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Cases have significance for ratepayers if jurors find SDG&E liable for punitive damages

By Nadin Abbott; Miriam Raftery also contributed to this report

June 21, 2013 (San Diego)—Six years after the Witch Creek/Guejito fires, which the California Public Utilities Commission found were caused by SDG&E’s lines, over 2,000 victims have reached settlements with SDG&E. But 16 victims have not settled or received any compensation from the utility for their losses.  Now a judge has ruled that some cases may proceed to trial.

At a court hearing on June 19, Judge Richard E. L. Strauss ruled that victims will finally have their day in court—in some cases, with a tort liability, all-issues trial. That could force SDG&E to pay punitive damages if a jury finds the utility was negligent and knew of fire hazards that it failed to correct.    

Judge Strauss has set a date for the all-issues trial to finally settle the remaining cases of the Witch Creek/ Rice and Guejito Fires of 2007. These were among the most destructive fires in San Diego history.

Plaintiffs sued SDG&E under both inverse condemnation statues and on tort liability grounds. The differences are significant. 

Inverse condemnation imposes strict liability, meaning SDG&E is responsible for paying damage caused by its lines regardless of whether the company was negligent or not, but would not have to admit fault.  Under strict liability only the victims’ actual damages can be ordered paid.

Under tort liability, however, a jury could find the company guilty of negligence—and if a jury finds evidence that the company covered up dangerous conditions, jurors could require potentially hefty punitive damages as punishment, a scenario that SDG&E’s legal team has been fighting hard to avoid.

There is another detail significant for all ratepayers in San Diego County.  If SDG&E pays claims under strict liability after damages-only trial, it’s possible the utility may be allowed by the CPUC to pass through its costs to ratepayers. 

But if a jury finds SDG&E knew the lines posed fire hazards and did nothing to correct the situation (as has been asserted by Ed Clark, a whistleblower previously interviewed by ECM), then SDG&E’s corporate shareholders—not ratepayers—could be on the hook for damages paid to fire victims.

 Ken Echiate, the lawyer leading the San Diego Gas and Electric (SDG&E) defense,  argued unsuccessfully that the best way to proceed in this case was with  all-damages strict liability trials.

Tom Tosdal, representing the plaintiffs, argued that this "was just another negotiating technique."

Judge Strauss agreed that if some cases want to proceed to a damages-only phase, and that will satisfy the parties, there is no reason not to proceed this way for those cases. The Judge indicated that in some cases this will provide finality for the plaintiffs and they will get the compensation they desire through a jury trial.

But he also set September 14, 2014 as a tentative date for an all issues trial, which could leave SDG&E open to far more substantial damages and a finding of liability.

As Judge Strauss said regarding damages only trials, they "might be appropriate only if both sides agree." These cases would close the possibly of later appeal, according to Echiate. That would only apply to those cases in which attorneys decide to proceed to  damages only trials.  

Judge Strauss stated that the court will again meet on November 14, 2013  to see how the cases still in arbitration are proceeding, and whether some plaintiffs have agreed to a damages only trial. Efforts will also be made to create protocols as to how these cases will proceed if there is agreement. Those cases that decide not to settle through mediation or participate in a damages only trial will go on to a full issues trial, where liability will also be established.

Also of significance, the Court has agreed to create umbrella cases for the remaining all issues trial, and will work with all concerned to create the case load. This will also facilitate the management of evidence, which in a case of this magnitude is massive.

The Judge asked all concerned to work with Court staff to create a system of e-filing for this matter, that will facilitate case management, including easing case dismissal when agreement is reached.

Plaintiffs want to move forwards to this phase, while SDG&E opposed the move. Significantly in one exchange between a plaintiff's lawyer and the court, Echiate categorically stated, "The company does not admit responsibility for the fire."

The lawyer for the plaintiffs fired back, "They don't want to talk about it."

Judge Strauss concluded that while he still wants to settle as many cases as possible, the time has come to set a date for trial tentatively set for September 14, 2014.

The judge reminded all involved, “This case has priority in this community.”

View legal documents filed by parties:  1, 2, 3, 4, 5

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