Court Opinion

ID: 9909445
Source: CourtListenerOpinion
Date Created: 2023-12-13 16:00:50.226341+00
Date Added: 2024-06-11T12:49:24.591258
License: Public Domain

No. 22-1026
Martinez v. Agway Energy Services, LLC

                                              In the
                      United States Court of Appeals
                                 For the Second Circuit
                                          ______________

                                         August Term, 2022

                    (Argued: June 8, 2023        Decided: December 13, 2023)

                                         Docket No. 22-1026
                                          ______________

           ANTONIO MARTINEZ, IN HIS CAPACITY AS EXECUTOR OF THE ESTATE OF NAOMI
                                       GONZALES,

                                                                     Plaintiff-Appellant,

                                                –v.–

                                  AGWAY ENERGY SERVICES, LLC,

                                                                     Defendant-Appellee. *
                                          ______________

B e f o r e:

                         CARNEY, BIANCO, † and MENASHI, Circuit Judges.
                                      ______________

*   The Clerk of Court is directed to amend the case caption to conform to the above.

†Judge Rosemary S. Pooler, originally a member of the panel that heard oral argument in this
case, passed away on August 10, 2023. Judge Joseph F. Bianco was selected at random to
complete the panel. See 28 U.S.C. § 46(d); 2d Cir. IOP E(b).
        Antonio Martinez, in his capacity as executor of the estate of Naomi Gonzales,
appeals from the judgment of the district court (D’Agostino, J.), which granted
summary judgment to the defendant Agway Energy Services, LLC (“Agway”) in this
putative class action for breach of contract and for engaging in deceptive business
practices in violation of New York General Business Law §§ 349, 349-d. Agway is an
energy supply company that markets electricity to residential customers in New York
and Pennsylvania. In 2016, Gonzales entered into an electricity supply agreement with
Agway, under which she would receive a one-month promotional rate and then be
charged a “competitive” variable monthly rate to be set at Agway’s “discretion.” The
agreement listed several factors guiding that discretion, including “market-related
factors” and Agway’s “costs, expenses and margins.” Agway also promised to
“automatically” include its EnergyGuard service, which covered up to $2,000 in parts
and labor for specified repairs related to the electrical services provided. Gonzales had
the right to cancel her agreement at any time without penalty. She maintained the
contract for almost two years. Soon after she canceled the agreement, she sued Agway
on behalf of a putative class of New York and Pennsylvania customers, alleging that
Agway’s monthly variable rate was consistently higher than that charged by the
incumbent local utility and claiming that Agway breached its agreement by failing to
charge “competitive” rates and by charging customers for the cost of EnergyGuard as
part of its overall rate. On behalf of the New York customers, she also argued that
Agway’s conduct violated New York’s General Business Laws. Because Gonzales
received what was promised under the plain terms of the agreement, we affirm the
district court’s grant of summary judgment to Agway.

      AFFIRMED.
                                     ______________

                           D. GREGORY BLANKINSHIP (Todd S. Garber, Bradley F.
                                 Silverman, on the brief), Finkelstein, Blankinship, Frei-
                                 Pearson & Garber, LLP, White Plains, New York, for
                                 Plaintiff-Appellant.

                           JOHN D. COYLE, Coyle Law Group LLP, Morristown, NJ, for
                                 Defendant-Appellee.
                                   ______________

                                            2
CARNEY, Circuit Judge:

       In February 2016, Naomi Gonzales entered into an electricity supply contract

with Defendant-Appellee Agway Energy Services, LLC (“Agway”), an energy supply

company incorporated in Delaware and selling electricity to residential and other

customers in New York and Pennsylvania. Under its agreement with Gonzales (“the

Agreement”), Agway would charge an introductory rate of $0.044 per kilowatt hour

(“kWh”) for one month, and, if she chose to continue receiving its services thereafter, it

would then charge her a “competitive monthly variable price,” which would be

“determined at Agway’s discretion.” App’x at 766–67. Agway’s materials represented

that, along with electricity services, it would “automatically” include its EnergyGuard

program, which it described as providing services for “protection in the event of a

breakdown of [the customer’s] residential central air conditioning unit or a problem

with the electrical wiring in [the customer’s] home.” Id. at 766–69. The Agreement was

explicit that purchasing electricity from Agway would not guarantee future savings,

and that the customer was free to cancel the Agreement at any time without paying a

termination fee.

       After maintaining the Agreement for almost two years, Gonzales exercised her

termination rights toward the end of 2017 and returned to her local default utility,

Central Hudson, as her source of electricity. During the period of its Agreement with

Gonzales, Agway charged a variable rate that was between 1 and 6 cents per kWh

higher than Central Hudson’s regulated rate.

       In December 2017, Gonzales sued Agway in federal district court, alleging that

Agway’s variable rate was “unconscionably high” compared to the rates charged by

Central Hudson during the term of the Agreement. She brought claims for breach of

contract, breach of the implied covenant of good faith and fair dealing, and unjust

enrichment, all under New York common law, and statutory claims under N.Y. General

                                             3
Business Law (“GBL”) §§ 349 and 349-d, which prohibit deceptive business practices.

Through successive orders issued by it in 2022, the district court granted Agway’s

summary judgment motion in its entirety. See Martinez v. Agway Energy Services, LLC,

No. 5:18-cv-235 (MAD/ATB), 2022 WL 306437, at *10–11 (N.D.N.Y. Feb. 2, 2022);

Martinez v. Agway Energy Services, LLC, No. 5:18-cv-235 (MAD/ATB), 2022 WL 1091607,

at *6 (N.D.N.Y. Apr. 12, 2022). Gonzales, by way of the executor of her estate, 1 now

appeals the judgment entered based on these orders. She argues principally that Agway

wrongfully charged customers for its EnergyGuard service and failed to charge rates

“competitive” with default utility rates.

