Richards v. Direct Energy Services, LLC
120 F. Supp. 3d 148
D. Conn.2015Background
- Plaintiff Gary Richards, a Connecticut resident, alleges Direct Energy Services (DES) lured customers with a low "teaser" rate then rolled them into a variable-rate plan that was marketed as tied to "business and market conditions," effectively charging prices well above wholesale rates.
- Richards was on DES’s variable plan April–August 2013 and alleges a 41% immediate price increase and payments "more than double the wholesale rate" for nearly every week he was enrolled.
- He sues under Connecticut CUTPA and Massachusetts consumer-protection law, and also alleges breach of the covenant of good faith and fair dealing and unjust enrichment; he seeks class certification for Connecticut and Massachusetts consumers.
- DES moved to dismiss under Rule 12(b)(6), arguing (1) Richards lacks standing to press Massachusetts claims, (2) the contract expressly granted DES discretion over rates (foreclosing CUTPA and bad-faith claims), and (3) unjust enrichment is precluded by an express contract.
- The Court denied dismissal as to the CUTPA claim and the covenant-of-good-faith claim, finding Richards pleaded plausible unfair/deceptive practices and bad faith; it dismissed without prejudice the Massachusetts statutory claim (for lack of standing) and the unjust enrichment claim (because an express contract exists).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing for Massachusetts consumer-protection claim | Richards argues DES’s conduct operated in both CT and MA and brings both claims | DES contends Richards only suffered injury in CT and therefore lacks Article III standing for MA claims | Dismissed without prejudice for lack of standing (Richards did not allege he personally purchased in MA) |
| Sufficiency of CUTPA claim (unfair/deceptive practices) | Richards alleges consumers reasonably read DES’s "business and market conditions" as tied to wholesale prices and that DES charged prices far above wholesale, warranting discovery | DES argues contract disclaimed any wholesale link and gave DES sole discretion; PURA approval and periodic review foreclose CUTPA liability as a matter of law | Denied — claim plausible; factual dispute over meaning and effect of contract terms requires discovery |
| Breach of covenant of good faith and fair dealing | Richards contends DES exercised contractual discretion unreasonably/bad faith by charging exorbitant, non-market prices, depriving him of the benefit of the bargain | DES says Richards accepted a discretionary pricing term and cannot use the covenant to rewrite the contract or impose a pricing ceiling | Denied — allegations plausibly show bad faith and unreasonable exercise of discretion; claim survives pleading stage |
| Unjust enrichment | Pleaded alternatively if contract invalidated; seeks recovery for unfair overcharges | DES argues unjust enrichment is barred because there is an express, enforceable contract between parties | Granted dismissal without prejudice — unjust enrichment unavailable where an express contract governs the subject matter |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (pleading standard: plausibility requires factual content to permit reasonable inference of liability)
- Bell Atlantic v. Twombly, 550 U.S. 544 (2007) (plausibility standard; pleadings must raise reasonable expectation that discovery will reveal supporting evidence)
- Mahon v. Ticor Title Ins. Co., 683 F.3d 59 (2d Cir. 2012) (standing must be shown for each claim at case inception)
- Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992) (injury-in-fact must be particularized and concrete for Article III standing)
- Naples v. Keystone Bldg. & Dev. Corp., 295 Conn. 214 (2010) (CUTPA "cigarette rule" three-part test for unfairness)
- Magnan v. Anaconda Indus., 193 Conn. 558 (1984) (implied covenant of good faith and fair dealing applies to every contract)
- A-G Foods, Inc. v. Pepperidge Farm, 216 Conn. 200 (1990) (definition of "substantial injury" and CUTPA’s remedial scope)
- De La Concha of Hartford, Inc. v. Aetna Life Ins. Co., 269 Conn. 424 (2004) (bad faith requires acts taken with dishonest purpose or design to mislead)