Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—Mass. Sup. Ct.: Grant of class certification reversed, consumer fails to show injury due to power outage, (Aug 1, 2016)

By Linda O’Brien, J.D., LL.M.

Customers of a public utility were improperly certified to proceed as a class in an action over the loss of electric power during a severe ice storm, the Massachusetts Supreme Judicial Court has ruled. The consumers failed to demonstrate an economic injury by allegedly overpaying for utility services for purposes of a claim under the Massachusetts Consumer Protection Act (Bellermann v. Fitchburg Gas and Electric Light Co., July 29, 2016, Duffly, F.).

Fitchburg Gas and Electric Light Company (FG&E) is a public utility that provides electric service to customers in the municipalities of Fitchburg, Lunenburg, Townsend, and Ashby. In December 2008, a major ice storm struck the northeastern United States, which caused tree limbs and whole trees to fall onto FG&E’s utility poles and electrical lines due to ice accumulation. The storm also damaged transmission lines that supplied FG&E’s system with power and resulted in power outages across New England, including all of FG&E’s customers.

Consumer Marcia Bellermann and other residential and business FG&E customers who lost power during the winter storm filed a putative class action suit against FG&E. The plaintiffs alleged that FG&E was inadequately prepared for the storm and deceptively communicated about the extent of the power outages in violation of the Massachusetts Consumer Protection Act (G.L. c. 93A). The plaintiffs moved for class certification based on those theories of injury. In October 2014, the lower court’s denial of class certification on the ground that the asserted injuries suffered by class members were too dissimilar was affirmed on appeal.

Subsequently, the plaintiffs proposed an alternative theory of injury, maintaining that they paid for a level of emergency preparedness and efficient restoration which FG&E failed to provide and the services they received were worth less than what they paid for those services. The lower court granted the plaintiffs’ renewed motion for class certification pursuant to the alternative theory of injury and FG&E appealed.

Class certification. The court found that the plaintiffs’ assertion of overpayment for FG&E ‘s services did not set forth a cognizable injury under G.L. c. 93A. The plaintiffs asserted that, for 16 years, FG&E failed to comply with Department of Public Utilities (DPU) regulations regarding emergency storm preparedness and they suffered economic injury by overpaying for a level of emergency preparedness required by DPU regulations.

The court noted that the plaintiffs’ overpayment theory failed as a matter of law because it was based on the incorrect assumption that they suffered an injury merely by paying a particular utility rate. While, under some circumstances, a consumer may suffer an economic injury purchasing a product or service that does not comply with applicable regulations, the injury must be a "separate, identifiable harm arising from the violation that is distinct from the claimed unfair or deceptive conduct itself."

In this case, according to the court, the plaintiffs did not claim that, as a result of FG&E’s alleged regulatory noncompliance, they did not receive the electricity for they paid. Instead, they contended that the noncompliance cause them to pay for emergency preparedness that they would not have received if an emergency had materialized during the class period. Such claim of economic injury based on a potential emergency preparedness did not support class certification under G.L. c. 93A. Thus, the plaintiffs did not meet the threshold requirement of demonstrating an injury caused by "the use or employment of the unfair or deceptive act or practice, the court concluded.

The case is No. SJC-11492.

Attorneys: C. Deborah Phillips (Nickless, Phillips and O'Connor) for Marcia D. Bellermann. Gavin J. Rooney (Lowenstein Sandler LLP) for Fitchburg Gas & Electric Light Co.

Companies: Fitchburg Gas and Electric Light Co.

Cases: StateUnfairTradePractices MassachusettsNews