California company accused of ‘dereliction of duty’, claimants fear it will not be able to pay $13.5bn settlement.

A trust representing more than 80,000 victims of deadly wildfires ignited by Pacific Gas and Electric’s (PG&E) electrical grid is suing nearly two dozen of the utility’s former executives and board members for alleged dereliction of their duty to ensure the equipment would not kill people.

The complaint filed on Wednesday in San Francisco Superior Court is an offshoot of a $13.5bn settlement that PG&E reached with the wildfire victims while the utility was mired in bankruptcy from January 2019 through June 2020.

As part of that deal, PG&E granted the victims the right to go after the utility’s hierarchy leading up to and during a series of wildfires that killed more than 100 people and destroyed more than 25,000 homes and businesses in Northern California during 2017 and 2018.

John Trotter, the trustee overseeing the $13.5bn settlement, is now following through with an action that targets a litany of former executives and board members.

The list includes two of PG&E’s former chief executives, Anthony Earley and Geisha Williams, who were paid millions of dollars during their reigns. The company is now being run by a former Michigan utility executive, Patricia Poppe, who is being overseen by a board of directors that was overhauled during PG&E’s bankruptcy case.

PG&E did not immediately respond to a request for comment from The Associated Press news agency.

PG&E works on power lines to repair damage caused by the Camp Fire in Paradise, California, on November 21, 2018 [File: Elijah Nouvelage/Reuters]

The wildfire victims’ lawsuit is seeking to tap into the $200m to $400m in liability insurance that PG&E secured for the former executives and board members, said Frank Pitre, the lawyer handling the case. He told the AP that he hopes to resolve the lawsuit within the next year to help wildfire victims still struggling to rebuild their lives.

If the lawsuit is successful, it could help make up for a roughly $1bn shortfall that the wildfire victims’ trust is currently facing because half of the promised settlement consisted of a PG&E settlement that is currently worth less than had been hoped when the deal was struck towards the end of 2019.

Trotter acknowledged the problem in a January 26 letter to the wildfire victims — many of whom had baulked at accepting the terms of a settlement that required half of the promised $13.5bn to consist of stock in a company with a history of negligence.

But none of the PG&E shares has been sold by the trust so far, leaving time for the stock to rebound.

PG&E’s stock price was hovering around $11.30 on Wednesday. The shares have ranged from a low of $3.55 to $25.19 during the past two tumultuous years. “I am still optimistic that we will get to the mark” intended for the PG&E stock, Pitre told the AP.

‘T-E-R-R-O-R’

The complaint against PG&E’s former executives and board members seeks to tie them to acts for which the utility has already accepted.

That includes the company pleading guilty to 84 felony counts of involuntary manslaughter for causing a 2018 wildfire that wiped out the town of Paradise, California, along with the surrounding area. PG&E was fined $4m in that case, the maximum penalty allowed.

“If there was ever a corporation that deserved to go to prison, it’s PG&E,” Butte County Judge Michael Deems said at the time of the utility’s sentencing eight months ago.

Deems’ condemnation is included in the wildfire victims’ lawsuit as well as scorching criticism from US District Judge William Alsup, who is overseeing PG&E’s probation in another criminal case stemming from the utility’s neglect of natural gas lines that blew up an entire neighbourhood in a San Francisco Bay Area suburb in 2010.

PG&E President Chris Johns speaks during a news conference the day after a natural gas transmission line ruptured, causing an explosion and fire that destroyed dozens of houses and killed at least four people in San Bruno, California, September 10, 2010 [File: Ramin Rahimian/Reuters]

Alsup has repeatedly ripped PG&E for not doing more to maintain its power lines in recent years, including during a court hearing earlier this month cited in the victims’ lawsuit.

“PG&E has been a terror, T-E-R-R-O-R, to the people of California,” Alsup said during the February 3 hearing.

Pitre said it is time to hold people hired to manage and oversee the company responsible for PG&E’s recklessness. “We are talking about a massive dereliction of duty.”





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