The California Supreme Court will not allow PG&E customers to bring a $2.5 billion lawsuit in response to electricity shutoffs the utility says are needed to prevent wildfires.
Attorneys for the plaintiffs say the decision will not only cut off Californians' abilities to sue utility companies, but also lead to "more and longer avoidable blackouts" across the state.
Justice Goodwin Liu wrote the 7-0 opinion issued Nov. 20. Justice Leondra Kruger took no part in the opinion; Justice Terry O’Rourke, of the California Fourth District Appellate Court, sat on the panel by assignment.
According to Liu, the issue stems from the fall of 2019 when Pacific Gas and Electric Co. deployed what it calls Public Safety Power Shutoffs to reduce risk of igniting wildfires during extreme weather conditions.
Named plaintiff Anthony Gantner sued, alleging PG&E had been negligent in maintaining its power grid and seeking damages for utility customers. He filed his complaint in Bankruptcy Court for the Northern District of California as part of PG&E’s Chapter 11 bankruptcy proceedings.
The California Public Utilities Code allows private lawsuits against utilities, but it has a provision barring litigation that would interfere with the California Public Utilities Commission’s official duties. The bankruptcy court dismissed the complaint on those grounds, and the U.S. District Court for the Northern District of California affirmed. When Gantner challenged the dismissal before the U.S. Ninth Circuit Court of Appeals, that body asked the California Supreme Court to assess the legality of suits that don’t allege the shutoffs were unneeded or violated PUC regulations, but rather allege the negligence directly created the need for the shutoffs.
Because it determined the Commission has “comprehensive regulatory and supervisory authority over PSPS,” Liu wrote, allowing Gantner’s lawsuit would interfere with that power. The Ninth Circuit also asked if PG&E Electric Rule 14 shields it from liability, but the Supreme Court didn’t address that question. According to the utility, “Rule 14 provides that the decision to shut off a customer’s power cannot trigger liability when, in PG&E’s ‘sole opinion,’ it is necessary for public safety.”
Liu said the Commission, in 2012, gave shutoff guidelines specifically to San Diego Gas & Electric. In 2018, following a historically destructive wildfire season, it “extended de-energization policies and procedures to all investor-owned electric utilities, including PG&E,” he said, adding the Commission promulgated formal guidelines in 2019. Lawmakers also acted, voting in 2016 to require electricity providers to submit annual wildfire mitigation plans.
After the 2019 shutdowns, the Commission fined PG&E more than $106 million for having inaccurate outage maps and an unavailable or nonfunctioning website while failing to give required shutdown notice to 50,000 customers. In another investigation, the Commission found PG&E didn’t identify or evaluate possible shutdown safety risks. But Gantner’s suit didn’t allege the utility violated Commission guidelines.
“Gantner’s suit, while alleging negligence by PG&E in grid maintenance only, claims that all of the alleged harm — and all damages sought — flow directly from PG&E’s fall 2019 PSPS events,” Liu wrote. “To award damages on this theory, a court would have to find that PG&E breached its duty by negligently maintaining its grid and that this negligence foreseeably caused the PSPS events and resulting harms. But the PUC has already instituted procedures for evaluating PSPS before and after a power shutoff, along with its own criteria for examining the propriety of each PSPS decision.”
The Court said the question of pre-emption turns not on a utility’s underlying conduct, but the Commission’s statutory and constitutional authority. More directly, the issue the suit raises isn’t the Commission’s role regarding grid maintenance but its supervision of shutoffs. And even though the Commission acknowledged the shutoffs caused harm, it had already “approved a system of PSPS decision-making based on the conclusion that in certain conditions, the harms of PSPS are outweighed by the benefits of wildfire prevention,” and a lawsuit would undermine that process.
Although Gantner argued dismissal would give utilities “a free pass for their own negligence,” Liu wrote plaintiffs in similar positions can challenge alleged negligence before the commission itself through a formal complaint process enshrined in state law. Although the Commission can’t award tort damages to utility customers, Liu wrote, “To the extent that customers are left without recourse to seek compensation for the alleged negligence of utilities or the loss of power during PSPS events, such concerns are properly directed to the Legislature.”
Gantner is represented by lawyers from Phillips, Erlewine, Given & Carlin, as well as attorneys from Hausfeld.
Phillips, Erlewine, Given & Carlin issued a statement on the outcome:
“This is a sad day for Californians. The Court’s opinion leaves consumers footing the bill for power shutoffs — even if days or weeks long — made necessary PG&E’s (or any other regulated utility’s) negligent grid maintenance no matter how negligent PG&E is in maintaining its electric grid and no matter how much damage it causes to its customers, as long as it complies with the CPUC regulations regarding the mechanics of shutoff implementation.
“We strongly disagree with the Court’s conclusion that this case would have interfered with the CPUC’s regulation of PG&E. Notably, the Court's opinion ignored two amicus briefs filed in the case by the former president of the CPUC and the former executive director, both of whom stated that this case did not interfere with CPUC regulation.
“The decision could also make it much harder for utility customers to bring class actions against CPUC-regulated utilities because the Court considered the amount of damages sought in deciding whether the action would interfere with CPUC regulation. The Court’s decision drastically shifts the balance of power between utilities and consumers. We urge the California Legislature to step in — as the Court suggests it might — and address the growing power disparity between California utilities and the citizens who are forced to rely on them. Until that time, the Court's opinion means that Californians can look forward to more and longer avoidable blackouts.”
Glancy Prongay & Murray and Jonathan Rotter filed support briefs on behalf of Loretta Lynch, former Public Utilities Commission president, and former Administrative Law Judge Steven Weissman and professor Seth Davis.
Christine Jun Hammond, Candace Morey and Mary McKenzie filed a support brief for the Public Utilities Commission.
PG&E is represented by attorneys with the firms of Cravath, Swaine & Moore and Horvitz & Levy.
Support briefs for PG&E came from Munger, Tolles & Olson, for Southern California Edison and San Diego Gas & Electric; and Vinson & Elkins for Edison Electric Institute.