On December 17, the United States Bankruptcy Court for the District of Delaware approved a settlement between Starion Energy Inc. and the Commonwealth of Massachusetts in which Starion agreed to pay up to $10 million to resolve claims that it engaged in deceptive business practices and violated state telemarketing laws.

Starion is a retail provider of electricity and natural gas that offers service to residential and commercial customers in states where energy deregulation permits customers to choose their supplier.

On October 16, 2018, Massachusetts Attorney General Maura Healey filed an enforcement action alleging that Starion, along with two of its principals and several related telemarketing firms, violated the Massachusetts Consumer Protection Act, Mass. Ann. Laws ch. 93A, § 2, 4, and the Massachusetts Telephone Consumer Protection Act, Mass. Ann. Laws ch. 159C, § 8. The claim alleged that Starion engaged in unfair sales tactics, including unsolicited telemarketing calls and pre-recorded calls, in which it falsely promised consumers lower electricity rates while signing them up for contracts that ultimately caused them to pay more on their monthly bills. Massachusetts sought to recover more than $30 million on behalf of affected consumers.

Shortly thereafter, in November of 2018, Starion filed a Chapter Eleven Petition for Bankruptcy in the District of Delaware. On January 15, 2019, the bankruptcy court denied Massachusetts’ motion to dismiss, finding that Starion had filed the Petition in good faith rather than in an attempt to avoid paying a potential judgment.

Under the terms of the settlement, Starion has agreed to pay up to $10 million to resolve the claims asserted by Massachusetts. The first $6 million was to be paid by the end of 2019 with the rest to be paid over a two-year period. However, half of the remainder may by forgiven if Starion complies with the terms that are to be set forth in a consent judgment to be filed in a Massachusetts state court.

We will continue to monitor the status of the settlement and report on this and other matters involving state and federal regulation of telemarketing practices.