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Srt Enterprises, Inc., For Itself Individually and On Behalf of Others Similarly Situated v. Direct Energy Business

December 20, 2011

SRT ENTERPRISES, INC., FOR ITSELF INDIVIDUALLY AND ON BEHALF OF OTHERS SIMILARLY SITUATED PLAINTIFFS
v.
DIRECT ENERGY BUSINESS, LLC DEFENDANT.



The opinion of the court was delivered by: Marvin E. Aspen, District Judge:

MEMORANDUM OPINION AND ORDER

Presently before us is the motion of defendant Direct Energy Business, LLC ("DEB") to dismiss the complaint filed by Plaintiff SRT Enterprises, Inc. ("Plaintiff"). Plaintiff brings an action for breach of contract and fraud against DEB, an electricity supplier, alleging that DEB billed Plaintiff for undisclosed and excessive charges. Specifically, Plaintiff is suing DEB on behalf of itself and "all persons and entities who have purchased electricity, natural gas, or other services from Direct Energy and who were billed (a) a cancellation or early termination charge by Direct Energy, or (b) a charge classified as a 'Customer Charge,' 'Standard Metering Charge,' 'Distribution Facility Charge,' 'Environmental Cost Recovery Adj.' or 'Energy Efficiency Programs.'" (Id. ¶ 21.) DEB contends that Plaintiff failed to state a claim against it because DEB disclosed, and was permitted to charge, the fees at issue. DEB further contends that the complaint should be dismissed because this dispute should be adjudicated in the first instance before the Illinois Commerce Commission ("ICC" or "Commission"). For the reasons set forth below, we grant the motion.

I. FACTUAL BACKGROUND

In 1997, the Illinois legislature passed the Electric Service Customer Choice and Rate Relief Law ("Rate Relief Act"), as Article XVI of the Illinois Public Utilities Act ("IPUA"), to "introduce competition into the Illinois electricity market." Commonwealth Edison Co. v. Illinois Commerce Comm'n, 328 Ill. App. 3d 937, 939, 767 N.E.2d 504, 506 (2d Dist. 2002); 220 ILCS 5/16-101 et seq. The law allowed for the creation of Alternative Retail Electric Suppliers ("ARES"), which are nonutility entities that "may or may not be affiliated with an existing utility company, and [are] authorized to sell and market electricity to customers." Local Union Nos. 15, 51, 702, IBEW v. Illinois Commerce Comm'n, 331 Ill. App. 3d 607, 609, 772 N.E.2d 340, 342 (5th Dist. 2002). When a customer contracts with an ARES, a local electric utility still delivers the customer's actual electricity. Commonwealth Edison Co., 328 Ill. App. 3d at 939, 767 N.E.2d at 506.

Plaintiff is an Illinois corporation with its principal place of business in Chicago, Illinois. (Compl. ¶ 4.) DEB, a limited liability company with its principal place of business in Pennsylvania, is an ARES that supplies electricity in Illinois and other states.*fn1 (Id. ¶ 5.) In February 2009, Plaintiff received a telephone call from a DEB representative offering to supply Plaintiff's electricity at a rate of $0.75 per kilowatt hour. (Id. ¶ 9.) According to Plaintiff, DEB claimed that would be less expensive than the rate offered by ComEd, Plaintiff's electricity supplier at the time. (Id.) On February 26, 2009, Plaintiff and DEB entered into a Power Supply Coordination Service Agreement ("Agreement"). (Id. ¶ 10.) The Agreement was for a term of 24 months and listed the price as $0.75 per kilowatt hour. (Id.) The Agreement included sections on "Price," "Billing and Payment," "Termination," and "Effect of Termination." (Id. ¶¶ 11--13.) As to the price, the Agreement stated: "The Price shall not include any charges for delivery services provided by the Host Utility; however.. charges from the Host Utility for any delivery service charges shall also be included upon the Direct Energy invoice." (Id. ¶ 11.)

In June 2009, Plaintiff cancelled its service with DEB because DEB's invoice to Plaintiff included charges that were allegedly undisclosed in the Agreement. (Id. ¶ 15.) Plaintiff also asserts that DEB charged undisclosed and excessive early termination and late payment charges. (Id. ¶¶ 19--20.)

