MAGDA SILVA, et al. v. MPOWER ENERGY, LLC, et al.; AYAN RHYMES and LOVELEEN KAUR v. MPOWER ENERGY NJ, LLC, et al.
23-CV-9849 (JGLC) (OTW); 24-CV-2015 (JGLC) (OTW)
UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK
March 27, 2025
ONA T. WANG, United States Magistrate Judge
ONA T. WANG, United States Magistrate Judge:
I. INTRODUCTION
The above-captioned actions have been brought by two sets of plaintiffs against subsidiaries of Mpower Energy, a New Jersey power supplier. In both cases, styled as class action suits, the plaintiffs, who hail from New Jersey, New York, and Washington, D.C., allege, inter alia, that the defendants engaged in deceptive and bad faith pricing practices that artificially inflated tens of thousands of customers’ gas and electricity bills in violation of their contracts. (See ECF 1, Silva ECF 1).1 Across the two suits, the plaintiffs bring claims for breach of contract, breach of the implied covenant of good faith and fair dealing, unjust enrichment,
For the following reasons, Defendants’ motion to compel arbitration is GRANTED as to all Plaintiffs in both actions. Both cases are STAYED pending resolution of the individual arbitrations of Plaintiffs’ claims.
II. BACKGROUND
A. Procedural History
Plaintiffs Ayan Rhymes (Rhymes) and Loveleen Kaur (Kaur), who reside in New Jersey, filed their complaint against Defendant Mpower Energy NJ, LLC on April 6, 2023, in the Superior Court of New Jersey, Law Division, Essex Court, under Docket ESX-L-002327. (ECF Nos. 1 at ¶¶ 1, 1-1). On May 10, 2023, the case was removed to the District of New Jersey under the case name Rhymes, et al. v. Mpower Energy NJ, LLC, Index 2:23-cv-2556 (BRM) (ESK) (D.N.J.). (ECF 1). On November 13, 2023, the New Jersey District Court stayed discovery, except for discovery limited to the issue of notice to Rhymes of the mandatory arbitration
Plaintiffs Magda Silva (Silva) and Kirk Burke-Hamilton (Hamilton) filed their complaint in the Southern District of New York against Defendants Mpower Energy NJ LLC and Mpower Energy, LLC (together, Mpower, or, Defendants) on November 7, 2023, under the case name Silva v. Mpower Energy, LLC, Index 23-cv-9849. (Silva ECF 1). Silva resides in New York; Hamilton resides in Washington, D.C. (Silva ECF 1 at ¶¶ 12, 14). An initial case management conference in this action only was held on January 31, 2024, at which the Court stayed the case until March 1, 2024. (Silva ECF 28 at 17:3-5).
Both matters have been referred to me for general pretrial management. (ECF 86, Silva ECF 11). On May 2, 2024, the Court held a joint, in-person status conference in both matters. (ECF 88, Silva ECF Nos. 38, 39).4 At the May 2 Conference, the parties proposed omnibus briefing in the two cases regarding the question of whether the parties should be compelled to arbitrate their claims. (Silva ECF 39 at 13:16–19). Limited discovery closed on June 28, 2024. (ECF 88). (See also ECF Nos. 64, 74).
B. Factual History
The Court assumes familiarity with the history of these cases and here summarizes the relevant facts.5
1. The Arbitration Provision
There are three contracts at issue in these actions: one signed by Silva; one signed by Hamilton; and one signed by Rhymes (individually, Contract Plaintiff, together, the Contract Plaintiffs). (See ECF Nos. 92-1, 92-2, 92-3). Plaintiff Kaur, who is married to Plaintiff Rhymes, did not execute a contract with Defendants, but sues here as a third-party beneficiary of the contract her husband executed. (See ECF 32 at 9). (See also ECF 91 at 28).
