Mirkin v. Xoom Energy, LLC
342 F. Supp. 3d 320
| E.D.N.Y | 2018Background
- Plaintiffs Susanna and Boris Mirkin contracted in March 2013 for residential electricity from XOOM under a SimpleFlex Variable Rate Electricity Sales Agreement and received service May–Nov 2013.
- The ESA stated rates would be a "variable rate, per kWh, that may change on a monthly basis" and that the rate would be "based on XOOM's actual and estimated supply costs"; it also warned "no guaranteed savings."
- Plaintiffs allege XOOM charged rates substantially above a constructed "Market Supply Cost" (their own, undisclosed formula) and call this a bait-and-switch; they cancelled service in Nov. 2013.
- Plaintiffs sued in New York state court in April 2018 asserting breach of contract, breach of the implied covenant of good faith and fair dealing, and unjust enrichment; XOOM removed under CAFA and moved to dismiss under Rule 12(b)(6).
- The court applied North Carolina contract law (choice-of-law clause) and New York procedural rules for statute-of-limitations issues, and considered whether the ESA’s dispute-resolution clause required exhaustion.
- The court found the dispute-resolution clause permissive (no mandatory exhaustion) but dismissed all three causes of action for failure to state a claim.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether plaintiffs had to exhaust contract dispute-resolution remedies before suing | Plaintiffs said clause is permissive and they may sue without exhausting internal remedies | XOOM said clause requires customers to use pre-suit dispute mechanisms before suing | Court: clause is permissive (uses "should" and "may"); no mandatory exhaustion required |
| Whether XOOM breached the ESA by not setting rates based on "actual and estimated supply costs" | Mirkin argued a reasonable customer would expect rates tied to wholesale/market supply and plaintiffs’ Market Supply Cost shows overcharging | XOOM argued the ESA gives it internal discretion to set rates based on its own costs and does not promise any specific market benchmark | Court: plaintiffs failed to plausibly show the ESA required rates tied to wholesale/market or that their fabricated Market Supply Cost reflected XOOM's internal costs; breach claim dismissed |
| Whether XOOM breached the implied covenant of good faith and fair dealing | Plaintiffs claimed XOOM arbitrarily "price gouged" and frustrated reasonable expectations under the contract | XOOM said implied-covenant claim duplicates the breach claim and rises or falls with it | Court: claim fails because it is duplicative of the dismissed contract claim under NC law |
| Whether unjust enrichment can proceed as alternative to contract claim | Plaintiffs sought unjust enrichment as an alternative remedy, arguing contract validity might be disputed | XOOM argued an express contract governs and bars quasi-contract recovery | Court: unjust enrichment dismissed because an express contract governs and plaintiffs did not show the contract’s invalidity as to the whole agreement |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (pleading must contain factual content sufficient to state a plausible claim)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (complaint must allege enough facts to raise a plausible right to relief)
- Lundy v. Catholic Health Sys. of Long Island Inc., 711 F.3d 106 (2d Cir. 2013) (court construes complaint in plaintiff's favor on a motion to dismiss)
- Crosby v. City of Gastonia, 635 F.3d 634 (4th Cir. 2011) (elements of breach of contract under North Carolina law)
- Serdarevic v. Centex Homes, LLC, 760 F. Supp. 2d 322 (S.D.N.Y. 2010) (ambiguities in contract construed against drafter/plaintiff-favoring rule on motion to dismiss)
- Suntrust Bank v. Bryant/Sutphin Props., LLC, 222 N.C. App. 821 (2012) (implied covenant claim rises or falls with breach of contract claim under NC law)
- Booe v. Shadrick, 322 N.C. 567 (1988) (where express contract governs, law will not imply a contract for unjust enrichment)