Panel rules out punitive damages against PG&E in fire lawsuit

SACRAMENTO -- In a ruling that could save Pacific Gas and Electric Company billions of dollars, a 3rd District Court of Appeal panel has ruled the utility cannot be held liable by a jury for punitive damages from the 2015 Butte Fire.

In a unanimous Monday decision written by Justice Jonathan K. Renner, the court found PG&E did not act with malice and made reasonable maintenance efforts to keep down plant growth near the lines. Pacific Gas and Electric Company v. Superior Court of Sacramento County, C085308 (Cal. App. 3rd, filed Aug. 17, 2017).

The fire burned more than 70,000 acres, killed two people and destroyed more than 800 structures. More than 2,000 plaintiffs filed hundreds of lawsuits against the company.

While it was "undisputed" that the fire started when one of the company's power lines came into contact with a pine tree, Renner found there were "no triable issues of fact" that could result in punitive damages under California law. He granted the utility's motion for summary adjudication.

Under the California Civil Code, punitive damages in a non-contractual case must be "proven by clear and convincing evidence that the defendant has been guilty of oppression, fraud, or malice."

"There is no evidence that PG&E acted maliciously in setting policies designed to minimize the risk of wildfire or engaging contractors to assist in the company's fire mitigation efforts," Renner wrote.

The ruling raises questions about other fire damage complaints. PG&E is facing a host of lawsuits by plaintiffs whose homes were damaged or destroyed in last year's Wine County fires. Most, if not all, of the suits filed against the utility seek punitive damages.

In the Butte Fire case, the various plaintiff claims were consolidated into a master complaint naming PG&E and a pair of contractors. The court rejected arguments PG&E failed to properly train and monitor independent contractors hired to clear the area, and that it had a "nondelegable duty" to maintain the lines.

"We continue to extend our thoughts and prayers to the victims and the communities that suffered losses as a result of the Butte fire," said PG&E spokesman Paul Doherty in an emailed statement. "We welcome the court's decision on this important matter. Regardless of the next legal steps, nothing is going to distract us from our important safety work."

Sacramento County Superior Court Judge Allen H. Sumner initially ruled in favor of PG&E's motion last year, then reversed himself. Sumner did find the company is liable for actual damages from the fire.

Attorney Gerald B. Singleton -- who represents hundreds of the plaintiffs -- said that according to financial filings, PG&E appears to have settled over half the claims from the fire, including most of the subrogation claims from insurers. The combined cost to the company has been at least $750 million, he said.

The partner with the Singleton Law Firm APC in Solana Beach was not a party to the appeal court case because he thought the punitive damages bid was likely to fail.

"I thought it was a close call, but I did not think there was sufficient grounds at that point to go forward with punitive damages," Singleton said.

Had the plaintiffs' bid been successful, the punitive damages could have been multiple times higher than what PG&E has paid out in settlements. The appeal court ruling did leave open the possibility plaintiffs could collect punitive damages under the state public utilities code, but these would need to be awarded by a judge.

"Judges tend to be more conservative than juries," Singleton said. "Generally if you're a plaintiff, you're anticipating getting punitive damages from a jury, not a judge."

Meanwhile, the state Legislature is evaluating a bill that could give utilities more legal cover going forward. SB 1088 would require utilities to submit "safety, reliability and resiliency plans" to the Public Utilities Commission every two years. These would attempt to anticipate possible disasters and lay out each company's plan for dealing with them.

But critics say, as written, SB 1088 would make it far it less likely the Public Utilities Commission will find utilities administratively liable for fire damages. PG&E and other utilities have argued change is needed because climate change has made it more difficult to protect lines, and that they are likely to eventually go bankrupt under current laws.

"It will enable utilities to shift costs of major events to ratepayers in a way that is not allowed under current law," Ignacio Hernandez, a lobbyist arguing on behalf of the Utility Reform Network, told the Assembly Governmental Organization Committee last week.

The committee passed SB 1088 by a 15-1 vote after a contentious hourlong hearing.