100 F. Supp. 3d 421
E.D. Pa.2015Background
- Plaintiff Michael Kantor switched his residential electricity service to Hiko Energy after mailings, salesperson statements, and website representations promising market-based rates and savings.
- Kantor paid lower rates initially but alleges Hiko later charged substantially higher rates (nearly tripling in Feb. 2014), resulting in greater costs than he would have paid with his prior supplier; he returned to his prior supplier and filed suit.
- Kantor filed a putative class action asserting (1) UTPCPL statutory fraud/misrepresentation, (2) breach of contract and the implied covenant of good faith and fair dealing, and (3) unjust enrichment; he seeks damages, treble damages, fees, and injunctive relief.
- The Pennsylvania Attorney General, Consumer Advocate, and Bureau of Consumer Protection filed a related PUC administrative complaint against Hiko alleging deceptive guarantees of savings and other violations; that proceeding sought license revocation, civil penalties, and restitution.
- Hiko moved to dismiss: arguing the economic loss doctrine bars the UTPCPL claim (relying on Werwinski), that the implied-covenant claim is subsumed by contract, that unjust enrichment cannot stand with an express contract, and asking to strike class allegations or stay for the PUC proceeding.
- The court denied the motion to dismiss and to strike or stay class allegations, holding UTPCPL claims are not barred by the economic loss doctrine and the other claims may proceed (with unjust enrichment preserved as an alternative theory).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the economic loss doctrine bars UTPCPL/statutory fraud claims | Kantor: UTPCPL claim is independent statutory fraud; economic loss doctrine applies to negligence, not statutory fraud | Hiko: Werwinski controls; economic loss doctrine bars statutory/common-law fraud claims tied to contract | Court: UTPCPL claims are not barred — Pennsylvania appellate decisions (Knight, Excavation Technologies/Bilt-Rite reasoning) displace Werwinski prediction |
| Whether breach of implied covenant of good faith is duplicative/impermissible | Kantor: covenant enforces contract promise to base pricing on market factors; alleges evasion of bargain | Hiko: plaintiff is trying to import terms not in the written variable-rate contract | Court: Covenant claim is part of contract claim (interpretive tool) and not dismissed at this stage |
| Whether unjust enrichment must be dismissed because an express contract exists | Kantor: may plead unjust enrichment alternatively if contract fails | Hiko: unjust enrichment unavailable where express contract governs | Court: Unjust enrichment may be pleaded in the alternative under Rule 8(d)(3); claim preserved for now |
| Whether class allegations should be struck or action stayed in favor of PUC proceedings | Kantor: PUC action and class action are distinct; premature to strike prior to discovery | Hiko: PUC provides superior forum and pending administrative proceedings overlap | Court: Declines to strike or stay; PUC remedies are not co-extensive with UTPCPL remedies and private claims are cumulative; no current PUC adjudication covering class claims |
Key Cases Cited
- Werwinski v. Ford Motor Co., 286 F.3d 661 (3d Cir.) (Third Circuit predictive holding that economic loss doctrine bars certain statutory fraud claims)
- Knight v. Springfield Hyundai, 81 A.3d 940 (Pa. Super. 2013) (Superior Court holds economic loss doctrine does not bar UTPCPL claims)
- Excavation Techs., Inc. v. Columbia Gas Co. of Pa., 985 A.2d 840 (Pa.) (Supreme Court decision discussing limits of economic loss doctrine and recognizing negligent misrepresentation exception)
- Bilt-Rite Contractors, Inc. v. The Architectural Studio, 866 A.2d 270 (Pa.) (Pennsylvania Supreme Court recognizing limits of economic loss doctrine)
- Pettko v. Pennsylvania Am. Water Co., 39 A.3d 473 (Pa. Commw. 2012) (administrative remedies under PUC do not necessarily preclude UTPCPL claims; remedies may be cumulative)