Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_15-cv-02383/USCOURTS-cand-3_15-cv-02383-3/pdf.json

Nature of Suit Code: 470
Nature of Suit: Civil (Rico)
Cause of Action: 18:1962 Racketeering (RICO) Act

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UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

UNITED ENERGY TRADING, LLC,

Plaintiff,

v.

PACIFIC GAS & ELECTRIC CO., et al.,

Defendants.

Case No. 15-cv-02383-RS 

ORDER GRANTING IN PART AND 

DENYING IN PART MOTION TO 

DISMISS AND DENYING MOTION 

FOR SANCTIONS

I. INTRODUCTION

This case stems from a dispute between defendant Pacific Gas & Electric Company 

(“PG&E”), a leading utility provider in northern California, and one of its competitors, plaintiff 

United Energy Trading, LLC (“UET”), a supplier of natural gas. UET avers the defendants 

engage in unlawful billing, collection, and payment schemes that misappropriate funds, defraud

UET, and unfairly compete for natural gas customers. UET asserts federal claims under the 

Racketeer Influenced and Corrupt Organizations Act (“RICO”), 18 U.S.C. §§ 1961 et seq., and the 

Sherman Act, 15 U.S.C. § 2, in addition to state law claims under a variety of theories, including

breach of contract, breach of fiduciary duty, intentional misrepresentation, and intentional 

interference with prospective business advantage. PG&E counters that UET’s claims in their 

entirety belong before the California Public Utilities Commission (“CPUC”), and in any event,

argue they have not pleaded any of their separate claims with the requisite specificity. 

For the reasons explained below, PG&E’s motion to dismiss is granted with respect to the 

breach of contract claim, and granted with leave to amend with respect to the respondeat superior, 

Sherman Act, and conversion claims. It is denied with respect to the remaining claims. PG&E’s 

motion for Rule 11 sanctions is also denied.

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II. FACTUAL BACKGROUND1

Defendant PG&E has been the regulated monopoly utility in California since 1905. Its 

service area spans from Eureka in the northern part of the state to Bakersfield in the south, and 

from the Pacific Ocean along the coast to the Sierra Nevada mountains in the east. PG&E 

provides both electricity and natural gas to commercial and residential end-users. Its website 

indicates it maintains approximately 4.3 million natural gas customers.

As a monopoly utility, PG&E is regulated by the CPUC, which determines the rates the 

company may charge for its electricity and natural gas. In 1991, the California legislature sought

partially to deregulate the state’s natural gas utility industry. To that end, the CPUC established

an important pilot program affording residential and small commercial gas customers—called 

“core” customers—the opportunity to aggregate their gas loads so they could participate in 

competitive gas markets. As a result of this program, Californians today are free to purchase their 

commodity gas from either PG&E or certain private providers known as Core Transportation 

Agents (“CTAs”). 

The delivery and billing models employed by the CTAs are crucial to the instant dispute. 

CTAs purchase natural gas on the open market and then sell it to end-users using PG&E’s 

distribution system. As a consequence, when an end-user purchases natural gas from a CTA, 

PG&E charges the customer a separate transportation fee. In the typical case, PG&E also charges 

customers for electricity on the same bill.

Perhaps for that reason, as another aspect of deregulation, PG&E is required to offer CTAs 

the opportunity to consolidate their billing with those of PG&E. Specifically, under PG&E’s 

relevant tariffs—known as its “Gas Rules”—CTAs may participate in a billing and collection

program called “Optional Consolidated PG&E Billing.” Under this program, both the CTA’s 

charges and PG&E’s charges appear on a single, consolidated statement, and the customer pays 

 

1

The factual background is based on the averments in the complaint, which must be taken as true 

for purposes of a motion to dismiss. 

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both sets of charges with a single check to PG&E. If the CTA chooses this billing option, PG&E 

is required to calculate the CTA’s charges based on the customer’s gas usage and the CTA’s 

confidential rate. PG&E assumes responsibility for the accuracy of these charges, but not for the 

accuracy of the CTA’s rate. 

Under Consolidated Billing, PG&E also acts as the CTA’s collections agent. In that 

capacity, PG&E is responsible for sending notices to the CTA’s customers informing them of 

unpaid balances, collecting from the CTA’s customers the balance of unpaid charges, and taking 

other appropriate actions to help recover from customers any unpaid amounts owed to the CTA. 

After PG&E receives money from a customer, it is required to pay the CTA the amounts paid to 

PG&E for the CTA’s charges. Additionally, when transferring payments, PG&E is required to 

specify the amount paid by each service account. If there are any amounts resulting from returned 

payments (e.g., the customer’s check “bounces”) or returned payment charges, PG&E may debit 

those amounts to the CTA on the billing statement for the following month. The tariffs, however, 

permit no other debits or set-offs.

Plaintiff UET is a qualified CTA operating in PG&E’s service area. It signed a Core Gas 

Aggregation Service (“CGAS”) agreement with PG&E in September 2010, and began serving 

customers in northern California shortly thereafter. UET thus competes with PG&E for 

commodity natural gas customers. Indeed, if UET cancels a customer’s account, the end-user

reverts to PG&E as the default natural gas provider.

UET supplies its natural gas to customers in California by transporting it across interstate 

pipelines for delivery to PG&E’s Citygate. Once the gas arrives, PG&E charges UET for storage 

and transportation of the gas to the end-user. The amount of this charge is determined by 

reference to UET’s overall volume.

In 2012, UET elected to participate in the Optional Consolidated PG&E Billing program. 

Accordingly, PG&E possesses all of UET’s customer information, and is responsible for 

calculating the amounts owed to UET, billing those amounts, collecting the money, and 

transferring it to UET. 

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The instant dispute centers on allegations that PG&E engages in unlawful activity as 

UET’s billing and collections agent. Specifically, UET avers three separate schemes in which 

PG&E defrauds UET and its customers. In the “Payment Withholding Scheme,” UET avers 

PG&E receives payments from UET customers and “holds” that money in a PG&E account 

instead of paying it to UET for its commodity charges. In the “Energy Credit Scheme,” PG&E 

applies credits from its own services or programs, such as rebates for the use of solar panels, to 

UET’s commodity gas charges, effectively misappropriating UET’s charges to offset the money 

PG&E owes to its own customers. In the “Reversal Scheme,” PG&E inappropriately “reverses” 

UET customer charges. A reversal is a signal to UET that PG&E has not, and cannot, collect on 

UET’s unpaid balance. It should occur only where PG&E ends service to a customer, based either 

on non-payment or the customer’s complete termination of PG&E service. PG&E nonetheless 

apparently reverses UET accounts from which payment has affirmatively been received.

