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Law360 (April 9, 2020, 5:55 PM EDT) -- A retail utility company has been accused in a $22 million lawsuit in Texas state court of wrongly trying to use the COVID-19 pandemic to end a contract with a business that launched its customer rewards program.
EnergyEarth LLC claims Just Energy (US) Corp. had already breached their agreement in many ways before outright canceling it last month and refusing to make any further payments. EnergyEarth, which develops points-based perks programs for utility companies to offer customers, said in a Harris County District Court lawsuit Wednesday that Just Energy "sees the nation's healthcare crisis as an opportunity to cut out a longtime business partner and boost its profits."
"With no prior notice, defendant announced that it was stopping all payments to EnergyEarth under the contract. And, to add insult to injury, it blamed the COVID-19 pandemic for its choice to cease performing," EnergyEarth said. "This was a pretext."
EnergyEarth told the court the parties began working six years ago to develop the loyalty perks program and launched it for Just Energy's customers in 2016. Through the program, customers accumulate reward points and can redeem those for prepaid Visa gift cards, other gift cards, energy-efficient merchandise and other rewards.
Under the agreement between the parties, EnergyEarth is to manage "all aspects" of the program, such as customer service, fulfillment, website maintenance and point account setup and maintenance. Just Energy was required, under the agreement, to provide EnergyEarth with customer information and point awards so it could maintain the program, according to the lawsuit.
The perks program has given Just Energy a way to "differentiate itself in the market," EnergyEarth alleges, explaining the company has consistently praised the program. In late 2019, EnergyEarth alleges that Just Energy's CEO attributed to the perks program a gross margin increase of 10% to $188.5 million. And in 2018 it touted approaching 1 million customers with perks and selected EnergyEarth as its 2018 "external partner of the year," according to the lawsuit.
The pandemic hasn't put Just Energy out of business, or given it any sound reason to cancel the contract with EnergyEarth, it alleges in the lawsuit, noting that Just Energy is still soliciting new customers and enrolling them in the perks program.
Among the breaches of the agreement prior to termination, EnergyEarth alleges, was Just Energy's repeated failure to enroll new and existing customers into the perks program, failing to dole out the appropriate number of points, and failing to pay EnergyEarth for its maintenance of the program.
By awarding fewer perks than it should under the agreement, Energy Earth told the court, Just Energy has harmed it because fewer points issued means a "lower volume, fewer redemptions and lower margins."
Just Energy in a statement to Law360 on Thursday said it was "aware of the claim and intends to defend it vigorously."
Counsel for Energy Earth did not return a message seeking comment Thursday.
Energy Earth is represented by R. Paul Yetter and Christopher R. Johnson of Yetter Coleman LLP.
Counsel information for Just Energy was not immediately available Thursday.
The case is Energy Earth LLC v. Just Energy (US) Corp., case number 2020-22395, in the 333rd District Court in Harris County, Texas.
--Editing by Orlando Lorenzo.
For a reprint of this article, please contact reprints@law360.com.
