Forte v. Direct Energy Services, LLC
MEMORANDUM-DECISION AND ORDER: The Court hereby ORDERS that Defendant's #24 motion to dismiss Plaintiff's First Amended Complaint pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure is GRANTED in part and DENIED in part. The Court further ORDERS that Plaintiff's unjust enrichment claim is DISMISSED. The Court further ORDERS that this case is referred to Magistrate Judge Baxter for all further pre-trial matters. Signed by Senior Judge Frederick J. Scullin, Jr. on 8/14/2017. (nmk)
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UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF NEW YORK
DIRECT ENERGY SERVICES, LLC,
a Delaware Limited Liability Company,
220 North Green Street
Chicago, Illinois 60607
Attorneys for Plaintiff
ADAM C. YORK, ESQ.
MICHAEL J. ASCHENBRENER, ESQ.
EDISON, MCDOWELL &
First City Tower
1001 Fannin Street
Houston, Texas 77002
Attorneys for Defendant
ANDREW M. EDISON, ESQ.
HUTSON B. SMELLEY, ESQ.
MICHAEL D. MATTHEWS, JR., ESQ.
ROBERT P. DEBELAK, III, ESQ.
FISHKIN LUCKS, LLP
New York, New York 10007
Attorneys for Defendant
STEVEN M. LUCKS, ESQ.
SCULLIN, Senior Judge
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MEMORANDUM-DECISION AND ORDER
Pending before the Court is Defendant's motion to dismiss Plaintiff's First Amended
Complaint pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. See Dkt. No. 24.
In 1996, New York deregulated its energy market to allow consumers to choose to
purchase natural gas and electricity from traditional utilities, like National Grid, or energy
services companies ("ESCOs"), like Defendant. See Dkt. No. 18 at ¶ 17. ESCOs have gained in
popularity over the years; and, according to Plaintiff, there are more than one million New York
consumers who use an ESCO to purchase their energy. See id.
The New York State Public Service Commission ("NYPSC") still regulates ESCOs;
however, unlike traditional utilities, ESCOs are not required to disclose their rates with NYPSC.
See id. at ¶ 18. Switching to an ESCO does not change which company delivers energy to the
consumer; rather, "[t]he only difference to the customer is which company sets the price for the
customer's energy supply." See id. at ¶ 19. ESCOs charge customers according to usage, e.g.,
based on the number of kilowatt hours, kWH.
In 2009, New York's legislature passed the ESCO Bill of Rights, which provides certain
enumerated protections against deceptive acts and practices. See id. at ¶ 21 (citing N.Y. Gen.
Bus. Law § 349-d(3)). Moreover, the ESCO Bill of Rights requires that, "'[i]n every contract for
energy services and in all marketing materials provided to prospective purchasers of such
Case 6:17-cv-00264-FJS-ATB Document 27 Filed 08/14/17 Page 3 of 19
contracts, all variable charges shall be clearly and conspicuously identified.'" See id. (quoting
N.Y. Gen. Bus. Law § 349-d(7))
Plaintiff alleges that Defendant advertises that its "'fixed New York electricity rates give
you freedom from price fluctuations imposed by your utility,' but it fails to adequately inform
consumers who switch that once their low 'teaser' rate expires their energy rates can skyrocket."
See id. at ¶ 23. In that vein, after the initial fixed-rate period expires, Defendant charges
consumers on a variable rate plan, which can be significantly higher than what a traditional
utility would charge. See id. at ¶ 24. Plaintiff asserts that Defendant's variable rate plans limit
Defendant's exposure by shifting the risk of rate fluctuation to the consumer. See id. at ¶ 26.
Specifically, Plaintiff alleges that Defendant "fails to: a) adequately inform consumers
that a variable rate plan can result in large increases in monthly energy bills when energy prices
rise; and b) clearly and conspicuously describe the factors that can cause consumers' energy costs
to rise." See id. at ¶ 27. In that regard, Plaintiff avers that the agreement between the consumer
and Defendant provides the following disclosure regarding variable rates:
After the Initial Term and during the Renewal Period, Direct Energy will charge
you at a variable price per kWh based upon generally prevailing market prices for
electricity in the LDU load zone for the applicable period, plus an adder,
determined solely by Direct Energy in its discretion. Your variable price will
include ancillary charges, cost of capacity, generation, line losses, New York City
Utility Tax (when applicable), and other miscellaneous charges.
