Lawyers for fire victims accuse PG&E of seeking advantage

SAN FRANCISCO -- The committee representing wildfire victims accused Pacific Gas & Electric Corp. on Wednesday of undercutting due process through legislation that imposed a deadline for the utility to participate in a multi-billion-dollar wildfire mitigation fund.

Attorneys for up to 50,000 plaintiffs whose lawsuits have been paused because of PG&E's bankruptcy argued their clients deserve a jury trial, even if that means the utility will not be able to emerge from bankruptcy by the date set by legislators to qualify for involvement in the fund.

"AB 1054 isn't for PG&E," said plaintiffs' attorney Michael Kelly. "It's for the victims."

PG&E responded that the attorneys misunderstand the bankruptcy code.

U.S. Bankruptcy Judge Dennis Montali faces a June 30, 2020 deadline to resolve PG&E's chapter 11 reorganization. The hearing Wednesday considered how to approach estimating the value of wildfire claims and whether to allow a state court trial over the Tubbs Fire in San Francisco County Superior Court to proceed.

Montali remarked the issues "have a lot of overlap and are interrelated."

All the major parties agree the value of the wildfire claims must be determined for PG&E to emerge from bankruptcy, but jostled over the procedure.

"PG&E wants to use this court as a litigation tactic to avoid what it saw as an exposure to liability," said plaintiffs' attorney Frank M. Pitre of Cotchett, Pitre & McCarthy LLP.

PG&E argued Montali, together with a district judge, should estimate the total value of claims for all 22 fires to form a capped trust. A district judge has to be involved to estimate the value of personal injury claims, including whether plaintiffs can recover damages for emotional harm, according to bankruptcy code.

The utility previously offered to fund a trust of $7.5 billion to resolve individual claims. Wildfire plaintiffs have estimated total damages at roughly $54 billion, which PG&E attorney Kevin Orsini criticized as having "no math behind" it.

PG&E is adamantly opposed to having a San Francisco County jury determine liability and damages for the Tubbs fire.

The committee representing wildfire claimants argued Montali should lift the stay on the Tubbs fire trial, which it said is most significant because PG&E did not admit liability. The Department of Forestry and Fire Protection found the fire was caused by private power lines and not PG&E equipment.

"One of the best settlement tools is a trial date," Montali agreed.

While the trial over the Tubbs fire is being argued in state court, Montali can begin to estimate the value of PG&E's liability in the other 21 fires. The estimation process is unique to bankruptcy court.

"We are people who can walk and chew gum at the same time," Pitre said.

Robert Julian, representing the committee of wildfire plaintiffs, argued there is an "inherent unfairness" in the estimation procedure proposed by PG&E.

Because of the "truncated process" they are burdened with because of AB 1054's deadline, plaintiffs' attorneys would not be able to properly argue their cases, according to Julian.

"From a justice and transparency point of view as opposed to a quicky point of view, the people who suffered the losses deserve to have the trial be public," Kelly said. "Having a trial where all the facts are tested and vetted by jurors is a safeguard to make sure estimation gets it right."

Concerned about the "ticking clock," Montali proposed an unprecedented procedure for him to handle the entirety of the process.

Montali said he would agree to try all aspects of the estimation trial that would decide whether PG&E was negligent in causing the fires and how much it owes to plaintiffs.

Adopting the proposal requires the consent of PG&E, the committee representing wildfire claimants and the group representing insurers.

Montali said it would be most efficient for "one judge in this courtroom" to manage everything to avoid legal complications that may cause PG&E to miss AB 1054's deadline.

Seemingly in agreement with the proposal, Orsini said Montali should not "roll the dice" by allowing the Tubbs fire trial to proceed and risk losing time.

"We know we have to go to estimation," he said. "We know we have to get this done quickly."