The complaint identifies the fulcrum of the illegality as an associated-in-fact enterprise 

called “Consolidated Billing.” It names three individuals—defendants Albert Torres (PG&E’s 

Vice President of Customer Operations), William Chen (PG&E’s ESP Service Manager), and 

Tanisha Robinson (PG&E’s Supervisor for EDI Operations and ESP Billing)—alleged to be

responsible for engaging in a pattern of wire fraud in furtherance of the Consolidated Billing 

enterprise.

UET avers PG&E’s unlawful schemes have caused it substantial harm. Specifically, UET 

has lost countless customers who were annoyed or upset at UET’s collection efforts on fully-paid 

accounts, but which PG&E falsely informed UET were in arrears. UET has also disconnected 

hundreds of accounts for non-payment based on PG&E’s false representation that these customers

had not paid UET’s charges. What is more, PG&E has inaccurately informed UET’s customers 

that they need not pay for UET’s services, and its employees have improperly induced UET’s 

customers to switch their service to PG&E. UET avers these actions not only were knowingly 

calculated to drive as many customers as possible back to PG&E, but also that PG&E engaged in 

these activities with the specific intent to destroy competition in the retail natural gas commodity 

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market.

In January 2014, UET initiated an adjudicatory proceeding before the CPUC seeking an 

injunction against certain of PG&E’s customer confidentiality practices and a refund on UET’s 

accounts. Eight months later, it moved for party status in another proceeding relating to PG&E’s 

compliance with tariffs governing CTA payment allocation. After the Commission enjoined 

several of PG&E’s practices and ordered discovery on the amount of UET’s refund, the three 

schemes mentioned above apparently came to light. Opining that the Commission could no longer

provide it with complete relief, UET commenced this action. It asserts federal claims under RICO 

and the Sherman Act, in addition to state law claims for breach of fiduciary duty, intentional 

misrepresentation, negligent misrepresentation, conversion, intentional interference with contract, 

intentional interference with prospective business advantage, breach of contract, and violation of 

California’s unfair competition law. Insisting that UET’s RICO claim is frivolous, PG&E filed a 

motion for sanctions under Rule 11 of the Federal Rules of Civil Procedure. In July 2014, the 

Administrative Law Judge agreed to hold the CPUC proceeding in abeyance during the pendency 

of this action. 

III. LEGAL STANDARD

A complaint must contain “a short and plain statement of the claim showing that the 

pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). While “detailed factual allegations are not 

required,” a complaint must have sufficient factual allegations to “state a claim to relief that is 

plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Bell Atl. v. Twombly, 

550 U.S. 544, 570 (2007)). A claim is facially plausible “when the pleaded factual content allows 

the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” 

Id. This standard asks for “more than a sheer possibility that a defendant acted unlawfully.” Id. 

The determination is a context-specific task requiring the court “to draw on its judicial experience 

and common sense.” Id. at 679. 

Additionally, Rule 9(b) of the Federal Rules of Civil Procedure requires that “[i]n 

allegations of fraud or mistake, a party must state with particularity the circumstances constituting 

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fraud or mistake.” To satisfy the rule, a plaintiff must allege the “who, what, where, when, and 

how” of the charged misconduct. Cooper v. Pickett, 137 F.3d 616, 627 (9th Cir. 1997). In other 

words, “the circumstances constituting the alleged fraud must be specific enough to give 

defendants notice of the particular misconduct so that they can defend against the charge and not 

just deny that they have done anything wrong.” Vess v. Ciba–Geigy Corp. U.S.A., 317 F.3d 1097, 

1106 (9th Cir. 2003).

A motion to dismiss a complaint under Rule 12(b)(6) of the Federal Rules of Civil

Procedure tests the legal sufficiency of the claims alleged in the complaint. See Parks Sch. of 

Bus., Inc. v. Symington, 51 F.3d 1480, 1484 (9th Cir. 1995). Dismissal under Rule 12(b)(6) may 

be based on either the “lack of a cognizable legal theory” or on “the absence of sufficient facts 

alleged under a cognizable legal theory.” Balistreri v. Pacifica Police Dep’t, 901 F.2d 696, 699 

(9th Cir. 1990). When evaluating such a motion, the court must accept all material allegations in 

the complaint as true, even if doubtful, and construe them in the light most favorable to the nonmoving party. Twombly, 550 U.S. at 570. “[C]onclusory allegations of law and unwarranted 

inferences,” however, “are insufficient to defeat a motion to dismiss for failure to state a claim.” 

Epstein v. Wash. Energy Co., 83 F.3d 1136, 1140 (9th Cir. 1996); see also Twombly, 550 U.S. at 

555 (“threadbare recitals of the elements of the claim for relief, supported by mere conclusory 

statements,” are not taken as true).

IV. DISCUSSION

A. Threshold Issues

1. Judicial Notice

When resolving a motion to dismiss for failure to state a claim, review is generally limited 

to the four corners of the complaint. Allarcom Pay Television. Ltd. v. Gen. Instrument Corp., 69 

F.3d 381, 385 (9th Cir. 1995). The court may, however, look to exhibits attached to the 

complaint, see Hal Roach Studios. Inc. v. Richard Feiner & Co., Inc., 896 F.2d 1542, 1555 n.19 

(9th Cir. 1989), and documents incorporated by reference into the complaint. See Van Buskirk v.

Cable News Network, Inc., 284 F.3d 977, 980 (9th Cir. 2002). Documents upon whose contents 

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the complaint necessarily relies—even if the complaint does not explicitly allege their contents—

and whose authenticity and relevance are uncontested, are considered incorporated by reference. 

See Coto Settlement v. Eisenberg, 593 F.3d 1031, 1038 (9th Cir. 2010); Knievel v. ESPN, 393 F.3d 

1068, 1076–77 (9th Cir. 2005). The court may, in addition, take into account material that is 

properly the subject of judicial notice. Lee v. City of Los Angeles, 250 F.3d 668, 688–89 (9th Cir. 

2001). Judicial notice may be taken of a fact not subject to reasonable dispute because it either is 

generally known within the trial court’s territorial jurisdiction, or can be readily determined from 

sources whose accuracy cannot reasonably be questioned. Fed. R. Evid. 201(b).

Here, PG&E asks that judicial notice be taken of seven documents related to the Gas Rules 

and earlier CPUC proceedings.

2 Defs.’ RJN Ex. A–G. UET objects only to exhibits A, D, and E 

on the grounds that it did not refer to those documents in its complaint. UET also asks that notice 

be taken of PG&E’s briefs in opposition to UET’s motion to hold in abeyance the CPUC 

proceeding it initiated. Pl.’s RJN Ex. 1, 2. 

Because Exhibit A is a published tariff approved by the CPUC, and Exhibits D and E are 

public records from relevant CPUC proceedings to which UET sought party status, PG&E’s 

request for judicial notice is granted. In the interest of completeness, UET’s request that notice be 

taken of PG&E’s briefs on abeyance is also granted.

