The following papers were read on this motion by defendant Gateway Energy Services Corporation pursuant to CPLR 3211(a)(1) and CPLR 3211(a)(7) for an Order granting defendant summary judgment and dismissing plaintiff’s Complaint:Notice of Motion, Defendant’s Memorandum of Law in Support Lucks Affirmation in Support, Exhibits 1-5Plaintiff’s Memorandum of Law in Opposition Shub Affirmation in Opposition, Exhibits 1-11Defendant’s Memorandum of Law in Reply Affidavits of ServiceDECISION & ORDER Upon the foregoing papers, this motion is determined as follows: Plaintiff Danielle Bell, a resident of New City, New York, commenced this putative class action1 by Summons and Verified Complaint dated March 1, 2018, alleging that defendant Gateway Energy Services Corporation (“Gateway”), of Montebello, New York, overcharged her and thousands of New York consumers for natural gas and/or electricity. The Complaint alleges that Gateway engaged in deceptive business practices to lure Bell and others into designating Gateway as their supplier for natural gas and/or electricity in lieu of their local utility companies. The Complaint charges that those deceptive business practices violated General Business Law section 349 (First Cause of Action);2 that Gateway’s conduct-including what the Complaint denominates as Gateway’s “exorbitantly” high energy-supply prices-breached Gateway’s utility contracts with Bell and other customers (Second Cause of Action); that Gateway breached its implied covenant of good faith and fair dealing with Bell and other Gateway energy-supply customers (Third Cause of Action); and that Gateway, as a result of its conduct, was unjustly enriched at its customers’ expense (Fourth Cause of Action). The Complaint seeks to certify a class of all similarly situated consumers, appoint Bell as class representative, and designate plaintiff’s counsel as class counsel. The Complaint further seeks an award of compensatory damages, restitution, injunctive relief, attorney’s fees, and the costs and expenses associated with prosecuting this action.On April 2, 2018, pursuant to a Court-issued briefing schedule, Gateway filed this pre-answer Notice of Motion to dismiss plaintiff’s Complaint pursuant to CPLR 3211(a)(1) and CPLR 3211(a)(7).3 For the reasons set forth below, Gateway’s motion is granted as to the Second, Third and Fourth Causes of Action, but denied as to the First Cause of Action alleging violation of General Business Law section 349. Accordingly, Gateway will be required to answer the Complaint, to the extent specified below.1. Background: Market Deregulation and Plaintiff’s ComplaintStarting in the 1980s, the Legislature authorized the New York State Public Service Commission (“PSC”) to begin deregulating New York’s retail energy market by requiring utilities to transport certain energy commodities owned or supplied by other companies (see e.g. Rochester Gas & Elec. Corp. v. Public Serv. Commn., 71 NY2d 313-320-522 [1988]; Public Service Law §66-d). Starting in the 1990s, the PSC restructured the electric service provider industry by allowing independent energy service companies (“ESCOs”), such as Gateway, to supply energy to retail consumers and set rates by means separate from geographically-based local utility companies that, by law, must continue to deliver such energy even if such local utility does not supply the energy it delivers (see id.; General Business Law §349-d[1][b]). This market-access policy changed New York’s historical practice by which each residential customer previously received electricity and natural gas from a local utility company that supplied energy, delivered energy and charged the customer on a single bill for both supply and distribution (see e.g. Retail Energy Supply Ass’n v. Public Service Commn., 152 AD3d 1133, 1134 [3d Dept 2017], lv granted sub nom. National Energy Marketers Assn. v. New York State Public Serv. Commn., 31 NY3d 902 [Mar. 27, 2008]; Progressive Mgmt. of N.Y. v. Galaxy Energy LLC, 51 Misc. 3d 1203, 1203 [Sup Ct Nassau Co 2016]).The gravamen of plaintiff’s Complaint is that Gateway used its “false promise of competitive rates based on market conditions in order to deceive [Bell and similarly situated] consumers into purchasing energy” from Gateway instead of local utilities, when in fact Gateway charged energy prices “substantially higher than rates charged by” local utilities and that bore “no relation to market rates or the wholesale cost of natural gas and electricity” (Complaint, at14). Gateway’s consumer-outreach practice, the Complaint asserts, was a “classic bait and switch deceptive scheme” by which “Gateway lure[d] consumers into switching to [Gateway's] natural gas and/or electricity supply service by offering teaser rates that [were] much lower than its regular rates” (id., at17), then raising rates far above market prices.The Complaint alleges that Gateway mailed Bell a letter in 2011 “enticing her to switch” to Gateway from her local natural gas and electricity provider, nonparty Orange and Rockland Utilities (“O&R”) (Complaint, at17). Bell signed with Gateway an Enrollment Consent and began a Fixed-Rate Plan (“FRP”) to purchase natural gas and electricity from Gateway, while also preserving her O&R utility-delivery service (see id.). The Enrollment Consent included an “Account Breakdown” stating that “Our fixed-rate plans are intended to protect you from future price Increases” (Def Exh. 2 [NYSCEF Doc. 11]), and indicating that Gateway’s provision of electricity and natural gas supply services was subject to “New York Residential Terms and Conditions” (“Terms and Conditions”) attached thereto (see id.). Those Terms and Conditions provided that Bell’s FRP, at its expiration, would roll over into a Variable-Rate Plan (“VRP”) that she could cancel at any time and without penalty:“If you have chosen a Fixed-Rate Plan, your initial term (“Initial