U.S. Appeals Court to Hear Appeal of Ruling Which Had Granted Class Action Status to Retail Energy Lawsuit

A U.S. Appeals Court will hear arguments regarding whether class action status should have been granted to a lawsuit against Stream Gas & Electric, its marketing unit Ignite Holdings, several subsidiaries, and several affiliated individuals.

As first reported by EnergyChoiceMatters.com, the lawsuit, which had been filed under the Racketeer Influenced and Corrupt Organizations (RICO) Act and alleges that Stream's business relies on an illegal "pyramid" scheme, had been "certified" to proceed on a class action basis in a January ruling from a district court

See prior story for background on certification ruling

Stream had sought to appeal the district court's certification ruling by arguing, among other things, that the court erred in granting class action status since precedent demands that RICO allegations require an examination of individual claims, not those of a class.

Stream had also said that the certification ruling erred because, "[u]nder Supreme Court precedent, Plaintiffs were required to prove -- not merely allege -- the existence of a pyramid scheme, in order to certify the class."

The United States Court of Appeals for the Fifth Circuit granted Stream's motion for leave to appeal under Fed. R. Civ. P. 23(f), and will now consider the substance of the appeal.

Additionally, the Appeals Court has ordered a stay of all trial court proceedings pending disposition of the Stream 23(f) petition and any subsequent appeal.

The Appeals Court also accepted an amicus brief filed by the Chamber of Commerce of the United States of America, the Direct Selling Association, and the National Energy Marketers Association in support of Stream's appeal of the certification ruling.

"If left uncorrected, the district court's decision would subject businesses to the risk of extortionate settlements coerced by the improper certification of meritless class claims that could not be proved at trial," the Chamber, DSA, and NEM had said in the amicus brief.