2. Jurisdiction

As a threshold matter, PG&E contends UET’s federal claims should be stayed under the 

primary jurisdiction doctrine and its state law claims dismissed based on the exclusive jurisdiction 

of the CPUC. 

 

2

The documents are: Gas Schedule G-CT, Gas Rule No. 23, UET’s First Amended Complaint 

filed in CPUC Proceeding C.14-01-006, UET’s Motion Requesting Party Status in CPUC 

proceeding A.13-12-012, the Scoping Memorandum and Ruling of Assigned Commissioner and 

Administrative Law Judge filed in CPUC proceeding C.14-01-006, UET’s Motion to Hold 

Proceeding in Abeyance in CPUC proceeding C.14-01-006, and the Administrative Law Judge’s 

Ruling Granting Motion to Hold Case in Abeyance in CPUC proceeding C.14-01-006. Defs.’ RJN 

Ex. A–G.

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a. Primary Jurisdiction

“The primary jurisdiction doctrine allows courts to stay proceedings or to dismiss a 

complaint without prejudice pending the resolution of an issue within the special competence of 

an administrative agency.” Clark v. Time Warner Cable, 523 F.3d 1110, 1114 (9th Cir. 2008). 

The doctrine may properly be invoked only “in a limited set of circumstances”; it “is not designed 

to ‘secure expert advice’ from agencies every time a court is presented with an issue conceivably 

within the agency’s ambit.” Id. at 1114 (internal quotations omitted). “It is to be used only if a 

claim requires resolution of an issue of first impression, or of a particularly complicated issue that 

Congress has committed to a regulatory agency.” Id. (internal quotations omitted). In deciding 

whether to apply the doctrine, courts typically assess whether there is: “(1) [a] need to resolve an 

issue that (2) has been placed by Congress within the jurisdiction of an administrative body having 

regulatory authority (3) pursuant to a statute that subjects an industry or activity to a 

comprehensive regulatory authority that (4) requires expertise or uniformity in administration.” 

Id. at 1115. 

In lieu of examining these factors, PG&E urges this Court to follow the example of PNG 

Telecomms., Inc. v. Pac-West Telecomm, Inc., No. Civ. S-10-1164 FCD/EFB, 2010 WL 3186195 

(E.D. Cal. Aug. 11, 2010). That case involved a dispute over an alleged interconnection 

agreement implementing obligations under the federal Telecommunications Act. See id. at *5. 

The district court found it appropriate to defer to the CPUC for three reasons. First, the 

Telecommunications Act specifically granted state commissions the authority to interpret the 

relevant provision of the federal statute at issue. Id. at *7. Second, the CPUC had expertise in 

resolving interconnection disputes. Id. Third, the issues in the case were already pending before 

the CPUC, so deference would avoid “an extremely inefficient bypass of an administrative 

remedy.” Id. (internal quotation marks omitted).

Unlike in PNG, prudential considerations do not favor deferring UET’s federal claims. 

First, neither RICO nor the Sherman Act implicate regulatory authority Congress placed within 

the specific jurisdiction of the CPUC. Second, PG&E has not identified any issue that requires the 

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Commission’s technical expertise to resolve, much less any question of first impression. True, 

PG&E casts this action as a billing dispute, and, invoking UET’s CPUC complaint, insists the 

claims rely on interpretation of the Gas Rules. See Reply in Supp. of Mot. to Dismiss at 9:3, 9:17–

10:1, 10:24–25. UET’s federal complaint, however, is predicated on fraudulent behavior 

involving misrepresentations found in emails sent over interstate wires. PG&E has not shown 

how the propriety of this behavior turns on a specific interpretation of Gas Rules 10, 11, 23, or 27. 

Third, unlike in PNG, the ALJ in the instant dispute held the CPUC proceeding in abeyance—

notwithstanding the fact the parties had engaged in significant discovery—because UET 

introduced allegations of tortious and criminal conduct that “spilled over the jurisdictional limits 

of the Commission.” Defs.’ Request for Judicial Notice (“RJN”) Ex. E. Given that observation, 

rather than hindering judicial efficiency, the ALJ noted this Court’s consideration would “serve[]

judicial economy.” Id. Finally, it is worth noting the Ninth Circuit has questioned whether primary 

jurisdiction doctrine even permits a case to be referred to a state agency rather than a federal 

agency. See Cost Mgmt. Servs., Inc. v. Wash. Nat. Gas Co., 99 F.3d 937, 949 n.12 (9th Cir. 1996). 

In light of these factors, and the discretionary nature of the primary jurisdiction doctrine, its 

application is not appropriate in the present case.

b. The CPUC’s Exclusive Jurisdiction

PG&E maintains UET’s state law claims fall within the exclusive jurisdiction of the 

CPUC. Its argument rests on two premises: first, that UET’s allegations are wholly based on the 

CGAS agreement, which requires that disputes be reviewed in the first instance by the CPUC; 

second, that application of the Covalt test mandates that the instant dispute falls within the 

exclusive jurisdiction of the CPUC. 

In September 2010, UET signed a CGAS agreement with PG&E that governs their core 

transport relationship. Two clauses are particularly relevant. First, the agreement provides that 

“[c]omplaints against the utility arising out of this Agreement shall be enforced only under the 

provisions of Section 1702 of the Public Utilities Code.” Mot. to Dismiss at 5:9–11. That section 

creates a process permitting a CTA to file a complaint with the CPUC against public utilities like 

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PG&E. Second, the CGAS agreement contains a waiver stating that “[n]o party under this 

Agreement shall be assessed any special, punitive, consequential, incidental, or indirect damages, 

whether in contract or tort (including negligence) or otherwise, for any breach, actions or inactions 

arising from[,] out of, or related to this Agreement.” Id. at 5:13–17. 

PG&E maintains these clauses, taken together, forbid this Court from hearing UET’s state 

law claims. At bedrock, its argument is that UET raises nothing more than a billing dispute 

founded on PG&E’s application of its CPUC-approved Gas Rules. As such, the claims 

necessarily arise out of the CGAS agreement because it mandates compliance with the Gas Rules. 

The agreement, moreover, provides that disputes must be adjudicated before the CPUC, and the 

waiver provision bars the recovery of relief beyond what the CPUC can mandate. Thus, according 

to PG&E, no additional recovery can be had and jurisdiction lies exclusively with the CPUC.

UET counters that while its CPUC complaint quarreled with PG&E’s compliance with Gas 

Rule 23, its federal complaint avers intentionally tortious conduct, fraud, and violations of 

statutory law. According to UET, nothing in the Gas Rules, the CGAS Agreement, or any 

decision by the CPUC could permit PG&E to monopolize, commit wire fraud, or perpetuate the 

other unlawful acts mentioned. Thus, the instant dispute falls outside the strictures of the CGAS 

Agreement. What is more, UET contends the waiver provision is invalid as to allegations of 

fraud, intentionally tortious conduct, or violations of statutory law, all of which are carefully 

pleaded in its federal complaint.