Term”) is the term specified in your Enrollment Consent or, if no term is specified, 12 months. We will send you a renewal notice between 30 and 60 days prior to the end of the Initial Term. Your Fixed-Rate Plan shall then automatically renew for successive month-to-month periods (each a “Renewal Term”) at our variable rate as described in the Price section below. You may cancel your [V]ariable-[R]ate [P]lan at any time with no early termination fee”(Def Exh. 2 [NYSCEF Doc. 11]).In relation to Gateway’s variable pricing for electricity and natural gas, the Terms and Conditions provided as follows:“Variable-Rate Plan. The price you will pay for all natural gas and/or electricity under our Variable-Rate Plan is a rate we set each month based on our evaluation of market conditions. Market conditions that we might consider include, among other items: the prevailing price of natural gas or electricity on the market, costs involved in moving the gas or electricity from the producer to your utility, our total acquisition costs for the electricity or natural gas (including, where applicable, transmission costs, storage costs, transportation costs and line losses) and the prevailing rates offered by your utility and other competitors”(id.). The Terms and Conditions also included a “No Warranties” clause in relation to pricing, which provided in relevant part:“No Warranties…. [W]e specifically disclaim any warranty or guaranty charged by us that the energy supplied pursuant to the Agreement will be lower than the price that you would have been charged by the utility or another ESCO”(id.). Gateway’s Terms and Conditions also contained an integration clause stipulating that such Terms and Conditions, along with plaintiff’s signed Enrollment Consent, “sets forth the entire agreement between the parties. Any and all prior or contemporaneous agreements, understandings and representations between the parties, whether verbal or written, are superseded by this Agreement” (Exh. A, id.).Bell renewed her Gateway FRP in May 2012 for a two-year term, subject to the same stipulations as the 2011 FRP, including the Terms and Conditions (see Def Exh. 4 [NYSCEF Doc. 13]). When Bell’s second FRP expired in December 2014, plaintiff renewed with Gateway for yet another two-year FRP (see Complaint, at24; Exh. A [NYSCEF Doc. 2]). Appurtenant to that renewal, Gateway mailed Plaintiff a letter on or about December 17, 2014, containing the Terms and Conditions (id., at
20-21), which again were the same as for the 2011 FRP and 2012 FRP.When Bell’s third FRP expired and she did not renew or cancel, Gateway automatically switched Bell to a month-to-month VRP (Complaint, at23), pursuant to the Terms and Conditions authorizing Gateway to switch FRP-expiring customers into a month-to-month VRP that the customer could cancel at any time and without penalty.The Complaint further alleges that Gateway had enclosed with its December 2014 renewal a cover letter to Bell (“2014 communication”) stating that:“Gateway remains dedicated to your complete satisfaction by providing you with competitive energy prices, attractive pricing plans, and excellent customer service”(Complaint, at25 [emphasis supplied in Complaint])-a representation that, according to the Complaint, Gateway repeated in Gateway’s letters to Bell explaining her utility rates under her 2014 FRP (id.; Exhs. B-1, B-2 [NYSCEF Docs. 3-4]).The Complaint avers that after paying variable rates in 2016 and 2017, Bell opted back into a Gateway FRP for several months before cancelling her Gateway service on May 18, 2017 (see Complaint, at27; see also Def’s Mem of Law, at 1 & n1).Based on Gateway’s 2014 communication purporting to assure “competitive energy prices,” the Complaint asserts that Bell reasonably understood-and that any reasonable consumer likewise would understand-Gateway to promise that it would set natural gas and electricity supply rates that would be competitive based on market conditions (see Complaint, at26). Instead, however, Plaintiff avers that during the 2016-2017 billing cycles in which Bell participated in Gateway’s VRP,4 Gateway’s retail price for electricity per kilowatt-hour (“KWh”) was consistently higher than O&R’s retail price and the New York Independent System Operator (“ISO”) all-in wholesale price, and in certain months was even double or triple those benchmark rates. For instance, Plaintiff asserts that during her April-May 2016 billing period under Gateway’s VRP, Gateway’s electricity-supply rate was $0.1239/kWh compared to $0.06197/kWh (for O&R) and $0.0445/kWh (for wholesale), and that this billing period reflected Gateway’s lowest VRP electricity-supply rates during Plaintiff’s participation in the VRP (see id., at28). Plaintiff further avers, for that same billing period, an even greater percentage disparity between Gateway’s variable-rate price for natural gas per 100 cubic feet (“CCF”) and O&R’s retail price and the wholesale market. For instance, Plaintiff claims that during her April-May 2016 billing period under Gateway’s VRP, Gateway’s natural gas-supply rate was $0.73/CCF compared to O&R’s $0.19716/CCF and the wholesale market’s $0.303/CCF (see id.). The Complaint alleges corresponding disparities between Gateway utility-supply prices, on the one hand, and corresponding O&R and wholesale prices, on the other, for each month that plaintiff participated in Gateway’s VRP (see id.).Based on the foregoing illustrative month-by-month comparative pricing data between Gateway, O&R and the wholesale market, the Complaint argues that the prices that Gateway charged plaintiff were not “competitive” as Gateway’s 2014 communication indicated. Moreover, the Complaint asserts that Gateway’s VRP prices did not fluctuate with market prices, and therefore Gateway’s prices did not and could not reflect “market conditions” as Gateway’s Terms and Conditions had promised (Complaint, at
