242 F. Supp. 3d 708
N.D. Ill.2017Background
- Plaintiff Oleg Kostovetsky, an Illinois natural-gas customer, alleges Ambit and its consultants induced him to switch from Nicor by promising savings but later charged much higher rates, asserting RICO and unjust enrichment claims; suit filed as a putative class action.
- Kostovetsky was enrolled by an Ambit consultant in June 2013; Ambit emailed and mailed terms of service (including a one-year "Guaranteed Savings Plan" that required affirmative renewal) to addresses on file in June 2013 and June 2014.
- After failing to renew, Kostovetsky was rolled onto Ambit’s Select Variable Natural Gas Plan in August 2014; rates on that plan spiked in late 2013–2014, producing higher bills for non‑renewing customers.
- Ambit relied on the mailed terms of service that disclosed the renewal requirement and the rollover to the variable plan; Kostovetsky testified he could not recall receiving the mailings but did not deny receipt.
- District court treated facts in plaintiff’s favor where required but found the mailing evidence created a rebuttable presumption of delivery that plaintiff did not rebut with a sworn denial.
- Procedural: court denied Ambit’s motion to strike (but denied in substance plaintiff’s novel theories were improper), granted Ambit’s summary judgment motion, denied a putative intervenor’s motion to intervene as untimely, and dismissed unjust enrichment as dependent on the failed fraud/RICO claim.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Ambit’s conduct (rollover + pricing) constituted racketeering (mail/wire fraud) under RICO §1962(c)/(d) | Ambit misrepresented rates (promised competitive/guaranteed savings) and used mail/wires to effect a scheme that inflated charges after rollover | Terms of service (mailed) disclosed renewal requirement and rollover; no contemporaneous intent to defraud; change in rates was breach or bad business practice, not fraud | Court: No RICO predicate acts; summary judgment for Ambit — disclosure and ability to avoid rollover defeat fraud inference |
| Whether evidence showed plaintiff had notice/assented to terms (affecting fraud and contract defenses) | Plaintiff: never personally assented via consultant and never saw terms; thus lacked notice | Ambit: mailed terms to correct address twice; mailing creates presumption of delivery; plaintiff’s lack of recollection does not rebut | Court: Mailings create unrebutted presumption of delivery; plaintiff bound by terms; notice/assent found |
| Whether Ambit had fraudulent intent at the time promises were made (necessary for mail/wire fraud) | Plaintiff: Ambit’s later high rates and marketing of “competitive” rates support an inference of contemporaneous intent to defraud | Ambit: rates were competitive when promised and rose later; company allowed customers to renew or return to guaranteed plan — no scheme evidence | Court: No circumstantial evidence of contemporaneous intent; timing and prior track record undermine inference of fraud |
| Whether unjust enrichment claim survives if RICO fraud fails | Plaintiff: unjust enrichment should survive independently | Ambit: unjust enrichment depends on the fraudulent theory and falls if fraud claim fails | Court: Unjust enrichment dismissed because it is premised on the rejected fraud theory; plaintiff forfeited other independent state‑law claims by not pleading them |
Key Cases Cited
- Empress Casino Joliet Corp. v. Balmoral Racing Club, Inc., 831 F.3d 815 (7th Cir.) (elements of a Section 1962(c) RICO claim)
- Bible v. United Student Aid Funds, Inc., 799 F.3d 633 (7th Cir.) (mail/wire fraud as RICO predicates and elements)
- CMFG Life Ins. Co. v. RBS Sec., Inc., 799 F.3d 729 (7th Cir.) (plaintiff may refine theories at summary judgment consistent with complaint)
- Corley v. Rosewood Care Ctr., Inc., 388 F.3d 990 (7th Cir.) (bait‑and‑switch/price increase disclosed in contract does not support mail fraud/RICO)
- Perlman v. Zell, 185 F.3d 850 (7th Cir.) (distinguishing breach of contract from fraud; fraud requires contemporaneous intent not to perform)
- Laouini v. CLM Freight Lines, Inc., 586 F.3d 473 (7th Cir.) (proper mailing raises presumption of delivery)
- United States v. Paneras, 222 F.3d 406 (7th Cir.) (circumstantial evidence may establish intent to defraud)