RHYMES et al v. MPOWER ENERGY NJ, LLC

Filing 60

ORDER administratively terminating motions to dismiss (ECF Nos. 15 , 16 ), denying motion for leave to file sur-reply (ECF No. 47 ) as moot, terminating discovery dispute (ECF No. 52 ) as moot, and directing parties to file a proposed scheduling order. A telephone status conference is set for November 20, 2023 at 11:45 a.m. (ECF No. 58). So Ordered by Magistrate Judge Edward S. Kiel on 11/13/2023. (bms)

UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY

CHAMBERS OF

FRANK R. LAUTENBERG U.S. POST
OFFICE & COURTHOUSE BUILDING
2 FEDERAL SQUARE
NEWARK, NJ 07102
973-645-6121

EDWARD S. KIEL

UNITED STATES MAGISTRATE JUDGE

LETTER ORDER
November 13, 2023
RE:

RE: Rhymes, et al., v. MPower Energy NJ, LLC
Case No.: 23–cv–02556–BRM–ESK

Dear Counsel:
This letter order addresses: (1) the parties’ joint dispute letter concerning
whether discovery should be stayed, or in the alternative, bifurcated (Stay
Dispute) (ECF No. 26) pending resolution of defendant’s motions to dismiss
plaintiff Ayan Rhymes’s claims (Rhymes Dismissal Motion) (ECF No. 15) and
plaintiff Loveleen Kaur’s claims (Kaur Dismissal Motion) (ECF No. 16)
(collectively, Dismissal Motions); (2) Rhymes’s motion for leave to file a sur-reply
to the Rhymes Dismissal Motion (Motion to File Sur-Reply) (ECF No. 47); and (3)
the parties’ joint dispute letter concerning the production of discovery and entry
of an electronically stored information (ESI) protocol (Discovery Dispute) (ECF
No. 52).
I.

BACKGROUND

This action arises out of defendant’s alleged “deceptive, bad-faith, and
unlawful pricing practices.”

(ECF No. 1–1 ¶ 1.) Defendant is an “independent

energy supply company” that provided plaintiffs with “electricity and natural gas
services.”

(Id. ¶¶ 2, 13.) In April 2021, defendant enrolled plaintiffs into a 12-

month fixed rate plan.

(Id. ¶ 34.) Pursuant to the terms of the contract,

plaintiffs were thereafter enrolled into a variable rate plan.

(Id. ¶ 3.) Plaintiffs,

however, allege that defendant breached the terms of the contract and violated
various consumer protection laws and regulations by charging “variable rates

Rhymes v. MPower Energy NJ, LLC
Case No.: 23–cv–02556–BRM–ESK
November 13, 2023
Page -2that were untethered from market pricing” and were “outrageously high.”

(Id.

¶¶ 42, 76.)
On behalf of themselves and two sub-classes, consisting of “customers”
from New Jersey, Illinois, Maryland, Ohio, Pennsylvania, and Washington D.C.
“charged for residential and commercial electricity and/or natural gas services by
[defendant],” plaintiffs filed a seven-count complaint on April 7, 2023 in the
Superior Court of New Jersey.

(ECF No. 1–1 ¶¶ 78, 79.) Defendant timely

removed this action pursuant to the Class Action Fairness Act, 28 U.S.C. § 1332(d)
(ECF No. 1) and then filed the Dismissal Motions on June 14, 2023 (ECF Nos. 15,
16).
The Dismissal Motions seek to dismiss plaintiffs’ individual and class
claims for failure to state a claim and lack of standing.

(See ECF Nos. 15, 16.)

The parties dispute whether the contract between defendant and Rhymes was
limited to the one-page document titled “Customer Details” or also encompassed
the “Terms and Conditions” page, which included a mandatory arbitration
agreement and class action waiver clause.

(ECF No. 15–1 pp. 10, 11; ECF No.

31 pp. 18–21.) Since Kaur did not sign any contract with defendant, a dispute
also exists as to whether Kaur’s claims fail as a matter of law. (ECF No. 16–1
p. 7; ECF No. 32 pp. 9–12.) Defendant further argues that plaintiffs cannot
represent “customers” outside of New Jersey.