PG&E is correct with respect to the breach of contract claim, but UET has the more 

persuasive argument with respect to all other claims. UET avers PG&E breached the CGAS 

contract because it violated Gas Rule 23.C.1.c(4)(a) by failing to pay UET the amounts paid to 

PG&E for UET’s gas commodity charges after it receives payment from UET’s customers. UET 

also claims PG&E violated Gas Rule 23.C.1.c(5)(a) by failing to specify the amount paid by each 

service account, collect the unpaid balance of all charges from customers, send notices informing 

customers of unpaid balances, and take actions to recover unpaid amounts owed to UET. These 

claims arise under the Gas Rules, the compliance with which the CGAS contract mandates, so

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they not only stem from the CGAS agreement, but their adjudication would require this Court to 

construe PG&E’s obligations under the Gas Rules. Because such a ruling could interfere with the 

CPUC’s exercise of its authority, the breach of contract claim falls within the exclusive 

jurisdiction of the CPUC.

With respect to the remaining claims, UET does not quarrel with PG&E’s application of 

the Gas Rules as not “to its liking,” Reply in Supp. of Mot. to Dismiss at 1:22; instead it objects to 

intentionally tortious conduct it avers caused it considerable harm. In other words, although 

Consolidated Billing is a service provided pursuant to a CPUC-regulated agreement, the essence 

of UET’s claims is not that the Payment Withholding Scheme, Energy Credit Scheme, and 

Reversal Scheme are mistaken applications of the Gas Rules amounting to a billing dispute 

governed by the CGAS agreement. Rather, UET avers those schemes represent intentionally 

tortious conduct that exceeds anything contemplated by the Gas Rules. Given that the allegations 

are assumed to be true, the remaining claims, as plead, fall outside the four corners of the CGAS 

Agreement.

PG&E also argues that San Diego Gas & Electric Co. v. Superior Court, 13 Cal. 4th 893 

(1996) (“Covalt”), supports the CPUC’s exclusive jurisdiction. The three-part test laid out in that 

case is designed to resolve conflicts between Public Utilities Code section 1759,3 which limits 

jurisdiction to review an order of the CPUC to the California Court of Appeal and the California 

Supreme Court, and section 2106,4 which grants courts jurisdiction to hear actions for damages 

 

3

“No court of this state, except the Supreme Court and the court of appeal . . . shall have 

jurisdiction to review, reverse, correct, or annul any order or decision of the commission or to 

suspend or delay the execution or operation thereof, or to enjoin, restrain, or interfere with the 

commission in the performance of its official duties . . . .” Cal. Pub. Util. Code § 1759(a).

4

“Any public utility which does, causes to be done, or permits any act, matter, or thing prohibited 

or declared unlawful, or which omits to do any act, matter, or thing required to be done, either by 

the Constitution, any law of this State, or any order or decision of the commission, shall be liable 

to the persons or corporations affected thereby for all loss, damages, or injury caused thereby or 

resulting therefrom. If the court finds that the act or omission was wilful, it may, in addition to the 

actual damages, award exemplary damages. An action to recover for such loss, damage, or injury 

may be brought in any court of competent jurisdiction by any corporation or person.” Cal. Pub. 

Util. Code § 2106.

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against a public utility that violates California law. See Kairy v. SuperShuttle Intern., 660 F.3d 

1146, 1150 (9th Cir. 2011). To determine whether an action is barred by § 1759, and thus falls 

within the CPUC’s exclusive jurisdiction, courts ask (1) whether the CPUC has the authority to 

adopt a regulatory policy on the subject matter of the litigation; (2) whether the CPUC exercised 

that authority; and (3) whether action in the case before the court would hinder or interfere with 

the CPUC’s exercise of regulatory authority. See Covalt, 13 Cal. 4th at 923, 926, 935.

Invoking UET’s complaint before the CPUC, as opposed to its federal complaint, PG&E 

insists the Covalt test is met because: (1) the issue is whether PG&E properly interpreted and 

applied the Gas Rules, a subject over which the CPUC has regulatory authority; (2) the CPUC not

only approved the Gas Rules and the CGAS Agreement, but has ongoing proceedings on these 

matters, so it has exercised its authority; and (3) UET’s state law claims require the Court to 

evaluate UET’s interpretation of Gas Rule 23, which would interfere with the CPUC’s exclusive 

right to interpret its own rules. 

PG&E’s exposition of the complaint is wide of the mark because it assumes the dispute is 

wholly derived from UET’s interpretation of Gas Rule 23. To the contrary, outside of the breach 

of contract claim, the federal complaint does not ask this Court to construe Gas Rule 23 because 

UET avers there is no application of that rule which would permit PG&E to engage in 

intentionally tortious conduct. Instead, notwithstanding Gas Rule 23, UET seeks to establish that 

PG&E’s behavior amounts to a violation of several provisions of California law. Perhaps for that 

reason, PG&E can neither point to any language in Rule 23 that the complaint asserts to have been 

misapplied, nor advance an interpretation of Rule 23 that purports to sanction the conduct UET 

has condemned. 

Framed in this manner, the Covalt test does not bar UET’s action. The CPUC has 

authority to make and approve rules regarding both CTAs and Consolidated Billing—two subjects 

upon which it has exercised its authority via the Gas Rules—but UET does not ask this Court to 

construe those rules, so the instant action does not threaten to interfere with the CPUC’s exercise 

of its authority. 

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Nwabueze v. AT&T, Inc., No. C 09–1529 SI, 2011 WL 332473 (N.D. Cal. Jan. 29, 2011), 

is instructive. There, the plaintiff challenged a telephone billing and collection practice known as 

“cramming,” advancing, like UET here, a federal claim under RICO, in addition to state law 

claims for, among other things, breach of fiduciary duty, tortious interference with contract, and 

violation of California’s unfair competition law. Id. at *4. AT&T argued the CPUC had exclusive 

jurisdiction over the state law claims because the CPUC had adopted an array of measures 

specifically aimed at addressing cramming. Id. at *13. Further, AT&T, like PG&E in this dispute, 

insisted the complaint merely challenged its billing and collection practices, and argued an award 

of damages would effectively replace the CPUC’s rules. Id. at 14. Applying the Covalt test, the 

district court found that a private action for damages would not undermine the CPUC’s regulatory 

regime.5 Id. at *16. In contrast to a claim for injunctive relief, which would require the court to 

impose procedures or prescribe specific steps AT&T must take, the court reasoned a lawsuit for 

past damages would not interfere with the CPUC’s ongoing, prospective regulation of the relevant 

industry. Id. Moreover, the court found it persuasive that the “plaintiff d[id] not allege any claims 

based on the CPUC’s cramming rules, and instead allege[d] claims based on violations of state 

law.” Id. at *17. 

