The Successful Administration of an Assurance of Discontinuance Class Action

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Administering an Assurance of Discontinuance

In the matter of Viridian Energy, LLC, Kroll Settlement Administration successfully distributed well over 90% of the $4,596,000 restitution fund.

In 2018 the Commonwealth of Massachusetts, by and through its Attorney General (AGO), entered an Assurance of Discontinuance (AOD) with Viridian Energy, LLC (Viridian). The AGO alleged that Viridian may have engaged in policies and practices in violation of provisions of the Commonwealth’s laws and regulations while marketing and selling retail electricity to consumers beginning in or around June 2012. The AOD resolved the AGO’s claims that Viridian may not have complied with the Massachusetts Consumer Protection Act while marketing and selling Viridian’s electricity supply.

Viridian denied the AGO’s allegations. However, to avoid risks and expenses associated with litigation, the parties entered into an AOD, which included Viridian’s agreement to pay a total settlement sum of $5,000,000. Of the total payment amount, $4,596,000 was paid into the restitution fund to be distributed to eligible customers, and the remaining $404,000 was paid to the AGO and the Massachusetts General Fund.

Kroll Settlement Administration was appointed by both parties to be the Viridian Energy Trustee which administered the restitution fund.

Restitution Fund

The AOD created a restitution fund for the benefit of Viridian’s current and former eligible customers. Specifically, over a period of 19 months, Viridian agreed to make four separate payments totaling $4,596,000 into the restitution fund for the benefit of its eligible current and former customers. Our team conducted the restitution distribution program in four phases corresponding to Viridian’s four payments into the restitution fund. No claims process was required for eligible customers to receive their restitution checks.

Administration Set Up

Prior to mailing any restitution checks, we built and maintained an informational website which provided answers to customers’ frequently asked questions. In addition, we established a toll-free telephone number staffed by our in-house live operators to answer more specific questions. Our live operators received calls from and spoke with almost 1,000 customers during the course of the four phases of this energy company enforcement action.

In Viridian’s original customer data, there were 96,301 total records of current and former customers. Our team was responsible for calculating both customers’ eligibility for payment and the restitution payment amounts based on Viridian’s billing data document. We determined the eligible customers and calculated the restitution amounts, and then applied a $5.00 de minimus check cutoff. This $5.00 cutoff avoided mailing checks so small that the print, postage, bank and administration fees would have exceeded the value of the check.

After we determined eligibility, calculated the restitution amount for each customer, and applied the de minimus cut-off, there were 56,615 customers eligible to receive a restitution check. Our team performed a pro-rata share adjustment based on our analysis of Viridian’s billing data document and the $4,596,000 available in the restitution fund. Prior to mailing the phase one checks, we provided each step of our analysis and calculations to the parties for their review and approval.

Distribution

After identifying each customer who was eligible for restitution, we calculated each customer’s pro-rata share of the $4,596,000. Through a random selection of eligible customers, 20,394 customers were mailed checks during phase one of the restitution program. Our team was required to designate enough customers who would ensure that all of Viridian’s first $1.8 million payment into the restitution fund was exhausted if all the phase one eligible customers cashed their checks.

Applicable to all four phases, all checks were mailed with an explanatory letter describing the AOD and restitution program. All restitution checks were valid for 90 days. Further, Kroll Settlement Administration was required to void any uncashed checks no later than 30 days after the check’s 90-day stale date.

If any customer’s check and letter were returned as undeliverable, our team attempted to contact those customers to the extent the customer contact information was available in Viridian’s data. The purpose of these outreach efforts was to remind customers to cash their checks, offer to re-issue their checks and/or to obtain updated mail addresses. During the four phases, we placed a total of 2,528 outbound calls to customers to assist them in receiving their restitution checks.

Subsequent restitution payments:

  • Phase 2: $921,000 paid by Viridian into the restitution fund. A random designation of 10,810 customers were sent restitution checks.
  • Phase 3: $1 million paid by Viridian into the restitution fund. A random designation of 11,046 customers were sent restitution checks.
  • Phase 4: $875,000 paid by Viridian into the restitution fund. The remaining 14,365 customers were sent restitution checks.

Summary

During this two-year administration, Kroll Settlement Administration successfully distributed well over 90% of the $4,596,000 Restitution Fund to 41,803 eligible customers who received and cashed their restitution checks.

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