Based on these allegations, Plaintiff brings two causes of action. The first cause of action is for breach of contract. Plaintiff accuses DEB of breaching the Agreement "by charging Plaintiff and class members for items above and beyond the quoted kilowatt per hour charge." (Id. ¶ 33.) In particular, Plaintiff claims that DEB charged for items supposedly included in the price, as well as for items that were not disclosed in the Agreement at all. (Id. ¶¶ 33--35). The second cause of action alleges violation of the Illinois Consumer Fraud and Deceptive Business Practices Act ("ICFA"). 815 ILCS 505/1 et seq. Plaintiff contends that DEB violated the ICFA by billing for charges that were not disclosed to Plaintiff and not included in the Agreement. (Id. ¶ 41.) Moreover, Plaintiff argues, the early cancellation charge is "so excessive as to constitute an unfair and deceptive practice within the ICFA." (Id. ¶ 43.)

Plaintiff seeks to "stop these deceptive billing practices and use of unlawful cancellation charges" and to recover "all undisclosed and unenforceable charges collected by Direct Energy." (Id. ¶ 3). Plaintiff thus seeks an injunction, compensatory and punitive damages, and attorneys' fees and costs. (Id. at 10.) In its motion, DEB contends that the disputed fees were lawful and disclosed in the Agreement. (Mem. at 2.) DEB further argues that we lack jurisdiction over this dispute over "rates and fees charged by DEB or ComEd . . . which are subject to the regulating authority of the Commission or within its specific expertise." (Id.)

II. STANDARD OF REVIEW

Motions to dismiss under Rule 12(b)(1) and (b)(6) are meant to test the sufficiency of the complaint, not to decide the merits of the case. Weiler v. Household Fin. Corp., 101 F.3d 519, 524 n.1 (7th Cir. 1996). A court may grant a motion to dismiss under Rule 12(b)(6) only if a complaint lacks "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S. Ct. 1955, 1974 (2007); see Ashcroft v. Iqbal, 556 U.S. 662, 129 S. Ct. 1937, 1949--50 (2009) (stating that a court's determination "whether a complaint states a plausible claim for relief will . . . be a context-specific task"); Killingsworth v. HSBC Bank Nev., N.A., 507 F.3d 614, 618--19 (7th Cir. 2007); EEOC v. Concentra Health Servs., Inc., 496 F.3d 773, 776--77 (7th Cir. 2007). In evaluating a motion to dismiss, we must accept all well-pleaded allegations in the complaint as true and draw all reasonable inferences in the plaintiff's favor. Iqbal, 127 S. Ct. at 1949--50; Bissessur v. Ind. Univ. Bd. of Trs., 581 F.3d 599, 602--03 (7th Cir. 2009); Brooks v. Ross, 578 F.3d 574, 581 (7th Cir. 2009).

Rule 12(b)(1) requires dismissal of claims over which the federal court lacks subject matter jurisdiction. Fed. R. Civ. P. 12(b)(1). Jurisdiction is the "power to decide" and must be conferred upon the federal court. In re Chicago, Rock Island & Pacific R.R. Co., 794 F.2d 1182, 1188 (7th Cir. 1986). In reviewing a Rule 12(b)(1) motion, we may look beyond the complaint to other evidence submitted by the parties to determine whether subject matter jurisdiction exists. See United Transp. Union v. Gateway W. Ry. Co., 78 F.3d 1208, 1210 (7th Cir. 1996). A plaintiff faced with a 12(b)(1) motion to dismiss bears the burden of establishing that the jurisdictional requirements have been met. See Kontos v. U.S. Dep't Labor, 826 F.2d 573, 576 (7th Cir. 1987).

III. ANALYSIS

While Plaintiff frames its complaint as an action for breach of contract and fraud, the complaint raises issues reserved for the jurisdiction of the ICC. First, the ICC has exclusive jurisdiction over whether DEB complied with the requirements for ARES as set out in the IPUA. 220 ILCS 5/16-115B. In particular, the ICC has jurisdiction "to entertain and dispose of complaints concerning the terms of a contract for utility service between an ARES and a customer." Chiku Enter. Inc. v. GDF SUEZ Energy Res. NA Inc., 10-0157, 2011 WL 1474049 (Ill.C.C. Apr. 12, 2011). Second, the ICC has jurisdiction under the IPUA to hear Plaintiff's complaint, whether the charges are DEB's or ComEd's. As such, we need not resolve whether the charges at issue are attributable to DEB or ComEd.

A. The Illinois Commerce Commission has jurisdiction to hear complaints that DEB violated ...


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