MARSHALL v. VERDE ENERGY USA, INC.
2:18-cv-01344
| D.N.J. | Oct 5, 2020Background
- Plaintiff Ray Marshall switched to Discount Power and was later assigned to Verde Energy (an ESCO); Verde sent a Welcome Letter and Terms of Service stating a variable generation rate that "may fluctuate monthly with market conditions."
- Marshall alleges Verde raised rates when wholesale prices rose but failed to lower them when wholesale prices fell, and sometimes charged rates far above wholesale and the local utility (PSE&G).
- Marshall asserted that Verde's Terms lacked the "clear and unambiguous" pricing mechanism required by N.J.A.C. § 14:4-7.6 (Pricing Regulation) and also violated marketing rules in N.J.A.C. § 14:4-7.4 (Marketing Regulation).
- SAC asserts six claims: two new regulatory/EDECA counts (Marketing & Pricing regs), CFA, breach of contract, breach of implied covenant of good faith and fair dealing, and TCCWNA.
- Court previously dismissed earlier complaints; on this motion Verde sought dismissal under Rule 12(b)(6). The court dismissed Counts I & II (no private right to enforce EDECA/regulations) and the breach-of-contract count, but allowed the CFA, breach of implied covenant, and TCCWNA claims to proceed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether consumers have a private right to enforce the Marketing and Pricing regulations under EDECA | Marshall: regulations and statutory provisions (Sections 82/83) support private enforcement and statutory damages | Verde: statutory and regulatory scheme vests enforcement and civil-penalty authority in the BPU; private enforcement is only available for limited, expressly provided regulations | No private right of action for the Marketing and Pricing Regulations; Counts I and II dismissed |
| Whether alleged regulatory violations can support a CFA claim | Marshall: violations of the Pricing/Marketing Regulations show unlawful conduct and constitute "substantial aggravating circumstances" under the CFA | Verde: regulatory enforcement belongs to the BPU; CFA claim still deficient for lack of substantial aggravating circumstances and express contract authorization | Court: regulatory violations (as pleaded) can supply substantial aggravating circumstances; CFA claim survives dismissal |
| Whether the breach of contract claim survives | Marshall: Verde breached the Agreement by not tying rates to market conditions and violation of Pricing Regulation impacts contract | Verde: Agreement did not obligate pricing tied to specific market comparators; prior dismissals show contract claim deficient | Dismissed: Marshall failed to allege breach or explain how regulatory violations make the contract void/unenforceable |
| Whether breach of implied covenant and TCCWNA survive | Marshall: regulatory violations demonstrate bad faith in performance and support implied-covenant and TCCWNA claims | Verde: regulatory theory concerns contract formation, not performance; thus cannot support covenant claim | Court: implied covenant claim survives (regulatory failures plausibly show bad faith in performance); TCCWNA survives because CFA claim stands |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (Rule 12(b)(6) plausibility standard)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (pleading standards for plausibility)
- Cox v. Sears Roebuck & Co., 647 A.2d 454 (N.J. law: regulatory violations can constitute CFA unlawful practice)
- Cetel v. Kirwan Fin. Grp., Inc., 460 F.3d 494 (CFA protects ordinary consumers; elements of claim)
- R.J. Gaydos Ins. Agency, Inc. v. Nat'l Consumer Ins. Co., 773 A.2d 1132 (New Jersey test for implied private right of action)
- Suber v. Chrysler Corp., 104 F.3d 578 ("substantial aggravating circumstances" standard for CFA recovery)
- Alpizar-Fallas v. Favero, 908 F.3d 910 (Third Circuit discussion of CFA's remedial scope and liberal construction)