See id. at ¶ 29.
The preceding disclosure is, according to Plaintiff, "buried without highlighting or other
emphasis amid the Contract's sea of confusing fine print." See id.
Plaintiff further points to an NYPSC Order issued on February 23, 2016, which required
ESCOs to "guarantee that customers will pay no more, on an annual basis, than the customer
Case 6:17-cv-00264-FJS-ATB Document 27 Filed 08/14/17 Page 4 of 19
would have paid as a full service customer of the utility." See id. at ¶ 33. However, as Plaintiff
acknowledges, the Albany County Supreme Court vacated the NYPSC Order. See id. at ¶ 34 &
n.2 (citing Nat'l Energy Marketers Assn. v. N.Y. State Pub. Serv. Commn., 53 Misc. 3d 641, 37
N.Y.S.3d 178 (N.Y. Sup. Ct. 2016)).
Specific allegations regarding Plaintiff
Plaintiff agreed to a contract with Defendant in December 2014. See Dkt. No. 18 at ¶ 35.
Defendant sent Plaintiff a Welcome Letter, with a copy of the Terms and Conditions and a
Disclosure Statement enclosed. See id. at ¶ 36. Plaintiff was originally contracted to pay a fixed
price of $0.07890/kWH for the first year of service. See id. at ¶ 37. The Disclosure Statement
further stated that "[Defendant] will send you a renewal notice between 30 and 60 days prior to
the end of your Initial Term. This Agreement shall automatically renew for successive monthto-month periods at our standard variable rate plan as per the price applicable to the Terms and
Conditions." See id.
According to Plaintiff, his "fixed rate electricity supply plan with [Defendant]
automatically converts to a variable rate without any action required by [him]." See id. at ¶ 38.
In explaining the variable rate Plaintiff should expect at the end of his initial contracted period of
service, the Terms and Conditions state as follows:
6. Price: the Rate and Daily Fee. During the Initial Term, your rate per kWh will
be as set forth on the Customer Disclosure Statement. . . . For variable rate, each
month will reflect the cost of electricity, including energy, capacity, settlement,
ancillaries, related transmission and distribution charges and other market-related
factors; plus all applicable taxes, fees, charges, costs, expenses and margins. You
may also be charged a flat daily fee, which you will find in the Customer
Disclosure Statement. After the Initial Term and during the Renewal Term, your
rate per kWh, as well as the daily fee, will both be variable, and will not change
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more than once each monthly billing cycle, unless we send advance written notice
indicating otherwise. Each will change as we solely determine based on business
and market conditions, and will not increase more than 40% over the rate for
previous monthly billing cycle.
Plaintiff argues that Defendant's disclosure "is not clear or simple, and it does not clearly and
conspicuously identify all variable charges, as required by law." See id. at ¶ 39. Plaintiff also
alleges that he did not receive a renewal notice at least thirty days prior to the contract renewal
that identified all variable charges. See id. at ¶ 41. Finally, Plaintiff asserts that, as a result of
Defendant's conduct, he was injured because he paid more for the variable rate than he would
have from an alternative energy supplier. See id. at ¶ 43. In that regard, Plaintiff contends that
he paid $822.14 more than he would have with National Grid. See id.
Based on the foregoing, Plaintiff asserts two causes of action against Defendant. 1 First,
Plaintiff asserts that Defendant violated New York Business Law § 349-d(7), which provides
that, "'[i]n every contract for energy services and in all marketing materials provided to
prospective purchasers of such contracts, all variable charges shall be clearly and conspicuously
identified.'" See id. at ¶ 56 (quoting N.Y. Gen. Bus. Law § 349-d(7)). Plaintiff argues that none
of Defendant's materials adequately disclose that Defendant charges a variable rate or explain
how that rate is calculated. See id. at ¶¶ 57-58.
