Lawyers Hunt for California Fires' Ground Zero to Go After PG&E

  • ‘We have forensic experts already on the ground,’ lawyer says
  • JPMorgan Chase put PG&E’s worst-case exposure at $12 billion

Wildfires Are Burning Northern California's Wine Country

While Northern California continues to burn, lawyers are already combing through the destruction to make a case that PG&E Corp. is to blame.

They aren’t waiting for state regulators to investigate as they hunt for proof that power lines downed by strong gusts of wind or a malfunction of utility-owned equipment set off the worst firestorms in California history. What’s more, the attorneys may not even have to show PG&E acted negligently to seek billions of dollars for property damage.

“We have forensic experts already on the ground," said Steve Campora, an attorney in Sacramento who specializes in suing over fires and explosions.

PG&E declined to comment on the prospect of litigation, with a spokesman saying the utility’s priorities are to support firefighting efforts and restore power and gas service “as quickly as possible.”

“We aren’t going to speculate about any of the causes of the fires and will cooperate with the reviews by any relevant regulator or agency,” spokesman Donald Cutler said.

Under a legal theory that private property owners are entitled to compensation for damage caused by public services, a state court judge found in June that PG&E was responsible for a 2015 fire in the foothills of the Sierra Nevada mountains that torched 70,000 acres and destroyed more than 500 homes. The utility admitted the culprit was a tree that fell into a power line.

The company said in a June regulatory filing that it accrued $750 million in losses from the Butte fire in Calaveras County, including $380 million in settlements -- and the litigation isn’t over yet.

Inverse Condemnation

The ability of to victims to recover from the utility for their losses stems from the constitutional principle of inverse condemnation, an offshoot of the better-known concept of eminent domain, which requires the government to pay for taking private property.

In the Butte fire case, the judge said the utility couldn’t escape responsibility for damages because of the inherent danger of transmitting electric power near trees. It didn’t matter how much effort PG&E put into vegetation management, Sacramento Superior Court Judge Allen Sumner said.

“The risk of wildfires from falling trees was not a risk plaintiffs were exposed to in the absence of PG&E’s electrical improvements,” he concluded.

PG&E has lost about $6 billion in market value since state officials said last week they were looking at the possible role of the utility’s equipment in the Northern California wildfires, which have killed at least 42 people, burned more than 245,000 acres and destroyed an estimated 5,700 structures.

PG&E Rout Isn’t Over Yet as Wildfires Hang Over Utility

The California Public Utilities Commission has directed PG&E and telecommunication companies to preserve evidence related to the fires. The utility regulator is also looking into PG&E’s maintenance of facilities and tree trimming practices in the affected areas.

Michael Picker, chairman of the Public Utilities Commission, said Wednesday the state may never find out whether PG&E’s electrical equipment played a role in igniting the fires because the blazes may have also burned the evidence necessary to find out what caused them.

While the official investigations may take months, Campora said his firm has teamed up with three others to handle inquiries from victims. The firms have dispatched a team of a dozen investigators and forensics investigators into the field.

‘Every Penny’

If the company is found liable, "then all that property damage, every penny, would be owed by PG&E," Campora said. "Property damage pales in comparison to the loss of life. The value of those cases is going to be astronomical. It’s going to be more money than PG&E has in insurance, I know that."

The first of what may be many fire-related cases against PG&E was filed Tuesday by another lawyer. The case in San Francisco state court, brought on behalf of a Santa Rosa couple who lost their home, includes both inverse condemnation and other garden-variety claims, including negligence, trespassing and nuisance.

The utility has about $800 million in liability insurance for potential losses. Under a worst-case scenario, JPMorgan Chase & Co. estimated the company faces $12 billion of potential gross liability for fires statewide.

‘Jumping the Gun’

Michael Reiter, a lawyer who has represented both victims and defendants in similar lawsuits, said the plaintiffs’ lawyers “may be jumping the gun” and will only have a good case if they can pinpoint the fires’ precise origin.

The utility will hire its own set of experts to counter the plaintiffs and "say they didn’t start it," Reiter said. “If there’s no causation you don’t get to damages. If there’s no damages there’s nothing to recover."

While plaintiff lawyers can get a “big reward" with contingency fees of 33 percent, it comes with considerable risk, as hiring investigators on the front end is expensive, he said.

“Your evidence goes away in a fire case if you don’t get it earlier than later,” he said.

Campora is no stranger to PG&E. In addition to working on the Butte fire litigation, he sued the company on behalf of victims of a 2010 natural gas pipeline explosion in San Bruno, 12 miles south of San Francisco, that killed eight people and destroyed 38 homes. The company was fined about $1.6 billion by state regulators and paid more than $550 million to settle personal injury and property damage claims stemming from the blast.

The legal threat to PG&E for the fires extends beyond private plaintiffs. Public entities are also likely to pursue claims, Campora said. Cal Fire, the state firefighting agency, and the counties affected by the fires will seek to hold the company liable for suppression efforts and damages to public works, including roads, he said.

Campora declined to say how many victims he and his colleagues represent so far, citing client confidentiality.

"PG&E will find out who we represent and how I represent them when I file the complaints," he said. "We’ve all had dozens of calls so far. I’d say dozens is a conservative estimate. And the fires aren’t out yet."

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