Congregation Yetev Lev D'Satmar Inc. v. Engie Power & Gas LC

Opinion and Order A Netflix subscription, a gym membership, and a home energy bill: what do each of these have in common? Each is a form of a recurring monthly charge in which rate increases can go unnoticed by consumers after the initial sign-up period. It is the last that is the subject of this case — one of the latest in a recent string of legal challenges to the variable-rate billing practices of energy services companies (“ESCOs”). Plaintiff Congregation Yetev Lev D’Satmar, Inc. (“Plaintiff”) signed a contract in 2017 with Defendant Engie Power & Gas, LLC, formerly known as Plymouth Rock Energy, LLC (“Plymouth Rock” or “Defendant”),¹ an ESCO. After twenty-four months of Plymouth Rock charging a Plaintiff a low, fixed, monthly “teaser” rate under the contract, Plaintiff alleges, Plymouth Rock began unlawfully charging a higher, variable rate. Plaintiff brought this putative class action and Plymouth Rock filed a motion to dismiss. For the reasons below, the Court grants dismissal of Plaintiff’s breach of contract claim; denies dismissal of Plaintiff’s implied covenant of good faith and fair dealing claim; grants in part and denies in part dismissal of Plaintiff’s claims under sections 349 and 349-d(7) of the New York General Business Law, and grants dismissal (on consent) of Plaintiff’s unjust enrichment claim. I. BACKGROUND Unless otherwise indicated, the following facts are taken from the Complaint. See Compl., ECF. No. 1 (Aug. 17, 2022). A. ESCOs For decades, customers have purchased electricity and natural gas through a public utility, whose prices states have strictly regulated. See Compl. 2. In the 1990s, states began deregulating their energy markets, which allowed customers to purchase electricity and natural gas through an ESCO instead of a public utility. See Compl. 15. An ESCO acts as a broker, purchasing energy from an energy company and then selling energy to customers. The ESCO can charge for energy, measured in kilowatt hours (kWh) for electricity, at different rates than a utility and change rates without approval from state regulators. Compl.

17-19. In practice, ESCOs often charge a fixed rate for a term — say, 12 months — and then switch the customer to a month-to-month variable rate. Compl.