California businesses may want to prep for fire-safety outages, rather than sue the utility, attorneys say

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Power cuts can damage a business in a variety of ways, but legal experts said it may not be easy to recover those damages, especially in light of a recent California Supreme Court case.

“I would say generally it would be difficult to recover damages from PG&E if they were cutting power for public safety purposes,” said Dario de Ghetaldi, a partner at Corey, Luzaich, de Ghetaldi & Riddle LLP, which is suing PG&E on behalf of hundreds of families who suffered losses as a result of the Butte fire in 2015, the North Bay fires in 2017, and the Camp Fire last year.

He said it depends on the specific facts, but since PG&E is authorized to cut the power by the California Public Utilities Commission for safety reasons, it would be a difficult case to bring.

The company would also likely have a strong defense against any litigation a business might bring and could argue they were being careful and can’t be held liable, according to Mike Danko, a partner at Danko Meredith representing about 3,000 victims of the 2017 and 2018 fires.

“As a general rule in order to hold somebody liable you have to show they were not careful or didn’t act in a reasonably careful fashion,” he said. “PG&E’s defense would be … we were acting reasonably carefully by cutting off the power given the conditions and that’s all that’s required.”

The utility has been issuing warnings about possible power shutoffs over the airwaves, in press releases and mailers, and through other channels. Danko said they could argue that businesses should have proactively prepared for any shutoffs and associated losses.

A case recently handed down by the state supreme court could also discourage business owners from taking the utility to court according to both attorneys.

The case concerned a gas leak at a Southern California Gas Company facility that caused residents of the area to relocate, creating economic harm to their businesses.

The court held the utility did not owe it to area businesses to guard against purely economic losses, however. Direct fire damage causing economic loss would be grounds for recovery, the court also said.

The nature of the suit is important since it concerned an unplanned gas leak, in stark contrast with the planned and publicized PG&E anti-fire measures which the utility has said will ideally come with multi-day warnings.

The utility has faced significant legal challenges since the fires of the last two years, but any plaintiff companies would not necessarily have to “get in line” to sue for their pound of flesh, according to Danko.

In response to the financial challenges associated with the 2017 and 2018 wildfires PG&E declared chapter 11 bankruptcy. Legally this “essentially requires people who have claims that predated the filing to get in line,” to bring claims against the company, Danko said.

“The bankruptcy doesn’t really affect somebody who has a claim tomorrow as it does folks with claims predating the bankruptcy,” which would include fire victims.

Ultimately, it may be a better strategy for businesses to gird themselves against a dark grid ahead of time as best they can rather than suing retroactively, according to Danko.

“They said they will cut off the power when conditions warrant, it becomes incumbent on a business to have a plan, to have a generator to have alternative plans in the case of a power loss.”

Danko said in court, the embattled utility could still say to businesses facing power cut related losses: “At some point you knew this was a likelihood and you haven’t taken steps to prevent this.”

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