Ambit Energy Lawsuit Thrown Out of U.S. Court

A proposed class action Ambit Energy lawsuit filed by retail electricity customer was thrown out of U.S. District Court recently by a federal judge in the Northern District of Illinois.

The consumer in this Ambit Energy lawsuit , plaintiff Oleg K., accused the would-be defendant of being in violation of the Racketeer Influence and Corrupt Organizations Act, also known as RICO. He also accused the company of breaking their promises to him and raising rates beyond what would be considered reasonable.

Ambit Energy is an energy service company, also known as an ESCO, one of several retail utility companies that purchase natural gas and electrical energy wholesale and turn around and resell it to the consuming public for a profit.

These ESCOs exist in states where energy services have been deregulated, ostensibly to interfere with traditional monopolization of regulated energy companies and allow for a more competitive pricing situation.

There are 15 states and the District of Columbia where energy deregulation has come about. The states are Connecticut, Delaware, Illinois, Maine, Maryland, Massachusetts, Michigan, Montana, New Hampshire, New Jersey, New York, Ohio, Oregon, Pennsylvania, Rhode Island and Texas.

Many consumers have found that the promise of deregulation and the promises of low prices that ESCOs offer frequently are disappointing, if not downright wrong in claiming that they will be cheaper. Often prices exceed that of traditional energy companies.

However, this Ambit Energy lawsuit failed to meet a level of standards needed to prove purposeful scheming to defraud the consuming public.

The federal judge who ruled on the case stated that it was demonstrated by the defendant’s counsel that rate increases complained about were in fact disclosed in a “terms of service” memo mailed to the plaintiff.

The judge was willing to say, according to Law360, that it is likely the energy retailer was engaging in questionable business behavior. Judge Gary Feinerman stated that Ambit Energy was assuming that a good healthy percentage of their client base, once lured in by a time-limited “Guaranteed Savings Plan” would fail to follow through and initiate renewal.

Oleg, although notified by mail of this eventuality, failed to initiate renewal and was rolled over into a cost category that jumped $.31 per therm. This rate increase may not have been immediately apparent to him until, according to Ambit’s counsel, a harsh winter season pushed usage up. This enormous price hike motivated the plaintiff to file this Ambit Energy lawsuit in U.S. District Court.

According to Law360, the federal judge stated about this Ambit Energy lawsuit that the RICO charges are very hard to prove. Oleg might have had more success if he had accused the ESCO of breaching its contract with him as a consumer. He could have considered bringing Ambit up against state consumer protection law, but he deliberately chose not to take that road.

The Ambit Energy lawsuit is Case No. 1:15-cv-02553, in the U.S. District Court for the Northern District of Illinois, Eastern Division.

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