Similarly, UET avers claims based on violations of state law, rather than PG&E’s Gas 

Rules,6and seeks only damages, rather than injunctive relief, as redress for past violations. In 

 

5

The court also relied on Hartwell Corporation v. Superior Court, 27 Cal. 4th 256 (2002). There, 

the California Supreme Court applied Covalt and found that a challenge to the adequacy of 

drinking water standards was barred because it would interfere with a “broad and continuing 

supervisory or regulatory program of the PUC.” Id. at 276. The court also held, however, that the 

plaintiffs could proceed on a theory that the drinking water failed to meet the federal and state 

drinking water standards because those claims would not interfere with the CPUC’s regulatory 

policy.

6

PG&E’s reliance on Davis v. S. Cal. Edison Co., 236 Cal. App. 4th 619 (2015) is therefore 

misplaced. In Davis, the plaintiff contended the defendant, “in processing his applications, 

violated . . . Tariff Rule 21 (Rule 21), Tariff Rule 16 (Rule 16), the California Renewable Energy 

Small Tariff (CREST) program, and the Net Energy Metering (NEM) program.” Id. at 622. 

UET’s claims, by contrast, do not arise under the Gas Rules; they arise under state law. Moreover, 

as Davis points out, “where the courts have found that the PUC does not have exclusive 

jurisdiction, the lawsuits have typically not required interpretation of PUC-approved rules.” Id. at 

640. Such is the case here.

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addition, unlike the circumstances in Waters v. Pacific Bell Company, 12 Cal. 3d 1 (1974), where 

a damages award was improper because the CPUC had adopted a policy limiting the liability of 

public utilities for the specific act alleged, PG&E offers no such policy. Accordingly, UET’s 

remaining claims are not barred by § 1759 because a lawsuit for damages based on past state law 

violations will not interfere with the CPUC’s prospective regulation of the commodity natural gas 

market.

B. Viability of Federal Claims

1. RICO

UET’s first claim proceeds under 18 U.S.C. § 1962(c), which makes it unlawful for any 

person associated with an alleged racketeering enterprise “to conduct or participate, directly or 

indirectly, in the conduct of such enterprise’s affairs through a pattern of racketeering activity.” 

18 U.S.C. § 1962(c).7 To state a civil claim for violations of § 1962(c), a plaintiff must allege 

“(1) conduct (2) of an enterprise (3) through a pattern (4) of racketeering activity (known as 

‘predicate acts’) (5) causing injury to plaintiff’s business or property.” Grimmett v. Brown, 75 

F.3d 506, 510 (9th Cir. 1996) (citing Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 496 (1985)). 

“While the factual circumstances of the fraud itself must be alleged with particularity, the state of 

mind—or scienter—of the defendants may be alleged generally.” Odom, 486 F.3d at 554.

As noted above, UET contends that the individual defendants engaged in three separate 

schemes—the Payment Withholding Scheme, Energy Credit Scheme, and Reversal Scheme—

which had the effect of directly injuring UET. Specifically, UET avers the individual defendants 

associated with “Consolidated Billing,” an enterprise “separate from [PG&E’s] primary business 

activities,” Compl. ¶ 33, for the purpose of engaging in ongoing acts of wire fraud. UET details 

ten alleged acts of fraud directed and carried out by these actors, involving the same type of data 

transmission for the same purpose, spanning over two years, and continuing to the present day. 

 

7

“[T]he survival of plaintiffs’ claim under § 1962(c) will ensure the survival of their claim under 

§ 1962(d),” Odom v. Microsoft Corp., 486 F.3d 541, 547 (9th Cir. 2007) (en banc), thus, only the 

claim under § 1962(c) need be addressed.

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For each predicate act of wire fraud, moreover, UET identifies the manner in which false 

information was transmitted, the exact date, the information contained in the transmission, the 

reason why it was incorrect, and the damages that resulted. UET therefore has alleged “(1) 

conduct (2) of an enterprise (3) through a pattern (4) of racketeering activity (known as ‘predicate 

acts’) (5) causing injury to plaintiff’s business or property.” Grimmett, 75 F.3d at 510.

PG&E’s first attack on the RICO claim is to argue that UET has not adequately identified 

an “enterprise” sufficiently distinct from PG&E. RICO defines an enterprise as “any individual, 

partnership, corporation, association, or other legal entity, and any union or group of individuals 

associated in fact although not a legal entity.” 18 U.S.C. § 1961(4). Though this language is 

broad, the Supreme Court has provided guidance. In United States v. Turkette, 452 U.S. 576 

(1981), the Court defined a RICO enterprise as “a group of persons associated together for a 

common purpose of engaging in a course of conduct.” Id. at 583. Later, in Cedric Kushner 

Promotions, Ltd. v. King, 533 U.S. 158 (2001), the Court clarified plaintiffs must “allege and 

prove the existence of two distinct entities: (1) a ‘person’; and (2) an ‘enterprise’ that is not simply 

the same ‘person’ referred to by a different name.” Id. at 161.

PG&E’s primary contention is that although UET asserts its claim against three specific 

employees, “UET has not pled a separate entity, in addition to PG&E itself, with sufficient 

particularity to support its RICO claim.” Mot. to Dismiss at 13:5–7. Specifically, PG&E argues a 

group of employees cannot be considered a distinct entity under RICO if they are “simply doing 

[their] jobs.” Id. at 13:9–10. Further, PG&E insists “Consolidated Billing” is a CPUC mandated 

billing option and a unit of PG&E; not a separate entity from PG&E. Thus, from that perspective, 

UET is simply objecting to the operations of PG&E, and not to the separate actions of the 

individual defendants. Because an entity that is the enterprise cannot also be the RICO defendant, 

Lopez v. Dean Witter Reynolds, Inc., 591 F. Supp. 581, 585 (N.D. Cal. 1984), PG&E concludes 

that UET’s RICO claim must fail for lack of distinctiveness. 

UET responds that a RICO “enterprise” need not be a legal entity, but may be an 

“association-in-fact” of individual defendants who are corporate employees. UET relies on Cedric 

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Kushner, where the Supreme Court held that where “a corporate employee, acting within the scope 

of his authority, allegedly conducts the corporation’s affairs in a RICO-forbidden way[,] [t]he 

corporate owner/employee, a natural person, is distinct from the corporation itself.” 533 U.S. at 

163 (internal quotation marks and citations omitted). UET thus argues it met the distinctiveness 

requirement because it named as RICO defendants only the individual employees responsible for 

the predicate acts, and alleged both that the Consolidated Billing enterprise is separate from PG&E 

(since PG&E is not in the business of offering consolidated billing services), and that the

individual defendants associated together to conduct the enterprise’s affairs through a pattern of 

racketeering activity. 