       On de novo review, we conclude that the Agreement’s plain terms permitted

Agway’s conduct, and that Gonzales received what she was promised. Accordingly, we

AFFIRM the district court’s judgment in Agway’s favor.

                                       BACKGROUND

I.     Factual Background 2

       A.      Regulation of Energy Supply Companies

       The claims at issue arise in the context of New York’s regulation (and de-

regulation) of its electricity market, fields committed by law to the New York Public

Service Commission (“Commission”).

1After Gonzales’s death in 2020, her son, Antonio Martinez, was substituted as Plaintiff. For
simplicity, we use “Gonzales” to refer to the Appellant throughout the opinion.

2We present the facts in the light most favorable to Gonzales, the non-moving party. See Elliott
v. Cartagena, 84 F.4th 481, 495 (2d Cir. 2023). Factual statements about the New York energy
market are drawn from the class action complaint and the parties’ statements of undisputed
facts, filed under N.D.N.Y. Local Civil Rule 56.1.

                                                4
       Until 1996, residential customers in New York had no choice but to purchase

electricity from their local incumbent utility—in Gonzales’s case, Central Hudson. 3 In

1996, however, the Commission decided to deregulate certain aspects of the retail

electricity market, aiming to promote competition and thereby to bring lower prices to

retail customers. Under the regulatory scheme, third-party energy supply companies—

so-called “ESCOs,” of which Agway is one—are permitted to buy electricity wholesale

from the local incumbent utility and resell it to customers, in theory employing

innovative purchasing strategies to reduce costs and pass on savings. When a customer

contracts with an ESCO, the local incumbent utility still delivers the electricity, but the

ESCO deals with the customer, sets the price and receives the customer’s payment, itself

paying the incumbent utility for the energy delivered.

       The Commission maintains supervisory authority over all ESCOs in the State of

New York. See N.Y. Pub. Serv. L. §§ 5(1)(h), 66(1); see generally In re Nat’l Energy

Marketers Ass’n v. N.Y. State Pub. Serv. Comm’n, 33 N.Y.3d 336, 340–42 (2019). New

York’s Public Service Law (abbreviated in New York as “PBS”) charges the Commission

3 The phrase incumbent utility is commonly used to refer to the entity that manages
transmission and distribution of electricity for a particular area in the state of New York. See
How to Shop for Utility Services, Dep’t of Pub. Serv., https://dps.ny.gov/how-shop-utility-services
(last visited Nov. 21, 2023). For incumbent utilities, the Commission uses an administrative
“major rate case process” to approve any proposed major changes to the rates charged. Major
Rate Case Process Overview, Dep’t of Pub. Serv., https://dps.ny.gov/major-rate-case-process-
overview (last visited Nov. 21, 2023). Under this process, the incumbent utility must first
demonstrate the need for rate increases, considering operating expenses, taxes, and return on
investments. Id. The Commission then conducts administrative hearings over an eleven-month
period to evaluate the requested rate increases. Id.; see also N.Y. Pub. Serv. L. § 66(12) (setting
forth the major rate case process). We take judicial notice of this procedural information posted
on the Commission’s website. See Village Green at Sayville, LLC v. Town of Islip, 43 F.4th 287, 299
n.7 (2d Cir. 2022).

                                                 5
with ensuring that “every electric corporation[ 4] . . . furnish and provide such service . . .

as shall be safe and adequate and in all respects just and reasonable,” and that “[a]ll

charges made or demanded by any such . . . electric corporation . . . be just and

reasonable and not more than allowed by law or by order of the commission.” N.Y.

Pub. Serv. L. § 65(1). To that end, the PBS authorizes the Commission to limit or

discontinue an ESCO’s access to utility distribution systems based on whether the

Commission deems such access to be “just and reasonable.” Nat’l Energy Marketers

Ass’n, 33 N.Y.3d at 351; see also N.Y. Pub. Serv. L. §§ 5(1)(b), 65, 66.

       B.     Gonzales’s Agreement with Agway

       Before 2016, Gonzales was a retail customer of Central Hudson, her local

incumbent utility in Cornwall, New York. In January 2016, Gonzales spoke by

telephone with an Agway representative, seeking to obtain her electrical service from

Agway. At the start of this recorded call—referred to by the parties as a “Third-Party

Verification Call” (“TPV call” and, by us, as “the enrollment call”)—the representative

told her that “[o]ral acceptance of Agway’s offer is an agreement to initiate service and

begin enrollment.” App’x at 758 (transcript of enrollment call). The Agway

representative explained to Gonzales that, in her first month of service, she would be

charged Agway’s introductory rate of $0.044 per kWh; after the end of the first month,

she would “continue to receive Agway’s competitive market based monthly variable

rate until [she] notif[ied] Agway of [her] wish to cancel.” Id. at 761. The representative

warned that “[p]articipation in this program is not a guarantee of future savings.” Id.

According to the representative, Gonzales would also “automatically receive” Agway’s

4As relevant here, the PBS defines “electric corporation” expansively to include “every
corporation, company, association, joint-stock association, partnership and person, . . . owning,
operating or managing any electric plant or thermal energy network.” N.Y. Pub. Serv. L. § 2(13).

                                                6
EnergyGuard program “that provides coverage for your center [sic] air conditioning

unit and electric wiring in your home.” Id.

       Soon after the call, Agway sent Gonzales written materials confirming her

enrollment and setting out detailed terms. These were a “Cover Letter,” a “Residential

Customer Disclosure Statement,” and a brochure describing the EnergyGuard program.

App’x at 766–70. 5 The Disclosure Statement reiterated the terms of Gonzales’s

enrollment, as set forth more generally in the enrollment call. It provided:

              The first month of the Initial Term will be at an Introductory
              Rate of . . . $ .044 per kWh for electricity; thereafter a monthly
              variable rate, to be determined at Agway’s discretion, will
              apply.