The three contracts are substantially similar. They each include: (1) a one-page form, including the customer‘s signature and personal identifying information, and key terms regarding pricing, duration, and cancellation (ECF Nos. 92-1 at 2, 92-2 at 4, 92-3 at 2); (2) a one-page list of Terms and Conditions (ECF Nos. 92-1 at 4, 92-2 at 6, 92-3 at 4); and (3) a Spanish-language copy of (1) and (2) (see generally ECF Nos. 92-1, 92-2, 92-3). The contracts also include certain contract summaries in compliance with state law, as well as Spanish-language
DISPUTES. Customer agrees first to contact Mpower [or MPE&G] and attempt to resolve in good faith all billing disputes or service problems. In the event the parties are not able to reach a resolution, they agree to submit any claim to arbitration. Each party waives the right to litigate in court or arbitrate any claim or dispute as a class action, as a member of a class or as a representative, or to act as a private attorney general. All disputes regarding transmission, distribution, power outages, and LDC charges should be directed to LDC. A dispute or complaint relating to a residential customer may be submitted by either party at any time to [the BPU, DPS, or PSC]. This Agreement shall be construed and governed by the laws of the State of New York without regard to its conflicts of law principles.
(ECF Nos. 92-1 at 4, 92-2 at 6, 92-3 at 4). (emphasis added).
2. The Enrollment Transaction
Between 2019 and 2021, Defendants’ Sales Agents (individually, Sales Agent, together, the Sales Agents) approached each of the Contract Plaintiffs individually near their respective residences and invited them to enroll with Mpower as their electricity and gas supplier. (ECF Nos. 92-7 at 21:7–23:23, 92-8 at 25:24–27:3, 92-9 at 14:10–15:10).6 Each of the Contract Plaintiffs said that they did, and the Sales Agents then began an enrollment process using electronic tablets. (ECF Nos. 92-7 at 22:24–23:15, 92-8 at 30:15–31:3, 92-9 at 14:10–15:7, 92-10 at 22:3–24:8). When enrolling Silva and Rhymes, the Sales Agents used an application called iKnock; with Hamilton, they used SalesRabbit. (ECF 93 at ¶¶ 4-7).
During the enrollment process, the Sales Agents showed the Contract Plaintiffs certain documents on their tablets. The Contract Plaintiffs provided the Sales Agents with personal
Defendants attest that the Contract Plaintiffs all received copies of the documents that they had signed via an automated text or email sent by the enrollment software (either iKnock or SalesRabbit) which included: the signed one-page form; the one-page list of Terms and Conditions; contract summaries in compliance with state law; and Spanish-language versions of the same. (ECF 94). (See also ECF 93 at ¶¶ 11-31).
Silva enrolled with Defendants on April 26, 2019. (ECF Nos. 92-2, 92-7 at 20:23–21:6, 94 at 9-13). (See also Silva ECF 1 at ¶ 12). Regarding the enrollment process, Silva specifically attests:
- That the Sales Agent showed her documents on a tablet (ECF 92-7 at 25:12–18);
- That she did not read the documents the Sales Agent showed her (ECF 92-7 at 25:12-26:17);
- That she nevertheless signed the documents on the tablet (ECF 92-7 at 24:8-10, 35:18-36:16);
- That she later received an email from Defendants attaching two .pdf files, one containing the one-page form bearing her signature, and one containing the Terms and Conditions that include the Arbitration Provision (ECF 92-7 at 38:22–39:25) (see also ECF Nos. 92-2, 94 at ¶¶ 9-13); and
- That, although she received the email attaching these documents, she did not read either attachment (ECF 92-7 at 38:22–39:25).
Silva verified that the signature on the contract at ECF 92-2 is hers. (ECF 92-7 at 36:3–16).
b. Rhymes‘s Enrollment
Rhymes enrolled with Defendants on April 26, 2021. (ECF Nos. 92-8 at 25:24–26:7, 93 at 18, 94 at 3-8). (See also ECF 1-1 at ¶¶ 10, 34). Regarding the enrollment process, Rhymes specifically attests:
- That the Sales Agent showed him documents on a tablet (ECF 92-8 at 30:15–36:3);
That he did not read the documents the Sales Agent showed him (ECF 92-8 at 33:7-12); and - That he nevertheless signed the documents on the tablet (ECF 92-8 at 35:10-36:3).
