Court Opinion

ID: 4558527
Source: CourtListenerOpinion
Date Created: 2020-08-25 17:00:36.80315+00
Date Added: 2024-06-11T09:27:36.610543
License: Public Domain

NOT PRECEDENTIAL

                       UNITED STATES COURT OF APPEALS
                            FOR THE THIRD CIRCUIT
                               ________________

                                      No. 18-3285
                                   ________________

                JAMES BROWN, individually and on behalf of all others
                              similarly situated,
                                                Appellant

                                             v.

                          AGWAY ENERGY SERVICES, LLC
                               ________________

                            On Appeal from the District Court
                         for the Western District of Pennsylvania
                                    No. 2-18-cv-00321
                        District Judge: Honorable Nora B. Fischer
                                    ________________

                   Submitted Pursuant to Third Circuit L.A.R. 34.1(a)
                                  On April 15, 2020

               Before: CHAGARES, SCIRICA, and ROTH, Circuit Judges

                                 (Filed: August 25, 2020)

                                   ________________

                                       OPINION *
                                   ________________

*
 This disposition is not an opinion of the full Court and pursuant to I.O.P. 5.7 does not
constitute binding precedent.
SCIRICA, Circuit Judge

       Appellant James Brown seeks review of the trial court’s order dismissing his

putative class-action claims asserting that Appellee Agway Energy Services, LLC

(“Agway”) violated contractual agreements with its customers. We will affirm. 1

                                             I.

       Brown’s claim arises from Agway’s system for pricing its services, so resolving

this case requires a basic understanding of Agway’s business. Traditionally, electricity

and gas companies held vertical monopolies in which the same company would produce

and deliver energy to customers. But about twenty years ago, Pennsylvania took

regulatory action intended to promote competition in the provision of energy services.

One of these steps allows customers to purchase energy from an electric generation

supplier (“EGS”), like Agway, which purchases electricity from a traditional electric

utility company and then resells it to customers. This allows customers seeking electricity

to choose between a traditional electricity utility company and an EGS. Aside from

providing electricity, an EGS can also offer other services. For example, Agway offers a

service called EnergyGuard, whereby a customer receives a certain amount of repair

services for energy-related appliances, like air conditioners, each year.

   1
      Because the parties are minimally diverse and more than five million dollars are at
issue, the trial court had jurisdiction over this putative class action under 28 U.S.C. §
1332(d). We have jurisdiction under 28 U.S.C. § 1291 because the trial court issued a
final order dismissing Brown’s case.

                                             2
       Brown contracted with Agway for the provision of electricity as well as the

EnergyGuard service. To consummate the contractual relationship, Agway sent Brown a

customer contract and a one-page document summarizing the contract. The contract’s

summary discloses many of its key terms. In the section titled “Price Structure,” the chart

discloses that the price is variable, is set “at Agway’s discretion,” and reflects the cost of

electricity acquired by Agway, together with 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.” App. 24-25. That same section

contains the bolded text: “There is no limit on how much the variable rate can change

from one billing cycle to the next.” App. 61. Section 3 of the contract, titled “Price,”

reiterates that the variable price will be calculated “by Agway, at Agway’s discretion, on

a customer specific basis each billing cycle” and that the rate

       will include all of the costs incurred in providing service to customer,
       including the following: electricity acquired by Agway from all sources
       (including energy, capacity, settlement, ancillaries), transmission and
       distribution charges, . . . other market-related charges, plus all applicable
       taxes including the gross receipts tax, fees, charges or other assessments and
       Agway’s costs, expenses and margins.

App. 62.

       On March 13, 2018, Brown filed a putative class action on behalf of himself and

all of Agway’s Pennsylvania customers. Relying on data showing that Agway charged

prices for electricity twenty to forty-six percent higher than traditional electricity utility

provider, Brown alleged that Agway had breached its contract by charging variable rates

for electricity that were not based on market-related factors.

                                               3
       The trial court granted Agway’s motion to dismiss for failure to state a claim,

concluding that the plain terms of the contract allowed Agway to set prices as it did.

Concluding that amendment would be futile, the trial court dismissed the case with

prejudice. The trial court denied two subsequent motions for reconsideration by Brown,

who filed a timely appeal with this Court.

                                               II.

       Brown contends that the trial court improperly dismissed his complaint for failure

to state a claim for breach of contract, and that it should have allowed him to replead.

Because we conclude that the contract’s plain language forecloses Brown’s claim, and

that repleading is futile, we will affirm the order of the trial court. 2

       In this diversity case, all agree that a valid contract exists and that Pennsylvania

contract law applies. Under Pennsylvania law, a breach of contract claim has three

elements: “(1) the existence of a contract, including its essential terms, (2) a breach of a

duty imposed by the contract and (3) resultant damages.” Ware v. Rodale Press, Inc., 322

F.3d 218, 225 (3d Cir. 2003) (quoting CoreStates Bank, N.A. v. Cutillo, 723 A.2d 1053,

1058 (Pa. Super. Ct. 1999)). “When a written contract is clear and unequivocal, its

meaning must be determined by its contents alone.” Robert F. Felte, Inc. v. White, 302

A.2d 347, 351 (Pa. 1973) (quoting E. Crossroads Ctr., Inc. v. Mellon-Stuart Co., 205

A.2d 865, 866 (Pa. 1965)) (internal quotations omitted).

2
 We review a grant of a motion to dismiss for failure to state a claim de novo. Fleisher v.
Standard Ins. Co., 679 F.3d 116, 120 (3d Cir. 2012).
                                                4
       Brown argues that Agway breached its contract by setting prices not sufficiently

tethered to its cost of acquiring the electricity it resold. He points to data showing that

Agway charged prices substantially higher than what he could have paid to a traditional

electricity provider. The problem with this theory is a simple one: the plain language of

Brown’s contract gives Agway flexibility to set prices based on a variety of factors, not

just the cost of acquiring electricity.

       The contract in this case is replete with language giving Agway discretion to set

prices based on factors other than the rates charged by traditional electric utility

companies. The contract states that the price charged to customers is set each month “at

Agway’s discretion” and “reflect[s] multiple enumerated factors.” App. 18-19. In more

detail, the contract states Agway will set a price based on:

       all of the costs incurred in providing service to customer, including the
       following: electricity acquired by Agway from all sources (including energy,
       capacity, settlement, ancillaries), transmission and distribution charges, . . .
       other market-related charges, plus all applicable taxes including the gross
       receipts tax, fees, charges or other assessments and Agway’s costs, expenses
       and margins.

App. 62.

       Several words in this contractual provision make clear that Agway can base its

prices on factors other than its cost of acquiring electricity, including the open-ended

phrase “market-related charges.” 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. The fact that Agway provides that service to Brown

                                               5
undermines his comparison of Agway’s prices to that of a traditional electric utility

supplier, which may not provide such a service.

       Finally, we agree that the trial court did not abuse its discretion in denying Brown

an opportunity to replead. When seeking leave to replead before the trial court, Brown

did not point to any facts he could replead that would repair the flaws in his case, and the

“failure to explain how [he] could have amended [his] complaint to cure its deficiencies

is a critical omission.” United States v. ex rel. Wilkins v. U. Health Grp., Inc., 659 F.3d

295, 315 (3d Cir. 2011). Therefore, we conclude the trial court did not abuse its

discretion in denying permission to replead. 3

                                             III.

       For the foregoing reasons, we will affirm the judgment of the trial court.

3
  We also conclude that the trial court did not abuse its discretion in denying Brown’s
requests to amend his complaint after final judgment had been issued under Federal Rules
of Civil Procedure 59(e) and 60(b).
                                              6