              ...

              The Electric Variable Rate shall each month reflect the cost of
              electricity acquired by Agway from all sources (including
              energy, capacity, settlement, ancillaries), related transmission
              and distribution charges and other market-related factors,
              plus all applicable taxes, fees, charges or other assessments
              and Agway’s costs, expenses and margins.

              ...

              Savings are NOT guaranteed[.]

Id. at 767. The Cover Letter also repeated the statement made in her enrollment call that,

after the end of the promotional period, she “will receive a competitive monthly

variable price.” Id. at 766. In addition, it specified that, “[f]or being an Agway electricity

customer, we also include the peace of mind and added value of Agway Energy

5The Disclosure Statement specified that, in addition to its own text, the Agreement between
Agway and the customer “includes the Cover Letter and any approved addenda.” Id. at 767.
Agway now agrees that these three documents comprise its contract with Gonzales.

                                               7
Services EnergyGuard Repair Program.” Id. The EnergyGuard brochure enclosed with

the Disclosure Statement similarly affirmed that customers would “automatically

receive all of the benefits of” EnergyGuard, id. at 769, which provided “[u]p to $1,000

each calendar year in covered parts and labor” as needed to repair covered damage to

central air conditioning units, and up to another $1,000 in covered repairs to electric

lines in the customer’s home, id. at 770.

       Gonzales’s use of Agway-supplied electricity began in February 2016, and she

was charged the promised promotional rate—$0.044 per kWh—in both February and

March of that year. Starting in April 2016, Agway set rates for her electricity anew each

month, initially charging her $0.08605 per kWh. From April 2016 through December

2017, Agway’s variable rate was consistently 1 to 6 cents per kWh higher than Central

Hudson’s retail rate for the same period. Gonzales canceled her service with Agway in

late 2017 and returned to Central Hudson as her electricity supplier.

II.    Procedural Background

       On December 6, 2017, Gonzales filed a class action complaint against Agway in

the United States District Court for the District of Delaware. She alleged that during the

period of her enrollment Agway wrongfully incorporated the costs of EnergyGuard

into its variable rates and failed to charge the promised “competitive” prices. Through

these actions, she asserted, Agway violated GBL §§ 349, 349-d; breached the Agreement;

breached the implied covenant of good faith and fair dealing under New York law; and

was unjustly enriched. As to the common law claims, Gonzales sought to represent a

class of all New York and Pennsylvania Agway customers who paid the variable rate

for residential electricity services; as to the New York statutory claims, she sought to

represent a subclass of Agway’s New York customers. On the parties’ stipulation, the

case was soon transferred to the Northern District of New York.

                                             8
       In 2018, the district court dismissed Gonzales’s claims for unjust enrichment and

breach of the implied covenant of good faith and fair dealing under Federal Rule of

Civil Procedure 12(b)(6), concluding that they were duplicative of the contract claim.

Gonzales v. Agway Energy Services, LLC, No. 5:18-cv-235 (MAD/ATB), 2018 WL 5118509,

at *4–5 (N.D.N.Y. Oct. 22, 2018). 6 After discovery and further proceedings, the court in

2022 granted Agway summary judgment as to the breach of contract claim. The court

construed the Agreement as permitting Agway to include the disaggregated costs of its

EnergyGuard program in its variable rate. Martinez, 2022 WL 306437, at *10. The court

further held that Gonzales did not create a triable issue of fact merely “by showing that

Defendant’s rates are not ‘competitive’ compared solely against those of the incumbent

utilities.” Id. Giving similar reasons, the district court in a separate order also granted

summary judgment to Agway as to the GBL claims. The court reasoned that it would be

“logically inconsistent” to hold that no triable issue of fact remained as to whether

Agway’s variable rate was “competitive” or “market-based,” but to allow Gonzales to

proceed with GBL claims that required her to “establish that those very same terms

were materially misleading to a reasonable consumer.” Martinez, 2022 WL 1091607, at

*5.

       This appeal followed.

                                        DISCUSSION

       On appeal, Gonzales challenges the district court’s grant of summary judgment

to Agway on her breach of contract and GBL claims. We review a district court’s

summary judgment grant de novo, construing the evidence in the light most favorable to

6Gonzales does not appear to be challenging this ruling, as she fails to develop any argument
concerning the district court’s Rule 12(b)(6) ruling in her briefs. Accordingly, we affirm the
district court’s dismissal of those claims.

                                               9
the non-moving party and drawing all reasonable inferences in that party’s favor. Bey v.

City of New York, 999 F.3d 157, 164 (2d Cir. 2021). Summary judgment is appropriate

only if “there is no genuine dispute as to any material fact and the movant is entitled to

judgment as a matter of law.” Fed. R. Civ. P. 56(a). The movant bears the burden of

“demonstrat[ing] the absence of a genuine issue of material fact.” Celotex Corp. v. Catrett,

477 U.S. 317, 323 (1986). For the following reasons, we AFFIRM the district court’s

judgment.

I.     Breach of Contract Claim

       The parties agree that the Agreement is governed by New York law. To prevail

on a breach of contract claim under New York law, a plaintiff must show that “(1) a

contract exists; (2) plaintiff performed in accordance with the contract; (3) defendant

breached its contractual obligations; and (4) defendant’s breach resulted in damages.”

34-06 73, LLC v. Seneca Ins. Co., 39 N.Y.3d 44, 52 (2022) (internal citations omitted); see

also Moreno-Godoy v. Kartagener, 7 F.4th 78, 85 (2d Cir. 2021) (same). Only the third of

these factors is at issue here: whether Agway breached its contractual obligations.

