subsidiaries. otTers electric and gas services in unregulated markets
throughout the United States:' lei. [)elendant XOOM Maryland is a state subsidiary of XOOM
Energy. which "sells and supplies electricity and natural gas in Maryland:' lei. ~ 11. Delcndant
ACN is a "North Carolina corporation with its principal place of business in Concord. North
Carolina:' Id ~ 9, ACN is "a multi-level (i.e. pyramid) marketing company:' which partners
with XOOM Energy to sell energy services to consumers through ACN,'s independent business
owners ("[BOs") and other sales channels. Id.
In their Second Amended Complaint ("SAC'). Plaintiffs allege that "using standardized
marketing and training matcrials. Defendants sell electric and gas [services 1 to consumers.
through a network of XOOM independent sales representatives employed by ACN:' ECI' No. 57
~ 2. Plaintiffs further allcge that "XOOM directly, and through its \BOs, reprcscnt to potcntial
customers that. if they switch to XOOM Irom their loca!. regulated utilities or othcr encrgy
supplicrs, thcy will receive a low introductory rate on their energy bills, followcd by purportcdly
competitive markct-based rates and savings on their energy bills:' Id. However. alier signing up
with XOOM. XOOM "unilaterally and without justilication. raises the rates chargcd and
customers' utility bills increasc unjustiliably:'

Id. Each named Plaintiff. as well as dozens of

"Onlinc Customer Complaints" includcd in the SAC. tells a similar story.

2

PlaintitT Michael Todd is a resident of West Orange, New Jersey. ECF No. 57

'i 6. In or

around May 2013. "Phil:' an independent business owner ("180") from ACN, called Mr. Todd
to discuss XOOM Energy. !d. lBO Phil promised Mr. Todd that ifhe switched Irom his currcnt
cncrgy supplicr to XOOM. "his energy bills would be consistently cheaper than what he was
paying his local utility provider." Ill. Subsequently, Mr. Todd switchcd his encrgy supplicr

li'OI11

Public Scrvicc Elcctric & Gas ("PSE&G") to XOOM. !d. Alicr a few months, Mr. Todd's encrgy
bills "skyrocketed:'

substantially incrcasing each month. !d. Mr. Todd allegcs that hc was

charged "86% higher in January 2014 and 128% highcr in February 2014" by XOOM than he
would have paid I'SE&G during the samc timc period. !d. Plaintiff Jcromc Bonicos, a resident of
Waldwick, New Jersey, had a similar experience. ECF No. 57 ~ 8. In or around January 2013. an
180 named "William" camc to Mr. Bonicos' home. !d. IBO William told Mr. Bonicos that ifhc
switched to XOOM, "his encrgy costs would consistcntly bc 5-10% chcapcr than his cncrgy
costs with I'SE&G:' !d. Mr. Bonicos subscquently switehcd to XOOM, and in2014, Mr.
Bonicos was charged $555.00 more over thc year than had hc stayed with PSE&G. It!.
Plaintiff Elizabcth Donncllon is a residcnt of Abingdon, Maryland. ECF No. 57 ~ 7. In or
around October 2014, "Blain:' an 180 Irom ACN, visited Ms. Donncllon's homc. Ill. The IBO
showed Ms. Donnellon "XOOM Energy brochures detailing XOOM's rates and purported
savings:' !d. The 180 promiscd Ms. Donnellon ifshc switchcd to XOOM, "her energy bills
would be consistcntly cheaper than if she stayed with Baltimore Gas and Electric ("BGE'').'' !d.
Howevcr, alicr switching to XOOM, Ms. Donnellon's encrgy bills "began to substantially risc
duc to the spike in XOOM's rates:' !d. Ms. Donncllon's bills were 35% highcr tha.n BGE's ratcs
in Dcccmbcr 2014 and 70% highcr than BGE rates in February 2015. !d.

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B. Procedural Baekt.:round
Plaintiffs initiated this action on behalf ofthemsclves

and all other similarly-situated

individuals on January 16. 2015. alleging various claims against XOOM Energy. XOOM Energy
Maryland. XOOM Energy New Jersey. and ACN. Inc. ECF No. I. Plaintiffs filed their First
Amended Complaint ("FAC') on March 25. 2015. dropping claims against XOOM Energy New
Jersey. ECF No. 33. In the FAe. Plaintiffs brought seven counts against the remaining three
Defendants: (I) violation of the Maryland Consumer Protection Act C'MCPA"). Md. Code. Com.
Law

SS

13-101. el seq.: (II) violation of the New Jersey Consumer Fraud Act C'NJCFA"). N.J.

Stat. Ann.

SS 56:8-1.

er seq.: (III) violation of the North Carolina Unfair and Deceptive Trade

Practices Act. N.C. Gen. Stat.

