United States District Court, D. Maine
KATHERINE VEILLEUX and JENNIFER CHON, individually and on behalf of all others similarly situated, Plaintiffs,
ELECTRICITY MAINE, LLC, PROVIDER POWER, LLC, SPARK HOLDCO, LLC, KEVIN DEAN, and EMILE CLAVET, Defendants.
ORDER ON DEFENDANT'S MOTION TO DISMISS AND
PLAINTIFFS' MOTION TO AMEND
TORRESEN UNITED STATES CHIEF DISTRICT JUDGE.
me are the Defendant's motion to dismiss and the
Plaintiffs' motion for leave to file a second amended
complaint (“SAC”). (ECF Nos. 30,
37.) The SAC asserts eight counts: Count One claims that
Defendants Kevin Dean, Emile Clavet, and Spark HoldCo, LLC
(“Spark”) violated §
1962(c) of the Racketeer Influenced and Corrupt Organizations
Act (“RICO”). SAC ¶¶
49-94 (ECF No. 37-1). Count Two alleges that Dean, Clavet,
and Spark conspired to violate RICO § 1962(c) in
violation of § 1962(d). SAC ¶¶ 95-103. Counts
Three through Eight are brought against Dean, Clavet, and
Spark, as well as Electricity Maine, LLC
(“Electricity Maine”), and
Provider Power, LLC (“Provider
Power”). These counts include, respectively, a
violation of the Maine Unfair Trade Practices Act, 5 M.R.S.A.
§ 207 (“UTPA”), SAC
¶¶ 104-10; negligence, SAC ¶¶ 111-15;
negligent misrepresentation, SAC ¶¶ 116-21;
fraudulent misrepresentation, SAC ¶¶ 122-27; unjust
enrichment, SAC ¶¶ 128-32; and breach of contract,
SAC ¶¶ 133-37.
moves to dismiss all eight counts against it. Spark argues
that the alleged injurious conduct occurred before it became
involved and that the Plaintiffs therefore fail to adequately
plead injury caused by Spark's conduct. The Plaintiffs
move for leave to amend to add allegations of conduct
subsequent to Spark's involvement, including by joining a
third named plaintiff. Spark resists the Plaintiffs'
motion to amend on the grounds that even with the additional
allegations, the SAC fails to state a plausible claim against
Spark. For the following reasons, the Plaintiffs' motion
for leave file a second amended complaint is
GRANTED and the Defendant's motion to
dismiss is GRANTED IN PART and DENIED IN
motion to dismiss a claim under Rule 12(b)(6) presents the
question of whether the complaint sufficiently states a claim
for which relief may be granted. Carrero-Ojeda v.
Autoridad de Energia Electrica, 755 F.3d 711, 717 (1st
Federal Rule of Civil Procedure 8(a)(2) requires that a
complaint contain a “short and plain statement of the
claim showing that the pleader is entitled to relief.”
To make this determination, courts in the First Circuit
follow a two-step analysis. First, the court must
“isolate and ignore statements in the complaint that
simply offer legal labels and conclusions or merely rehash
cause-of-action elements.” Carrero-Ojeda, 755
F.3d at 717. Then, taking all well-plead facts as true and
“drawing all reasonable inferences in [the
plaintiffs'] favor, ” the court must determine
whether the complaint “plausibly narrate[s] a claim for
relief.” Id. “Plausible” means
“more than merely possible” but does not require
all facts necessary to establish a prima facie case.
plausibility, Rule 9(b) requires “particularity”
in pleading claims for which “fraud lies at the
core of the action.” Hayduk v. Lanna, 775
F.2d 441, 443 (1st Cir. 1985). The particularity requirement
means the complaint must state the “time, place, and
content” of the fraud. Id. at 444. The
defendant's intent or knowledge, however, may be alleged
generally. Fed.R.Civ.P. 9(b).
Rule 15(a) provides that leave to amend a complaint should be
“freely given when justice so requires.”
Fed.R.Civ.P. 15(a). Courts therefore generally grant leave to
amend unless there is evidence of “undue delay, bad
faith or dilatory motive on the part of the movant, repeated
failure to cure deficiencies by amendments previously
allowed, undue prejudice to the opposing party by virtue of
allowance of the amendment, [or] futility of
amendment.” Forman v. Davis, 371 U.S. 178, 182
(1962). The analysis for futility of amendment applies the
same standard as that for a Rule 12(b)(6) motion to dismiss.
Morgan v. Town of Lexington, 823 F.3d 737, 742 (1st
motion to dismiss stage, I accept all of the Plaintiffs'
well-pled allegations as true. Because the analysis for
futility and a Rule 12(b)(6) motion to dismiss is the same, I
grant the motion for leave file a second amended complaint
and proceed, with the parties' agreement, to consider the
sufficiency of the allegations in the SAC.
three named Plaintiffs in this dispute are the individuals
Kathleen Veilleux and Jennifer Chon and the small business
Rocky Coast. The Plaintiffs are customers of Defendant
Electricity Maine, a competitive electricity provider
(“CEP”) in Maine, and they
propose to represent a class of 100, 000 like customers who
enrolled in Electricity Maine before December 9, 2014. SAC
¶¶ 40-41. The individual defendants, Kevin Dean and
Emile Clavet, founded Electricity Maine in 2011. SAC
¶¶ 8-9, 15. Dean and Clavet are also controlling
members of Defendant Provider Power, LLC, a corporation that
is separate from Electricity Maine but “operated as a
cohesive unit under the name Electricity Maine until May 3,
2016.” SAC ¶ 6.
like Electricity Maine are private power supply companies
that hedge electricity from wholesale providers and resell it
to customers. SAC ¶ 25. CEPs are licensed under Maine
law to compete with regulated utility providers. The Maine
Public Utilities Commission
(“PUC”) sets a “standard
offer” rate for electricity sold by regulated utility
providers. SAC ¶¶ 13-14. Fluctuation in wholesale
electricity prices may disadvantage CEPs when competing on
price with utility providers. SAC ¶ 25.