Although Rhymes asserts that he never received a copy of the documents he reviewed with the Sales Agent (ECF 92-8 at 43:10–44:3), he produced a photograph of his mobile device depicting a text message, dated April 26, 2021, reading, Hi Ayan, Welcome to the Mpower family! and including both a hyperlink to an agreement document and a passcode (ECF 92-12). Rhymes testified that he did not recall either receiving this text message or accessing the hyperlink therein (ECF 92-8 at 43:10–44:3), which Defendants dispute, based on forensic evidence that he did so, which Defendants produced in discovery (ECF Nos. 93 at ¶¶ 23–25, 94 at ¶¶ 3–8). This hyperlink is still active and accessible, and the document at that web address contains the Terms and Conditions, including the Arbitration Provision, and is identical to the contract submitted to the Court at ECF 92-2. (Compare ECF 92-1 with 92-12). Rhymes verified that the signature on the contract at ECF 92-1 is his. (92-8 at 99:8-11)
c. Hamilton‘s Enrollment
Hamilton enrolled with Defendants on or around September 29, 2021. (ECF Nos. 92-3, 93 at 28, 94 at ¶¶ 14–15). (See also Silva ECF 1 at ¶¶ 14, 111). At his deposition, he recalled few specifics regarding his enrollment, including whether he provided or verified his personal identifying information. (See generally ECF 92-9 at 14:10–18:4). He also testified that, although he did not recall ever seeing or signing the contract at ECF 92-3, (ECF 92-9 at 20:25-21:8, 23:18-24), the customer information and signature on the document are his (ECF 92-9 at 24:25-25:15). Although Hamilton did not produce a copy of the contract in discovery, (ECF 92-
III. DISCUSSION
Section 2 of the Federal Arbitration Act (FAA) provides that a written agreement to arbitrate shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.7
When deciding a motion to compel arbitration and stay all or part of a litigation pursuant to the FAA, the court applies a standard similar to that applicable for a motion for summary judgment, and considers all relevant, admissible evidence contained in the pleadings, admissions on file, and affidavits. Meyer v. Uber Techs., Inc., 868 F.3d 66, 74 (2d Cir. 2017) (citing cases). If the dispute falls within the scope of the arbitration agreement, then, absent a genuine issue of material fact regarding the formation of the agreement, the court must grant the motion to compel and stay the litigation. Id. If the making of the arbitration agreement is in dispute, then the court should deny the motion. Barrows v. Brinker, 36 F.4th 45, 49 (2d Cir. 2022) (quoting
In support of their motion, Defendants argue that the Contract Plaintiffs agreed to the Arbitration Provision after being afforded an opportunity to review the Terms and Conditions during the enrollment process. (ECF Nos. 91 at 5, 99 at 7–8). Plaintiffs argue that they never saw, and were never afforded an opportunity to review, the Terms and Conditions at all, including the Arbitration Provision. (ECF 97 at 6). They insist that they were, at most, only shown the one-page form during the enrollment process, and thus lacked notice of the Terms and Conditions, which were not in fact part of the parties’ contract. (ECF 97 at 7–8).
