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June 2015

Gordon & Rees Team Secures Dismissal in Favor of Alternative Retail Electric Supplier

On May 22, 2015, Gordon & Rees New York, Connecticut, and Chicago offices obtained a judgment in favor of an Alternative Retail Electric Supplier client in the Northern District of Illinois after the Judge granted the Motion to Dismiss.

Led by New York Partner, Peter Siachos, Connecticut Partner, William Murray, Chicago Partner, Hayes Ryan, Chicago Senior Counsel, Angelo Kappas, and Connecticut Associate, Greil Roberts, Gordon & Rees represented a client, who provides alternative sources of electric or gas energy across various states in the country, to defend against several class action complaints in several jurisdictions. 

As a result of recent harsh winters across the country, the Plaintiff’s bar has been filing class action lawsuits in multiple jurisdictions alleging breach of contract, unjust enrichment, and deceptive business practices, among others, for rising and fluctuating prices for energy.  Plaintiffs have claimed multi-million dollar exposure as a result of alleged fraudulent practices where it is alleged that a teaser rate is offered to lure customers away from local suppliers only to subsequently raise prices.  Despite contracts stating that any rate charged was variable on certain factors, such as market pricing, the Plaintiff’s bar has been successful in certain jurisdictions surviving Rule 12(b)(6) motions to dismiss.  In fact, the same firm represents the lead Plaintiff in most of these jurisdictions, touting their successful rulings in various jurisdictions in hopes of persuading new jurisdictions to deny forthcoming motions to dismiss. With this rising new area in class action litigation, the Alternative Retail Electric Supplier retained Gordon & Rees to defend against these high-exposure claims in New York, Rhode Island, Connecticut, and Illinois.

In Illinois, the Chicago office of Gordon & Rees filed a Motion to Dismiss not only on Rule 12(b)(6) grounds for failure to state a claim but on a jurisdictional challenge under Rule 12(b)(1).  In attacking the class action complaint under Rule 12(b)(1), it was argued on behalf of the client that Plaintiff’s claims were nothing more than challenges to excessive rates, which vested exclusive and primary jurisdiction with the Illinois Commerce Commission as a regulatory body over local suppliers and Alternative Retail Electric Suppliers.  Plaintiff attempted to argue that the claims were not alleging excessive rates but were instead alleging fraudulent business practices, which did not fall under the Illinois Commerce Commission’s jurisdiction.  By showing the Court that the Illinois Commerce Commission did in fact govern and regulate over pricing, marketing materials, and general statements, the Court agreed with Gordon & Rees's position that Plaintiff’s claims, no matter how she tried to characterize them, fell under the jurisdiction of the Illinois Commerce Commission. 

Relying on precedent and analysis of the excessive statutory language, the judge granted the jurisdictional challenge and affirmatively stated that the Court did not have jurisdiction since it rested with the Illinois Commerce Commission.  In so doing, the judge relied on the statutory interpretation and case law presented in the motion to dismiss in formulating the ruling.  Moreover, while some Courts would have ceased the analysis after granting a Rule 12(b)(1) motion to dismiss, the judge went on to fully analyze the arguments set forth in the Rule 12(b)(6) motion to dismiss as well.  The judge agreed with Gordon & Rees's position that the contracts were clear and not deceptive with regard to its variable rate, thereby precluding a breach of contract claim, unjust enrichment cause of action, and deceptive business practices claim from surviving the motion to dismiss.    

The client was pleased to have avoided the potential multi-million dollar exposure from this class action lawsuit in Illinois and to use the ruling made in the Northern District of Illinois to go on the offensive in other jurisdictions as the Plaintiff’s bar has been doing with their successful rulings. 

J. Hayes Ryan
Peter G. Siachos