(ECF No. 16–1 p. 30.)

I held an initial scheduling conference on June 27, 2023 and entered an
order setting fact discovery to close on February 23, 2024.

(ECF No. 25 ¶ 3.)

Thereafter, the parties filed the Stay Dispute, in which defendant sought leave to
file a motion to stay or, in the alternative, bifurcate discovery.

(ECF No. 26.) I

denied defendant’s request for leave but advised the parties that I would “await
the completion of briefing on the [Dismissal Motions]” before determining
whether “additional briefing [was] necessary on” the Stay Dispute.

(ECF No.

28.) On September 22, 2023, defendant filed the Sur-Reply Motion, which

Rhymes v. MPower Energy NJ, LLC
Case No.: 23–cv–02556–BRM–ESK
November 13, 2023
Page -3Rhymes opposed on October 2, 2023.

(ECF Nos. 47, 49.) Rhymes filed a reply

in further support of the Sur-Reply Motion on October 19, 2023. (ECF No. 53.)
The parties filed the Discovery Dispute on October 18, 2023.
II.

(ECF No. 52.)

STAY DISPUTE 1

A court has the discretion to stay a proceeding whenever “the interests of
justice” mandate “such action.”
(1970).

United States v. Kordel, 397 U.S. 1, 12 n.27

A court’s authority “to control the disposition of the causes on its docket

with economy of time and effort” implicitly carries with it “the power to stay
proceedings.”

Landis v. N. Am. Co., 299 U.S. 248, 254 (1936). In making such

a determination, courts must weigh a number of factors, including whether: (1) a
stay would unduly prejudice or present a clear tactical disadvantage to the nonmoving party; (2) denial of the stay would create a “clear case of hardship or
inequity”; (3) a stay would simplify the issues and the trial of the case; and (4)
discovery is complete and/or a trial date has been set.
F.Supp.3d 440, 446 (D.N.J. 2014).

Akishev v. Kapustin, 23

This analysis requires courts to strive to

“maintain an even balance” while “weigh[ing] competing interests.”

Landis, 299

U.S. at 254–55.
Generally, the filing of a dispositive motion does not constitute good cause
under Federal Rule of Civil Procedure (Rule) 26(c) to stay discovery.

Gerald

Chamales Corp. v. Oki Data Am., Inc., 247 F.R.D. 453, 454 (D.N.J. 2007).
However, when the underlying motion to dismiss seeks to compel arbitration, the
analysis changes.

Klepper v. SLI, Inc., 45 F.App’x. 136, 138 (3d Cir. 2002)

(vacating an order directing the parties to proceed with discovery while the
defendant’s motion to compel arbitration remained pending).

The Third Circuit

Given the filing of the Sur-Reply Motion, I recognize that briefing for the
Dismissal Motions is not yet complete. I have, however, reviewed all of the submissions
to date and find that because the Stay Dispute provides fulsome arguments, further
briefing is not required to resolve this issue.
1

Rhymes v. MPower Energy NJ, LLC
Case No.: 23–cv–02556–BRM–ESK
November 13, 2023
Page -4has held that “‘upon [a court] being satisfied that the issue involved in … [an
action] is referable to arbitration,’ the court ‘shall on application of one of the
parties stay … the action until such arbitration has been had in accordance with
the terms of the agreement.’”

Id. (quoting 9 U.S.C. § 3).

This is because

requiring the “parties to submit to full discovery … may unnecessarily subject
[the parties] ‘to the very complexities, inconveniences[,] and expenses of litigation
that they determined to avoid.’”

Id. (quoting Suarez-Valdez v. Shearson

Lehman/American Express, Inc., 858 F.2d 648, 649 (11th Cir. 1988)).

Parties

may nevertheless “be given a limited opportunity to conduct discovery on the
narrow issue of whether an arbitration agreement exists” when the enforceability
of the arbitration provision is in question. Ross v. CACH, LLC, No. 14-06321,
2015 WL 1499282, at *2 (D.N.J. Apr. 1, 2015).
While plaintiffs’ claims are based upon the existence of a contract, the
parties dispute what terms the contract includes and who the contract is binding
upon.

