Fighting Fire

Five attorneys talk about the massive class action against PG&E

Published in 2020 Northern California Super Lawyers Magazine

On Nov. 8, 2018, a blaze that would come to be known as the Camp Fire broke out near Paradise. In about half a day, 20,000 acres and 6,713 structures were reduced to ash. The death toll would reach 86. A satellite photographed a mass of gray smoke the size of a small country drifting out over the Pacific Ocean—lives and hopes gone in a handful of hours.

Fires are nothing new to Californians, but they are coming with increased intensity and regularity in an age when a stray spark is all it takes for things to get out of control. Pacific Gas & Electric has been blamed by the state for causing many blazes in recent years; critics have accused the company of failure to properly maintain equipment, clear vegetation near power lines, and adequately secure electrical poles brought down by strong winds on bone-dry hillsides.

About 20 of the worst fires in recent Northern California history were brought together in one massive class action involving more than 80,000 claims against PG&E, which prompted the utility to file for bankruptcy, and ultimately to agree to a $13.5 billion payout for victims. We spoke to five Northern California attorneys involved in the legal proceedings. 

 

The Run-Up

Frank M. Pitre, Cotchett, Pitre & McCarthy, Burlingame, co-lead trial counsel North Bay fires: I and Steve Campora have been fighting PG&E since the [2010] San Bruno pipeline explosion and fire. We know more about the insides of PG&E and how it operates and all its failings than anyone I know.

“The [San Bruno] blast exposed the utility's haphazard system of record-keeping for its tens of thousands of miles of gas pipelines and its sometimes shoddy construction and inspection practices. The catastrophe prompted questions about whether the company was actually carrying out pipeline-safety improvements that ratepayers had been charged for.” [KQED, Sept 8, 2015]

Pitre: I grew up in San Francisco, but in middle school my family moved to San Bruno. So when the San Bruno fire and explosion hit, it hit home. The families impacted were ones I had gotten to know over decades in my community. People who were firefighters were classmates of mine, and I knew people who were injured and burned. So, yeah, it was a personal battle. When I got involved with the Butte fire in 2015 and I represented families in Calaveras County, I came to understand something. In the Bay Area, people buy and sell homes all the time. But in Calaveras County, if you lost a house, it probably had been in your family for multiple generations. A guy I represented told us he had “lost the property where my grandfather taught me how to be a man. How to hunt and chop wood and pick stones out of the river to build a fireplace.” That home meant more than just a structure; it was everything about who that person was. 

Steven M. Campora, Dreyer Babich Buccola Wood Campora, Sacramento, plaintiff’s executive committee North Bay fires: PG&E was a company in crisis financially and culturally, and what you needed to do was develop an overall game plan for multiple fires over multiple years. I’ve probably taken 250 depositions in the last 10 years. There are millions of documents to review and a constant need to retain and communicate with experts. I’ve had a lawsuit pending against PG&E as a result of a catastrophe of one sort or another since 2008. It’s been a full-time job. This has been the primary focus of my work.

Pitre: In some ways, the problem traces back to 2007, when CEO Peter Darbee hired an expert to assess levels of risk in how they were doing business. The assessment concluded two things that speak volumes about what their problems are: The corporate attitude was, essentially, everything is broken and can’t be fixed. At the other end is that PG&E’s culture doesn’t tolerate bad news. If you have everything broken and can’t be fixed and nobody wants to hear bad news, you are sweeping everything under the carpet. And so we are here today. 

Michael A. Kelly, Walkup, Melodia, Kelly & Schoenberger, San Francisco, co-lead trial counsel North Bay fires: The Sonoma fires happened in October of 2017. I own a home there, and we watched as the fires approached and receded, approached and receded from the town.

“All told, the October 2017 fires scorched more than 245,000 acres across Northern California and killed at least 44 people, including 24 people in Sonoma County.” [The Press-Democrat, September 28, 2019]

Kelly: There were lots of lawyers saying they were going to take care of everything—unfortunately, many of them without prior experience with a vulnerable population. I felt I owed my neighbors and friends whatever I could do to help. And I saw a chance to hopefully get PG&E to turn around its corporate attitudes to safety.

Kelly: The early clients, they needed to be counseled and to get help in dealing with their own insurers. The top 12 fire and casualty insurers in the United States were sending people here, from AAA to Travelers to State Farm to AIG, Chubb. Most victims had never read their fire insurance policies and were shocked at how underinsured they were, and flabbergasted at some of the limits of coverage their insurance companies had set as the most they would pay.

We began to recognize how PG&E was making excuses regarding the causes of the North Bay fires. “The winds were blowing at historic levels,” they said, when they were actually below threshold levels that the wires and poles are supposed to withstand. Then they said it was climate change. “Millions of trees have died in the Sierras,” they were saying. Well, yeah, but this fire happened in Sonoma County.