SS 75-1.1. el seq.:

(IV) breach of contract and the covenant of

good faith and fair dealing: (V) common law fraud. including fraudulent concealment and
fraudulent inducement: (VI) negligent misrepresentation: and (VII) unjust enrichment.
Defendants moved to dismiss all counts of the FAC on April 27. 2015. ECF No. 37. The Court
issued a Memorandum Opinion and Order on February 22. 2016. granting. in part. and denying.
in part. DeICndant's Motion to Dismiss.
With respect to the breach of contract claims in the FAe. only Ms. Donnellon's claim
against XOOM Energy Maryland survived the Defendants' motion to dismiss. ECF No. 37. ECF
No. 50 at 17. Plaintiffs' breach of contract claims against XOOM Energy and ACN were
dismissed without prejudice. ECF No. 50 at 17. The Court held that. applying either Maryland or
New Jersey law. XOOM Energy and ACN could not be liable under the alleged contracts
because they were not "parties" to the contracts. !d at 15. Plaintiffs now rc-allege. and this

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Memorandum Opinion will address. the breach of contract claims with respect to XOOM Energy
and ACN in Count III of the SAC. I ECF No. 57 at 28-29.
Additionally. Plaintiffs' claims of common law fraud. violations of the Maryland
Consumer Protection Act. and the New Jersey Consumer Fraud Act in the FAC were dismissed
without prejudiee.2 ECr No. 50 at 19-25. The Court hcld that under the heightened pleading
standard for fraud claims. pursuant to Fed. R. Civ. P. 9(b). Plaintiffs had failed to "state with
particularity"' to whom the statements of fraud were attributed. and thus. all claims under the
common law and both consumer protection statutes were dismissed. Id. at 23. Plaintiffs now reallege. and this Memorandum Opinion will address. the claims against all Defendants in Counts I
(MCPA). II (NJCrA). and IV (common law fraud) of the SAC. ECF No. 57 at 24-28. 30-3 J.
Finally. with respect to the negligent misrepresentation claims. only Messrs. Todd and
Bonicos' claims against ACN survived Defendants' Motion to Dismiss. ECr No. 37. ECF No.
50 at 28. Messrs. Todd and 130nicos' additional negligent misrepresentation claims against
XOOM Energy Maryland and XOOM Energy. and Ms. Donnellon's negligent misrepresentation
claim against all Defendants. were dismissed without prejudice. Id. at 26-28. Plaintiffs now reallege. and this Memorandum Opinion will address. Messrs. Todd and Bonicos' negligent
misrepresentation claims with respect to XOOM Energy Maryland and XOOM Energy. and Ms.
Donnellon's negligent misrepresentation claims against all Defendants. in Count V of the SAC.
ECF No. 57 at 28-29.
II.

STANDARD OF REVIEW

Pursuant to Rule 8(a)(2) of the Federal Rules of Civil Procedure. a complaint must
contain "a short and plain statement of the claim showing that the pleader is entitled to reliee
I In the SAC. ECF No. 57, Plaintiffs do not re-allege the claims for breach of the covenant argood Hlith and t:,ir
dealing from Count IV in the FAC. or the unjust enrichment claim from Count VII. ECF No. 33 .
.2 Plaintiffs'
claim under the North Carolina Unfair and Deceptive Trade Practices Act was dismissed with prejudice.

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Fed. R. Civ. P. 8(a)(2). In evaluating Defendants' Motion to Dismiss under Fed. R. Civ. P.
12(b)(6). the Court must accept all well-pleaded factual allegations of the complaint as true. and
derive all reasonable inferences in the light most favorable to the Plaintiffs. See Iharra
Slales. 120 F.3d 472. 474 (4th Cir.1997). To survive dismissal."a

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Uniled

complaint must contain

sufficient factual matter ... to 'state a claim to relief that is plausible on its face.... Ashen!!; ".
Iqhal. 556 U.S. 662. 678 (2009) (quoting Bell Allanlic Corp.

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Twomhly. 550 U.S. 544.570

(2007»). "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:'
Iqhal. 556 U.S. at 678 (citing Twomhly. 550 U.S. at 556). Ilowever. a court need not accept a
plaintiff's legal conclusions as true. as "[t]hreadbare recitals of the elements 01''1cause of action.
supported by mere conclusory statements. do not surtice:' Jd.
In claims "alleging fraud or mistake. a party must state with particularity the
circumstances constituting fraud or mistake. Malice. intent. knowledge. and other conditions of a
person's mind may be alleged generally." Fed. R. Civ. P. 9(b). Rule 9(b) requires ,.that a plaintiff
alleging fraud must make particular allegations of the time. place. speaker. and contents of the
allegedly false acts or statements:' Adams
2000); U.S. ex reI. lVilson

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NVR Homes. Inc.. 193 F.R.D. 243. 249-50 (D. Md.

Kellogg Bl'Own & Rool. Inc.. 525 F.3d 370. 379 (4th Cir. 2008)

(describing the "who. what. when. where. and how of the fraud claim").
III.

