defendant's contract requires that their energy rates be based on the defendant's supply costs that's not their only basis but is that the basis to start the calculation that you know your honor that is the only opening brief the customers monthly variable rate is based on zooms actual and estimated supply costs which may include but not be limited to prior period just months inventory and balancing costs so it's  confined to the defendant's supply costs that's whatever balance it costs that doesn't seem like it's a scientific term balancing costs are actually included in the wholesale cost of energy when you purchase and want to cause a balancing in that and energy companies such as zoom pays to purchase energy is complete composed of dozens of components though most of those components are regulated costs and regulated components and a balancing cost is one dollar of those supply costs which is what their contract but not identical know your own argument tied to but not identical they must reflect their costs as these companies are very lean businesses they're centrally brokers and traders they direct energy in direct energy the contract said that the defendants prices were to be based on business and market conditions the court said well that's there's significant leeway in here the plaintiffs in that case were trying to tie the company's rates to its supply cost that was their their main argument this is the opposite the company has bound its costs has bound its rates to its supply cost so we don't have the same problem that the  plaintiffs had in direct energy where the court was able to say well there's these myriad of factors there's many things that can go into how the defendant set straight in and in direct energy the practices that were challenged there are indicative of the practices the practices of this industry as a whole and as pointed out by the public service commission staff recently this is a one billion dollars fraud that's being perpetrated on new york consumers consumers can't compare their prices they can't tell that they're getting overcharged in the energy companies like defendants here they know it and they're charging much higher rates than then what they're paying for energy and consumers are stuck idea  staff has found that the industry has has taken proactive steps to obscure their pricing it's not like when you drive around and you purchase gas you can look and see what how much the gas is charging this is something that is billed to you constantly as you use your energy it comes a month later and it's very difficult to compare prices which is why companies like zoom make representations that their prices are going to be tied to their cost that they can get market share that we haven't had discovered yet say you  know exactly the relationship between their costs and the prices they charge that is true but we have a very good idea because im purchases on the wholesale market this is simply a wholesaler that they buy on the wholesale market and they know the price they  basically know the price we don't know the exact price we don't know all of their supply costs but again they don't they're very lean operations they don't have a lot of staff they certainly don't deliver or bill or do or  the many of the marketing components are outsourced but again this is a product you signed up once as your honor pointed out in your honour's dissent in the in the richards case maybe you do some diligence the st month that you sign up the st month but they they trick  you there they give you a teaser rate so the month that you sign up where you're doing diligence you're on a teaser rate and then the next months come and they raise your rate raise your rate raise your rate and all of a sudden you're paying sometimes three hundred and four thousand and fifty percent more than you would have paid you utility for the same energy it's the same stuff there's no difference and here the defendants have tied their contract their prices to their underlying supply c allege in the complaint which must be taken is true and we show based on wholesale prices that the defendants of cost don't resemble their supply costs in fact they're taking four hundred and five thousand and sixty percent margins compared to what they're paying on wholesale that's not what that's not what you would pay with con ed or any other utility and here the contract requires that cost be that the defendant's rates be based on their supply costs time is running out why do you believe you implied covenant climb so this point it's just breach of contract it's not unjust enrichment and those two claims were removed from the proposed many complaint because they were dismissed those the judge's ruling that those kinds were duplicative of the contract well the court below faulted us for the perceived faults of the court found was that we didn't disclose our calculations because it's a complaint but we disclosed our calculations so that the court could see how the various components added up and didn't equal anywhere near what the prices zoom zoom was charging the court also found that we didn't specify as clearly is the court would have like the zoom purchases on the wholesale market which is key because if zoom says our rates are going to be based on our costs it's a fair point to say what are your costs well we found proof that zoom is a participant in new york's regulated wholesale energy market and so we're able to determine their costs and when you line up their costs for energy alongside the rates they charge it doesn't add up and it's consistent with with a pattern of behavior that has harmed new york consumers to the tune of billions of dollars in this case is just one of the many consumer protection actions that are trying to bring some oversight to this industry and protect new york consumers and we should have been allowed and should be allowed to proceed to discovery thank you are you here arguing the sufficiency of your st complaint or your amended complaint both your honor the st complaint we believe was sufficient it's a simple breach of contract case the defendant's contract says its prices are razor it's simple not you i'm a little