Second, Plaintiff contends that "Defendant has been unjustly enriched by charging its
residential and small business customers more than they would have paid as full service utility
customers, while providing them with nothing of value in return for their higher payments." See
Plaintiff brings this case as a putative class action; however, the subject of Defendant's motion
to dismiss is Plaintiff's personal claims.
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id. at ¶ 70. Specifically, Plaintiff contends that he paid $822.14 more than he would have if he
had maintained service directly via National Grid. See id. at ¶ 71.
Defendant's motion seeks dismissal of each of Plaintiff's claims. Generally, Defendant
argues that Plaintiff's N.Y. Gen. Bus. Law § 349-d(7) claim fails as a matter of law because
Defendant complied with that law's requirements. Further, Defendant contends that Plaintiff's
unjust enrichment claim fails because there is an adequate remedy in contract and at law.
Standard of review
Courts use a two-step inquiry when addressing a Rule 12(b)(6) motion. "First, they
isolate the moving party's legal conclusions from its factual allegations." Hyman v. Cornell
Univ., 834 F. Supp. 2d 77, 81 (N.D.N.Y. 2011). Second, courts must accept factual allegations
as true and "determine whether they plausibly give rise to an entitlement to relief." Ashcroft v.
Iqbal, 556 U.S. 662, 679 (2009). A pleading must contain more than a "blanket assertion[ ] of
entitlement to relief." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 n.3 (2007). Thus, to
withstand a motion to dismiss, a pleading must be "plausible on its face" such that it contains
"factual content that allows the court to draw the reasonable inference that the defendant is liable
for the misconduct alleged." Iqbal, 556 U.S. at 678 (citation omitted).
Furthermore, when addressing a Rule 12(b)(6) motion, a court may "consider documents
attached to or incorporated by reference in [a] complaint[.]" Cooper v. Parsky, 140 F.3d 433,
440 (2d Cir. 1998) (citation omitted). Even where "'a plaintiff chooses not to attach to the
complaint or incorporate by reference a [document] upon which it solely relies and which is
integral to the complaint,' the court may . . . take the document into consideration in deciding the
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defendant’s motion to dismiss, without converting the proceeding to one for summary
judgment." Int’l Audiotext Network, Inc. v. Am. Tel. & Tel. Co., 62 F.3d 69, 72 (2d Cir. 1995)
In this case, the Court will consider Plaintiff's First Amended Complaint and the two
exhibits annexed to the complaint, including the Terms and Conditions and the Welcome Letter,
with enclosures, he received when he signed up for service. See Dkt. Nos. 18-1, Terms and
Conditions; 18-2 Welcome Letter.
New York General Business Law § 349-d(7)
The parties' disagreement in this case focuses on the proper application of N.Y. Gen. Bus.
Law § 349-d(7), the full text of which is as follows: "In every contract for energy services and in
all marketing materials provided to prospective purchasers of such contracts, all variable charges
shall be clearly and conspicuously identified." N.Y. Gen. Bus. Law § 349-d(7). In short, § 349d(7) requires that an ESCO "clearly and conspicuously" disclose information regarding variable
charges on some, but not all, communications it has with its customers and prospective
purchasers. Consequently, the Court's inquiry is two-fold. First, the Court must determine
whether the material in question qualifies as a contract or as "marketing materials provided to
prospective purchasers of such contracts." Id. Second, the Court must consider whether those
qualifying materials clearly and conspicuously disclose "all variable charges." Id.
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1. Marketing materials provided to prospective purchasers
In his First Amended Complaint, Plaintiff has identified the following materials for the
Court's consideration: "NEW YORK RESIDENTIAL & SMALL COMMERCIAL TERMS
AND CONDITIONS," see Dkt. No. 18-1, (hereinafter, "Terms and Conditions"), Welcome
Letter, with attached Terms and Conditions and "DIRECT ENERGY CUSTOMER
DISCLOSURE STATEMENT FOR ELECTRICITY OR NATURAL GAS," see Dkt. No. 18-2,
(hereinafter, "Welcome Letter" and "Disclosure Statement"), and website marketing materials
annexed to the First Amended Complaint, see Dkt. No. 18 at ¶ 25. 2 Moreover, in his response to
Defendant's motion to dismiss, Plaintiff provided a screen shot, purportedly portraying
Defendant's website on June 26, 2017. See Dkt. No. 25-1 at 63.
