Update 5/23/2018: the court's written order here.
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Here's the latest in those inverse condemnation cases against Pacific Gas & Electric for taking the homes and businesses which were lost as the result of last fall's northern California wildfires. Multiple complaints have been filed, and they've been consolidated in the San Francisco Superior Court, and assigned to a single judge as complex litigation.
Last Friday, the court (as reported here, here, and here), denied PG&E's demurrer (that's pretty much a motion to dismiss for failure to state a claim for you non-Californians), which asked the court to determine that the inverse condemnation cause of action is not applicable when a private utility cannot "automatically" pass on the costs of a judgment to ratepayers. In short, toss the cases because even if everything alleged is true, the utility could not be held liable for inverse condemnation. Tort maybe, but inverse condemnation, no.
The crux of PG&E's argument is that it is a private utility, and unlike a public utility and governmental entities, it cannot collect taxes or increase its rates on its own, but must go to the state public utilities commission and ask for a rate increase in the event it is held liable for what is estimated to be billions of dollars in these and other wildfire cases. It argued that the main purpose of inverse condemnation liability is to distribute the cost of takings which benefit the public among those who benefit from the taking (what we call "the Armstrong principle"), but pointed out that California PUC recently determined in another case that a utility cannot obtain a rate increase. Since it is not entitled to spread the cost, PG&E argues, it cannot be held to the standards of inverse condemnation liability.
It also argued that for a California to hold it liable in these circumstances would itself be a taking of its property (money), and giving it to another private owner (the fire victim) under the Fifth Amendment.
Here are the briefs on PG&E's demurrer:
This is an issue we shall continue to follow closely. As the briefs correctly point out, the California Supreme Court has never weighed in on the details of if and when a private utility that is PUC-regulated can be held liable in inverse condemnation for being at least partially the cause of wildfires that damage private property. The major appellate authority so far is an opinion from one of California's Courts of Appeal, Barham v. S. Cal. Edison Co., 88 Cal. Rptr. 2d 424 (1999), and that case did not delve into the issue which PG&E now raises.
In other words, stay tuned, as usual.
