URBINO v. AMBIT ENERGY, L.P.
3:14-cv-05184
| D.N.J. | Jul 24, 2015Background
- Plaintiff Michael Urbino, on behalf of himself and a putative class, alleges Ambit Energy marketed "low, competitive" and "consistent" rates to induce customers to switch, but then charged higher bills.
- Urbino switched from PSE&G to Ambit and alleges a bill for Dec. 30, 2013–Jan. 29, 2014 was ~60% higher than it would have been with PSE&G.
- Ambit moved to dismiss under Rule 12(b)(6); the Complaint relies on Ambit’s printed marketing and the parties’ written Terms of Service Agreement (TOSA).
- The TOSA offered both variable- and fixed-rate plans, expressly stated variable rates are subject to change at Ambit’s discretion, described Ambit as a third-party supplier, and contained an integration clause.
- The Court considered whether (1) Urbino adequately pleaded violations of the New Jersey Consumer Fraud Act (CFA), (2) breach of the implied covenant of good faith and fair dealing, and (3) unjust enrichment survive given the contract’s terms.
- The Court dismissed the CFA and unjust enrichment claims with prejudice and dismissed the good-faith-and-fair-dealing claim without prejudice.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| CFA — misrepresentation/omission | Ambit’s marketing promised "substantial savings" and "consistent" low rates; omission of disclosure that wholesale price spikes could be passed to customers | TOSA expressly disclosed Ambit as third-party supplier, stated variable rates may change at Ambit’s discretion, and contained an integration clause | Dismissed with prejudice — contract disclosures undercut misrepresentation/omission; marketing statements were puffery/not actionable |
| Contract terms vs. alleged fraud | Urbino says he relied on marketing, not contract fine print | Ambit says the contract governs and authorized rate changes, so no actionable concealment or misrepresentation | Court held the contract governs; alleged statements cannot overcome explicit contractual authorization to change rates |
| Implied covenant of good faith and fair dealing | Ambit acted in bad faith by shifting undisclosed risk and intentionally inducing customers | Ambit acted pursuant to discretionary contractual rights; no facts alleging improper motive or bad faith | Dismissed without prejudice — plaintiff failed to plead facts showing Ambit used discretion in a manner outside the risks assumed by Urbino under the contract |
| Unjust enrichment | Plaintiff contends Ambit was unjustly enriched because customers would not have contracted if marketing were truthful | Ambit points to the valid, unrescinded contract and that plaintiff received the service paid for | Dismissed with prejudice — unjust enrichment unavailable where an express contract governs and services were provided |
Key Cases Cited
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (standard for plausible pleading)
- Ashcroft v. Iqbal, 556 U.S. 662 (courts disregard legal conclusions in pleading review)
- Phillips v. County of Allegheny, 515 F.3d 224 (3d Cir.) (construing complaint in plaintiff's favor)
- Malleus v. George, 641 F.3d 560 (3d Cir.) (three-step Twombly/Iqbal pleading analysis)
- Fowler v. UPMC Shadyside, 578 F.3d 203 (3d Cir.) (separating factual from legal allegations)
- Frederico v. Home Depot, 507 F.3d 188 (3d Cir.) (Rule 9(b) particularity for fraud)
- Kost v. Kozakiewicz, 1 F.3d 176 (3d Cir.) (pleading sufficiency principles)
- Int'l Union of Operating Eng'rs Local No. 68 Welfare Fund v. Merck & Co., 192 N.J. 372 (CFA elements under New Jersey law)
- Wilson v. Amerada Hess Corp., 168 N.J. 236 (discretionary contractual rights and good faith limit)
- VRG Corp. v. GKN Realty Corp., 135 N.J. 539 (unjust enrichment requires no valid contract)
- Turf Lawnmower Repair, Inc. v. Bergen Record Corp., 139 N.J. 392 (unfair practice/consumer fraud context)