KGO’s Pat Thurston asked me about the Kincade Fire, the Camp Fire, the North Bay Fires, the PG&E Bankruptcy, the CPUC, and more. We took calls and she asked me to stay for a second hour.
KRON4’s Sanaz Tahernia asks me how we got into this situation, how long will it last, and what can be done about it. (14 minutes.)
I told the New York Times that PG&E filed bankruptcy not because it needed to but because it wanted to “use the bankruptcy rules to their benefit to limit their liability to victims.” And they have it as front page news today.
But it was back in January I told KRON4 the same thing. I explained that PG&E filed bankruptcy for one reason only — because it figured it could use the bankruptcy laws to hold on to more of its corporate profits at the expense of its victims.
They are doing this now because they have spent millions to determine what is the best scenario for the shareholders and they have found the best way for holding on to the most money and keeping it out of the hands of victims is bankruptcy,” said Danko.
Now the New York Times explains exactly how PG&E’s plan is panning out:
- PG&E has set up a claims deadline that is too short and too arbitrary for the victims to comply with;
- PG&E’s bankruptcy filing makes people think its not worth it to make a claim because PG&E doesn’t have money when it in fact does; and
- PG&E is allowing victims to believe (incorrectly) that they can’t get money from PG&E if they have received money from their insurance company.
The deadline for filing a claim is October 21. We’re hoping that the New York Times article encourages victims to step forward before the deadline and file a claim even if they are not sure about whether they are entitled to compensation.
Opinion Rejects Common Caltrans Defense Strategy
Chris Chandler was killed as he crossed busy El Camino Real in a marked crosswalk. We argued at trial that Caltrans should have known that the crosswalk was dangerous because of an accident that occurred in a similar crosswalk 20 miles away. The jury agreed, and awarded the family $9.5 million.
Caltrans appealed arguing that the jury should never have been allowed to hear about the accident at the intersection 20 miles from where Chandler was killed because, the Caltrans argued, it was an entirely different intersection. Caltrans argued that, because there had been no record of pedestrian accidents at the particular crosswalk where Chandler was killed, it could not have known of the danger.
The Court of Appeal ruled that the evidence was properly put before the jury and affirmed the jury’s unanimous $9.5 million verdict.
Because the two intersections and accidents were sufficiently similar in material ways and provided the State with actual or constructive notice of the dangers of placing marked crosswalks with no safety enhancements at uncontrolled El Camino intersections, the trial court did not abuse its discretion in allowing plaintiffs to present evidence of the [other] accident.
The Court of Appeal’s decision is important. Caltrans almost always seeks to avoid liability by arguing that, unless there have been multiple injuries or deaths at the particular intersection in question, Caltrans could not have known of any undue risk, and thus should not be held liable. It will be harder for Caltrans to make that argument in the future.
What’s today’s “motion for relief from stay” all about?
The dispute about PG&E’s total liabilities.
When it filed bankruptcy, PG&E said its liabilities as a result of the 2017 and 2018 wildfires totaled at least $30 billion. Yet, PG&E now proposes to resolve all wildfire claims by funding a trust for wildfire claimants of substantially less — about $14 billion.
What explains the difference? Well, after the bankruptcy, Cal Fire determined that PG&E’s facilities did not cause the Tubbs fire – the most costly of the 2017 fires. Rather, according to Cal Fire, the Tubbs fire started at wires on private property. Thus, PG&E argues it is not responsible for the Tubbs fire after all and so should not have to pay Tubbs claims. Damages for the Tubbs fire amount to as much as $18 billion, by some estimates. Subtract that amount from PG&E’s original $30 billion estimate and, PG&E argues, a $14 billion trust fund should be adequate to pay all the claims for which PG&E is in fact liable.
Tubbs claimants, however, have a different view. Even if the Tubbs fire was ignited by power lines on private property — not by PG&E distribution lines — PG&E should still be held liable because the fire wouldn’t have started that night had PG&E turned off the power as it was supposed to. Therefore, PG&E should not be let off the hook for a mere $14 billion. Rather, its total bill is well over $30 billion, even using PG&E’s estimates.
Why the dispute matters now.