There is no dispute that the Terms and Conditions, the Welcome Letter, and the
Disclosure Statement must comply with § 349-d(7). However, the parties disagree as to whether
the website screen-shot in Plaintiff's complaint 3 and the screen-shot included in Plaintiff's
response to Defendant's motion to dismiss qualify under the first part of the two-part test and/or
whether the Court can consider them at this stage of this lawsuit.
Plaintiff has included two copies of the Terms and Conditions as exhibits to his First Amended
Complaint. One copy is free standing while the other is enclosed in the Welcome Letter. Their
language is identical; thus, the Court, when referring to the Terms and Conditions, refers to both
Defendant contends that the Court should not consider the website materials annexed to the
First Amended Complaint because Plaintiff failed to allege that he in fact saw those materials or
that they existed in 2014. See Dkt. No. 26 at 4. However, granting all reasonable inferences in
Plaintiff's favor, the Court finds that the website screen-shot's inclusion in the First Amended
Complaint and Plaintiff's statement that Defendant provided him with some materials in
connection with his order are sufficient to allow the Court to consider the screen-shot for
purposes of considering Defendant's motion to dismiss.
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The parties generally agree on the approach the Court should use to determine whether
§ 349-d(7) requires disclosure regarding variable charges. To that end, the parties advocate for a
two-part test, requiring disclosure on "(1) . . . all materials directly provided to consumers ('as
opposed to, for instance, ads on buses'); and (2) . . . 'only where the material refers to a specific
rate structure.'" See Dkt. No. 24-1 at 11 (quoting Mirkin v. Viridian Energy, Inc., No. 3:15-1057,
2016 WL 3661106, at *3 (D. Conn. July 5, 2016)); see also Dkt. No. 25 at 6 (stating that § 349d(7) "applies to marketing materials that (1) are provided to prospective purchasers and (2) refer
to a specific rate structure").
The aforementioned two-part test is not literally derived from § 349-d(7)'s text.
Nonetheless, the plain meaning of § 349-d(7) supports the first limitation, namely, that only
materials provided directly to consumers must comply with § 349-d(7). In that regard, the
statute requires disclosure on "all marketing materials provided to prospective purchasers of
such contracts." N.Y. Gen. Bus. Law § 349-d(7) (emphasis added). The use of the word
"provided" in the phrase "provided to prospective purchasers" insinuates that, for the materials to
be covered, an ESCO must actively distribute such materials to consumers who are likely to
purchase a contract for service. Thus, § 349-d(7)'s umbrella does not cover passive and general
marketing materials such as a Facebook advertisement, an advertisement on a bus, or a television
commercial. Moreover, the word "prospective" is defined as "[a]nticipated or expected; likely to
come about." Black's Law Dictionary 1259 (8th ed. 2004). Therefore, to qualify, an ESCO must
provide the marketing materials to customers who are likely or soon to become its customers,
i.e., not simply a person browsing a website or viewing a brochure.
However, the second proposed limitation, that § 349-d(7) applies only when the
marketing materials refer to a specific rate structure, derives exclusively from a case in the
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District of Connecticut. The court, in Mirkin, based its interpretation of § 349-d(7) on several
passages of legislative history and its desire to avoid "the absurd result that [the defendant]
would be required to place a discussion of its variable rates on every single marketing item it
provided to the public." Mirkin v. Viridian Energy, Inc., No. 3:15-CV-1057, 2016 WL 3661106,
*4 (D. Conn. July 5, 2016). The court further accepted the defendant's argument that certain
comments from the bill's sponsor supported the additional limitation. See id. (stating that
"Assemblyman Michael N. Gianaris, a sponsor of the bill, explain[ed] that subsection (7)
requires that 'all variable charges must be clearly and conspicuously identified as such . . .'"