Given the Supreme Court’s guidance in Cedric Kushner, UET has pleaded adequately 

RICO’s distinctiveness requirement. UET does not allege that PG&E is either a RICO person or a 

RICO defendant. Instead, UET avers three PG&E employees associated-in-fact to conduct the 

affairs of a Consolidated Billing enterprise through a pattern of racketeering. Because “[a] 

corporate employee who conducts the corporation’s affairs through an unlawful RICO pattern of 

activity” is distinct from that corporation, UET identifies an entity sufficiently distinct from 

PG&E by stating allegations against the individual defendants and averring the enterprise exists 

apart from the corporate vehicle. Id. at 165 (quotation marks and citation omitted). 

PG&E’s reliance on Riverwoods Chappaqua Corporation v. Marine Midland Bank, N.A., 

30 F.3d 339, 344 (2d Cir. 1994), is misplaced. Riverwoods not only predates Cedric Kushner, but 

in Riverwoods, unlike here, the corporation, Marine Midland, was both a RICO defendant and a 

participant in the alleged associated-in-fact enterprise.8See id. at 333–34. Further, while the 

 

8

Thus, while the Riverwoods court noted “employees in association with the corporation do not 

form an enterprise distinct from the corporation,” 30 F.3d at 344, that is not the case here as the 

complaint does not allege PG&E is a RICO defendant. For similar reasons, In re Toyota Motor 

Corp. Unintended Acceleration Marketing, Sales Practices, and Products Liability Litigation, 826 

F. Supp. 2d 1180 (C.D. Cal. 2011), is off point. There, none of the individual employees were 

named as RICO defendants, and the complaint merely alleged the defendant corporations 

associated-in-fact to carry on their primary business activities. Id. at 1202–03. Here, the

individual defendants are named, PG&E is not alleged to be a part of the RICO enterprise, and the 

complaint avers the individuals associated-in-fact to engage in fraudulent conduct separate and 

apart from their corporate responsibilities. PG&E is correct these allegations stand in tension with 

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individual defendants here undertook their actions in connection with PG&E’s corporate affairs, 

UET does not aver PG&E instructed the employees to dispatch fraudulent bills or commit wire 

fraud. In other words, UET does not contend Robinson, Torres, and Chen were merely “doing 

their jobs” because the complaint does not characterize PG&E to be saying their “job” is to engage 

in fraud. As a result, by stating the allegations against the individual defendants and their 

associated-in-fact enterprise, UET targets “a ‘person’ and an ‘enterprise’ that is not simply the 

same ‘person’ referred to by a different name.” Cedric Kushner, 533 U.S. at 161.

PG&E next insists that UET has failed satisfactorily to identify the requisite “pattern of 

racketeering activity.” That requirement mandates allegations of at least two separate yet related 

predicate acts stemming from conduct of an open ended nature, carried out over a period lasting 

longer than one year, and posing a threat to continue. Religious Tech. Ctr. v. Wollersheim, 971 

F.2d 364, 366–67 (9th Cir. 1992). Predicate acts are related if they have “the same or similar 

purposes, results, participants, victims or methods of commission.” H.J., Inc. v. Nw. Bell Tel. Co., 

492 U.S. 229, 240 (1989). Continuity can be shown by proving “a series of related predicates 

extending over a substantial period of time,” or “past conduct that by its nature projects into the 

future with a threat of repetition.” Id. at 241–42.

PG&E argues UET’s RICO claim fails because the “pattern” element must be evaluated as 

to each individual defendant. In particular, PG&E maintains the complaint falls silent as far as an 

explanation of how each RICO defendant—Robinson, Torres, and Chen—personally engaged in a 

racketeering activity even once. UET counters that it identified at least ten specific acts of wire 

fraud involving each of the individual defendants because it alleged the defendants oversee, 

manage, implement, and direct the three schemes.

Accepting the complaint’s allegations as true and construing them in the light most 

favorable to the non-moving party, as is required, UET has pleaded adequately a “pattern of 

 

the respondeat superior count. As discussed below, PG&E’s motion to dismiss that claim will be 

granted.

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racketeering activity” because it credits at least ten different acts to the direction and supervision 

of each individual defendant, even if they were working together.

In sum, UET’s RICO claim has been adequately pleaded. Accordingly, PG&E’s motion to 

dismiss this count must be denied.

2. RICO Claim Two: Respondeat Superior

UET asserts PG&E is liable on an agency theory for the racketeering activities committed 

by Robinson, Torres, and Chen. To establish an agency relationship “a party must demonstrate the 

following elements: (1) there must be a manifestation by the principal that the agent shall act for 

him; (2) the agent must accept the undertaking; and (3) there must be an understanding between 

the parties that the principal is to be in control of the undertaking.” Bowoto v. Chevron Texaco 

Corp., 312 F. Supp. 2d 1229, 1239 (N.D. Cal. 2004). 

Here, UET’s factual assertions are insufficient to state a claim against PG&E on an agency 

theory. UET avers (1) PG&E is distinct from the Consolidated Billing program operated by 

Robinson, Torres, and Chen, (2) PG&E has benefitted from its employees’ racketeering activities, 

and (3) PG&E exercised control over the individual defendants’ racketeering activities. These 

conclusory allegations fail to demonstrate the necessary understanding between PG&E and the 

enterprise, much less establish how PG&E was in control of the illegal undertaking. PG&E’s 

motion to dismiss is therefore granted as to this count with leave to amend.

3. Sherman Act: Attempt to Monopolize

The third claim proceeds under Section 2 of the Sherman Act, 15 U.S.C. § 2. That 

provision outlaws anticompetitive conduct that monopolizes or threatens actual monopolization. 

To establish a claim for an attempt to monopolize, UET must demonstrate four elements: “(1) 

specific intent to control prices or destroy competition; (2) predatory or anticompetitive conduct 

directed at accomplishing that purpose; (3) a dangerous probability of achieving ‘monopoly 

power’; and (4) causal antitrust injury.” Rebel Oil Co. v. Atl. Richfield Co., 51 F.3d 1421, 1432–33 

(9th Cir. 1995).