PG&E cannot get out of bankruptcy until PG&E and its victims agree, or the bankruptcy judge decides, how much PG&E owes. The fire survivors argue that they will never come to an agreement with PG&E concerning the size of the trust fund that PG&E should establish unless and until the issue of PG&E’s liability for the Tubbs fire is decided. Further, the law does not allow for the bankruptcy judge to decide the whether PG&E caused the Tubbs fire. That key issue must be decided by either a federal trial court, or by a state trial court.
If the bankruptcy judge sends the issue to a federal trial court, it will take years to reach trial. Thus, the survivors are asking the bankruptcy judge to send eight Tubbs cases back to state court in San Francisco, where they were when PG&E filed bankruptcy back in January. (Two of the eight clients are represented by the NorCalFireLawyers.) Because the victims in those eight cases are elderly and infirm, state law allows the state court judge to fast-track the trials and have them heard in about 120 days.
Once the state court decides whether PG&E is liable for the Tubbs fire, then PG&E and the fire survivors will be in a better position to agree on the size of the trust fund that will be necessary for PG&E to exit bankruptcy. And if they can’t agree, then the bankruptcy judge can weigh in, keeping in mind the trial court’s determination.
The bankruptcy judge will hear arguments on July 24. He will likely decide that day or soon thereafter whether to send the eight cases to state trial court, or to federal trial court, or to do something else with them.
PG&E now accepts responsibility for the Camp Fire. PG&E says that it wants to pay claimants for what they’ve been through, and that it wants to set aside $14 billion for that purpose. But here’s the catch: in order to be paid, victims must file papers with the bankruptcy court by October 21. If you don’t get a claim on file by October 21, you can’t participate in the payout. Period.
The judge realized that many Camp Fire victims are traumatized and won’t be able to hire a lawyer in time. But he felt it important to set an early deadline to help get PG&E out of bankruptcy as quickly as possible.
Click on image to watch the report:
PG&E Chief Financial Officer Jason Wells appeared in Bankruptcy Court to answer questions under oath. It was his second time. The first time, I asked him about the bonus PG&E paid to CEO Geisha Williams as she was shown the door. I couldn’t understand why, in the days leading to the bankruptcy, PG&E found $2.5 million in cash to stuff into her pocket, but couldn’t come up with the money PG&E agreed to pay to certain of the Butte fire survivors. It was especially hard to understand why PG&E would pay Williams rather than the Butte fire victims given that Williams was in charge of PG&E’s electrical system when it burned down the victims’ homes.
During his first appearance in court Wells could only bob and weave before finally tell me that he would have to “get back to me” with his answer at the next round of questioning. But after two months, Wells still had no answer.
Question to PG&E CFO Jason Well (By Mr. Danko): . . .[W]hy did PG&E decide to pay Geisha Williams [PG&E’s former CEO] her 2.5 million dollar bonus in the days leading up to the bankruptcy, but not pay the Butte fire victims the agreed up settlements?
Answer: (By Mr. Wells): Sir, during the previous hearing we discussed how we had to make a decision [to] preserve the ongoing service of our Gas and Electric business and we were put in an untenable situation given the unusual notice requirement of Senate Bill 901 which required us to disclose that we intended to file for bankruptcy without having the protection of the bankruptcy court itself and so, unfortunately we were in a position of having to make prioritization on payments so we didn’t run out of cash.
Question: I understand that you said last time that you were going to preserve cash and that is why you didn’t pay the Butte fire victims or honor the agreements that you made with the Butte fire victims. My question, however, is why did you pay Geisha Williams her bonus in the days leading to the bankruptcy and not honor your other agreements? Why did you prioritize [Geisha Williams’] deal over the deal you had reached with the Butte fire victims?
Answer: Sir, you asked this question and we answered it extensively as part of the 341 hearing two months ago.
Question: You looked at the transcript of that hearing, I’m sure?
Question: Oh, you didn’t? Well let me refresh you. I asked you “why did PG&E decide to pay Geisha Williams her severance and not pay the Butte fire victims their settlements?” Your answer was, “I don’t have an answer for your question.” I asked you then, “where would I get that answer? If not from you, then from who?” And then you promised me, “I’ll be prepared to discuss that at the next meeting.”