(citation omitted)). The Mirkin court also discussed how requiring ESCOs to provide disclosures
on all marketing materials could confuse the consumer because some marketing materials would
lack context. See id. (stating that "[i]t is hard to imagine how requiring such a disclosure would
make sense unless the document referred to a specific rate structure"). Thus, the court concluded
that "the best reading of the statute is that disclosure of a variable rate plan is required only when
a specific plan is actually being discussed in the contract or marketing materials." Id.
The words of the statute, however, do not support the Mirkin court's interpretation of
§ 349-d(7). The statute itself imposes no additional restriction but rather casts a relatively clear
net to encompass all marketing materials provided to prospective purchasers. In other words, the
Mirkin court's interpretation of § 349-d(7) functions as a judicial amendment to the statute. See
Henson v. Santander Consumer USA Inc., 137 S. Ct. 1718, 1726 (2017) (stating that "the proper
role of the judiciary [is] to apply, not amend, the work of the People's representatives").
Furthermore, the single quotation that the Mirkin court highlighted from the legislative history is
ambiguous at best and should not be used to rewrite an otherwise clear statute. See Graham Cty.
Soil & Water Conservation Dist. v. U.S. ex rel. Wilson, 559 U.S. 280, 302 (2010) (Scalia, J.,
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concurring in part and concurring in judgment) (stating that "it is utterly impossible to discern
what the Members of Congress intended except to the extent that intent is manifested in the only
remnant of 'history' that bears the unanimous endorsement of the majority in each House: the text
of the enrolled bill that became law"). Finally, the Mirkin court's concern to avoid the absurd
result that an ESCO would be required to place a discussion of its variable rates "on every single
marketing item it provided to the public," Mirkin, 2016 WL 3661106, at *4, is exaggerated
because the first limitation, discussed above, unambiguously limits the statute's reach to ESCO
contracts and materials given to prospective purchasers of those contracts, not all material
distributed to the public. Thus, the reach of the statute does not cover generalized marketing
materials intended for the general public who are not prospective (i.e., "[a]nticipated or expected;
likely to come about," Black's Law Dictionary 1259 (8th ed. 2004), purchasers of the ESCO's
Faithfully applied, the statute imposes no condition that the particular marketing
materials reference a specific rate structure to trigger § 349-d(7)'s requirement that the ESCO
disclose its variable charges. Therefore, the Court finds that § 349-d(7)'s disclosure requirement
is triggered in contracts for energy services and in marketing materials directed at prospective
purchasers of those contracts.
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The marketing materials in the First Amended Complaint depict the following image:
See Dkt. No. 18 at ¶ 25.
Plaintiff describes this advertisement as part of a "marketing campaign that promises consumers
savings and entices them with free smart thermostats, rewards points, and other incentives to
switch, failing to adequately inform consumers that their plan will ultimately switch to
[Defendant's] variable rate plans, and that these variable rates can rapidly rise[.]" See id.
This excerpted advertisement, however, is nothing more than a common advertiseme3nt
designed to peak a consumer's curiosity to investigate Defendant's service. In other words, this
advertisement is too general and not directed towards a consumer who is likely to become a
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contract purchaser. 4 Thus, the Court finds that this advertisement need not comply with § 349d(7)'s disclosure requirement.
As to the website materials included in Plaintiff's response, Defendant contends that,
because Plaintiff introduced this screen-shot for the first time in his response, the Court cannot
consider it on a motion to dismiss. In that regard, it is well-settled that a party is not entitled to
amend its complaint through statements and exhibits made in its motion papers. See Wright v.
Ernst & Young LLP, 152 F.3d 169, 178 (2d Cir. 1998) (citation omitted).
In this case, Plaintiff failed to include or even mention the screen-shot he now purports to
use as evidence that Defendant's marketing materials do not comply with § 349-d(7). Moreover,
he captured the screen-shot on June 26, 2017; thus, there is no connection between this material
and Plaintiff's experience when he first signed up with Defendant in 2014. Therefore, the Court
declines to consider the website screen-shot included in Plaintiff's response to Defendant's
motion to dismiss.