       Summary judgment on a contract claim is appropriate “only when the

contractual language . . . is found to be wholly unambiguous and to convey a definite

meaning.” Topps Co. v. Cadbury Stani S.A.I.C., 526 F.3d 63, 68 (2d Cir. 2008). We will find

a contract unambiguous “if the language it uses has a definite and precise meaning, as

to which there is no reasonable basis for a difference of opinion.” Lockheed Martin Corp.

v. Retail Holdings, N.V., 639 F.3d 63, 69 (2d Cir. 2011). Whether contract terms are

unambiguous presents “a question of law that is resolved by reference to the contract

alone.” O’Neil v. Ret. Plan for Salaried Emps. of RKO Gen., Inc., 37 F.3d 55, 59 (2d Cir.

1994) (internal quotation marks omitted). When a contract contains “definitive,

particularized” language, that language “takes precedence over expressions of intent

                                              10
that are general, summary, or preliminary.” Rabin v. Mony Life Ins. Co., 387 Fed. App’x

36, 40 (2d Cir. 2010) (quoting John Hancock Mut. Life Ins. Co. v. Carolina Power & Light Co.,

717 F.2d 664, 669 n.8 (2d Cir. 1983).

       As explained above, Gonzales’s agreement with Agway consisted of the Cover

Letter, Disclosure Statement, and EnergyGuard brochure that she was sent soon after

her enrollment call. 7 The Agreement promised that Gonzales would be charged $0.044

per kWh for her first month of service, and thereafter a “monthly variable rate, to be

determined at Agway’s discretion.” App’x at 767. It described this monthly variable

price as “competitive,” id. at 766, and explained that the variable monthly rate would

reflect “the cost of electricity acquired by Agway from all sources (including energy,

capacity, settlement, ancillaries), related transmission and distribution charges and

other market-related factors, plus all applicable taxes, fees, charges or other assessments

and Agway’s costs, expenses and margins,” id. at 767. The Agreement cautioned that

savings were “NOT guaranteed.” Id. “For being an Agway electricity customer,”

Agway also promised “automatically” to “include the peace of mind and added value

of” EnergyGuard. Id. at 766.

       Gonzales claims that Agway’s monthly variable rate violated the terms of the

Agreement. Although she acknowledges that the Agreement allowed Agway to use its

discretion to set the monthly variable rate, she argues that Agway’s discretion was

limited by its representations that it would charge rates that were “competitive” and

“based on market costs,” and that it failed to do so. Appellant’s Br. at 33. Second, she

argues that Agway breached the Agreement by charging customers for the

EnergyGuard service after leading them to believe the service was included at no cost.

7Gonzales does not argue that the exchange recorded on the enrollment call was part of the
Agreement.

                                              11
Id. On review, we conclude that the plain meaning of the Agreement’s terms regarding

how Agway would set the post-promotion variable monthly rate leaves no triable issue

of fact as to whether Agway was in breach under either theory: it was not.

       A.     Agway was entitled to consider more than its procurement costs when
              using its discretion to set monthly variable rates.

       As with other types of breach of contract claims, courts in this Circuit evaluate

claims arising from energy services agreements on a case-by-case basis. The dispositive

questions are whether an agreement entitled the energy services provider to use

discretion in setting its rates and, if so, how the agreement cabined that discretion.

See, e.g., Congregation Yetev Lev D'Satmar, Inc. v. Engie Power & Gas, LLC, No. 1:22-cv-

04844-NRM-RER, 2023 WL 4674273, at *3 (E.D.N.Y. July 21, 2023) (“Subsequent cases in

this Circuit with alleged breaches of ESCO contracts have turned on how—if at all—a

contract describes how an ESCO will determine its variable rate.”).

       In Richards v. Direct Energy Services, LLC, 915 F.3d 88, 96 (2d Cir. 2019), for

example, we affirmed the district court’s grant of summary judgment to an ESCO after

the plaintiff sued for breach of contract and related claims. The plaintiff, Richards, had

signed an electricity supply agreement with Direct Energy that guaranteed him a fixed

rate of $0.0745 per kWh for one year, after which Direct Energy would begin charging a

rate that would “be variable each month at Direct Energy’s discretion.” Id. at 94. The

relevant agreement provided that this variable rate “may be higher or lower each

month based upon business and market conditions.” Id.

       Richards chose to continue his agreement with Direct Energy past the one-year

promotional period, and for three months thereafter he paid its variable rate. Id. at 95.

During those three months, Direct Energy’s rate was consistently $0.0236 per kWh

                                             12
higher than the “Standard Service Rate” set by Connecticut’s Public Utilities Regulatory

Authority for the state’s two regulated-rate electricity distribution systems. Id. at 95. 8

       In affirming the grant of summary judgment to Direct Energy, we concluded that

the contract unambiguously entitled Direct Energy to consider the objectives reflected

in the record—"achiev[ing] a target profit margin, match[ing] competitors’ prices, and

reduc[ing] customer losses”—and that although Direct Energy was bound to “exercise

[its] discretion in good faith,” Richards had not offered any evidence that it failed to do

so. Id. at 98–99 (internal quotation marks omitted). Accordingly, we held that “Direct

Energy did not evade the spirit of the contract or frustrate Richards’s justified

expectations” when it exercised its contractually provided “discretion to set the variable

rate based upon business and market conditions.” Id. at 98 (internal quotation marks

omitted).

