In what appears to be the first salvo of New Jersey litigation over the power losses caused by Hurricane Sandy, the state’s second-largest electric company has been hit with a putative class action.
The suit, filed Wednesday in Hunterdon County Superior Court, alleges that Jersey Central Power & Light, and its corporate parent, First Energy Corp. of Akron, Ohio, breached contracts with customers by ceasing to provide service for seven days or more after the massive Oct. 29 storm devastated large parts of the state.
It further alleges that JCP&L, through negligence, carelessness and recklessness, breached its duty to provide service, maintain its equipment and prepare for “known and anticipated weather conditions and potential effects,” respond properly to outages and hire or contract with enough people to fulfill those obligations.
The complaint, in Stypa v. First Energy Corp., also raises two counts of violation of the Consumer Fraud Act. One is based on JCP&L’s failure to provide electricity after Sandy. The other is for allegedly misleading customers about its efforts to restore service, with respect to timing, resources, prioritization and other information.
The plaintiffs claim they incurred ascertainable losses by relying on those representations.
The suit was filed by Britt Simon of Simon Law Group in Somerville. He and his wife Laura, who also works at the firm, are among the named plaintiffs, as are some of their neighbors in the Whitehouse Station section of Readington Township.
Simon says to his knowledge, his is the first Sandy suit in New Jersey and, even if it is not granted class action status, it is worth pursuing.
His telephone has been “ringing off the hook” with calls from others eager to join the case and, by midday Thursday, he had 54 more names he might want to add, he says.
His four-lawyer firm had to close for five days due to lack of power and his home lost it for 10 to 11 days.
His own losses — spoiled food, a kitchen floor that buckled from melting refrigerator ice and hotel costs — exemplify the types of damages the plaintiffs seek to recover, he says.
Some, including AllStar Music Academy in Flemington and a dentist, might seek lost income damages, too. The case could also encompass personal injury claims by those who got sick in unheated homes or died from carbon monoxide produced by generators, though it currently has no such plaintiffs, he says.
“My goal is to get JCP&L to provide good service,” says Simon. “We’ve had storms before” and it promises to do better next time but it doesn’t. He notes it seems to consistently do worse than Public Service Electric & Gas, the state’s largest electricity provider.
He has heard reports about visiting out-of-state utility workers remarking on the age of equipment in New Jersey and says one of his plaintiffs had such a conversation.
He believes JCP&L has underinvested in infrastructure to maximize profits.
A July 18 decision by the Board of Public Utilities ordering JCP&L to justify its earnings and address concerns regarding its performance lends support to Simon’s view.
The board acted in response to a request by the Division of Rate Counsel based on reliability issues related to JCP&L’s performance during Hurricane Irene in August 2011 and the October 2011 snowstorm, including concerns that it was not investing enough in infrastructure.
JCP&L, like other utilities, operates under a state-approved tariff that shields it from liability for outages.
Section 4.01 states it will “use reasonable diligence” to maintain service but “shall not be liable for any loss or damage, direct or consequential” if service is interrupted due to “any natural disaster, accident … or other causes whatsoever beyond its control.”
Another potential obstacle to recovery is case law saying the CFA does not apply to highly regulated industries, including Daaleman v. Elizabethtown Gas Co., 77 N.J. 267 (1978), which held that the statute could not be used to sue a utility for manipulating a tariff provision to overcharge customers.
Simon acknowledges his case is not a slam-dunk, but says, “there have been cases that succeeded, not necessarily in New Jersey,” and “you’re never going to have a successful case if you don’t bring the action.”
JCP&L spokesman Ron Morano declines comment, saying he has not seen the suit. He calls Sandy the largest storm in JCP&L’s history and “a catastrophic event,” adding “we understand our customers’ frustration” and worked very hard to restore them as safely and quickly as possible.
JCP&L is one of four utility companies that provide power to New Jersey, with about 1.2 million residential and business accounts in 13 counties, the largest numbers being in Monmouth (278,940), Ocean (237,340) and Morris (196,392). At the peak of the outages, roughly 984,000 customers, about 90 percent, were without power.
Simon’s suit came a day after a similar action was brought against Long Island Power Authority in New York Supreme Court, in Nassau County.