Kelly: We assembled a group of experienced lawyers who knew PG&E. These kinds of cases don’t usually lend themselves to a class action, where everybody tends to have a common and typical injury. But here we have people who lost mobile homes and people who lost large homes, people with property loss and personal losses, people with physical injuries and business losses. We had 21 fires with potentially 21 potential causes, whether it was a transformer which exploded or a pole which broke or whatever. Ultimately, the North Bay cases were all venued in San Francisco before Superior Court Judge Karnow.

“San Francisco Superior Court Judge Curtis Karnow said that although details of the fires vary, the suits share legal issues making it necessary to organize them in one court, avoiding delays and the possibility of conflicting rulings.” [The Press-Democrat, January 5, 2018]

Kelly: Our judge was preparing to set a trial date for September 2019. It was late in 2018, and then came the Camp Fire.

 

The Camp Fire

“Fire investigators in Northern California say they found the human remains of 6 more individuals, bringing the death toll to at least 48 people who have died in the wildfire that burned through the town of Paradise with shocking speed, making the Camp Fire the deadliest wildfire in state history.” [NPR, Nov. 13, 2018]

Pitre: Subsequent to the Camp Fire, PG&E said, basically, “Wow, we got a heck of a problem on our hands,” and started looking at bankruptcy as an option.

“Pacific Gas and Electric, California’s largest utility, serving more than 16 million people, filed for bankruptcy protection on Tuesday because it is facing tens of billions of dollars in liability for wildfires.” [New York Times, Jan. 29, 2019]

Kelly: It was a thoroughly great disappointment, because our hopes were to quickly get money into hands of those harmed in Sonoma and Napa and Mendocino, so they could rebuild.

Alison Cordova, Cotchett, Pitre & McCarthy, Burlingame, co-trial liaison counsel in Tubbs fire cases: Bankruptcy is not built for victims to obtain justice. It’s just not made for victims, that’s all there is to it. And the constant struggle of having to butt up against that process—in my opinion, it’s created to serve the debtor. We are dealing with thousands and thousands of peoples’ lives and livelihoods. 

Kelly: We simply found out by word of mouth through [PG&E’s] lawyers. We had a meeting scheduled and they said, “We can’t be there because the company decided to file for bankruptcy.” So we had like 48 hours’ notice. Federal law provides for a stay on claims against anyone who files for bankruptcy—so everything was frozen.

Pitre: I always felt that the bankruptcy was, ultimately, a litigation tactic. That it was a way for them to take all the litigation of the [multiple] fires and put it into an arena where they could cram down the amount viable for victims. But looking back now, I see how it reflects a company that was in crisis. Now, after we have all done this work, I have seen how they propped themselves up, paying out dividends that hadn’t been earned, money that should have been plowed back into the infrastructure. They put themselves into a position where they didn’t have the financial wherewithal to operate safely. There came a day when they had to pay the piper. 

Cordova: I was talking to a fire victim yesterday morning. I myself have a hard time talking about her case. My client lost her mother in the fire. Her mother was an artist, and she had tons of her artwork in her house—which was destroyed. The client’s own house, too, where she lived with her 16-year-old daughter, was destroyed in the Tubbs fire. Her daughter was suffering with glioblastoma multiforme, a kind of cancer, and within six months after the fire, she died. And that was her whole family. So, within a span of six months, she lost her mom, all the memories of her mom, her own home, and her daughter. Now she is fighting to maintain a life, to recover and recuperate and get back on her feet.

Pitre: Then there’s the impact of what’s going on in Sacramento [at] the state capitol. There were serious concerns that, if you had a bankruptcy in place during the next fire season, PG&E would not be able to withstand another calamity. So the governor’s office got involved working on legislation that was akin to providing what I call a superfund or insurance pool of $20 billion. That turned out to be Assembly Bill 1054.

“Gov. Gavin Newsom signed a complex wildfire liability bill into law Friday morning. … Under the plan, utilities and ratepayers will pay into a fund that utilities could access if a fire caused by their equipment resulted in more than $1 billion in property damage.” [KQED, July 12, 2019] 

Kelly: AB 1054 also contained provisions that no utility could participate in this fund if they were in bankruptcy. So this was one small break provided by the Legislature to at least shrink the time necessary to get through a bankruptcy. It put some pressure on PG&E, and we knew we were going to be through this by July [2020], when they legally have to be out of bankruptcy to qualify for the new state wildfire fund.

