CORSALE v. SPERIAN ENERGY CORPORATION
2:18-cv-00996
| W.D. Pa. | Apr 10, 2019Background
- Plaintiffs Corsale and Taylor are Pennsylvania consumers who signed short-term fixed-rate agreements with Sperian Energy (an electric generation supplier) in 2015; after three-month fixed terms, the contracts rolled over to month-to-month variable-rate plans.
- Sperian sent Updated Terms and Conditions before the variable periods; those Updates stated variable prices "may change each month in response to market fluctuations and conditions at the discretion of Sperian Energy" and that prices "may be higher or lower than the EDC's rate."
- Plaintiffs allege Sperian charged rates substantially above their local utilities and wholesale market prices (Corsale: +13% to +102%; Taylor: +6% to +135%), causing thousands to pay excessive charges; they assert breach of contract, unjust enrichment (alternative), and UTPCPL claims.
- Sperian moved to dismiss under Rule 12(b)(6); the court considered whether the Updated Terms were enforceable and whether the pleaded facts state plausible claims under Pennsylvania law.
- The court treated the Updated Terms as controlling (they were effectively accepted by plaintiffs’ silence/payment) and dismissed: Count I (breach of contract) and Count III (unjust enrichment) with prejudice; Count II (UTPCPL) was dismissed but plaintiffs were granted leave to amend limited UTPCPL allegations.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Which contract terms govern (Initial vs Updated T&Cs)? | Plaintiffs say Initial Terms should control or that Updates lack consideration and are unenforceable. | Sperian says Updates govern and, in any event, UCC permits modification without new consideration. | Updated Terms govern; notice + plaintiffs' silence/payment constituted acceptance and provided consideration for the modification. |
| Breach of contract: Did Sperian breach by charging "exorbitant" rates? | Plaintiffs contend rates far exceeded utility and wholesale rates, so Sperian breached pricing obligations. | Sperian argues the Updated Terms gave discretionary pricing and permitted rates that could exceed utility rates. | Dismissed: The Updated Terms permit monthly pricing "at the discretion of Sperian" and consider multiple factors; rate disparities alone do not show breach. |
| Breach of contract: Did Sperian fail to tie prices to wholesale market conditions? | Plaintiffs assert Sperian's prices were "untethered" to wholesale market prices and thus breached. | Sperian asserts the contract language is permissive ("may" change) and discretionary, so no duty to mirror wholesale prices; also market responses can differ by supplier. | Dismissed: The Updated Terms use permissive/discretionary language; plaintiffs' side-by-side comparisons are insufficient to show failure to follow the contract. |
| UTPCPL deceptive-practices claim: nondisclosure of high rates / monthly fees / bait-and-switch | Plaintiffs allege Sperian failed to disclose its materially higher rates and concealed monthly fees and engaged in a bait-and-switch by changing terms. | Sperian says disclosures (welcome letters, T&Cs, monthly bills) informed customers of fees and the possibility rates could be higher; any bait-and-switch claim is not pled in detail. | Dismissed as pleaded: Failure-to-disclose and fee claims fail (fees were disclosed; customers received bill comparisons); bait-and-switch theory not adequately pleaded — court grants leave to amend UTPCPL claim. |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (pleading standard requiring plausible factual allegations)
- Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (Twombly plausibility standard)
- Orange v. Starion Energy PA, Inc., [citation="711 F. App'x 681"] (3d Cir.) (rate disparities alone do not establish breach where contract permits discretion)
- Brown v. Agway Energy Servs., LLC, 328 F. Supp. 3d 464 (W.D. Pa. 2018) (dismissing breach where contract allowed discretionary pricing)
- Tanksley v. Daniels, 902 F.3d 165 (3d Cir. 2018) (courts may consider documents integral to the complaint on a motion to dismiss)
- Bruni v. City of Pittsburgh, 824 F.3d 353 (3d Cir.) (12(b)(6) conversion principles and notice when relying on extra-pleading materials)
- Commonwealth v. Golden Gate Nat'l Senior Care LLC, 194 A.3d 1010 (Pa.) (UTPCPL remedial scope and interpretation)
- Haywood v. Univ. of Pittsburgh, 976 F. Supp. 2d 606 (W.D. Pa. 2013) (elements of breach of contract under Pennsylvania law)
- Cook v. General Nutrition Corp., [citation="749 F. App'x 126"] (3d Cir.) (unjust enrichment unavailable when express written contract governs)