Given that plaintiffs’ complaint makes no reference to a mandatory

arbitration agreement or class action waiver clause, the question of arbitrability
and waiver cannot be resolved without considering evidence extraneous to the
pleadings.

See Corsi v. Cellco P’ship, No. 22-04621, 2023 WL 3775320, at *3

(D.N.J. June 2, 2023) (denying without prejudice the motion to compel arbitration
so the parties could conduct limited discovery to determine whether a valid
arbitration exists).
A.

Rhymes’s Individual and Class Claims

In support of the Rhymes Dismissal Motion, defendant argues that upon
Rhymes having executed the “Customer Details” page, he was provided with a
link to the contract.

(ECF No. 39 pp. 7, 8.) Defendant argues that because

Rhymes opened the link and accessed the “Terms and Conditions” page, he was
given notice of the mandatory arbitration agreement and class action waiver

Rhymes v. MPower Energy NJ, LLC
Case No.: 23–cv–02556–BRM–ESK
November 13, 2023
Page -5clause.

(Id.) Meanwhile, Rhymes argues in opposition to the Rhymes

Dismissal Motion that the contract consists solely of the “Customers Details” page
and that he was never provided notice, let alone access, to the “Terms and
Conditions” page.

(ECF No. 31 pp. 10–12.) Rhymes, hence, argues that his

individual and class claims should not be dismissed.

(Id.)

I cannot predict the ultimate disposition of the Rhymes Dismissal Motion.
However, I can conclude that requiring defendant to engage in complete discovery
at this juncture would present a clear tactical advantage to Rhymes.
Klepper, 45 F.App’x. at 138.

See

Rhymes’s individual and class claims are based

upon the existence of a contract, yet the terms of the contract are unknown.
Without evidence demonstrating whether the “Terms and Condition” page is
indeed part of the contract and that the mandatory arbitration agreement and
class action waiver clause are enforceable, the Dismissal Motions cannot be
resolved.

Discovery will, therefore, be stayed except for discovery limited to the

issue of notice to Rhymes of the mandatory arbitration agreement and class
action waiver clause and the enforceability of same (Limited Discovery).
Pending the completion of the Limited Discovery, the Rhymes Dismissal Motion
shall be administratively terminated without prejudice.

See Guidotti v. Legal

Helpers Debt Resol., L.L.C., 716 F.3d 764, 774 (3d Cir. 2013) (holding that when
“arbitrability [is] not … apparent on the face of the complaint, [a] motion to
compel arbitration must be denied pending further development of the factual
record”).

Furthermore, Rhymes is granted leave to cure the potential

deficiencies in the complaint upon the completion of the Limited Discovery.

See

Grayson v. Mayview State Hosp., 293 F.3d 103, 108 (3d Cir. 2002) (holding that if
a complaint is vulnerable to dismissal pursuant to Rule 12(b)(6), the court must
permit a curative amendment, irrespective of whether a plaintiff seeks leave to
amend).

Rhymes v. MPower Energy NJ, LLC
Case No.: 23–cv–02556–BRM–ESK
November 13, 2023
Page -6B.

Kaur’s Individual and Class Claims

In support of the Kaur Dismissal Motion, defendant argues that because
Kaur’s allegation that she entered into a contract with defendant is factually
unsupported, her individual and class claims should be dismissed.

(ECF No. 16–

1 p. 15.) Kaur argues in opposition to the Kaur Dismissal Motion that as a thirdparty beneficiary, she “has standing to enforce the contract” Rhymes entered into
with defendant.

(ECF No. 32 p. 14.)

Since Kaur’s claims are based upon the

existence of Rhymes’s contract with defendant, discovery as to her individual and
class claims shall also be limited for the same reason discovery as to Rhymes’s
individual and class claims is limited.

Thus, the Kaur Dismissal Motion shall

also be administratively terminated without prejudice.
I note that because the complaint did not identify Kaur as a third-party
beneficiary, Kaur requests that “to the extent the Court believes [she] should be
so identified, [she] requests leave to amend her [c]omplaint to clarify the basis of
her contractual standing.”

