On Friday, Pacific Gas and Electric Company (PG&E), the SF utility company that provides power to roughly 16 million people throughout Northern California, got a shock as the judge overseeing its bankruptcy proceedings ruled that victims of the 2017 Santa Rosa Tubbs Fire can move forward with legal action.
This could result in as much as $18 billion in liability.
Previously, Judge Dennis Montali had put the brakes on fire-related litigation while PG&E continues to sort out its Chapter 11 proceedings, which it entered into in January in anticipation of this kind of possible financial fallout from 2017’s and 2018’s California fires.
But according to a memorandum decision issued Friday, Montali changed course in part because “relief from stay will definitively bring a resolution as to debtors’ liability in the Tubbs fire, and provide an important data point that most likely will facilitate resolution of the wildfire tort claims in this case.”
Further, “commencement of this litigation, while connected to the bankruptcy, will not interfere with the bankruptcy case” and “there is nothing to show that other creditors would be prejudiced if relief were granted,” since the company’s guilt or innocence relative to one fire doesn’t necessarily reflect on similar charges for other fires.
It had looked for a while like PG&E was off the hook for the Tubbs Fire, which devastated Santa Rosa in October of 2017, killing 22 people and destroying over 5,600 buildings, becoming at the time the most destructive fire on record in the state.
In January, Cal Fire investigators determined that PG&E was not to blame for the disaster, placing liability for it on a private electrical system in Calistoga.
But the many people still suing PG&E over the Tubbs Fire disagree, and now will have the opportunity to persuade a jury that Cal Fire got it wrong.
In response to the news Friday, PG&E released a statement saying that it “has made significant progress in further refining a viable, fair, and comprehensive plan of reorganization that will compensate wildfire victims.”
On Monday the company’s stock price dropped again, down to just more than $10 from $18 a week ago and just less than $45 a year ago.