Judge Won’t Toss RICO Racketeering Lawsuit Against PG&E

Friday, November 27, 2015
Judge Richard Seeborg

The Internet is full of people complaining about Blue Spruce Energy Services (here, here and here), a company born of natural gas deregulation that competes for customers in with Pacific Gas & Electric (PG&E) as a cheap third-party provider..

Blue Spruce Energy Services is a trade name in California for United Energy Trading (UET), and in U.S. District Court the company is the one doing the complaining—about PG&E. Last week, Judge Richard Seeborg refused to toss out a lawsuit’s allegations that the utility violated RICO corruption laws while snatching customers back from UET, according to Courthouse News Service.

“UET has pleaded adequately a ‘pattern of racketeering’ because it credits at least ten different acts to the direction and supervision of each individual defendant, even if they were working together,” Judge Seeborg wrote.

UET supplies gas to 60,000 customers in PG&E’s territory, at times using an aggressive sales force that generates complaints. In June 2014, UET accused PG&E of trying to win back those customers by pissing them off and making it look like UET was to blame.

The lawsuit accuses PG&E, which acts as the billing and collections agency for UET, of moving payments into its own accounts and then telling customers they were past due. When customers complained to PG&E, they were advised to dump UET and come back home, the suit alleges.

Colorado-based UET pays $40,000 a month for the billing service and said the PG&E scheme cost it more than $1.7 million. The suit claimed hundreds of customer accounts were disconnected or cancelled and “countless” numbers were “annoyed or upset” at UET’s further efforts to collect the money not showing up in accounts.

Many of the allegations in the lawsuit are present in a complaint UET made to the California Public Utilities Commission (PUC) earlier in the year. PG&E dismissed the brouhaha as a simple billing dispute, but the RICO charges in court raise the conflict to new level.

The judge did toss UET’s claim that PG&E’s actions violated antitrust laws in an effort to monopolize the gas distribution business, Courthouse News said. He said UET didn’t prove that competition was foreclosed or they suffered antitrust harm.

UET is seeking punitive damages and a RICO conviction triples awards.

–Ken Broder


To Learn More:

PG&E Can't Duck RICO Lawsuit, Judge Says (by Nick Cahill, Courthouse News Service)

Retail Supplier Sues Utility Over Billing Practices, Alleged Withholding of Customer Payments (by Paul Ring, Energy Choice Matters)

Rival Accuses PG&E of RICO Corruption (by Nick Cahill, Courthouse News Service)

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