(ECF No. 32 p. 14 n. 3.) Although Kaur has not filed

a formal motion for leave to amend, I find that in the interests of justice and
efficiency, Kaur may file an amended complaint.

The amended complaint shall

address the deficiencies asserted by defendant in the Kaur Dismissal Motion and
amend, to the extent necessary, the complaint upon completion of the Limited
Discovery. See Grayson, 293 F.3d at 108; Feuerstein v. Simpson, 582 F.App'x 93,
97 n. 3 (3d Cir. 2014) (“Rule 15(a)(2) [does not] actually require[ ], by its terms, a
formal motion to amend.

Rather … [the] provision[ ] simply describe[s] the

circumstance[ ] under which a court may grant leave to amend.

Accordingly,

courts have consistently held that leave to amend may be granted without a
formal motion.”).

Rhymes v. MPower Energy NJ, LLC
Case No.: 23–cv–02556–BRM–ESK
November 13, 2023
Page -7II.

SUR-REPLY MOTION

Rhymes argues that defendant’s reply in further support of the Rhymes
Dismissal Motion (Reply) impermissibly raises new arguments and introduces
new evidence.

(ECF No. 47–1 pp. 4, 11.) Defendant disagrees with this

characterization and asserts that the Reply “responds directly to [Rhymes’s]
allegations and theories [raised] in opposition” to the Rhymes Dismissal Motion.
(ECF No. 49 p. 5.)
I find that defendant’s inclusion of declarations from two new witnesses in
the Reply (ECF Nos. 39–2, 39–3), presents new factual claims, which Rhymes
should have an opportunity to respond to.

However, given that the Dismissal

Motions will be administratively terminated pending the completion of the
Limited Discovery, the Sur-Reply Motion is moot.
III. DISCOVERY DISPUTE
The Discovery Dispute concerns plaintiffs’ request that defendant be
compelled to respond to their discovery requests.

(ECF No. 52 p. 3.) Plaintiffs

take issue with defendant’s objections to produce discovery related to its: (1)
customers’ contracts, communications, and complaints; (2) training materials; (3)
policies, procedures, and practices for setting rates and monthly fees; (4)
government investigations into its pricing practices; (5) marketing and
advertising efforts; and (6) data retention and destruction policies.

(Id. pp. 4–

13.) Plaintiffs also request that the Court enter their proposed ESI protocol.
(Id. p. 14.)
Defendant

argues

that

plaintiffs’

discovery

requests

are

“wildly

disproportionate to the needs of the case” and given the pending Stay Request
and its lack of resources, such discovery need not yet be exchanged.

(Id. pp. 3,

4.) Similarly, defendant argues that plaintiffs’ proposed ESI protocol is “very

Rhymes v. MPower Energy NJ, LLC
Case No.: 23–cv–02556–BRM–ESK
November 13, 2023
Page -8burdensome … [and] greatly exceeds the scope of other model protocols.”

(Id.

p. 15.)
Since discovery will be stayed except to complete the Limited Discovery, the
Discovery Dispute is rendered moot.

To the extent the Discovery Dispute

concerns issues that may arise during the Limited Discovery period, the parties
shall make a good faith effort to resolve all disputes.
ORDER
1.

Discovery is stayed except for the Limited Discovery.

The Clerk of the

Court is directed to administratively terminate the Dismissal Motions at ECF
Nos. 15 and 16.
2.

The parties shall meet and confer and file a proposed scheduling order

by November 17, 2023 setting forth deadlines for: (a) the Limited Discovery; (b)
raising discovery disputes to the Court, if any, as to the Limited Discovery; (c) the
filing of an amended complaint, if any; and (d) the filing of renewed, dispositive
motions, if any.
3.

The Sur-Reply Motion is DENIED as moot.

The Clerk of the Court

is directed to administratively terminate the Sur-Reply Motion at ECF No. 47.
4.

The Discovery Dispute is moot.

The parties are directed to meet and

confer in good faith to conduct the Limited Discovery.
5.

The parties are reminded of the telephone status conference set for

November 20, 2023 at 11:45 a.m.

(ECF No. 58.)

/s/ Edward S. Kiel

EDWARD S. KIEL
UNITED STATES MAGISTRATE JUDGE