Ambit $9.3M Energy Rate Class Action Settlement Preliminarily Approved

A federal judge preliminarily approved a $9.3 million settlement that will end a class action lawsuit alleging Ambit Energy Holdings LLC uses bait-and-switch advertising to trick customers into buying their services.

Lead plaintiff Amy Silvis alleges in her class action lawsuit that she and other Ambit customers in Pennsylvania were duped into switching energy providers by misleading advertising about Ambit’s variable energy program.

She claims Ambit offered a month-long teaser rate at a fraction of the cost under the program, only to double customers’ bills the following month.

The plaintiff alleges that Ambit unfairly lures customers in with the “teaser rates” knowing that it would not be able to sustain those rates. She says the company acted in bad faith when entering into contracts with customers for the variable energy program.

The company argues that the rate increase was due to record winter temperatures and not part of a scheme to deceive customers; however, the plaintiff alleges that Ambit breached terms in its contract with customers to use rates based on energy and capacity markets.

While a federal court agreed with Ambit, that decision was overturned by the Third Circuit in January 2017. The Third Circuit sided with the class action plaintiff finding that the Ambit contract could be read to limit the company’s ability to alter prices outside of rates based on market factors.

After mediation, Ambit agreed to pay $9.3 million to settle the class action lawsuit in October 2017.

According to the class action settlement, Ambit customers who enrolled in the variable energy rate program between January 2011 until January 2014 are eligible to claim reimbursement for 15 percent of their Ambit energy bills during that time. A second Class of Ambit customers who enrolled in the program between January 2014 and February 2018 are eligible to claim reimbursement for two percent of their Ambit energy bills during that time.

U.S. District Court Judge Eduardo C. Robreno preliminarily approved the class action settlement agreement and scheduled a fairness agreement for Aug. 8, 2018.

“Defendant has offered compensation of 15% or 2% of all fees paid by the putative Class members, depending on when their respective contractual obligations began,” noted the judge in a memorandum supporting the preliminary approval of the class action settlement agreement. “The difference between the amounts is related to changes made to Ambit’s contracts after a certain date that potentially weaken the cases of the second category of Class members. The Court finds that there is a conceivable basis for presuming that the fairness, adequacy, and reasonableness of the Settlement Agreement will be demonstrated during the final approval process.”

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Silvis is represented by Jonathan Shub and Kevin Laukaitis of Kohn Swift & Graf PC and Troy M. Frederick of Marcus & Mack PC.

The Ambit Rate Hike Class Action Lawsuit is Amy Silvis v. Ambit Energy LP, et al., Case No. 2:14­-cv­-05005, in the U.S. District Court for the Eastern District of Pennsylvania.