ANALYSIS
A. Breach of Contract

(Count III)

In Count III of the SAC. Plaintiffs allege that "Plaintiffs and all members of the Class
entered into contracts with XOOM pursuant to which it was to chargc them for energy supplied.
purportedly at rates lower than those charged by Plaintiffs' local regulated utilities:' ECI' No. 57

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~ 80. "Maryland law requires that a plaintiff alleging a breach of contract "must of necessity
allege with certainty and delinitenessf{lcts

showing a contractual obligation owed by thc

defendant to the plaintifTand a brcach of that obligation by defendant. ... Cillar \'. Balik 0{
America. N.A .. No. 13-cv-3230-RWT. 2014 WI. 3704280. *4 (D. Md. July 22. 2(14) (citing
Polek v. J.P. lv/orgall Chase Balik. iVA .. 424 Md. 333. 362 (2012)) (emphasis in original).
Similarly. under New Jersey law. the plaintiff must prove that the parties entered into a valid
contract. the defendant failed to perform its contractual obligation. and the plaintiff sustained
damages as a result. Accurate Ahstracts. LLC

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Hams Edge, LLC. No. 14-CV-1994

(KM)(MAH). 2015 WI. 5996931. at *4 (D.N.J. Oct. 14.2(15).
In the Court's prior Memorandum Opinion, the only Breach of Contract claim that
survived was the claim brought by PlaintifT Donnellon against XOOM Maryland. The Court
dismissed claims involving XOOM Energy and ACN based on its finding that Plaintiffs had not
sufficiently alleged that XOOM Energy and ACN were parties to any contract with Plaintiffs.
Having now reviewed the SAC, which reasserts the previous claims with additional allegations.
and the Defendants' Motion to Dismiss. the Court sees two primary questions to be addressed as
it relates to the Breach of Contact claims. First. should the PlaintifTs' claim that the contracts
between the parties were. apparently. entirely oral lead to dismissal of the Breach of Contract
claims based on the claimed implausibility of an oral contract for energy supply? This question
was answered in the negative in the Court's prior Opinion. but changes in the allegations in the
SAC make this an issue worth revisiting. Second. have the Plaintiffs now sufficiently alleged that
each Defendant was a party to the agreement'? The Court will address these questions in turn.

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i.

Oral Agrccmcnts

Defcndants argue that ..the notion of an 'oral" contract to supply energy ... is wholly
implausible:' ECF No. 59-1 at 11. In support. they cite to Maryland and New Jersey state
regulations that purportedly require energy suppliers to provide customers with written contracts.
Md. Code Regs. 20.53.07.08(B)-(C)

("Supplier Contracts"): N.J. Admin. Code ~ 14:4-7.6. But

while it may seem difficult to imagine a contract for energy supply that could be effectively
offered and accepted without being reduced to a writing. in the context of the allegations in the

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SAC. it does not rise to the level of implausibility. Indeed. the entire premise of the case appears
to be the notion that the !BOs made a fairly simplistic offer to the Plaintiffs: they would provide
energy at cheaper rates than the Plaintiffs' current providers if the Plaintiffs switched providcrs.
And there is support in thc catalogue of customer complaints included in the SAC for the notion
that thc Defendants did. in fact. engage in agreements that were both oral. see ECr No. 57 at 12
("1 never had to sign anything and actually never even met with my so called friend in person to
sign up for this SCAM scrvice"). and bare-boncs in nature. it!. at 13 (..takes 3 minutes to sign up.
30 to 60 day(s) to cancel").
Additionally. the terms are sufficiently delinitive. with XOOM Maryland supplying
lower cost energy in exchange for Plaintiffs switching providers ... that the performance to be
rendered by each party can be ascertained with reasonable certainty:' Weichert Co. Rea/tors \'.
Ryall. 608 A.2d 280. 284 (N.J. 1992). Thus. because an "agreement cxists once offer.

acceptance. and consideration are exchanged between the parties. regardless of whether the
agreement is oral or written:' Lopez \'. XTEL

COllst.

01'1'.. U.C. 796 F. Supp. 2d 693. 699 (D.

Md. 20 II ). the Court will not dismiss Plaintiffs' Breach of Contract claim solely because the
contracts are alleged to have been oral.

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ii. Parties to the Contract
As the Court noted in its prior Opinion. as a general matter, a contract cannot be enforced
against a person who is not a party to it. ECF No. 50 at 15 (citing Cecilia Sclll\'{/her Tr. Two

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/iar(/im/ Acc. & Indem. Co.. 437 1',Supp. 2d 485. 489 (0, Md, 2006)), In their prcvious Motion
to Dismiss. Defendants argued that Plaintiffs had not alleged a contractual relationship with
ACN and XOOM Energy but conceded there was a contract between Plaintitl's and XOOM
Maryland, ECF No. 37-1 at 25. The Court agreed, Both the Court and Defendants cited to
paragraph 7 of the FAC for the proposition that there did exist a contract with. at least. XOOM
Maryland, as that paragraph stated that "Plainti ff Donnellon switched her energy supplier from
BGE to XOOM MD in or around October 2014," ECF No, 33 ~ 7. In the Court's view. this
established a contractual link between PlaintifTs, as customers, and XOOM Marylaod, as the
entity contractually bound to supply Plaintiffs with low-cost energy,
Notably, however, in the SAC. Plaintiff removed the "MD" from this paragraph so that it
now reads, "Plaintiff Donnellon switched her energy supplier Irom BGE to XOOM in or around
October 2014,"} Thus, it would appear that the PlaintifTs now seck to make the allegations
incrcasingly vaguc in an etTort to lead the Court to extend the finding of privity between Plaintiff
Donnellon and XOOM Maryland to all Defendants. l3ut the Court is not persuaded that merely
shining from a statement specifically identifying XOOM Maryland as thc entity to whom
Donnellon contracted with tor her encrgy supply, to a 1I10rcvague statemcnt that it was the
parties collectively defined as "XOOM," is sufficicnt to allege that ACN and XOOM Energy
were also parties to the agreement.