       In Mirkin v. XOOM Energy, LLC, 931 F.3d 173 (2d Cir. 2019), on the other hand,

we reversed a district court’s dismissal of breach of contract and other claims against

another New-York-operating ESCO: XOOM Energy, LLC (“XOOM”). There, the

relevant agreement did not describe the monthly variable rate as being set according to

8Richards arose in the context of Connecticut’s electricity market, rather than New York’s, see
Richards, 915 F.3d at 93, but the regulatory schemes in both states resemble each other closely
enough that our reasoning there appropriately bears upon our result here. Connecticut’s
electricity market was deregulated in 2000, meaning that while local utilities still “maintain[ed]
monopoly control over electricity distribution systems,” private retail electricity suppliers (such
as defendant Direct Energy) could “piggyback on [local] electricity distribution systems” and
“sell to consumers at market-based, unregulated rates.” Id. Much like ESCOs in New York,
private suppliers in Connecticut were allowed to offer variable prices, promotional rates, or
renewably sourced electricity to entice new customers. See id. But the Public Utilities Regulatory
Authority (“PURA”)—Connecticut’s analogue to New York’s Commission—still maintained
supervisory authority over these suppliers. See id. PURA licensed them, periodically reviewed
their licenses, and policed how consumer contracts were worded. Id. The private suppliers’
rates, however, were not regulated. Id.

                                                13
the ESCO’s discretion. Rather, it stated that the plaintiffs would pay a monthly variable

rate “based on XOOM’s actual and estimated supply costs which may include but not

be limited to prior period adjustments, inventory and balancing costs.” Id. at 175. We

concluded that the plaintiffs had plausibly alleged a breach because both their

originally filed complaint and their proposed amended complaint alleged that XOOM’s

rates over time “showed significant upward deviations from the Market Supply Cost

and continued to rise even when that cost fell,” despite XOOM’s promise to base its

rates on “actual and estimated supply costs.” Id. at 177, 175.

       The difference between the contractual language in Mirkin and that in Richards

was “critical[]” to our decision to reverse in Mirkin. Id. at 178 n.3. While the Mirkins’

contract “required XOOM to base its variable rates on its supply costs . . . the contract in

Richards, by its plain terms, imposed no such requirement; the relevant provision there

made no mention of procurement costs.” Id.

       Here, Gonzales argues that her agreement with Agway is more like the

agreement in Mirkin than the one at issue in Richards. 9 More specifically, she argues that

9Gonzales also contends that Richards does not apply here, reasoning that “Richards rejected a
plaintiff’s assertion that, to satisfy its implied duty of good faith and fair dealing, an ESCO must
charge a rate equal to, or lower than, a utility’s rate,” something Gonzales does not assert here.
Appellant’s Br. at 39, 44. In Gonzales’s view, Richards’s applicability is limited to claims that
ESCOs’ rates are capped by incumbent utility rates. We do not read Richards so narrowly.

Richards’s allegations resembled those at issue here, and in large part relied on evidence that
“the variable rate stayed constant while procurement costs fluctuated from the winter of 2013–
2014 through August 2015.” Richards, 915 F.3d at 97. Richards’s argument was thus much
broader than Gonzales suggests: Richards’s claim for breach of the implied covenant of good
faith and fair dealing rested on his assertion that “a reasonable consumer would understand
[Direct Energy’s] contract language to mean that the variable rate would fluctuate with Direct
Energy’s procurement costs.” Id. (cleaned up). Accordingly, our decision turned on our view
that the contract allowed Direct Energy to consider various “business and market conditions,”
including its own profit margins, when setting its rates, and that these factors would not
necessarily fluctuate in parallel with market costs. See id. at 97–98. The same is true here.

                                                14
because “[default] utility rates serve as a reasonable proxy for market costs,” and

because there were “significant discrepancies between Defendant’s rates and [default]

utility rates, as well as instances where Defendant’s rates d[id] not rise or fall as market

costs r[o]se and f[e]ll,” Agway must have breached its promise to base its variable rates

on “its procurement costs or other market-related factors.” Appellant’s Br. at 35–36. We

disagree.

       First, Gonzales’s agreement with Agway did not promise that its price-setting

discretion would be limited to its procurement costs. To be sure, Gonzales’s agreement

with Agway referenced procurement costs when it stated that the variable rate “shall

each month reflect the cost of electricity acquired by Agway from all sources.” App’x at

767. But procurement costs were only one among several named factors, including

unspecified “market-related factors” that the Agreement gave Agway “discretion” to

consider when setting its monthly variable rate. Id.; see also Brown v. Agway Energy

Servs., LLC, 822 Fed. App’x 100, 103 (3d Cir. 2020) (affirming district court’s dismissal of

breach of contract claims based on substantially similar language in Agway’s contract).

Unlike in Mirkin, language promising that the monthly variable rate would be based

solely “on [the energy service provider’s] actual and estimated supply costs,” is

nowhere to be found in Gonzales’s agreement with Agway. Cf. Mirkin, 931 F.3d at 175.

       Second, it is not clear to us that the term “market-related factors” in the

Agreement is synonymous with and limited to market costs such as the cost of

procuring energy. In Richards, for example, we appeared to interpret the similar term

“business and market conditions” to embrace considerations like reducing customer

losses, achieving target profit margins, and matching competitors’ rates. 915 F.3d at 98.

But Gonzales’s breach of contract claim would fail even if we were to agree that

Agway’s discretion to consider “market-related factors” allowed it only to consider

                                             15
“market costs,” because the Agreement also expressly permitted Agway to consider its

“costs, expenses and margins” when setting prices. App’x at 767.

       Gonzales does not argue that Agway considered factors other than its

procurement costs, market-related factors, and its costs, expenses, and margins when

setting its variable rates. Unlike the defendant in Mirkin, Agway has pointed to several

factors expressly listed in the Agreement that can explain the differences between

Agway’s rates and the cost of obtaining electricity from the default utility during the

relevant period. Compare Appellee’s Br. at 5, and App’x 775–78, with Mirkin, 931 F.3d at

177 (explaining that XOOM “failed, in its briefs and at oral argument, to cast doubt on

the plausibility of [the Mirkins’] allegations” by explaining the “substantial deviations”

between its rates and the Market Supply Cost).

       In sum, the plain language of the Agreement permitted Agway to consider

factors beyond its procurement costs when setting its monthly variable rates.