surprised here you're even invoking the st complaint if you've got a nd complaint in the record and that's the one that is limited to the breach of contract and drops the others i would have thought you're here on the nd line we're here on both because it's the we're at the pleading stage your honor and we pled what zoom's why do you want the st one which has three cause of action two of which you just told us you dropped so why should we look at something  most of which is the st that's not in this fair enough if we have to stand on one complaint we would stand on the nd the nd car right now and district court referred to an allegation of wholesale cost being ninety percent of total calls that's correct is that in the nd complaint yes your honor you tell me you don't want to hand her can you help me find with her yes your honor i can but it was there i just don't see it as look you're satisfied it's in there so yes you're if you like we can submit a letter if it's if you say it's and it's definitely in there a term search would right now you keep talking about their supply costs but in fact your nd complaints refer specifically to  the fact that they supply costs were based on their cost in the wholesale market that's correct they buy on the wholesale market so they again that's why i don't understand in your well your st complaint does talk about supply but if your theory is they promised that the price to the consumer would vary according to the wholesale price and why not just say that why do you then sort of use the more general terms supply because they could get supply theoretically on the retail market they could go to another retailer while you're under the contract bases the prices on the defendant's quote supply costs and we know as we allege in the complain that they buy wholesale so we they don't buy from another retailer and we allege and must be taken is true they buy wholesale they pay the wholesale price and so we know based on our experience in the industry that a nd complaint is sufficient it will be up to the district judge to decide in the st instance classes that's correct general we were dismissed on the pleadings we haven't we've had no discovery we haven't been permitted to show that the it please the court my name is david cot i am the attorney for the defendants apologies here's what the contract says and it's on page a ninety four of the appendix i need a ninety four of the the st paragraph of the contract says the customer's variable market rate will be quote based upon actual and estimated and estimated supply closs which may include but not limited to but not limited to prior period adjustments inventory and balancing costs close quote that's the contract perversion we're dealing with on this appeal and when you look at either the plaintiff's initial complaint where the plaintiffs proposed an amended with a commodity and your essentially a commodity broker yeah i think i would agree that churchill right so so we start off in the you have this teaser rate over the market rate the next month you're forty five percent over the rate of and by october if you're sixty percent over the rate i have a tough time understanding how  in a commodities business where i mean you on improving on a lack of electricity is electricity it's not even like you're selling better electricity or anything like that it seems to me you're just simply calculated by the plaintiffs unrelated to the costs set forth in the contract that i just quoted it related to the wholesale cost now not their market rate they they put in the market rate and that's what judge parker just asked me they put in the market rate and when they put in the elements of the market rate which is what the court just asked me comparing market rate that's their market greed that has elements that aren't found anywhere in the contract that's the st thing nd thing the contracts allows us to charge estimated costs if you're any kind of business people the estimated cost should trap the real cost only be a lagging indicator well wrapped well it would be to have is that would you try to do you estimate accurately of course but we're in an industry where you sometimes can get spikes  prices you can get the polar vortex where the the energy source because everybody is very shivering in their home or trial date maybe you're going to show that in fact your rate did vary according to the wholesale rate because it spiked it went down you might you may you may win but right now you've got a contract that says something like cause and they have a ledge you're very very with supply costs that in i was curious about that the district court said that it said the night the this is the statement that more than ninety percent of defendants apply because come from it's purchase of wholesale energy what's conclusory about the supreme court was clear you must set forth a plausible cause of action not based on speculation based on actual facts before you what is the conclusion  distinguished from factual when you say more than ninety percent come from the purchase of wholesale energy which word or phrase is is is a day could get in the ninety percent because it's not te not specific enough it might not it's not tethered to the contract the contract says we can take into account rather to the word supply that's in the contract supply right and that's the very same sense ninety there is nothing tied there to the words of the contract which means estimated supply cost and which includes prior period is more than ninety percent of defendants actual and estimated supply costs and it would have been who's read taking into account other factors such as prior period adjustments have to recite the whole contract every time they make an alligator well i don't and the judge in the district court here in her  st motion to dismiss order granting the motion to dismiss was very clear and gave a roadmap to the plaintiffs as to what the court for was insufficiently pled under i didn't even use the word wholesale the st time great right and in the back and they say all right judge you think you think you've faulted us for not talking about holes it will talk about all sales and we