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Friday, July 19, 2024 | Back issues
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Fire Victim Trust Sues Former PG&E Executives and Directors

A trust responsible for paying victims of Northern California wildfires in 2017 and 2018 sued nearly two dozen former PG&E executives, who could be liable for hundreds of millions of dollars.

SAN FRANCISCO (CN) --- Seeking to boost a multibillion-dollar trust for paying Northern California wildfire victims, a retired judge overseeing the fund sued 22 former Pacific Gas and Electric Co. board members and executives Wednesday.

“It is our duty to hold accountable the prior officers and directors who grossly neglected to do their jobs in the lead-up to the North Bay Fires and the Camp Fire,” retired Justice John K. Trotter said in a statement Wednesday.

Trotter, a former presiding justice of California's Fourth Appellate District, oversees the PG&E Fire Victim Trust, a fund responsible for compensating survivors of the 2017 North Bay wildfires and 2018 Camp Fire. The trust was created as part of a settlement reached after PG&E declared bankruptcy in January 2019 as it faced a potential $30 billion or more in liability for wildfires allegedly sparked by its equipment.

The lawsuit filed in San Francisco County Superior Court accuses 22 former PG&E leaders, including former CEOs Geisha Williams and Anthony Early Jr., of breaching their fiduciary duty by failing to put in place critical safety measures despite knowing the dangers posed by the utility’s deficient tree trimming work and aging infrastructure.

“I think they are massively liable,” Fire Victim Trust attorney Frank Pitre said in a phone interview. “These corporate executives are responsible for exercising their fiduciary duties of oversight and governance to establish policies and practices to mitigate the risk of a catastrophic wildfire.”

“These individuals had the responsibility to customers, employees, shareholders, and the public to ensure that safety was one of PG&E’s highest priorities. They had the power to do so. Yet they failed, at enormous financial cost to the company and indescribable cost to entire Northern California communities.”

Retired Fourth Appellate District Justice John K. Trotter, who oversees the Fire Victim Trust

The lawsuit claims the executives should have adopted a public safety power-shutoff program before the 2017 North Bay Fires because they knew PG&E was six years behind in its tree trimming and removal work in 2017. San Diego Gas and Electric started a power-shutoff program in 2012 --- five years before the North Bay Fires, Pitre noted.

The suit also claims the corporate leaders failed to properly manage aging infrastructure, including a worn C-hook that snapped off a century-old transmission tower in Butte County in November 2018 and sparked the most destructive wildfire in California history, the Camp Fire.

An asset management program would have enabled the utility to keep track of how long its older equipment was expected to last “so you don’t have 100-year-old structures in the hinterlands that fail and cause the calamity that ensued,” Pitre said.

The lawsuit comes after Trotter acknowledged in a letter to fire victims last month that the trust is $1 billion short of its intended value due to PG&E’s lower than expected stock price. The trust was intended to make $13.5 billion available to fire victims through a mix of cash and liquidated shares of PG&E stock. More than 86,000 claims for compensation were filed with the trust.

Pitre said the lawsuit is not intended to make up for any shortfalls in the compensation fund. PG&E assigned its right to pursue claims against the executives to the Fire Victim Trust as part of the settlement package. The value of those claims is limited to the maximum amount of insurance available to PG&E for claims against its officers and directors. That limit is somewhere between $200 million to $400 million or possibly more than $400 million, Pitre said.

The lawsuit details millions of dollars in bonuses awarded to executives and directors as the company failed to invest in safety upgrades and programs that trust claims could have prevented the fires that killed more than 100 people in 2017 and 2018.

“These individuals had the responsibility to customers, employees, shareholders, and the public to ensure that safety was one of PG&E’s highest priorities,” Trotter said in a statement Wednesday. “They had the power to do so. Yet they failed, at enormous financial cost to the company and indescribable cost to entire Northern California communities.”

In an emailed response to the lawsuit, PG&E said Wednesday that it considers the safety of customers and communities it serves its most important responsibility.

“We continue to honor the victims of the Camp Fire and previous fires, and all that was lost, by continuing the important work to reduce wildfire and other risk across our energy systems,” the utility said.

The company noted it agreed to fund approximately $25.5 billion in compensation for the fires, including settlements to cover losses for government entities, insurers and individual fire victims.

“PG&E has already contributed the vast majority of the agreed $13.5 billion to compensate individual wildfire victims. We are aware of the lawsuit,” the company stated. “We remain focused on reducing wildfire risk across our service area and making our electric system more resilient to the climate-driven challenges we all face in California.”

Former PG&E executives are not the only ones being sued by the Fire Victim Trust. The fund also sued multiple PG&E contractors responsible for tree trimming, infrastructure inspections and maintenance in three complaints filed last month.

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