Shareholder Sues PG&E Over San Bruno Blast

REDWOOD CITY, Calif. (CN) - Pacific Gas & Electric breached its duty to shareholders when it failed to maintain the gas pipeline that caused the 2010 San Bruno explosion that killed eight people, according to a lawsuit filed two days after the company pleaded not guilty to criminal charges relating to the blast.

A faulty pipeline, identified as Line 132, ruptured in a residential neighborhood in San Bruno in the early evening of Sept. 9, 2010, causing a fire that killed eight people and injured 58 others. The fire damaged 108 homes, 38 of which were destroyed, according to the 21-page criminal complaint.

The government claims in the criminal indictment that PG&E knew of deficiencies in its 46,000 miles of gas transmission and distribution pipelines but failed to maintain accurate and complete records of leaks, or to make the records it did have accessible, or to maintain welding maps or inspection records, or to keep records about how the lines were manufactured.

The company pleaded not guilty this week to all 12 counts that it violated the Gas Pipeline Safety Act.

Federal prosecutors told the court at a hearing that the government will amend the criminal charges to seek enhanced fines amounting to twice the profit associated with the alleged illegal conduct or twice the loss suffered by the victims, whichever amount is greater.

After the hearing, PG&E issued a statement calling the explosion "a tragic accident."

"While we don't believe any employee intentionally violated federal pipeline safety regulations, the legal process will ensure that all of the facts related to this tragic event are fully reviewed," the company said.

In the civil lawsuit, Louis Marini, owner of 14,000 shares of stock, accuses PG&E officers of failing to properly maintain gas transmission lines, resulting in the deadly explosion that exposed shareholders and the company to "billions of dollars in losses."

The losses could include compensation paid to victims of the blast, the city of San Bruno and San Mateo County, legal fees and fines and penalties that could total $4.5 billion, in addition to "significant reputational harm," according to the lawsuit.

Marini also claims that "despite the massive amount of evidence that has surfaced regarding PG&E's inaccurate and missing records, PG&E continues to rely on those records."

The California Public Utilities Commission last year levied a $14.35 million fine against the company for failing to promptly notify the commission of incorrect records relating to a San Carlos gas pipeline the company had claimed was seamless when it was in fact an aging pipe with seams that had been welded together.

The commission allowed PG&E to increase pressure on that pipeline based on the representation that the pipe was seamless.

"These recent events demonstrate that, despite self-serving public relations statements and television commercials proclaiming a change in corporate culture, the recurrent problems that plagued PG&E have not been remediated," the lawsuit states.

Marini asked the court declare that the officers breached their duty to shareholders, require them to pay PG&E and its shareholders the amounts that their breaches damaged the company and return their salaries.

He also wants the court to order the officers to implement comprehensive corrective measures sufficient to prevent similar breaches in the future, attorney fees and costs.

PG&E spokesperson Greg Snapper told Courthouse News: "We are committed to making our gas system the safest and most reliable in the country. We've made a lot of progress over the last several years, including a commitment to spend $2.7 billion toward safety enhancements ranging from automated shutoff valves to pipeline replacement and strength-testing our lines. There's a lot of progress to be talked about here in California, but we know there's still more work to be done. Our commitment to safety is unwavering."

Named as defendants in the civil suit are PG&E directors and officers Peter Darbee, Christopher Johns, Kent Harvey, Barbara Rambo, Barry Lawson Williams, C. Lee Cox, David Andrews, David Coulter, Forrest Miller, Leslie Biller, Lewis Chew, Mary Metz, Maryellen Herringer, Richard Meserve, Roger Kimmel, Rosendo Parra, Thomas King and William Morrow.

The derivative lawsuit was filed on behalf of PG&E and lists the company as a nominal defendant.

Marini is represented by Dario de Ghetaldi with Corey, Luzaich, de Ghetaldi, Nastari & Riddle in Millbrae.

De Ghetaldi did not immediately reply to a request for comment.

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