won't just say it's in there somewhere we'll say ninety percent of that is a little sail you don't think that's no i don't think under it pauline twamley because it's not tethered to the words of the contract they don't explain where they get ninety percent was are you saying the attorney general did something it yeah i've i do think it's just is i think the lesson of vic ball and tom lee and i know your honour's deal with it more than i do you deal with it every day is you don't get to say and the plan or if you look at page a eighty three dollars of the appendix in paragraph fifty eight dollars of their proposed amended complaint they talk about if we could get additional discovery we could prove if you look at plaintiff's reply br and page eighteen plaintiff's opening brief at page sixteen it talks about it and i'm going to i'm going to be very gentle talk yeah if we can get some more discovered we can fill in the holes that we have in our complaint balancing costs and so forth and what you doing here is assume is a teaser rate expired you jacking these rates way up hoping that people who are  your customers aren't going to be sophisticated enough to their utility to build to see this wall of variation upward variation in the price of something that's essentially a commodity which you bomb as a broker in a commodities walked seems misleading to me and i don't mean mislead me but it  st page of the contract right in the middle where the contract states to the customer we do not guarantee savings in the st page of the contract under the term the contract the customer eliminates the possibility that your that you reach your kind of not at all i'm simply responding to judge parker's question that the consumer doesn't know and essentially we take advantage of the consumer by the teaser rate here we have a price sensitive customer we know that because of his other class action brought by the same attorneys when he bought energy like we did for variety and you have a price sensitive clock i don't i hadn't anticipated that question chris klug class issues are in here your honor i will confess i had not thought about that but i but on this record for who's in the class the people the clinton mclaren's would be people who have received this contract which says number one we don't guarantee any savings and number two you can leave whenever you want just pick up the phone and dial an eight hundred number why appreciate you don't effect that this customer is only with us for about five months we have balancing costs and we may have other costs given though this is ninety percent of you of the of the price well again i had to colloquy earlier with the court on my view on whether ninety percent is it conclusory allegations or not on a loser whether it's going to lose or you're not it's still ninety percent which is a lot right but it doesn't as a consumer then think that that my price is going to vary substantially with wholesale costs on this contract i don't think the consumer can have that expectation i do not think the consumer can have the closing in fact it was ninety eight percent with the consumer then be entitled to think well it's a wholesale cost very my costs are going to hear and we may be talking about a different contract a lot of the case i'm just wondering if your problem is with that ninety is too low a number or you don't like the whole concept ninety percent or so to tell me there's nothing in the record on a motion to dismiss is that you'll forgive me a bit is that there's nothing record and i might have been overbroad there's nothing that supports the allegation of ninety percent in the record be you could do it from other energy companies you could get the information from energy this life that at the pleading stage if you said ninety percent because i briefly to your honor's park question about the ninety percent allegation that's on it's on page a sixty four of the appendix sixty four yes your honor it's paragraph four in the proposed amended complaint and just briefly to address the defendant's point about prior period adjustments the charts that we put in the complaint show that the wholesale cost during the relevant period are quite stable and essentially what the defendants are asking that the court do at the pleading stage is assume that there was some prior period where wholesale prices were very very high and that they were very positive  they were there were the spikes were both high and positive and they were prolonged and that's simply a question of fact that at this stage of the litigation they can't be answered and we believe that we that there are a wholesale there there are a wholesale market participant they there is publicly available data about their participation in the wholesale markets were able to calculate the wholesale price for this plaintive during their exact billing cycles and when you compare that to the prices that they paid for wholesale entered the defendants paid for wholesale energy compared to what the consumer put paid it simply doesn't add up it's the prices that the defendants are charging are not connected to their commission is the merkins filed their st case against a radiant energy in two thousand and fourteen late at the end of two thousand and fourteen the public service commission announced a reset of the market where they they did they were deciding to hold a hearing whether to evaluate whether all eskimos could be prohibited from providing variable rate products unless they guaranteed to beat the utility and that proceeding last summer proceeded to guarantee to beat the utility so so basically you had the guarantee say you have to make i mean the consumer would have to save money correct that was the only way they would understand the problem you're confronted with the ball and calmly and so everybody says whether or not it meets the ball and but within two weeks of those cases they reversed the district court for throwing out a complaint a very short complain short concise according to the rules and they reinstated it so i understand why plaintiffs don't say we are sufficient under the top league it which gets the full sequence a read on the train your honor