2. Clear and conspicuous disclosure
The Court will now consider whether the Terms and Conditions, see Dkt. No. 18-1,
Disclosure Statement, see Dkt. No. 18-2, and Welcome Letter, see id., "clear[ly] and
conspicuous[ly]" disclose "all variable charges."
Plaintiff's argument to the contrary is nonsensical. Essentially he argues that, because he is no
longer a prospective customer, any of the materials he, or members of the class, viewed prior to
purchasing should qualify. See Dkt. No. 25 at 6-7.
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There are two layers to the Court's inquiry at this step. First, the Court must determine
the content of the information that an ESCO must disclose; next, the Court must determine
whether Defendant clearly and conspicuously disclosed that information.
With respect to the content of what an ESCO must disclose, Defendant urges the Court to
adopt the reasoning of Mirkin and Wise v. Energy Plus Holdings, LLC, No. 1:11-cv-7345
(S.D.N.Y.), that § 349-d(7) "requires disclosure only of the existence of a variable rate, rather
than the basis on which it varies[.]" Mirkin, 2016 WL 3661106, at *5. Plaintiff, to the contrary,
argues that § 349-d(7) requires an ESCO to disclose "the factors that can cause consumers'
energy costs to rise in a variable rate energy plan" to satisfy the statute's remedial purpose. See
Dkt. No. 25 at 11. Furthermore, Plaintiff asserts that the plain language of the statute, using the
plural "variable charges" rather than "variable rate," shows the legislature's intent to require a
more robust disclosure. See id. Finally, Plaintiff contends that merely requiring an ESCO to
disclose when it will charge a variable rate cannot be reconciled with the statute's call for the
disclosure to be clear and conspicuous. See id.
It is unclear what Plaintiff contends Defendant should disclose in addition to the fact that
it charges a variable rate per kWH. 5 By its terms, the statute merely requires the identification of
variable charges. In this case, the only variable charge to which Plaintiff was subject was the
variable rate for the price of his electric service. See Dkt. No. 26 at 3. Although there may be a
factual circumstance where an ESCO's service agreement would have multiple variable charges,
Plaintiff does, however, make the general claim that Defendant fails to "adequately inform
consumers that a variable rate plan can result in large increases in monthly energy bills when
energy prices rise; and . . . clearly and conspicuously describe the factors that can cause
consumers' energy costs to rise." See Dkt. No. 18 at ¶ 27. Regardless of the accuracy of this
claim, Plaintiff does not appear to argue that the statute requires such disclosure, only that
Defendant's failure to do so is deceptive. However, whether Defendant's actions are deceptive is
irrelevant to whether it disclosed all variable charges, as § 349-d(7) requires.
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this is a case where Plaintiff has only alleged a single variable charge, i.e., the rate per kWH.
Accordingly, the Court finds that § 349-d(7) requires that an ESCO disclose the identity of all
variable charges to which a customer is subject; in this case, that means that Defendant must
"clearly and conspicuously" disclose that it will charge a variable rate per kWH after the initial
The Court must finally determine whether Defendant's disclosure satisfies the statute's
"clear and conspicuous" requirement. The first document to consider is the Terms and
Conditions. Defendant contends that the Terms and Conditions "is just two-and-a-half pages,
written in plain English, and can be read in a few minutes -- making it, at most, a pond of clear
contract terms." See Dkt. No. 24-1 at 13. Despite Defendant's contention to the contrary, the
Terms and Conditions do not make any effort to highlight or conspicuously disclose that a
variable rate is forthcoming. The relevant section of the Terms and Conditions is reproduced
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See Dkt. No. 18-1.
Surely, the requirement that the disclosure be "conspicuous" requires something more than
maintaining the same sized font, the same color, and placement in the sixth subsection of the
Terms and Conditions. Conspicuous, is defined as "clearly visible or obvious." Black's Law
Dictionary 329 (8th ed. 2004). At this stage in the litigation, affording all reasonable inferences
in Plaintiff's favor, it is plausible that a reasonable jury could find that Defendant's disclosure in
its Terms and Conditions fails to be conspicuous.