.1 As the Court observed at the Motions Hearing. this change was not noted in the Plaintiffs' red-line version of the
SAC. Given that this provision formed the basis of both the Defendants' and the Court's view that the contract was
with XOOM Maryland. and only XOOM Maryland. it is surprising that this significant change was not red-lined as
all other changes were. The Court will assume that the failure to highlight the change was an inadvcI1ent error.

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Additionally, the conclusion that XOOM Maryland was the entity in contractual privity
with Plaintiff Donnellon as their customer, is consistent with provisions in the SAC indicating
that "Xoom Energy Maryland, LLC ... sells and supplies electricity and natural gas in
Maryland," ECF No. 57 ~ II, and "XOOM MD supplied the overpriced energy to customers."
ill. '124. While Plaintiffs have added additional facts indicating the involvement of ACN and
XOOM Energy in the solicitation of customers. including Plaintiffs. that information. while
relevant to the fraud allegations, does not suftice to establish that there was a contractual
relationship involving those parties. To the extent Plaintiffs have alleged any contractual
relationship. it is between Plaintiff Donnellon, as customer, and XOOM Energy Maryland, as
energy supplier,
Plaintiffs' argument that ACN and Xoom Energy should be held liable under a theory of
apparent authority also fails. "To support a finding of apparent authority. both Maryland and
New Jersey law require a showing that the principal"s conduct created the appearance of the
agent's authority, causing a third party to reasonably rely on that representation." Ziemkiell'icz \'.
R+L Carriers. Inc.. 996 F. Supp. 2d 378. 401 (D. Md. 2014). Here, Plaintiffs have not alleged
that they relied on a representation that they were entering into an agreement with ACN or
XOOM Energy. Rather. the picture painted by Plaintiffs is one where the Plaintiffs were unelear
as to which company they were entering into a contract with and were instead relying solely on
promises of better prices and their relationships with the individual 1130s. Thus, Plainti ffs'
agency argument fails. Plaintiff Donnellon's breach of contract claim with respect to XOOM
Maryland survives Defendants' motion to dismiss. All other breach of contract claims are
dismissed with prejudice.

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B. Fraud and Related Claims
Plaintiffs again assert claims for common law fraud. the Maryland Consumer Protection
Act. and the New Jersey Consumer Fraud Act. ECF No. 57 at 24. 26. 30. The Court will discuss
the elements of cach claim and then analyze them jointly as the relevant issues overlap.
i. Common Law Fraud (Count IV)

To state a claim for common law Iraud, a plaintiff must allege "(1) that the delcndant
made a false representation to the plaintiff: (2) that its falsity was either known to the defendant
or that the representation was made with reckless indifference as to its truth, (3) that the
misrepresentation was made for the purpose of defrauding the plainti ff: (4) that the plaintifT
relied on the misrepresentation and had the right to rely on it. and (5) that the plaintilTsuffered
compensable injury resulting trom the misrepresentation:'

LeRore \'. One Wesl Bank. FSB. 898 F.

Supp. 2d 912. 919 (D. Md. 2012).~
To constitute a false representation. "a statement must be a misrepresentation of material
fact. It eannot be an estimate or opinion or puffing." Daniyan \'. Viridian EneriO'. LLC, GLR-142715.2015 WL 4031752. at *2 (D. Md. June 30. 2015). The elements for a claim of fraudulent
concealment are: (I) the defendant owed a duty to the plaintiff to disclose a material fact: (2) the
delendant failed to disclose that fact: (3) the delendant intended to defraud or deceive the
plainti 1'1': the plainti ff took action in justi liable reliance on the concealment: and (5) the
(4)
plaintiff suffered damages as a result of the defendant's concealment. Hill\'. Brush EnRineered
Maleria/s. Inc.. 383 F. Supp. 2d 814. 820 (D. Md. 2005): accord Arcand \'. Brolher Inlem.
Corp .. 673 F. Supp. 2d 282 (D.N.J. 2009). Both Iraudulent representation and Iraudulent

.( Similarly. the clements ofa claim for common law fraud in New Jersey are: (1) a materitsllllisrepresentation
ora
presently existing or past fact; (2) knowledge or beliefby the defendant of its falsity; (3) an intention that the other
person rely on it; (4) reasonable reliance thereon: and (5) resulting damages. Alexander \'. elGNA Corp .. 991 F.
Supp. 427,435 (D.N.!. 1998); Faistl \'. Energy ('I"" /lalding'. u.e, Civil Action No. 12-2879,2012 WI. 3835815
(D.N.J. Sept. 4. 2012).