CEPs stayed out of the residential and small business market
because consumer interaction costs are high and because price
is the primary basis of competition between electricity
providers. SAC ¶ 14. In 2011, CEPs in Maine held only
0.05% of the residential and small business supply market.
SAC ¶ 15.
2011 and 2013, however, Electricity Maine enrolled nearly
200, 000 residential and small-business customers,
approximately one-third of that consumer cohort in Maine. SAC
¶¶ 15-18. Electricity Maine advertised on radio,
television, internet, and print that they offered substantial
cost savings and low rates. SAC ¶¶ 16-18. The
Plaintiffs provide several examples of this advertising,
• In August 2011, the Lewiston Sun Journal
published Clavet's statement that Electricity Maine's
rates “will always beat the standard offer. You'll
never, ever pay more than the standard offer” and
Electricity Maine's customer service project manager
Danielle Beckwith's statement “there is no catch
and no gimmicks . . . . [T]here's just a better
rate.” SAC ¶¶ 18(a)-(b); 66(a)-(b).
• Following the publication of Clavet and Beckwith's
statements in the Lewiston Sun Journal article,
Electricity Maine republished the fraudulent statements on
their website. The fraudulent statements have remained
published on Electricity Maine's website until at least
December of 2016. SAC ¶ 66(c).
• In 2012, Clavet and Dean appeared on the television
show 207TV and stated Electricity Maine prices were lower
than the standard offer and that customers would be notified
of any price increase. SAC ¶¶ 18(c); 66(d).
• In August of 2016, Provider Power stated on its
website that it “SAVED RESIDENTS MILLIONS OF
DOLLARS.” SAC ¶¶ 18(i); 66(j).
• In November of 2016, Provider Power stated on its
YouTube channel that “200, 000 customers have switched
to Electricity Maine, saving over $14 million in energy
costs.” SAC ¶¶ 18(j); 66(k).
the Defendants advertised that they would always beat the
standard offer, they knew that “recouping Electricity
Maine's investment in customer recruitment was not
possible without charging more than the standard
offer.” SAC ¶ 24; see also SAC
¶¶ 26, 68-69. Indeed, after enrolling 190, 000
customers by mid- 2012, Electricity Maine began to
significantly increase its rates in early 2013. SAC ¶
22. Later, Electricity Maine rates were double the standard
offer. SAC ¶ 22.
Maine included an automatic reenrollment provision as a term
of service. SAC ¶ 29. Until January of 2015, the Maine
PUC required CEPs to provide renewal notices between 30 and
60 days in advance of automatic renewal “in the
customer's bill or in a separate document issued with the
customer's bill.” SAC ¶ 29. Electricity Maine
also informed customers that it would send a
“Confirmation Letter” before they were
automatically reenrolled in another long-term contract under
different terms. SAC ¶¶ 29, 72-74.
customers' introductory terms expired, the Defendants did
not send Confirmation Letters by mail on “at least 200,
000 occasions between 2012 and 2015.” SAC ¶¶
30, 73. Instead, the “Defendants-if they sent any
notice at all-provided notice by email.” SAC ¶ 30.
These email notices were not included in customers' bills
or a document issued with the bill, in contravention of PUC
regulations and customer expectations. SAC ¶ 30.
Intending to confuse customers, the Defendants emailed the
notices from “unrecognizable email addresses” and
email addresses unaffiliated with Electricity Maine. SAC
¶¶ 31-32. The Defendants knew that renewal emails
were going to customers' spam folders, and customers were
not receiving notice. SAC ¶¶ 31, 34. The Defendants
were also aware that customers could not understand the
notices they did receive. SAC ¶ 32.
example, on October 1, 2014, Electricity Maine sent Chon an
email that her contract would be renewed for a 24-month term
at a rate of $0.11394/kWh. SAC ¶ 33. In October of 2014,
the standard-offer rate was approximately 43 percent lower
than Electricity Maine's offered rate. SAC ¶ 34.
This email went to Chon's spam folder, where she
recovered it in 2016. SAC ¶ 34. Chon was reenrolled
under the new terms without her knowledge. SAC ¶ 34.
3, 2016, Provider Power sold all outstanding membership
interest in Electricity Maine to Spark, a Delaware
corporation with a principal place of business in Texas. SAC
¶ 7. The Plaintiffs allege the following with respect to
• Spark had “knowledge of the Enterprise's
operations and the manner in which it automatically reenrolls
customers without notice.” SAC ¶ 63.
• Spark “seiz[ed] control of the Enterprise”
from Clavet and Dean by purchasing Electricity Maine from
Provider Power. SAC ¶ 61.
• Spark “shares control of Electricity
Maine” with Clavet and Dean, each of whom
“remains an Electricity Maine employee or
consultant.” SAC ¶¶ 8-9.
• Spark levied “significant financial
incentives” with Provider Power “to control the
Enterprise outside the corporate structure and enhance the
fraudulent scheme previously controlled exclusively” by
Clavet and Dean. SAC ¶ 61.
• Spark's “control over the Enterprise's
racketeering activities through financial incentives is
entirely distinct from its inherent corporate control over
Electricity Maine's regular business activities.”
SAC ¶ 62. Spark “us[es] financial incentives to
control the Enterprise outside the corporate