Barbara Gillis v. Respond Power LLC

• Court: Court of Appeals for the Third Circuit
• Decided: February 3, 2020
• Docket: 18-2765
• Status: Unpublished

Opinion

NOT PRECEDENTIAL

UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT

________________

No. 18-2765 ________________

BARBARA GILLIS; THOMAS GILLIS; SCOTT MCCLELLAND; KIMBERLY A. MCCLELLAND, INDIVIDUALLY AND ON BEHALF OF OTHERS SIMILARLY SITUATED,

Appellants

v.

RESPOND POWER, LLC ________________

On Appeal from the United States District Court for the Eastern District of Pennsylvania (D. C. Civil Action No. 2-14-cv-03856) District Judge: Honorable Mitchell S. Goldberg ________________

Submitted under Third Circuit LAR 34.1(a) on March 14, 2019

Before: MCKEE, ROTH and FUENTES, Circuit Judges

(Opinion filed: February 3, 2020)

OPINION ________________

 This disposition is not an opinion of the full Court and pursuant to I.O.P. 5.7 does not constitute binding precedent. ROTH, Circuit Judge

Appellants in this case were subscribers to a “variable rate” service offered by

Respond Power, LLC. Consumers who subscribed to this service agreed to pay a

variable rate for energy that fluctuated depending on several factors. Appellants filed a

proposed class action claiming that various injuries resulted from an allegedly misleading

disclosure. Because the District Court correctly dismissed their suit, we will affirm.

I

Appellants are energy consumers who entered into variable rate energy

agreements with Respond between November 2010 and June 2014. Under the variable

rate energy agreement, consumers contracted with Respond for their energy instead of

contracting directly with local utility companies. A disclosure in the agreement stated

that the price each consumer would pay “may vary month to month,” and that, although

Respond’s “goal each and every month is to deliver power at a price that is less than what

[the consumer] would have paid” the local utility company, “due to market fluctuations

and conditions, Respond Power cannot always guarantee that every month [the

consumer] will see savings.”1 Appellants alleged that Respond’s advertising “promised

customers . . . that [they] would save on their monthly electric bills if they switched” to

Respond’s service,2 and quoted from advertising that emphasized the “MAJOR

1 App. 265. 2 App. 441. 2 ADVANTAGES” of switching, including “Competitive Rates with Historical Average

Savings of up to 10% Annually.”3

Appellants filed this lawsuit after discovering that they were actually paying a

monthly rate that was, at certain points, several times higher than the rate they would

have paid the local utility company. According to Appellants, neither the Disclosure nor

Respond’s advertising adequately explained that, by switching to Respond, it was

possible that consumers could end up paying a higher monthly rate. They filed a putative

class action and eventually sought certification on two Pennsylvania state law claims, one

for breach of contract and one for breach of the implied duty of good faith and fair

dealing. The District Court denied their motion for class certification. On appeal, we

vacated on grounds not relevant here and “remand[ed] for reconsideration of Plaintiffs’

motion [for class certification].”4 On remand, the District Court “recognize[d] that the

mandate rule may require reconsideration of Plaintiffs’ motion for class certification.”5

Nevertheless, in the interest of efficiency and, explaining that class certification could

depend on the merits, the court invited the company to “answer, move, or otherwise

respond” to the complaint.6 The company moved to dismiss, and the court granted that

motion. The energy consumers appealed again.

II7

3 App. 292. 4 Gillis, et al. v. Respond Power, 677 F. App’x 752, 753 (3d Cir. 2017). 5 App. 465. 6 App. 465. 7 The District Court had jurisdiction pursuant to 28 U.S.C. §§ 1332(d) and 1446. We have jurisdiction pursuant to 28 U.S.C. § 1291. 3 Appellants make two arguments on appeal. First, they argue that the District

Court failed to follow our mandate when it invited a response to the complaint instead of

first deciding class certification. Second, they argue that the District Court erred in

dismissing their claims. We review both issues de novo.8

First, our instruction to the District Court to reconsider the motion for class

certification did not prevent the District Court from inviting the company to respond to

the complaint. Appellants’ argument rests on an overly formalistic reading of our prior

opinion. While a district court “must implement both the letter and spirit of the

mandate,”9 we are confident that the District Court did so here because it determined that

the most efficient way to continue was by assessing the strength of the class’s allegations

through motion-to-dismiss briefing. Nor was it otherwise improper to rule on the motion

to dismiss before reaching the question of class certification. Class actions often proceed

in this manner.10

Appellants do not claim that the District Court ignored a substantive ruling from

their prior appeal. Indeed, we did not previously rule on the merits of Respond’s motion

to dismiss. “On remand, a trial court is free to ‘make any order or direction in further

progress of the case, not inconsistent with the decision of the appellate court, as to any