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concealment are subject to the heightened pleading standard of Rule 9(b). See Hill. 383 F. Supp.
2d 814. 822-23.
ii. Maryland

Consumer

Protection Act (Count I)

The MCPA prohibits the commission of '"unfair or deceptive trade practices:' which
includes making a "false ... or misleading oral or written statement ... or other representation
of any kind which has the capacity. tendency. or effect of deceiving or misleading
consumers" and "knowing concealment. suppression. or omission of any material lact with the
intent that a consumer rely on the same in connection with the promotion or sale of any
consumer goods ... or consumer service .. :. Md. Code Ann .. Com. Law

* 13-30 I(I )-(9). To

bring an action under the MCI' A. the plaintiff must allege "( I) an unfair or deceptive practice or
misrepresentation that (2) is relied upon. and (3) causes the plaintiff actual injury:' Daniyan \'.
Viridian Energy. HC. GLR-14-2715.

2015 WL 4031752. at

* I (D.

Md. June 30. 2015).

While claims of lraud under the MCPA are subject to the heightened pleading
requirements of Rule 9(h). "omissions are not subjected to the heightened pleading standards of
Rule 9(b) because such allegations cannot be described in terms of the time. place. and contents
of the omission:' Daniyanl'. Viridian Energy,

He.

GLR-14-2715.

2015 WL 4031752. at

*I

(D. Md. June 30. 2015) (citing Marshall v. .failles B. NlIl/er & Co.. 816 F. Supp. 2d 259. 267 (D.
Md. 2011)); see also Landau \'. Viridian Energy I'll LLC. Civil Action No. 16-2383.2016 WL
6995038 (E.D. Pa. Nov. 30. 2016) (noting that claims based on dcccption. not Iraud. under the
Pennsylvania Unlair Trade Practices and Consumer Protection Law need only satisfy the normal
pleading standard of Rule 8(a)). Nonetheless. the MCPA does provide consumers with protection
against "omissions of material laet" and "such omissions are material 'if a significant number of

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unsophisticated consumers would tind that information important in determining a course of
action .... Daniyan. 2015 WL 4031752. at *2.
Here. Plaintiffs claim that "Defendants violated the MCPA by failing to disclose that. on
a consistent basis. XOOM's regular rates are substantially higher than its competitors and not
competitive in the market" ECI' No. 57'158. Plaintiffs also claim that '"Defendants violated the
MCPA by failing to disclose to consumers that after the initial introductory period. XOOM's
energy rates increased substantially and exceed those charged by rcgulated utilities'" hi. ~ 59.
Thus. at least some of Plainti ffs' MCP A claims arc subject not to the heightened pleading
standard of Rule 9(b). but to the regular pleading standard of Rule 8(a).
iii. New .Jersey Consumer

Fraud Aet (Count II)

To state a claim under the NJCFA. PlaintifTs must allege sufficient facts to demonstrate:
(1) unlawful conduct: (2) an ascertainable loss: and (3) a causal relationship between the
unlawful conduct and the ascertainable loss. Harnish \'. Widener Uni\'. Sch. ,!lLall'.

93 I 1'. Supp.

2d 641. 648 (D.N.J. 2013). Unlawful conduct is detined as:
The act. use or employment by any person of any unconscionable
commercial practice. deception. fraud. false pretense. lalsc
promise. misrepresentation.
or the knowing. concealment.
suppression. or omission of any material fact with intcnt that others
rely upon such concealmcnt. supprcssion or omission. in
conncction with the sale or advertisement of any mcrchandise or
real estate. or with the subscqucnt perfonnancc of such person as
aforesaid. whethcr or not any pcrson has in fact bcen misled.
deceived or damaged thereby.
N.J. Stat. Ann.

* 56:8-2. ""This broad definition of unlawful practice covers affirmative acts and

knowing omissions'" Faistl. 2012 WL 3835815. at *5 (D.N.J. Scpt. 4. 2012). A claim under the
NJCI' A requires more than a brcach of contract or breach of warranty: it requircs "substantial
aggravating circumstances'"

Id.: Urhino \'. AII/hil EnerKJ' }f()ldin~s. LLe. Civil Action No. 14-

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5184 (MAS)(DEA). 2015 \VI. 4510201. at *3 (D.N.J. July 24. 2015). To meet this standard. a
plaintiff must demonstrate that the business behavior in question "stands outside the nonn of
reasonable business practice in that it will victimize the avcrage consumer."' Jd. (eiting Til/I
Lawnmoll"er Repair. Inc. v. Bergen Record Corp .. 139 N.J. 392. 416 (1995». Unless the parties'
relationship is governed by a valid contract. "whether a business practice is unfair" is typically "a
question f()f the jury."' Urbino v. Amhit Energy I/oldings. LLC. Civil Action No. 14-5184
(MAS)(DEA). 2015 \VI. 4510201. at *3 (D.N.J. July 24. 2015): see also Richard\" \'. Direct
Enerf!J' Services. LLC. 120 F. Supp. 3d 148. 158 (D. Conn. 2015) (noting that "whether
[Defendant energy supplier]"s variable-rate plan was an unfair or deceptive marketing practice is
'a question of fact that is not readily susceptible to resolution on a motion to dismiss")
Unlike the Maryland Consumer Protection Act. New Jersey courts seem to agree that all
violations of the NJCF A must "meet the heightened pleading requirements of Fed. R. Civ. P.
9(b)." Torres-Ilemande:: \'. CVT Prepaid Sols" Inc" No. 3:08-CV -I 057-FL \V. 2008 \VL
5381227. at *5 (D.N.J. Dec. 17.2008); Naporano Iron & Metal Co. \'. American Crane Corp ..
79 F. Supp. 2d 494. 510 (D.N.J. 2000); Slim CD. Inc. \'. Heartland PaymentS)'s .. No. 06-2256.
2007 \VL 2459349 (D.N.J. Aug. 22. 2007) ("The pleading requirements of Rule 9(b) apply to ...
NJCFA claims as well as ... common law fraud claims."").
iv. Analysis
In its previous Opinion. the Court dismissed PlaintifTs' fraud claims because Plaintiffs
failed to allege with particularity to which Defendants the statements were attributable. Id at 23.
Plaintiffs now re-allege the fj'aud claims against all DelCndants in Counts I. II. and IV of the
Second Amended Complaint. ECF No. 57 at 24-28. 30-31. In the Second Amended Complaint.
Plaintiffs now allege:

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23. Each of the misrepresentations made orally by. or on behalfoL
the Defendants and/or their corporate atliliates (e.g. XOOM NJ)
were consistent with one another and were derived Irom XOOM
selling scripts. marketing and training materials bclievcd to have
been composed and distributed by Delcndant ACN to its coconspirators and joint venturers.
24. Upon information and beliel: the plan to deceive prospective
XOOM customers is the product of a scheme carried out jointly
and knowingly by all Detcndants: ACN sold the energy through its
mos. XOOM Energy produced the selling scripts pursuant to a
strategy developed by ACN. and XOOM NJ and XOOM MD
supplied the overpriced energy to customers.
ECF No. 57 at 8-9. These additional allegations regarding Defendants' unil(lrI11marketing
materials. training materials. and selling scripts lend support and clarity to the allegations which
were made in the FAC. and are re-alleged in the SAC.
Speci!ically. Plaintiffs !irst allege that Phil. an ACN IBO. called PlaintilTTodd in May
2013. According to the Complaint. 180 Phil represented to Mr. Todd that ifhe switched to
XOOM. "his energy bills would be consistently cheaper than what he was paying his local utility
provider:' ECF No. 57 '1i 6. Second. PlaintifTs allege that an ACN IBO named Blain visited
Plaintiff Donnellon's home in October 2014. showed her XOOM brochures. and promised Ms.
Donnellon ifshe switched to XOOM "her energy bills would be consistently cheaper than ifshe
stayed with [her local service provider]:' Third. Plaintiffs allege that an 180 named William
visited Plaintiff Bonicos' home in January 2013. IBO William told Mr. Bonicos that ifhe
switched to XOOM. "his energy costs would consistently be 5-10% cheaper than his energy
costs with [his local service provider]." With the added allegations regarding the role each
Delcndant played in developing the material used by the !BOs. Plaintiffs have now stated with
particularity the identity of the speakers. the time. the place. and the contents of the statements at
issue in a manner that states a claim as to each Dcfcndant.

15

Additionally, Plaintiffs allege that Defendants made these representations for the purpose
of inducing Plaintiffs' reliance -

as ACN !BOs made phone calls and home visits to Plaintiffs'

homes, speaking with them about XOOM Energy and soliciting them to switch providers,
Plaintiffs reasonably relied on the representations and switched providers, only to be charged
higher rates. Accordingly, Plaintiffs have stated a e1aim for common law fraud against XOOM
Energy, XOOM Energy Maryland, and ACN. Ilence, Defendants' motion to dismiss the
common law Iraud e1aims is denied.
Plaintiffs have also stated a e1aim for violations of the Maryland Consumer Protection
Act and New Jersey Consumer Fraud Act. As the Court held previously, the statements made by
the !BOs were not mere puffery and could reasonably have induced Plaintiffs' reliance. ECF No.
50 at 23. Failing to disclose that XOOM prices generally increase, were substantially higher than
XOOM's competitors, and were rarely lower than its competitors. states a claim under the
Maryland Consumer Protection Act. See Allen \'. Cili,\/orlgage,

Inc .. No. CIY. CCB-l 0-2740,

2011 WL 3425665. at *9 (D. Md. Aug. 4, 2011) (holding that plainti ITstated e1aim under MCPA
when defendants' letters to plaintilTs, "taken in combination," had plausible "effect of deceiving
or misleading [plainti ITs
]"): Daniyan

l'.

Viridiaf1 EnC1XY. LLC, GLR-14-2715.

2015 WL

4031752, at *2 (D. Md. June 30. 2015) (dismissing MCPA claim but drawing distinction where
energy supplier website and marketing materials state that rates may be higher than utility's
rates). This is especially true where "a number of unsophisticated consumers would find that
infomlation:'

i.e. the promise of cost savings on their energy bills. "important in determining a

course of action:' Id.
Likewise. engaging in a "c1assic bait-and-switch scheme" that "Iure[s] potential
customers in by making exaggerated claims of energy savings which ultimately prover s 1

16

'illusory'" constitutes the unlawful conduct that plausibly violates the New Jersey Consumer
rraud Act. See Klein \'. Budget Re/1/ a CarS)'s .. Inc.. No. CIV.A. 12-7300 JLL. 2013 WL
1760557. at *6 (D.N.J. Apr. 24. 2013) (finding unconscionable conduct under NJCFA where
rental car company engaged in "bait-and-switch"

scheme by luring in customers with promises

of frequent-flyer miles. then adding hidden surcharges): Arcand \', Brotherlnterll.