A. The Contract Plaintiffs Agreed to the Arbitration Provision
Defendants have satisfied their burden of showing that the Contract Plaintiffs executed contracts containing the Arbitration Provision. A plaintiff‘s admission that they signed a contract creates a presumption that the signatory consented to the contract‘s terms. Wilson v. Mercury Cas. Co., 18-CV-11014 (AT) (OTW), 2019 WL 13020790, at *3 (S.D.N.Y. 2019) (citing Gold v. Deutsche Aktiengesellschaft, 365 F.3d 144, 149 (2d Cir. 2004)). Defendants here have provided signed copies of their contract with each applicable plaintiff, including the one-page form and the one-page Terms and Conditions. (ECF Nos. 92-1, 92-2, 92-3). Each Contract Plaintiff has verified that the signature on each of their respective contracts is, indeed, theirs.9 (ECF Nos. 92-7 at 36:3–16, 92-8 at 99:8–11, 92-9 at 24:25-25:15). Defendants have also provided ample testimony from both Plaintiffs and Defendants’ Sales Agents reflecting that the Contract Plaintiffs reasonably should have known that they were entering into agreements with Terms and Conditions and that their signatures would be a physical manifestation of assent to those Terms and Conditions. See Applebaum v. Lyft, 263 F.Supp.3d 454, 465 (S.D.N.Y. 2017). Defendants have thus made a prima facie showing by a preponderance of the credible evidence that the parties executed an agreement to arbitrate.
I find that the Contract Plaintiffs had inquiry notice of the Terms and Conditions, and that there is, therefore, no genuine dispute regarding whether the parties agreed to the Arbitration Provision.
To bind the parties, a contract requires a meeting of the minds and a manifestation of mutual assent. Starke v. SquareTrade Inc., 913 F.3d 279, 288 (2d Cir. 2019) (internal quotation marks and citation omitted). Where an offeree does not have actual notice of certain contract terms, he is nevertheless bound by such terms if he is on inquiry notice of them and assents to them through conduct that a reasonable person would understand to constitute assent. Id. at 289 (emphasis in original). To determine whether an offeree has had inquiry notice of contract terms, New York courts look to whether the term was obvious and whether it was called to the offeree‘s attention, which often turns on whether the contract terms were presented to the offeree in a clear and conspicuous way. Id. The same contract law principles apply to online transactions, as well as to the instant hybrid analog-digital setting. Id.; Lojewski v. Group Solar USA, LLC, 22-CV-10816 (PAE), 2023 WL 5301423, at *8 (S.D.N.Y. 2013).
Although the evidence does not establish that the Contract Plaintiffs had actual notice of the Terms and Conditions, it does establish that they had inquiry notice, and, therefore, that they assented to the Arbitration Provision. Given the transactional context of the parties’ dealings, a reasonable person in the Contract Plaintiffs’ position would presume that signing documents—be they analog or digital—in connection with enrollment for residential energy services would clearly contemplate[] some sort of continuing relationship between themselves and Defendants that would require some terms and conditions. Meyer, 868 F.3d
C. All Plaintiffs Must Arbitrate Their Claims Individually
All Plaintiffs—including Kaur10—must arbitrate their claims individually. Under the FAA, courts are expected to rigorously enforce arbitration agreements according to their terms, including terms that specify with whom the parties choose to arbitrate their dispute and the rules under which that arbitration will be conducted. Am. Exp. Co. v. Italian Colors Rest., 570 U.S. 228, 233 (2013) (citing cases). A class action waiver in a valid agreement to arbitrate is
D. These Cases Are Stayed Pending Mediation and Arbitration
The Second Circuit has held that the text, structure, and underlying policy of the FAA mandate a stay of proceedings when all of the claims in an action have been referred to arbitration and a stay requested. Katz v. Cellco P‘ship, 794 F.3d 341, 347 (2d Cir. 2015), cert. denied, 577 U.S. 1031 (2015). Defendants have requested such a stay here. Accordingly, the Court hereby STAYS this case pending arbitration.
IV. CONCLUSION
For the foregoing reasons, Defendants’ motion to compel individual arbitrations is GRANTED and both actions (23-CV-9849 and 24-CV-2015) are STAYED in their entirety pending completion of arbitration. The parties are directed to file a joint status letter on both dockets within 60 days of completing arbitration.
The Clerk of Court is respectfully directed to close ECF 46 in case 23-CV-9849, and ECF 90 in case 24-CV-2015.
SO ORDERED.
Dated: March 27, 2025
New York, New York
/s/ Ona T. Wang
Ona T. Wang
United States Magistrate Judge