Accordingly, no genuine dispute of material fact remains as to whether Agway

breached its obligations to Gonzales when it set its rates based on factors like its costs,

expenses, and margins.

       B.     The Agreement entitled Agway to include the cost of EnergyGuard in its
              monthly variable rate.

       As explained above, Agway was entitled to consider its "costs, expenses and

margins,” when setting rates, as long as it considered those factors in good faith. App’x

at 767; Richards, 915 F.3d at 99. Accordingly, it was entitled to include the cost of

providing its EnergyGuard program in its monthly variable rate.

       Gonzales argues otherwise, contending that the Agreement bars any charge for

the EnergyGuard service, whether disaggregated or rolled into the final electricity

charge, because the Agreement implies that EnergyGuard will be provided for free.

Appellant’s Br. at 48–51. In urging this approach, she relies principally on the Cover

                                             16
Letter, which states, “For being an Agway electricity customer, we also include the

peace of mind and added value of Agway Energy Services EnergyGuard Repair

Program.” 10 App’x at 766. Gonzales also stresses Agway’s representation that

EnergyGuard would be included “automatically” and the fact that EnergyGuard is not

included by name in the list of factors that Agway is entitled to consider when setting

its variable rate. Appellant’s Br. at 49–50.

       We read the Agreement differently. The plain terms of the Cover Letter say only

that EnergyGuard is included with Agway’s services. The attached EnergyGuard

brochure, too, says only that Agway customers “automatically receive all the benefits

of” EnergyGuard. App’x at 769. Nothing in the Agreement promised that Agway

would absorb the cost of EnergyGuard, or that the cost of EnergyGuard was not among

the “costs, expenses and margins” that Agway explicitly stated it would consider in

setting the variable monthly rate. See id. at 767; see also Brown, 822 Fed. App’x at 103

(“Further, the provision makes clear that Agway can consider its own ‘costs, expenses,

and margins’ in setting prices. One obvious cost is Agway’s EnergyGuard service.”).

       Gonzales urges that, even if Agway was permitted to charge in some way for

EnergyGuard, Agway’s “variable rate could only include an amount reflective of

EnergyGuard’s actual costs.” Appellant’s Br. at 50–51. Again, Gonzales points to

nothing in the Agreement or our precedent that supports this contention. For the

reasons already stated, Agway’s “discretion” to set its variable monthly rate based on,

among other factors, its “costs, expenses and margins,” allowed it to charge some

10Gonzales urges that her interpretation is further supported by a proposed script for customer
service representatives (produced by Agway in response to document requests during the
Commission’s proceedings). She does not suggest, however, that this proposed script was part
of the contract she had with Agway, nor that any Agway representative ever read this script to
her. We therefore have no reason to consider it.

                                               17
amount beyond its actual costs to operate EnergyGuard, so long as it exercised that

discretion in good faith. App’x at 767; see Richards, 915 F.3d at 99.

       C.      Gonzales has not raised a triable issue of fact as to whether Agway
               exercised its discretion in bad faith.

       While Gonzales appears to argue that Agway acted in bad faith when it included

in its rates what she terms “an exorbitant charge for EnergyGuard, unrelated to its

actual costs,” Appellant’s Br. at 51, she has failed to raise a triable issue of fact that it

acted in bad faith.

       In support of her argument, Gonzales points to the proffered testimony of an

expert witness, Dr. Frank Felder. Id. In his expert report, Dr. Felder calculated the

“value” of EnergyGuard to customers and compared it with the cost of EnergyGuard

according to one of Agway’s experts. App’x at 510–11. Dr. Felder then subtracted

EnergyGuard’s purported value from his previous “overcharge calculations,” which

were based on comparisons between the cost of electricity from Agway and the cost of

electricity from default utilities. Id. at 511. But Dr. Felder calculated these

“overcharge[s]” based on his subjective and unsupported view of what a “reasonable

margin” would have been. See id. at 347; 512.

       The district court concluded that Dr. Felder’s report was inadmissible under

Federal Rule of Evidence 702, because his conclusions about the overcharges were

based on “unreliable methodology and insufficient data”—namely, his subjective views

on the reasonableness of margins and the unsupported contention “that the proper

comparison for [Agway's] variable rate is solely the rates of the incumbent utilities.”

Martinez, 2022 WL 306437, at *14.

       It was not “manifestly erroneous” for the district court to exclude Dr. Felder’s

report. Amorgianos v. Nat’l R.R. Passenger Corp., 303 F.3d 256, 265 (2d Cir. 2002) (internal

quotation marks omitted). As explained above and below, the proffered comparisons

                                               18
between Agway’s prices and those of the default utilities are legally insufficient—

without more, and in light of the Agreement’s express terms—to raise a triable issue of

fact as to Gonzales’s breach of contract and GBL claims. And contrary to Gonzales’s

argument that the EnergyGuard-related portions of Dr. Felder’s report should not have

been excluded because they “ha[d] nothing to do with [default] utility rates,”

Appellant’s Br. at 54, Dr. Felder calculated the “value” of EnergyGuard for the specific

purpose of subtracting that number from his legally insufficient overcharge

calculations. App’x at 511. It was not an abuse of discretion for the district court to

exclude his EnergyGuard-related calculations with the rest of the report.

