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Hamlen v. Gateway Energy Services Corporation

United States District Court, S.D. New York

March 6, 2017

ROBERT HAMLEN, Plaintiff,
v.
GATEWAY ENERGY SERVICES CORPORATION, Defendant.

          OPINION AND ORDER

          Vincent L. Briccetti United States District Judge

         Plaintiff Robert Hamlen brings this putative class action against Gateway Energy Services Corporation claiming violations of the New Jersey Consumer Fraud Act (“NJCFA”), N.J. Stat. Ann. § 56:8-1 (West); breach of contract; breach of the implied covenant of good faith and fair dealing; and unjust enrichment, alleging defendants used deceptive pricing practices to charge thousands of New Jersey customers higher rates for natural gas.

         Now pending is defendant's motion to dismiss. (Doc. #14).

         For the reasons set forth below, the motion to dismiss is GRANTED IN PART and DENIED IN PART.

         The Court has subject matter jurisdiction pursuant to 28 U.S.C. § 1332(d).

         BACKGROUND

         In deciding the pending motion, the Court accepts as true all well-pleaded allegations in the complaint and draws all reasonable inferences in plaintiff's favor.

         Plaintiff is a New Jersey citizen who purchased natural gas from defendant from November 2010 to January 2016. Defendant is a New York corporation that sells retail electricity and natural gas to commercial and residential consumers in New Jersey, among other areas.

         In September 2010, plaintiff was a customer of New Jersey Natural Gas (“NJNG”), a different retailer, when he spoke with defendant's representative via telephone. The representative recited defendant's standard sales pitch for its variable-rate natural gas plan, stating “your price of . . . natural gas will be a variable rate set by Gateway Energy based on market conditions and will fluctuate monthly.” (Compl. ¶ 15). Subsequent to this conversation, defendant provided plaintiff with the contract.

         There are three contract clauses relevant to this case. First, the “Variable-Rate Plan” clause provides:

The price for all electricity or natural gas sold under our Variable-Rate Plan is a rate set by us each month based on our evaluation of a number of factors that affect the total price of electricity or natural gas to a customer. The following description is not exhaustive of all factors that may influence our pricing decision each month, but it does describe the major components that influence our analysis in a typical month. Each month our management uses the information described below, along with numerous other considerations, to determine how low a price we can charge in the upcoming month.
• We determine the cost of all electricity or natural gas (including, where applicable, transmission costs, storage costs, transportation costs and line losses) that we have already obtained for delivery to customers in your utility territory for the upcoming month. Because we often acquire supply over time in preparation for future delivery needs (in an effort to mitigate the volatility in price) and do not acquire all of our required electricity or natural gas from the spot market, our supply costs may not directly follow spot market prices.
• If additional supplies of electricity or natural gas will be required for the upcoming month, we will determine the anticipated cost to acquire such additional supplies from the spot market.
• If we expect to have surplus supply for the upcoming month, we evaluate the expected income we may receive from selling the surplus. Additionally, with electricity, we may expect to have surplus or shortfall in any given hour of the upcoming month. In this case, we evaluate the expected income or costs that may be incurred by eliminating the surplus or shortfall.
• We evaluate, if known, the prices that your utility and other competitors in your area plan to charge in the upcoming month.
• We evaluate the amount of profit we hope to earn from the sale of electricity or natural gas in your utility territory.
• We evaluate any taxes that must be included in the rate we charge for electricity or natural gas in your jurisdiction.
• From time to time, and as a direct result of sudden or drastic increases in price, we may experience a higher level of cost to supply our customers than we wish to bill our customers in a single period. In these circumstances, we may amortize ...

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