That is why I am here now. You have had two months to think about it. I am looking for your answer as to why you paid Geisha Williams her 2.5 million dollar bonus while you . . you couldn’t pay, you couldn’t honor the agreements that you had made with the Butte fire victims to pay them. So why did you prioritize payment to Geisha Williams, who was in charge of the whole operation when those people were burnt out of house and lost all of their belongings? Why did you prioritize paying her bonus over paying the money that you agreed to pay the victims who needed that because they were homeless? That is my question for you. And I thought you had two months to think about that answer and you were going to give it to me when I came here today.
Answer: No, I appreciate your question. We had to take in to consideration all of the obligations the company was facing and we collectively came to the conclusion that we needed to make that severance payment.
Question: Why? Why did you need to make that severance payment? Was Geisha Williams homeless?
Answer: She was not homeless.
Question: Had she lost her home in a fire?
Answer: She had not lost her home in a fire.
Question: Ok, so why [did you decide] to pay Geisha Williams her bonus but not honor the agreement to pay the Butte fire victims what they were owed.
Answer: It was part of her employment agreement or arrangement with the company.
Question: So that is why you gave that some sort of a priority, because she had an employment agreement?
Question: Why did you prioritize the employment agreement over people who basically had nothing?
Answer: Sir, we are committed to resolving these claims that the company faces.
Question: Yes, but my question is not whether you are committed to resolving the claims the company faces. My question is why did you prioritize Geisha Williams’s claim over the claims of the fire victims?
Answer: Sir, you have made your point.
Question: I’m looking for an answer. You told me you would be prepared to discuss it today. I have waited two months on behalf of my clients for an answer. They want to know is why you paid Geisha Williams.
Answer: You have made your point sir.
Question: Is your answer you have no idea?
Answer: Sir, we as a company collect and disperse more than 80 million dollars a day. We were making hundreds and thousands of decisions on prioritization. You have my answer. You have made your point many times.
So there you have it. PG&E paid Geisha Williams her agreed upon $2.5 million bonus, but renegged on paying the Butte Fire victims their agreed upon settlements because, well, they were shelling out $80 million a day and just felt it more important to honor its agreement to the one in charge when the fire started than her victims.
When PG&E says it cares about the fire victims, it’s just not true.
Having paid to shareholders money it was supposed to use on wildfire remediation and prevention, PG&E now says it can’t get the work done unless it raises rates. The CPUC is going to let them.
PG&E argued it couldn’t comply with the laws because there were just too many trees, too close to its wires. The judge replied, “That’s a problem of your own making.”
Scott Deveau and Mark Chediak of Bloomberg report that PG&E is likely to sign Bill Johnson as its new CEO. Bill Johnson was most recently CEO of the Tennessee Valley Authority, the large southeastern public utility. Critics are glad Johnson is now gone from the TVA because, they say, he consistently favored corporate interests over the public interest. They see Johnson’s departure as an opportunity to replace him with someone who will put the “public” back “public utility.
For the last six years, Bill Johnson has steered TVA in the direction of serving corporate interests over public interests, evident in preferential rates and rate restructuring for corporate customers which have caused residential and small businesses’ energy bills to rise. . . And TVA has been consistently opaque, hiding details about policy decisions from public scrutiny and being less transparent, as we saw with this week’s so-called listening session which was neither web-streamed nor held the same day as the board meeting itself.
And safety doesn’t exactly stand out on Johnson’s list of accomplishments. Just this past November, a federal jury slammed his utility for a contractor’s actions that killed more than 40 workers and sickened hundreds more.
But during his tenure at TVA, Johnson did indeed do wonders for the utility’s bottom line.
TVA earned more than $1.1 billion in net income in the fiscal year ended Sept. 30, up by more than 63 percent from the previous year . . . Net income was the second highest ever for TVA in its 85-year history during 2018, behind only the record high of $1.2 billion earned in 2016.
Make no mistake about it. PG&E chose Johnson as its new leader hoping that he will be able to return it to profitability; not to make the utility safe. Once again, PG&E is placing corporate profits over the safety of the public.