       Gonzales does not point to any other evidence that would raise a triable issue of

fact as to whether Agway exercised its discretion in bad faith. The same was true in

Richards, where we concluded that the plaintiff had not raised a triable issue of fact as to

bad faith because he merely argued that prices were “too high” without providing

any evidence that they were any higher than competing ESCOs’ rates. 915 F.3d at 99. 11

Indeed, the language of the Agreement between Gonzales and Agway makes this case

clearer than Richards. The contract at issue in Richards did not define “business and

market conditions,” leading Judge Pooler to express the view, in her partial dissent, that

11Richards interpreted and applied the analogous implied covenant of good faith and fair
dealing that arises under Connecticut law. Much as it does under New York law, Connecticut’s
implied covenant of good faith and fair dealing attaches to every contract and “requires that
neither party do anything that will injure the right of the other to receive the benefits of the
agreement.” Richards, 915 F.3d at 97 (internal quotation marks and alterations omitted) (quoting
Renaissance Mgmt. Co. v. Conn. Hous. Fin. Auth., 281 Conn. 227, 240 (2007)). To prevail on a claim
for breach under Connecticut law, the plaintiff must show that the defendant’s “allegedly
wrongful acts were ‘taken in bad faith.’” Id. (quoting De La Concha of Hartford, Inc. v. Aetna Life
Ins. Co., 269 Conn. 424, 433 (2004). This “in general implies both actual or constructive fraud, or
a design to mislead or deceive another, or a neglect or refusal to fulfill some duty or some
contractual obligation, not prompted by an honest mistake as to one’s rights or duties, but by
some interested or sinister motive.” Id. (internal quotation marks omitted).

                                                19
a reasonable customer could interpret the term to include only “those conditions that

affect Direct Energy’s costs of providing electricity,” such as “fixed costs of labor,

facilities, legal representation . . . and the more variable cost of purchasing electricity

and electricity derivatives. Id. at 111 (Pooler, J., dissenting in part). Based on evidence

that Direct Energy “raised variable-rate prices to recoup anticipated losses among fixed-

rate customers, and . . . smoothed variable-rate prices so that customers would not

notice how high they were getting,” Judge Pooler saw a triable issue of fact as to

“whether Direct Energy’s reasons [for setting its variable rate] amounted to bad faith or

a breach of the contract given the letter and spirit of the contract.” Id. at 112.

       Here, on the other hand, Agway’s contract with Gonzales expressly stated that

Agway could consider its “costs, expenses and margins” when setting its rates. App’x at

767. Further, Agway specified that “[s]avings are NOT guaranteed” and made no

representations that its prices would always be lower than those of the incumbent

utilities, for example. Id. Agway (like Direct Energy) provided “exactly what [Gonzales]

bargained for: after paying a fixed rate below the [default utility rate] for a fixed time,

[Gonzales] would pay a variable rate set at [Agway’s] discretion.” See Richards, 915 F.3d

at 99. In doing so, it did not breach its contract.

       D.     Agway’s representation that its rate would be “competitive” does not alter
              our analysis.

       Gonzales also argues that Agway breached the Agreement by failing to honor a

promise to provide “competitive” rates. Appellant’s Br. at 35. In support, she relies on

the same information discussed above: price comparisons that show “sharp

discrepancies between Defendant’s rates and rates charged by [default] utilities” during

Gonzales’s two-year enrollment period. Id. She contends that the incumbent utilities are

Agway’s main competitors, and accordingly suggests that consistently unfavorable

comparison of Agway’s unregulated rates with incumbent utility rates suffices to

                                              20
establish that Agway breached the Agreement by setting rates that were not

“competitive.” Id. at 35–36.

       We are not persuaded. First, “competitive” is a broad and general term that is

not defined in the Agreement. See App’x at 766–70. The portions of the Agreement

listing factors that Agway may consider when exercising its rate-setting discretion, on

the other hand, are significantly more specific. Under “fundamental rule[s] of contract

construction . . . specific words will limit the meaning of general words if it appears

from the whole agreement that the parties’ purpose was directed solely toward the

matter to which the specific words or clause relate.” Global Reinsurance Corp. of Am. v.

Century Indemnity Co., 22 F.4th 83, 97 n.7 (2d Cir. 2021) (internal quotation marks

omitted); see also Lockheed Martin Corp., 639 F.3d at 69 (“If the document as a whole

makes clear the parties’ over-all intention, courts examining isolated provisions should

then choose that construction which will carry out the plain purpose and object of the

agreement.”) (internal quotation marks omitted and alteration adopted).

       Here, the whole agreement between Agway and Gonzales makes it apparent that

the parties intended to contract for energy services on financial terms governed by the

more specific language giving Agway discretion to set prices based on listed factors. See

App’x at 767. Indeed, Gonzales has not explained what she understands “competitive”

to mean. Without a satisfactory definition of “competitive,” any contractual promise to

charge a competitive rate lacks the definiteness that New York law requires to make it

enforceable. Cf. Gutkowski v. Steinbrenner, 680 F. Supp. 2d 602, 611–12 (S.D.N.Y. 2010)

(collecting cases holding that vague and generalized promises like those for “fair

compensation,” “substantial income,” or “market rate” are insufficiently definite).

       Second, even if we agreed with Gonzales that the Agreement promised a

“competitive” rate, it is not obvious to us which energy services companies Agway was

promising to compete against when setting its rates. Gonzales argues that the

                                            21
incumbent utilities provide the proper comparators. Appellant’s Br. at 35. Agway

argues that it should be understood as competing against the other ESCOs—

particularly because ESCOs are regulated differently than incumbent utilities.

Appellee’s Br. at 5–7. The plausibility of each interpretation serves only to underscore

the vagueness of the reference to “competitive” rates.

       Third, Agway presented expert evidence comparing its variable rates to rates

offered by other ESCOs in territories where Agway operated, for each quarter from

2014 to 2019. This comparison showed that in ninety-eight percent of the surveyed

periods, Agway’s variable rate was lower than the median variable rate offered by other

ESCOs for electricity alone (without any additional energy-related product like

EnergyGuard). Accordingly, Gonzales cannot argue that Agway failed to set rates that

were competitive with other ESCOs. Instead, her counsel emphasized at oral argument

that Agway’s rates were “sixty percent higher” than those of the incumbent utility. Oral

Arg. Audio at 50:41–45. According to Gonzales’s complaint, however, Agway’s rate was

not consistently sixty percent higher than Central Hudson’s during the Agreement

period; rather, it varied between 0.3145% and 134.6939% higher than Central Hudson’s

rate during that time.

