Imagine: it’s Super Bowl Sunday. You’re about to call the new local pizza place and have them deliver several pies to your house to get you and your guests through the big game. You find the pizza place’s number online, call them to place your order, and they tell you they’ll be there in 30 minutes they can’t sell you a pizza unless you sign a written contract and return it to them.
That. Is. Crazy.
And yet, that is the issue under consideration by the Supreme Court of Maryland in In the Matter of SmartEnergy Holdings, LLC, d/a/a SmartEnergy.
In the 1980’s, the Maryland General Assembly adopted the Maryland Telephone Solicitations Act (MTSA). It was adopted around the same time as other state and federal laws, such as the federal Telephone Consumer Protection Act of 1991. The purpose of those laws was to protect consumers from nuisance “cold calls” from merchants they don’t know selling products they’ve never heard of. Under the MTSA, a sale resulting from a “telephone solicitation,” as defined by the MTSA, is not final until the merchant obtains a signed contract from the customer.
Fast forward to 2017. SmartEnergy, a licensed retail electricity supplier in Maryland, mailed postcards to Marylanders advertising its residential electricity product. Individuals responded to the postcard by calling SmartEnergy’s toll-free number, and those individuals who were interested enrolled in SmartEnergy’s service. SmartEnergy made no outbound calls to potential customers, only postcards. SmartEnergy recorded every call and, after the call, sent a contract to the new customer. Thinking the inbound calls were not “telephone solicitations” that triggered the MTSA’s contracting requirements, SmartEnergy did not obtain the customer’s signature on the contract.
Under the MTSA, a “telephone solicitation” is defined as “the attempt by a merchant to sell or lease consumer goods . . . that is: (1) [m]ade entirely by phone and [i]nitiated by the merchant.” SmartEnergy’s position is that this definition indicates that the Maryland General Assembly did not intend for all telephone conversations to be “telephone solicitations” under the MTSA. If that’s what the General Assembly had wanted, it could easily have said so, but it did not. Rather, the General Assembly established a two-part test: the attempt to sell must be “made entirely by phone” and “initiated by the merchant.”
Applying this test, SmartEnergy argued that, if a sale is interpreted to have been initiated by mailing the postcard, then the sale would not take place “entirely” over the telephone. Alternatively, if a sale is interpreted as being “initiated” by a call from a potential customer, then the sale is not initiated by the merchant. Therefore, SmartEnergy’s position is that none of its enrollments are from “telephone solicitations,” and signed contracts are not needed.
The Maryland Public Service Commission, the Circuit Court of Montgomery County, and the Court of Special Appeals disagreed with SmartEnergy. They found that the customers’ inbound calls to SmartEnergy were “telephone solicitations” and the MTSA’s signed contract requirement applied. Now, SmartEnergy has filed a Petition for Certiorari, asking the Supreme Court of Maryland to take the case and overrule the Commission’s and lower courts’ decisions.
At least five entities filed amicus briefs in support of SmartEnergy’s Petition for Certiorari. Two of them are the Maryland Chamber of Commerce (Chamber) and the Maryland Retailers Association (MRA). They argue that requiring signed contracts for these routine, everyday telephone transactions “will dramatically alter Maryland commerce.” Unless the Supreme Court of Maryland steps in, businesses will face increased compliance costs, and customers will face unnecessary complexity when all they want to do is order food or buy products like bike parts, TVs, computers, medication, and flowers. In other words, higher costs, more complexity, and negative customer experiences.
Another issue in the case is whether the Public Service Commission even has jurisdiction to interpret the MTSA to begin with. SmartEnergy’s position is that it does not, and that Maryland statutes expressly require the Attorney General’s Consumer Protection Division to “administer” the Maryland Consumer Protection Act, which includes the MTSA. The Chamber and the MRA weighed in on this issue, expressing their concern that “the Commission’s decisions regarding whether an energy company violated the MTSA will serve as precedent for companies and industries over which the Commission has no jurisdiction.” The Court of Special Appeals disagreed with SmartEnergy and concluded that the Commission has jurisdiction to consider MTSA violations.
So if you live in Maryland, unless the Supreme Court of Maryland steps in, you might need to sign a contract the next time you buy something over the phone from some place you’ve never shopped before. That would definitely change how you order pizzas, flowers, medications, or even – G-d forbid! – call a lawyer for help when you need it.
The case is In the Matter of SmartEnergy Holdings, LLC d/b/a SmartEnergy, Supreme Court of Maryland Case No. SCM-PET-0363-2022. GreeneHurlocker is co-counsel for SmartEnergy in the proceedings.