338 F. Supp. 3d 470
W.D. Pa.2018Background
- Pennsylvania deregulated retail electricity in 1996; Clearview is an electric generation supplier (EGS) that sells generation but does not deliver electricity. Customers receive a single bill from their utility that includes the EGS supply rate.
- Gorecki switched to Clearview in 2012, took a six-month fixed introductory plan that auto-renewed into a variable, month-to-month plan described in a Sales Agreement.
- The Sales Agreement stated the rate was "based on wholesale market conditions," and that "Clearview sets the generation supply rate that you pay," but did not define "wholesale market conditions."
- Plaintiff alleges Clearview charged a static rate of $0.1299/kWh from Sept. 2016–Aug. 2017 while wholesale PJM-based prices (LMP plus capacity/ancillary charges) fluctuated materially lower, causing overpayment.
- Gorecki sued on behalf of a putative Pennsylvania class for breach of contract (failure to base rates on wholesale market conditions) and, in the alternative, unjust enrichment. Clearview moved to dismiss under Rule 12(b)(6).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Breach of contract: did Clearview fail to "base" its variable rate on wholesale market conditions? | Gorecki: Sales Agreement promised rates "based on wholesale market conditions"; static $0.1299/kWh despite wholesale fluctuation supports inference of breach. | Clearview: Plaintiff's comparisons are legally insufficient (cannot rely on retail utility rates); wholesale market conditions are multifactorial and plaintiff's PJM-based price calc is oversimplified. | Court: Denied dismissal as to breach. Because the contract did not define "wholesale market conditions," plaintiff plausibly alleged facts (static rate vs. fluctuating wholesale prices) supporting a breach claim at the pleading stage. |
| Adequacy of market-price comparison evidence | Gorecki: Used PJM LMP + capacity/ancillary charges to approximate wholesale price and compared it to Clearview's billed rate. | Clearview: Such comparisons are "apples to bananas"; wholesale market conditions are not reducible to a single PJM price series. | Court: Permitted plaintiff's approach at pleading stage because the Sales Agreement gave no definition to limit the term and factual inferences must be drawn in plaintiff's favor. |
| Whether Clearview's contractual discretion allows any rate | Gorecki: Contract required rates be based on wholesale market conditions, limiting discretion. | Clearview: It sets the rate and need not mirror wholesale prices exactly. | Court: Agreed defendant has some discretion but not unlimited; plaintiff plausibly alleged that discretion was abused given the unchanging rate despite market swings. |
| Unjust enrichment as alternative remedy | Gorecki: Pleaded unjust enrichment in the alternative to contract claim. | Clearview: Existence and validity of a written contract preclude unjust enrichment. | Court: Granted dismissal (without prejudice) of unjust enrichment because parties do not dispute the existence/validity of the written contract. |
Key Cases Cited
- CoreStates Bank, N.A. v. Cutillo, 723 A.2d 1053 (Pa. Super. Ct.) (elements of breach of contract under Pennsylvania law)
- Fowler v. UPMC Shadyside, 578 F.3d 203 (3d Cir.) (plausibility standard; courts accept well-pleaded facts)
- Malleus v. George, 641 F.3d 560 (3d Cir.) (three-step framework for reviewing pleading sufficiency)
- Orange v. Starion Energy PA, Inc., [citation="711 F. App'x 681"] (3d Cir.) (retail-utility comparison alone insufficient to plead that EGS did not follow a market-based pricing formula)
- Grudkowski v. Foremost Ins. Co., [citation="556 F. App'x 165"] (3d Cir.) (unjust enrichment unavailable when parties have a valid written contract)