       Taking the above points together, we conclude that Gonzales failed to raise a

triable issue of fact as to whether Agway made an enforceable promise as to the

competitiveness of its rate levels.

       We do not suggest, however, that energy services companies have carte blanche

to charge their customers any rate they wish, so long as they reserve rate-setting

discretion in their contracts. As discussed above, and as we have held before, energy

services companies must exercise their rate-setting discretion in “good faith.” Richards,

915 F.3d at 99.

                                            22
       Energy services companies also remain accountable to the Commission. Notably,

around the same time that Gonzales was contracting with Agway for energy services,

the Commission acknowledged that the New York retail energy market was “not

providing sufficient competition or innovation to properly serve consumers,” and that

[c]ommodity price differentiation has not worked.” Notice of Evidentiary and Collaborative

Tracks and Deadline for Initial Testimony and Exhibits, at 3, State of N.Y. Pub. Serv.

Comm’n, Case 15-M-0127, et al. (issued December 2, 2016). It initiated a multi-year

process to re-evaluate the market, after which the Commission issued an order that

prohibited ESCOs from “offering variable-rate, commodity-only service except where

the offering includes guaranteed savings” over incumbent utilities on a year-over-year

basis. App’x at 1036, 1072–75 (Commission’s Dec. 2019 Order). The 2019 Order included

a few exceptions, including one that provided Agway, by name, a “limited

opportunity” to continue offering variable-rate service without guaranteed savings, in

light of “the specific, credible evidence Agway submitted regarding the energy-related

value of [EnergyGuard].” Id. at 1056. 12

                                       *       *      *

       In summary, the Agreement’s language leaves no doubt that Agway’s pricing

decisions were permissible. Gonzales has not established a breach of contract by

showing that Agway considered its costs, margins, and expenses—including the costs

of (and profits from) EnergyGuard—in setting its monthly variable rate, nor by showing

12Gonzales argues that the Commission’s 2019 Order bears on her claims because it reflects a
public policy judgment that ESCOs like Agway must compete against—and guarantee savings
over—default utilities. Appellant’s Br. at 16–17, 46–47. This argument fails for two simple
reasons. First, such a public policy did not prevail until the Commission announced its new
ESCO rules in 2019—more than three years after Gonzales contracted with Agway. Second, any
public policy that the 2019 Order might have communicated did not extend to Agway, which
was expressly exempted from the new guaranteed savings requirement. App’x at 1056.

                                              23
that Agway failed to charge rates comparable to those charged by the incumbent local

utilities, rather than other ESCOs. As a matter of law, the Agreement’s language dooms

these theories. The district court therefore correctly granted summary judgment to

Agway. See Topps, 526 F.3d at 68 (summary judgment is appropriate if contractual

language is “wholly unambiguous”). Indeed, a contrary result would risk turning

courts into rate-setting agencies treading on the Commission’s mandate, an untenable

outcome.

II.    GBL claims

       Section 349 of New York’s GBL outlaws “[d]eceptive acts or practices in the

conduct of any business, trade or commerce or in the furnishing of any service in this

state.” N.Y. Gen. Bus. L. § 349(a). Section 349-d specifies that “[n]o person who sells or

offers for sale any energy services for, or on behalf of, an ESCO shall engage in any

deceptive acts or practices in the marketing of energy services.” Id. § 349-d(3). “To state

a claim for a § 349 violation, ‘a plaintiff must allege that a defendant has engaged in

(1) consumer-oriented conduct that is (2) materially misleading and that (3) plaintiff

suffered injury as a result of the allegedly deceptive act or practice.’” Nick’s Garage, Inc.

v. Progressive Cas. Ins. Co., 875 F.3d 107, 124 (2d Cir. 2017) (quoting City of New York v.

Smokes-Spirits.com, Inc., 12 N.Y.3d 616, 621 (2009)). “‘Whether a representation or an

omission, the deceptive practice must be likely to mislead a reasonable consumer acting

reasonably under the circumstances.’” Id. (quoting Stutman v. Chem. Bank, 95 N.Y.2d 24,

29 (2000)).

       Gonzales argues that issues of fact remain as to whether Agway engaged in

deceptive practices, asserting that (1) Agway falsely represented that its variable rate

would be competitive and based on market costs, and (2) Agway charged for

EnergyGuard even though statements in the Cover Letter and enrollment call, along

                                              24
with the absence of EnergyGuard from the definition of Agway’s variable rate, can all

be construed to mean that EnergyGuard would be provided free of charge.

       But having ruled above that the Agreement unambiguously permitted Agway to

exercise its discretion to incorporate its costs, expenses, and margins into its monthly

variable rate, we also find no triable issue of fact as to whether the Agreement’s

language would “be likely to mislead a reasonable consumer” on these two issues. See

id. Therefore, we affirm the grant of summary judgment to Agway as to Gonzales’s GBL

claims.

                                        CONCLUSION

       For the foregoing reasons, the district court’s judgment is AFFIRMED. 13

13Because we affirm the grant of summary judgment to Agway on all of Gonzales’s claims, we
also affirm the district court’s dismissal of Gonzales’s class certification motions as moot.
Agway argues, without having cross-appealed, that the district court erred in initially granting
class certification to the New York subclass and proposes that Martinez—as executor of his
mother’s estate—is not an adequate class representative in any event. Without a conditional
cross-appeal, however, an appellee “may not advance a theory that challenges some aspect of
the lower court’s judgment.” See Pacific Capital Bank, N.A. v. Connecticut, 542 F.3d 341, 349 (2d
Cir. 2008). In any case, because we hold that none of Gonzales’s claims survives summary
judgment, Agway’s arguments regarding class certification are moot.

                                                25