8 Krieger v. Bank of Am., N.A., 890 F.3d 429, 437 (3d Cir. 2018); McBride v. Int’l Longshoremen’s Ass’n, 778 F.3d 453, 458 n.5 (3d Cir. 2015). 9 Bankers Trust Co. v. Bethlehem Steel Corp., 761 F.2d 943, 949 (3d Cir. 1985). 10 Gayle v. Warden Monmouth Cty. Corr. Inst., 838 F.3d 297, 313 n.19 (3d Cir. 2016) (noting that certification need not precede motion to dismiss briefing). 4 question not settled by the decision.’”11 We therefore decline Appellants’ invitation to

intrude on the District Court’s inherent power to manage its own docket.

Second, accepting all facts alleged in the complaint as true and construing the

complaint in the light most favorable to Appellants, we agree with the District Court that

the complaint does not state a claim for relief that is plausible on its face. With respect to

the breach of contract claim, Appellants cannot plausibly allege an ambiguity where the

agreement at issue expressly states that “Respond Power cannot always guarantee that

every month you will see savings.”12 Appellants fault the District Court for not applying

Pennsylvania law on “latent” ambiguity in contracts. Respond counters that the

Appellants did not make this argument below. Even assuming this argument was

properly preserved, “the ambiguity inquiry” must pertain to the meaning of a specific

term in the contract “rather than simply support a general claim that the parties meant

something other than what the contract says on its face.”13

By urging us to use the Disclosure and marketing materials to find a latent

ambiguity in the term “Variable Rate,” and then construe that term as a prohibition on

charging more than local utility companies, Appellants seek to do far more than interpret

an ambiguous term. Instead, their reading would turn the agreement on its head. As the

District Court said, the disclosure contains “clear and unambiguous language” that

11 Casey v. Planned Parenthood of Se. Pa., 14 F.3d 848, 857 (3d Cir. 1994) (quoting Bankers Trust Co. v. Bethlehem Steel Corp., 761 F.2d 943, 950 (3d Cir. 1985)). 12 App. 237. 13 Bohler-Uddeholm America, Inc. v. Ellwood Group, Inc., 247 F.3d 79, 96 (3d Cir. 2001). 5 vitiates Appellants’ claims,14 and a court “may not modify the plain meaning under the

guise of interpretation.”15 16

Appellants’ second remaining cause of action is for breach of the duty of good

faith and fair dealing. Pennsylvania appellate courts, as well as federal courts sitting in

diversity, have generally held that every contract under Pennsylvania law imposes a duty

of good faith and fair dealing in the performance and enforcement of the contract.17

Appellants argue that Respond violated this duty by charging more than local utility

companies for energy. The District Court correctly dismissed this claim, as the implied

duty does not displace the clear terms of the parties’ written agreement.18 As discussed

above, that agreement imposed no obligation on Respond to charge less than local utility

14 App. 17. 15 Stephan v. Waldron Elec. Heating & Cooling LLC, 100 A.3d 660, 665 (Pa. Super. 2014). 16 In a similar case in the Second Circuit Court of Appeals, Mirkin v. XOOM Energy, LLC, 931 F.3d 173 (2d Cir. 2019), energy consumers sued the third-party energy supplier for breach of contract. The variable rate contract there provided that the monthly rate would be based on XOOM’s “actual and estimated supply costs.” Because the consumers’ rates were far higher than those costs, the court held that the consumers’ allegations were sufficient to state a claim. The present case is distinguishable from XOOM because Respond’s contract lists different factors as the basis for cost and the consumers do not argue that Respond failed to base its rate on those factors. 17 E.g., J.J. DeLuca Co. v. Toll Naval Assocs., 56 A.3d 402, 412 (Pa. Super. Ct. 2012) (stating that every contract imposes such a duty); Kamco Indus. Sales, Inc. v. Lovejoy, Inc., 779 F. Supp. 2d 416, 425 (E.D. Pa. 2011) (assuming the duty exists); but see Ash v. Continental Ins. Co., 593 Pa. 523, 533 n.2 (2007) (declining to decide the issue). 18 See, e.g., USX Corp. v. Prime Leasing Inc., 988 F.2d 433, 439 (3d Cir. 1993). 6 companies every month. The agreement only required that Respond base its variable rate

on certain factors. Appellants do not argue that Respond failed to do so.19

III

For the reasons stated above, we will affirm the order of the District Court

granting Respond’s motion to dismiss.

19 Furthermore, Appellants’ reliance on Kamco Industrial Sales, Inc. is misplaced, as that case involved the interpretation of an ambiguous contract provision that would have nullified other provisions in the contract, see 779 F. Supp. 2d at 427-29. 7