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Citing Recent Supreme Court Decision, Retail Supplier Says Jury Trial Needed For PSC To Impose Punitive Penalties
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In what may be the first sought application of a recent U.S. Supreme Court administrative law precedent to retail energy regulation, SmartEnergy Holdings, LLC ("SmartEnergy") said in a pleading with the Maryland PSC that SmartEnergy has the right to a jury trial for any adjudication of a punitive penalty for allegedly fraudulent conduct
In a recent decision concerning the Securities and Exchange Commission (Sec. & Exch. Comm’n v. Jarkesy), the U.S. Supreme Court (SCOTUS) held that the antifraud provisions of the SEC, "replicate common law fraud."
The Seventh Amendment of the U.S. Constitution provides the right to a trial by jury for, "[s]uits at common law".
Citing precedent, SCOTUS agreed that SEC civil penalties are, "a type of remedy at common law
that could only be enforced in courts of law."
As such, SCOTUS ruled that the SEC's administrative proceedings, and by extension similar administrative tribunals, cannot impose punitive damages meant to address common law fraud, and that defendants before such administrative agencies are entitled to a jury trial for determination of any such penalty
Citing both Jarkesy and Maryland law, SmartEnergy argued that the PSC's imposition of any civil penalties for alleged fraud in the current complaint proceeding against SmartEnergy (see background here) would violate Maryland law
SmartEnergy said, "Article 23 of the Maryland Constitution provides that the 'right of trial by Jury of all issues of fact in civil proceedings in the several Courts of Law in this State, where the amount in controversy exceeds the sum of $25,000, shall be inviolably preserved.' Md. Const. Decl. of Rts. art. 23. While the Commission has discretion to bring certain cases before its own administrative judges, the penalties the Commission purports to bring against SmartEnergy are of the type traditionally brought at common law. And when such cases are brought in Maryland courts under the common law, they are subject to final adjudication through a trial by jury."
"Maryland’s Article 23 provides a fundamental right to a jury in civil cases, which the Maryland Supreme Court has previously recognized should be interpreted as identical in scope to the federal right to a jury trial guaranteed by the Seventh Amendment to the United
States Constitution," SmartEnergy said
Given the Maryland Supreme Court's prior finding that the state right to a trial by jury should follow the federal right, the Jarkesy decision is now controlling, SmartEnergy argued
SmartEnergy argued that any penalty sought for its alleged fraudulent, misleading, or deceptive practices replicates claims and remedies for common law fraud, as in Jarkesy
Thus, as in Jarkesy, any punitive penalty sought by the PSC must be heard by a jury, SmartEnergy argued
As more fully discussed in our prior story from February, the Maryland Supreme Court found that SmartEnergy's telephonic enrollments, even though the call was inbound from a customer, were still subject to the wet signature requirement of the Maryland Telephone Solicitations Act (MTSA), and that SmartEnergy did not obtain such signature, nor did its marketing qualify for an exemption under the MTSA.
In addition to MTSA violations, the PSC, among other things, found that the underlying SmartEnergy postcards at issue in the complaint were "deceptive and misleading".
Case 9613
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September 3, 2024
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Copyright 2024 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com
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