Corp .. 673 F.

Supp, 2d 296-97 (D.N.J. 2009) (finding plaintilTadequately pleaded unlawfill conduct under
NJCr A where printer company made misrepresentation to induce customers to purchase
additional merchandise); see also Richards \'. Direct Energy Serl'ices. LLC. 120 r. Supp. 3d 148.
158 (D. Conn. 2015) (noting that whether a variable-rate plan is an"unfair or deceptive
marketing practice" is "not readily susceptible to resolution on a motion to dismiss," and proper
inquiry is whether plaintilTalleges "suflicient facts to raise a reasonable expectation that
discovery will reveal evidence supporting the claim ..).5 Therefore. Defendants' motion to dismiss
the MCPA and NJCFA is also denied.
C. Negligent Misrepresentation
Finally. Plaintiff's re-allege the negligent misrepresentation claims against all Defendants
in Count V of the Second Amended Complaint. ECr No. 57 at 28-29. Under the Court's
previous Opinion. Messrs. Todd and Bonieos' negligent misrepresentation claims against ACN
proceeded; but the Court dismissed the claims against XOOM Energy and XOOM Maryland
because it was unclear to whom the alleged misrepresentations could be attributed. Messrs. Todd
and Bonieos. the plaintifl's from New Jersey. allege no facts to suggest that XOOM Maryland
made misrepresentations

to them. Thus. the Court will limit its analysis here to Plaintifls Todd

Richardt addressed a claim under Connecticut Unfair Trade Practices Act. Conn. Gen. Stat. ~ 42-llOb(a). See
Rich"rd, \'. Direct £l1erg)'8eI'l''' .. /.I.e. 120 F. Supp. 3d 148. 156.

5

17

and Bonicos' negligent misrepresentation claims against XOOM Energy and Plaintiff
Donnellon's negligent misrepresentation claims against all Defendants.
As these claims do not sound in fraud. they arc subject to the more liberal pleading
standard of Fed. R. Civ. P. 8(a)(2). To state a claim for negligent misrepresentation in Maryland:
..( I) the defendant. owing a duty of care to the plainti fl'. negligently asserts a false statement: (2)
the defendant intends that his statement will be acted upon by the plaintiff; (3) the defendant has
knowledge that the plainti ITwill probably rely on the statement. which. if erroneous. will cause
loss or injury; (4) the plaintifCjustiliably.

takes action in reliance on the statement; and (5) the

plaintiff suffers damage proximately caused by the defendant"s negligence," Lloyd \'. Gen.
Jvfolors Corp .. 397 Md. 108. 136 (2007). In the context of negligent misrepresentation. "where
the lailure to exercise due care creates a risk of economic loss only. 'an intimate nexus between
the parties [i]s a condition to the imposition of tort liability," Such an intimate nexus requires
"contractual privity or its equivalent," SlIperior Bank. F.SB. \'. Tandell/ Nal. Morlgage. Inc.. 197
F. Supp. 2d 298. 320 (D. Md. 2000) (quoting WeislI/an\'. Connors. 540 A. 2d 783. 791 (Md.
1988)). Under New Jersey law. plaintiffs need only prove that (I) delendant negligently made a
false eommunication of materia I Iact: (2) plaintilTjustiliably

relied upon the misrepresentation:

and (3) the reliance resulted in an ascertainable loss or injury. Elias

I'.

Unga's Food Prods. Inc..

252 F.R.D. 233. 251 (D.N.J. 2008).
As a preliminary matter. multiple Delendants may be liable for the negligent
misrepresentations of the !BOs where a civil conspiracy exists. A civil action for conspiracy is
essentially a tort action. Farris

I'.

COlll7/y()rCall/den. 61 F. Supp. 2d 307. 330 (D.N.J. 1999);

accord !laic 7i'IICks(irA/wyland. LLC \'. Vol\'() Trllcks Norlh AII/erica. Inc.. 224 F. Supp. 2d
1010. 1021 (D. Md. 2002). "The conspiracy is not the gravamen of the charge. but merely a

18

mattcr of aggravation. enabling thc plaintiff to rccovcr against all thc dcfendants as joinl
tortfcasors:' Farris. 61 F. Supp. 2d at 330: see also !fale. 224 F. Supp. 2d at 1021 (cxplaining
that conspiracy "'is not a scparate tort capable of indcpcndcntly sustaining an award of damagcs
in the absence of other tortious injury to the plaintiffs:'). By contrast. neither Maryland law nor
New Jersey law recognizes a causc of action for civil conspiracy for breach of contract or unjust
enrichment. Hale. 224 F. Supp. 2d at 1021: Trim Equip .. Inc.

1'.