Defendant unpersuasively analogizes this case to Mirkin; however, the disclosures in that
case were clearly more pronounced than in this case. In that regard, the Mirkin court described
the disclosure in the defendant's terms and conditions in the following way:
[The terms and conditions] indicate in several different places, and using the
same font that is used for the rest of the text, that the contract changes to a
variable rate plan after the first six months. Two of those places are called out in
a box clearly intended to highlight the most relevant terms to consumers.
Mirkin, 2016 WL 3661106, at *5 (emphasis added).
Here, the Terms and Conditions only mention that the rate will change in one section, and this
information is not clearly placed in a position meant to highlight its content.
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Similarly, Defendant's Disclosure Statement, reproduced below, fails to provide a
conspicuous disclosure that the plan's rate structure will change after the initial period:
See Dkt. No. 18-2 at 7.
The only disclosure in this section merely mentions a variable rate plan and does not mention
that Defendant will charge a variable rate per kWH, nor is it conspicuously displayed.
Moreover, the Welcome Letter does not contain any reference to a variable rate per kWH
plan but merely points its reader to the Disclosure Statement and Terms and Conditions.
Axiomatically, a reference to two documents that plausibly fail to comply with the statutory
requirement cannot itself satisfy the same.
Therefore, the Court denies Defendant's motion to dismiss because Plaintiff's First
Amended Complaint has plausibly set forth a viable claim that Defendant's Terms and
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Conditions, Welcome Letter, and Disclosure Statement fail clearly and conspicuously to disclose
all variable charges.
"To prevail on a claim for unjust enrichment in New York, a plaintiff must establish: '(1)
defendant was enriched; (2) the enrichment was at plaintiff's expense; and (3) the circumstances
were such that equity and good conscience require defendant[ ] to make restitution.'" Hughes v.
Ester C Co., 930 F. Supp. 2d 439, 471 (E.D.N.Y. 2013) (quotation omitted).
Defendant rightfully asserts that "'"the existence of a valid and enforceable written
contract governing a particular subject matter ordinarily precludes recovery in quasi contract
[i.e., unjust enrichment] for events arising out of the same subject matter.'"" MacDraw, Inc. v.
CIT Grp. Equip. Fin., Inc., 157 F.3d 956, 964 (2d Cir. 1998) (quotation and other citation
omitted). Furthermore, "[g]enerally, if there is an adequate remedy at law, a court will not
permit a claim in equity." Bongat v. Fairview Nursing Care Ctr., Inc., 341 F. Supp. 2d 181, 188
(E.D.N.Y. 2004) (citing Strom v. Goldman, Sachs & Co., 202 F.3d 138, 144 n.6 (2d Cir. 1999))
(holding that a claim for unjust enrichment must be dismissed because the plaintiff had a viable
FLSA claim, among others) (other citations omitted).
Although Plaintiff asserts that his contract with Defendant is void because Defendant
never gave him the appropriate notice that his contract would renew, his remedy under the statute
is an action for damages pursuant to § 349-d(10). In other words, all of the conduct for which
Plaintiff complains Defendant is liable has a statutory remedy, thereby making a claim for unjust
enrichment inappropriate under the circumstances. Therefore, the Court grants Defendant's
motion to dismiss Plaintiff's unjust enrichment claim.
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Having reviewed the entire file in this matter, the parties' submissions, and the applicable
law, and for the above-stated reasons, the Court hereby
ORDERS that Defendant's motion to dismiss Plaintiff's First Amended Complaint
pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, see Dkt. No. 24, is
GRANTED in part and DENIED in part; and the Court further
ORDERS that Plaintiff's unjust enrichment claim is DISMISSED; and the Court further
ORDERS that this case is referred to Magistrate Judge Baxter for all further pre-trial
IT IS SO ORDERED.
Dated: August 14, 2017
Syracuse, New York
As a result of this Memorandum-Decision and Order, the only claim that remains is Plaintiff's
claim that Defendant violated New York General Business Law § 349-d(7).
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