Here, UET avers PG&E intends to monopolize the deregulated retail natural gas market in 

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its service area by forcing out CTAs using its market power and abusing its fiduciary relationship 

under the Consolidated Billing program. UET claims PG&E possesses market power because it is 

the default regulated monopoly utility for natural gas. If a customer cancels another provider’s 

service, the customer automatically becomes PG&E’s customer if they wish to buy natural gas in 

PG&E’s service area. UET asserts PG&E also has market power because it controls all billing and 

collection activities for the companies who have chosen to use Consolidated Billing. PG&E 

charges a fee for those services, but refuses to disclose its payment allocation criteria, so UET and 

other CTAs cannot determine accurately whether their customers have paid their bills. UET 

maintains it has suffered antitrust injury resulting from PG&E’s anti-competitive conduct because, 

among other things, it has lost customers, profits, and market share. PG&E points out that the 

Consolidated Billing program is completely optional, and had UET chosen another option, it 

would have primary control of its own billing and collection services.

UET’s claim under the Sherman Act fails because UET has not sufficiently pleaded that 

the alleged schemes, whether independently or in combination, caused antitrust injury or 

foreclosed competition in a substantial share of the relevant market. To make out its claim for 

attempted monopolization, UET must demonstrate how PG&E’s conduct causes injury to 

competition beyond UET. See Rebel Oil, 51 F.3d at 1433; United States v. Microsoft Corp., 253 

F.3d 34, 58 (D.C. Cir. 2001). Here, UET avers PG&E’s schemes “have had an anticompetitive 

effect across the entire retail natural gas commodity market,” Compl. ¶ 119, but it has not pleaded 

sufficient supportive facts. Instead, it claims the unlawful reversion of its customers to PG&E 

“resulted in a reduction in competition,” id.— bare allegations that fail to shed light on whether 

PG&E’s practices extend beyond its relationship with UET, and if so, how they affected other 

CTAs and providers within the commodity natural gas market. Accordingly, PG&E’s motion to 

dismiss this claim for relief will be granted but with leave to amend.

C. State Law Claims

1. Breach of Fiduciary Duty

In order to plead a claim for breach of fiduciary duty, a plaintiff must show the existence of 

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a fiduciary relationship, its breach, and damage caused by the breach. Benasra v. Mitchell 

Silberberg & Knupp LLP, 123 Cal. App. 4th 1179, 1183 (2004); Pierce v. Lyman, 1 Cal. App. 4th 

1093, 1101 (1991). Sounding in fraud, this claim is subject to Rule 9(b)’s heightened pleading 

standards. See Concha v. London, 62 F.3d 1493, 1502 (9th Cir. 1995).

Here, pursuant to the Consolidated Billing program, UET avers PG&E acts as its billing 

and collections agent. As such, PG&E possesses all of UET’s customer information, and is 

responsible for calculating the amounts owed to UET, billing those amounts, collecting the 

money, and transferring it to UET. Because they are UET’s customers, however, UET avers it has 

the right to control and supervise PG&E’s billing and collection activities. Accordingly, UET 

avers PG&E is its agent under California Civil Code § 2295,

9

and owes UET a fiduciary duty of 

loyalty as a result. See Michelson v. Hamada, 29 Cal. App. 4th 1566, 1575–82 (1994).

UET avers PG&E breached its fiduciary duty in a number of ways, including by (1) 

retaining money it collected from UET’s customers for its own benefit, (2) making false 

representations to UET about the status of its customer accounts, and (3) encouraging UET’s 

customers to cancel UET’s services so the customer will revert back to PG&E. Each of these 

allegations is supported by the examples contained in the three fraud-based schemes. UET also 

avers PG&E’s breach was intentional and made with the knowledge and authorization of William 

Chen. Finally, UET adds it has been damaged by PG&E’s breach through the money and 

customers it has lost as a result. 

Given the above, UET has pleaded facts sufficient to state a viable claim against PG&E for 

breach of fiduciary duty. PG&E’s motion to dismiss this count is accordingly denied.

2. Intentional Misrepresentation

To state a claim for intentional misrepresentation under California law, a plaintiff must 

plead seven elements with particularity: (1) the defendant represented to the plaintiff that an 

 

9

Section 2295 provides: “[a]n agent is one who represents another, called the principal, in 

dealings with third persons.” Cal. Civ. Code § 2295.

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important fact was true; (2) that representation was false; (3) the defendant knew that the 

representation was false when the defendant made it, or the defendant made the representation 

recklessly and without regard for the truth; (4) the defendant intended that the plaintiff rely on the 

representation; (5) the plaintiff reasonably relied on the representation; (6) the plaintiff was 

harmed; and (7) the plaintiff’s reliance on the representation was a substantial factor in causing 

that harm to the plaintiff. Manderville v. PCG & S Group, Inc., 146 Cal. App. 4th 1486, 1498 

(2007).

Here, UET avers PG&E made repeated, intentionally false statements to UET every time 

PG&E used the wires to transmit information about UET’s customer accounts reflecting that 

UET’s customers had not paid for UET’s charges, but where the customer had in fact fully paid or 

PG&E had instructed them not to pay. The six specific examples articulated in the Payment 

Withholding Scheme and the Energy Credit Scheme illustrate these allegations with particularity. 

UET avers PG&E intended it to rely on the false statements because PG&E prevented it from 

discovering the schemes, and UET justifiably relied on the false representations by disconnecting 

its customers when their charges were in fact fully paid. Finally, UET avers its damages include 

lost revenues and income unlawfully withheld by PG&E, lost customers, lost market share, out of 

pocket costs associated with trying to collect customer accounts that PG&E falsely represented 

were not paid, and costs associated with trying to repair customer relationships.

UET has adequately pleaded a claim for intentional misrepresentation against PG&E. 

PG&E’s motion to dismiss this count is accordingly denied.

3. Negligent Misrepresentation

To state a claim for negligent misrepresentation, a plaintiff must allege (1) 

misrepresentation of a material fact; (2) absent reasonable grounds for believing it to be true; (3) 

intent to induce reliance; (4) justifiable reliance by the plaintiff who is unaware the representation 

is false; and (5) damages. While knowledge of falsity is not required, the misrepresentation must 

be affirmative; omissions or implied representations are insufficient. Apollo Capital Fund LLC v. 

Roth Capital Partners, LLC, 158 Cal. App. 4th 226, 243 (2007). Most courts in this district also 

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subject state common law negligent misrepresentation claims to the heightened pleading standards 

of Rule 9(b). Jackson v. Fischer, 2013 WL 6732872, at *17 (N.D. Cal. Dec. 20, 2013) (internal 

citations omitted). 

For the same reasons stated in the previous section, UET has pleaded adequately a claim 

for negligent misrepresentation. PG&E’s motion to dismiss this count is accordingly denied.

4. Conversion

To sustain a claim for conversion, a plaintiff must demonstrate (1) the plaintiff’s 

ownership or right to possession of the property; (2) the defendant’s conversion by a wrongful act 

or disposition of property rights; and (3) damages. Burlesci v. Petersen, 68 Cal. App. 4th 1062 

(1998). Here, UET avers it owns the money its customers pay for its natural gas, yet PG&E 

wrongfully withheld payments made by UET customers for UET charges. UET claims its 

damages include lost revenues and income unlawfully withheld by PG&E, lost customers, lost 

market share, out of pocket costs associated with trying to collect customer accounts that PG&E 

falsely represented were not paid, and costs associated with trying to repair customer relationships. 