Cordova: It’s the largest bankruptcy in history, and it is moving faster than any bankruptcy in history. That creates a unique project—it’s quite a task. We started into the process and we’re hearing, “There’s no way we’d be at a plan to resolve anytime soon;” that three to five years down the road would be the very soonest. And now [after AB 1054] we have until July. So there are a lot of tort plaintiff lawyers and bankruptcy lawyers who have been working ’round the clock to get this done.

 

The Outcome

“It’s been a long, painful road for the victims of some of California’s worst fires: the Camp fire of 2018, the Tubbs fire of 2017, the Butte fire of 2015. 

“On Friday, there came an announcement that many anticipated: In a settlement, Pacific Gas & Electric Co. agreed to pay $13.5 billion to victims of wildfires ignited by its power lines.” [Los Angeles Times, Dec. 7, 2019]

Campora: I can’t discuss how the figure was arrived at, because we have all signed onto a non-disclosure statement. 

Kelly: It became clear that $13.5 billion in cash and stock was probably the maximum amount the company could afford to pay. They had other obligations, and the company could only bear so much debt and still be investible on the stock market.

Cordova: Something called the Official Committee of Tort Claimants (TCC) is what’s really fighting on behalf of the victims’ interests in the bankruptcy process. But at the beginning of the case, there wasn’t enough money offered to the victims because, I think, they weren’t valuating the Tubbs Fire cases. So some individual fire lawyers, we said. “Let’s get relief, let’s go back and show everybody PG&E were responsible for Tubbs.” Critical to that was understanding the role played by one state agency, the California Department of Forestry and Fire Protection, or Cal Fire.

Kelly: Cal Fire’s obligation is to determine the cause and origin of wildfires in the state. But their decisions are not binding in court. 

Khaldoun Baghdadi, Walkup, Melodia, Kelly & Schoenberger, San Francisco, co-trial liaison counsel in Tubbs fire cases: The Cal Fire investigation concluded they couldn’t identify any PG&E infrastructure with igniting that fire. PG&E seized on that to claim they were therefore absolved of responsibility. We (and our experts) disagreed.

Cordova: Cal Fire had found PG&E responsible for every single fire except Tubbs, and Tubbs was the most lethal and destructive of the 2017 fires. It was the one fire Cal Fire didn’t find PG&E responsible for, and because of that, in the bankruptcy case all of the offers disregarded the Tubbs victims. We got a $3.5 billion, then an $8 billion offer; in the first, the (Tubbs) victims were offered nothing, and in the second, close to nothing.  We were like, this is unacceptable—because from the investigation we had done with our own experts, we believed there was a very credible route to establishing liability. We told the court, look, the victims will never accept a plan where PG&E doesn’t pay for Tubbs.

Baghdadi: If PG&E wasn’t going to acknowledge responsibility, we were going to do our best to persuade a jury to acknowledge it for them. And then, weeks away from our trial date …

Cordova: … the $13.5 billion plan and offer was proposed to the TCC and to the victims, and a part of that plan was to resolve all of the Tubbs fire cases.

Pitre: The vote to approve the plan was certified May 22. Mike Kelly and I were able to negotiate resolution of all federal claims and state claims so that the $13.5 billion is reserved for fire victims. Clearly, the victims understood that the plan was not perfect. The share of their compensation tied to the future value of PG&E stock posed risks, but the uncertainty of a viable alternative that could be vetted before the  June 30th deadline to take advantage of the $21 billion Wildfire Mitigation Fund, and the potential for beginning the process of getting paid this year, appears to have had immense support. Simply put, those impacted by this calamity understood this was the best path to promptly resurrecting their lives.

 

From the Ashes

Baghdadi: I’m hopeful the impact of all of this is you end up with a PG&E that isn’t focused on private profit and public harm, but end up with some accountability. Because typically, when big California businesses make mistakes, there’s a means of holding them accountable. But here, PG&E continued the same pattern of cultural mistakes to the point of bankruptcy, and forced victims to face an uncertain and unfortunate process.

Campora: Obviously, people in Northern California need to have power, whether from a reconstituted PG&E or somebody else who buys them. Legislation has been introduced that says, if you are a utility that has been convicted of a felony in the past 10 years, the state can take you over. It’s obviously targeting PG&E.

Cordova: Is there something good that can come out of this? That might be for someone bigger than me to answer. 

Baghdadi: There’s talk of California’s fire season as being a “new normal.” A lot of elements of climate change are true. But using the “new normal” concept as an excuse for poor management is unfair to California. Maintaining infrastructure and making sure electrical lines don’t cause fires can be done during drought as well as during the rainy season. But I do agree that future cases of this magnitude will require coalitions being formed and the careful and cooperative dedication of many attorneys.


Editor’s Note: At the time of publication, the California Public Utilities Commission had approved the payout plan, which was awaiting final approval by U.S. Bankruptcy Judge Dennis Montali.

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