PG&E Secures California Supreme Court Victory Shielding Company from Liability for Public Safety Power Shutoffs

On November 20, 2023, the California Supreme Court held that Cravath client PG&E, the country’s largest utility, cannot be sued for losses incurred by customers during public safety power shutoffs that complied with the guidelines set forth by its regulator, the California Public Utilities Commission (“PUC”). In a unanimous decision, the Court held that such claims are barred because their adjudication would interfere with the PUC’s comprehensive supervision and regulation of safety shutoffs.

Throughout the fall of 2019, PG&E conducted a series of emergency power shutoffs, called Public Safety Power Shutoffs, to reduce the risk that its utility infrastructure would ignite a wildfire during extreme weather conditions. Plaintiff Anthony Gantner sued PG&E, alleging that these power shutoffs were necessitated by PG&E’s negligence in maintaining its power grid over multiple decades and that Californians harmed by these shutoffs are entitled to $2.5 billion in damages.

Gantner initially filed this lawsuit during PG&E’s bankruptcy in 2019. PG&E moved in the Bankruptcy Court for a dismissal of the complaint with prejudice, arguing that the claims are preempted by California Public Utilities Code Section 1759 (which preempts claims that hinder or interfere with the PUC’s regulatory authority) and otherwise barred by PG&E’s tariff rules. The Bankruptcy Court dismissed the complaint, holding that the action was preempted by Section 1759. Mr. Gantner appealed that decision to the federal district court, which agreed with the bankruptcy court and again found that his negligence claim was barred by Section 1759.

Mr. Gantner then appealed that decision to the Ninth Circuit Court of Appeals. The Ninth Circuit heard oral argument in January 2022. Citing the “significant public policy implications for California residents and utilities” raised by this case, the Ninth Circuit certified two questions to the California Supreme Court:

1.  Whether Section 1759 preempted Gantner’s negligence claim, and

2.  Whether PG&E’s tariff rule barred Gantner’s negligence claim.

The California Supreme Court ruled in favor of PG&E on the first issue. “The PUC has authorized the regulated use of PSPS events as a ‘last resort,’ endorsing the practice where the public safety benefits of a reduced risk of wildfire ignition outweigh the harms of lost power,” the Court wrote. “By seeking billions of dollars in alleged damages resulting directly from power shutoffs, Gantner’s suit would ‘hinder or frustrate’ the PUC’s carefully designed implementation calculus.”

Because the California Supreme Court agreed with PG&E’s argument that Gantner’s lawsuit was barred by Section 1759, the Court did not reach the second issue presented by the Ninth Circuit.

Cravath served as lead counsel for PG&E before the California Supreme Court and in related proceedings before the United States Bankruptcy Court, the United States District Court, and the Ninth Circuit Court of Appeals. The Cravath team representing PG&E before the California Supreme Court includes partner Omid H. Nasab, of counsel Nicholas S. Medling and associates Melissa A. Syring and Paula Zampietro.

The case is Gantner v. PG&E Corp., No. S273340 (Cal. 2023).