PG&E maintains the conversion claim fails both because the amount converted is 

approximate and UET cannot establish it is entitled to immediate possession of the property. 

PG&E is correct that “actions for the conversion of money have not been permitted when the 

amount of money involved is not a definite sum.” PCO, Inc. v. Christensen, Miller, Fink, Jacobs, 

Glaser, Weil & Shapiro, LLP, 150 Cal. App. 4th 384, 396 (2007). Though UET points generally 

to the ten incidents it pleads with respect to the fraudulent schemes, the uncertainty with respect to 

the sum it seeks is too great given the damages it claims. Thus, UET has failed to plead

sufficiently a viable claim for conversion. The motion to dismiss this count is accordingly granted 

but with leave to amend.

5. Intentional Interference with Contract

To sustain a claim for intentional interference with contract, a plaintiff must show: “(1) a 

valid contract between plaintiff and a third party; (2) defendants’ knowledge of the contract; (3) 

defendants’ intentional acts designed to induce a breach or disruption of the contractual 

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relationship; (4) actual breach or disruption of the contractual relationship; and (5) resulting 

damage.” Guidiville Band of Pomo Indians v. NGV Gaming, Ltd., 531 F.3d 767, 774 (9th Cir. 

2008). 

UET avers it is party to a valid contract with its customers where it provides natural gas in 

return for money. It asserts PG&E is aware of these contracts and has engaged in intentional acts 

designed to disrupt them. These acts include making repeated, intentionally false statements to 

UET that UET’s customers had not paid for UET’s charges, when in fact the customers had fully 

paid or PG&E had instructed them not to pay. UET also avers PG&E’s customer service 

representatives encourage UET’s customers to cancel UET’s services during calls to discuss 

billing issues. UET contends its contractual relationships were actually breached because some of

its customers cancelled their contracts as a result of PG&E’s interference. UET claims damages in 

the form of lost revenue and lost income, amongst others. 

PG&E argues UET’s claim fails because the interference alleged is not by a third-party to 

the contract. Yet that is precisely the position PG&E occupies in relation to UET’s agreement 

with its customers. Accordingly, UET has pleaded a viable claim for intentional interference with 

contract. PG&E’s motion to dismiss this count is accordingly denied.

6. Intentional Interference with Prospective Business Advantage

Under California law, a claim based on intentional interference with prospective business 

advantage requires (1) an economic relationship between the plaintiff and some third party with 

the probability of future economic benefit to the plaintiff; (2) defendant’s knowledge of the 

relationship; (3) intentional acts, apart from the interference itself, by defendant designed to 

disrupt the relationship; (4) actual disruption of the relationship; and (5) economic harm to the 

plaintiff proximately caused by the acts of defendant. See Korea Supply Co. v. Lockheed Martin 

Corp., 29 Cal. 4th 1134, 1153–54 (2003). 

UET’s factual averments here largely mirror those in the prior section. UET has therefore

pleaded a viable claim for intentional interference with prospective business advantage. PG&E’s 

motion to dismiss this count is accordingly denied.

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7. Breach of Contract

As detailed above, UET’s breach of contract claim falls within the exclusive jurisdiction of 

the CPUC. PG&E’s motion to dismiss this count is accordingly granted without leave to amend.

8. Unfair Competition

Section 17200 of California’s Unfair Competition Law (“UCL”) prohibits all unlawful, 

unfair, or fraudulent business acts or practices. Cal. Bus. & Prof. Code § 17200 et seq. Each of 

these three types of business acts or practices are independently actionable; “a plaintiff may show 

that the acts or practices at issue are either unlawful or unfair or deceptive.” Walker v. 

Countrywide Home Loans, Inc., 98 Cal. App. 4th 1158, 1169 (2002). “A business practice is 

‘unlawful’ if it is forbidden by law.” Id. (internal quotation marks omitted). “Unfair” business 

practices are those which “offend[] an established public policy”; are “immoral, unethical, 

oppressive, unscrupulous or substantially injurious to consumers”; or those which do not outweigh 

“the gravity of the harm to the alleged victim.” Id. at 1169-70 (internal quotation marks omitted). 

Finally, a business practice is “deceptive” if “members of the public are likely to be deceived.” Id.

at 1170. 

Here, the complaint incorporates all of the substantive allegations preceding this claim for 

relief and asserts PG&E’s conduct constitutes unlawful, unfair, anti-competitive, and fraudulent 

business practice. UET seeks restitution of all amounts paid by UET customers to PG&E that it

has not remitted to UET, plus applicable interest. 

UET has pleaded adequately a claim under the “unlawful” prong because the complaint 

demonstrates how PG&E’s conduct amounts to a predicate violation of other laws. See Cel-Tech 

Commc’ns, Inc. v. Los Angeles Cellular Tel. Co., 20 Cal. 4th 163, 180 (1999) (the UCL “borrows 

violations of other laws and treats them as unlawful practices that the unfair competition law 

makes independently actionable”) (citations and quotation marks omitted). The motion to dismiss 

the UCL count is accordingly denied.

D. Motion for Sanctions

PG&E moves for sanctions against UET on the theory that its RICO claim is frivolous. 

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Rule 11 sanctions are appropriate when an attorney presents to the court “claims, defenses, and 

other legal contentions . . . [not] warranted by existing law or by a nonfrivolous argument for the 

extension, modification, or reversal of existing law or the establishment of new law.” Fed. R. Civ. 

P. 11(b)(2). Where, as here, a “complaint is the primary focus of Rule 11 proceedings, a district 

court must conduct a two-prong inquiry to determine (1) whether the complaint is legally or 

factually baseless from an objective perspective, and (2) if the attorney has conducted a reasonable 

and competent inquiry before signing and filing it.” Holgate v. Baldwin, 425 F.3d 671, 676 (9th 

Cir. 2005) (citation omitted). 

The allegations of fraudulent conduct contained in the complaint are not legally or 

factually baseless, and UET appears to have conducted a reasonable inquiry prior to filing its 

claims. Accordingly, PG&E’s motion for sanctions is denied.

V. CONCLUSION

PG&E’s motion to dismiss is granted with respect to the breach of contract claim, and 

granted with leave to amend with respect to the respondeat superior, Sherman Act, and 

conversion claims. It is denied with respect to the remaining claims. PG&E’s motion for sanctions 

is denied. Any amended complaint UET elects to file must be filed within thirty (30) days from 

the date of this order. 

IT IS SO ORDERED.

Dated: November 20, 2015

______________________________________

RICHARD SEEBORG

United States District Judge

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