Manor. Civil No. 08-556 I.

2011 WL 705703. *8 (D.N.J. 2(11). Thus. where PlaintitTs have set forth sufficient lacts
suggesting a civil conspiracy between Defendants. Plaintiffs may recover against multiple
Defendants jointly for claims sounding in tort -

i.e. fraud and negligcnt misrcpresentation -

but not for thc brcach of contract claims.
Plaintiffs havc pleadcd sufficient facts linking all Defendants to the allegcd unlawful
activity. Specifically. Plaintiffs allege that XOOM and ACN developed the training matcrials and
content for thc mos. creating a sales "pitch" that creatcs "consumer confusion about the entities
with which they arc dealing." ECF No. 57 ~~ 37-39. Plaintiffs allege that "by hiring and training
mos. ACN knowingly participated in the schcme conceivcd oC dcsigned. and carried out by
XOOM and ACN acting in conccrt:' lei. ~ 39. This schemc. they arguc. mislcd and defraudcd
customcrs. lei. '140. PlaintitTs attach no !ewer than 29 customcr complaints. making such
allegations as "ACN rep told us he could [definitcly] savc us moncy on electric bill. Got first bill
and this is not true at all I have never had bills this high"' ECF No. 57 at 15. "'ACN rep never told
me that Xoom energy will charge monthly service fee. the only thing thcy told me is thcy can
help to save up to 70% gas bill."' lei. at 21. and "'[w]c l'(lUndout that wc actually paid more every
month!!!! ... Watch out for your ncighbors and friends who scll you ACN services:' iel. at 13.
PlaintifTs also point to a news article in which a fonncr ACN sales rep states, "I'm robbing

19

people. I pitch[cd]to them that they can save money. but it's the exact opposite:' ECF No. 57'1
32. These are sufficient facts to suggest concerted action between XOOM Energy. its
subsidiaries. and ACN. Therefore. Messrs. Todd and Bonicos have stated a claim for negligent
misrepresentation against XOOM Energy.
However. under Maryland law. which governs Ms. Donnellan' s claims, where a plainti 1'1'
claims purely economic losses, plaintiff may recover on a negligent misrepresentation claim only
if contractual privity or the equivalent exists between plaintiff and defendant. See 1I1111/illg/oll
MONg Co. ", Mor/gage Power Fillallcial

Serl'ices. IlIc .. 90 F. Supp. 2d 670 (D. Md. 2000)

(upholding dismissal of negligent misrepresentation claims where plaintiff m0l1gage company
harmed by faulty appraisals did not show contractual privity betwecn itsclf and rcal estate
appraisers). The alleged facts do not demonstratc that Ms. Donnellon was in contractual privity
or the equivalcnt with ACN. The filcts only suggest that Ms. Donnellan was in contractual
privity or the equivalcnt with XOOM Energy Maryland. Plaintiff's' reliancc on Weismall ,',
COllllors. 540 A.2d 783 (1988) is unavailing. In Wei.mulI1. a prospective employer was liable to a

prospective employee for negligent misrepresentation when the company vice president made
statements about the solvency of the company during "pre-contractual negotiations." Weismall.
540 A.2d at 793-94. (1988). Howevcr. the defendant in that case was the very same employer
with which thc cmployec later contracted for employment. Jd. at 431 C.[t]his meeting began a
chain of events that led to an employmcnt rclationship between [Plaintifll Connors and
[Dcfcndant] Weisman"). Hcre. ACN merely acted as a sales agent for XOOM. and was not in
privity with Ms. Donncllon. Accordingly. the dismissal of Ms. Donnellon's claims lor ncgligcnt
misrcprcsentation against ACN stands.

20

Ms. Donnellon also cannot proceed on her negligent misrepresentation claims against
XOOM Energy or XOOM Energy Maryland because under Maryland law. whieh controls
PlaintilTDonnellon's

claims. "a promissory representation made with an existing intention not to

perform is actionable for fraud ... [but] not for negligent misrepresentation:'

He v. Capi/alOne.

2IJIJNor/il Gilll/or.

Na/. Ass 'n. 863 F. Supp. 2d 480. 492-93 (D. Md. 2012) (internal citations

omitted). As PlaintilT Donnellon's Iraud claim has already survived dismissal. her ncgligent
misrepresentation claims against these Defendants shall be dismissed.
IV.

CONCLUSION
For the foregoing reasons. Defendants' Motion to Dismiss for Failure to State a Claim,

ECF No. 59. is granted. in part. and denied in part. Ms. Donnellon's breaeh of contract claims
(Count III) against XOOM Energy Maryland proceed. and Plaintiffs' breach of contract claims
against ACN and XOOM Energy are dismissed. Plaintiffs' common law Iraud claims (Count
IV). claims under the MCPA (Count I). and claims under the NJCF1\ (Count II) proceed against
all Defendants. Messrs. Todd and Bonieos' negligent misrepresentation claims (Count V) against
ACN and XOOM Energy proceed. and Ms. Donnellon's negligent misrepresentation claims
against all Defendants are dismissed. 1\ separate Order shall issue.

Date: February!'

2017

•

21

k//---

George J. ITazel
United States District Judge