Barbara Gillis v. Respond Power LLC
677 F. App'x 752
| 3rd Cir. | 2017Background
- Respond Power (Respond) sold variable-rate electricity supply contracts to ~50,000 Pennsylvania customers between Nov. 2010 and June 2014; each contract used a uniform Disclosure Statement containing a "Variable Rate" provision.
- Plaintiffs (Gillis and McClelland families) allege Respond's marketing promised savings versus utility rates and that Respond charged higher rates than represented, breaching contract and the implied covenant of good faith and fair dealing.
- Plaintiffs moved to certify a class for declaratory judgment and breach-of-contract claims after class discovery; the District Court denied certification (finding numerosity only) based largely on extrinsic testimony about individual plaintiffs’ understandings of the Variable Rate provision.
- The District Court treated differing, subjective depositions as showing lack of typicality, adequacy, and commonality because it believed ambiguity would require inquiry into each class member’s understanding.
- Plaintiffs appealed under Rule 23(f). The Third Circuit held that in interpreting a standard-form contract, uncommunicated, subjective individual understandings are irrelevant to contract construction and thus should not have driven the class-certification denial.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether individual class members’ subjective, uncommunicated understandings of a standard-form contract term preclude class certification | Individual understandings are irrelevant; the form contract should be interpreted uniformly under Pennsylvania law | Extrinsic deposition testimony showing varied understandings defeats typicality, adequacy, and commonality and requires individualized inquiries | Held for Plaintiffs: court erred to rely on uncommunicated subjective understandings; such evidence is irrelevant for interpreting standard-form contracts and cannot defeat class certification at this stage |
| Whether ambiguity in the Variable Rate provision would permit extrinsic evidence that varies among class members and thereby defeat commonality | Any ambiguity should be resolved by objective extrinsic evidence applicable to the class, not private, undisclosed interpretations | Ambiguity allows extrinsic evidence, and depositions show divergent interpretations requiring individualized proof | Held: Ambiguity permits extrinsic evidence of mutual intent, but uncommunicated subjective intent is inadmissible; District Court improperly used only individualized subjective testimony |
| Proper standard for reviewing class certification denial | N/A (procedural) | N/A | Third Circuit reviews for abuse of discretion and de novo legal standard application; here District Court abused discretion by using irrelevant evidence |
| Remedy on appeal: whether this Court should independently certify the class | Plaintiffs asked this Court to reverse and certify | Respond opposed | Held: Court will vacate and remand for reconsideration rather than certify itself, declining to go beyond District Court’s opinion scope |
Key Cases Cited
- Grandalski v. Quest Diagnostics Inc., 767 F.3d 175 (3d Cir. 2014) (standard for reviewing class-certification orders)
- Hayes v. Wal–Mart Stores, Inc., 725 F.3d 349 (3d Cir. 2013) (abuse-of-discretion standard components)
- Northbrook Ins. Co. v. Kuljian Corp., 690 F.2d 368 (3d Cir. 1982) (when contract language is ambiguous, court may consult extrinsic evidence to ascertain mutual intent)
- Celley v. Mut. Benefit Health & Accident Ass’n, 324 A.2d 430 (Pa. Super. Ct. 1974) (uncommunicated subjective intent is not relevant to contract interpretation)
- Quilloin v. Tenet HealthSystem Phila., Inc., 673 F.3d 221 (3d Cir. 2012) (standard-form/adhesion contract characterization and its implications)
- Kolbe v. BAC Home Loans Servicing, LP, 738 F.3d 432 (1st Cir. 2013) (noting form-contract cases are often suitable for class treatment)
- Sacred Heart Health Sys., Inc. v. Humana Military Healthcare Servs., Inc., 601 F.3d 1159 (11th Cir. 2010) (discussing when form contracts facilitate class treatment)
- Janicik v. Prudential Ins. Co. of Am., 451 A.2d 451 (Pa. Super. Ct. 1982) (claims from form-contract interpretation generally give rise to common questions)
- Byrd v. Aaron’s Inc., 784 F.3d 154 (3d Cir. 2015) (discussing limits on appellate courts substituting their own class-certification determinations for the district court)