By David B. Rivkin, Jr., and Robert A. Julian

March 11, 2024, in the Wall Street Journal

The September 2020 Archie Creek Complex Fire in Douglas County, Ore., destroyed 138 houses, more than 100,000 acres of land and an entire fishing ecosystem. Hundreds of families lost everything in the blaze and have had to live the past 3½ years, much of it in a Covid lockdown, in trailers.

Three government reports found that Berkshire Hathaway Energy’s PacifiCorp caused the fires. But PacifiCorp has delayed paying victims for their losses. Seventeen Douglas County homeowners have died waiting for a judge to give them a trial date. The Oregonian reported a year ago that the claims were “moving through the court system at a glacial pace, leaving thousands of victims in a debilitating state of financial and emotional uncertainty.” It wasn’t until December that PacifiCorp, facing trial, settled the homeowners’ and timber companies’ claims for $250 million.

Douglas County isn’t alone. Since 2017, wildfires have burned millions of acres, destroyed more than 30,000 homes, and killed more than 235 people in California, Oregon and Hawaii. Damages—economic losses and personal injury—are in the billions of dollars. When old equipment fails because of high velocity windstorms, firefighters simply can’t get to the fires in time.

PacifiCorp went from earning $921 million in 2022 to losing $468 million in 2023, a financial shellacking driven by $1.6 billion in wildfire-related charge-offs. Fires have taken a heavy toll on other investor-owned electric utilities, as Warren Buffett noted in his recently released annual letter to Berkshire Hathaway shareholders. Mr. Buffett argued that investor-owned utilities in many states are unable to raise sufficient capital and are facing bankruptcy. Their customers will experience higher rates and less reliable service.

One reason that utilities face this industrywide crisis is that too many public-utility commissions, or PUCs, require them to fund green projects instead of hardening electrical lines, clearing above-ground lines of vegetation, and creating an emergency shut-off system that would reliably cut power during dangerous storms.

Another problem is the interminable delays in dealing with wildfires’ consequences. There is no evidence that Oregon’s governor, Legislature, PUC or district attorneys have taken any action to determine PacifiCorp’s responsibility for igniting the fires that raged in more than a dozen Oregon counties. Victims’ lawyers have secured judgments against PacifiCorp for recklessly and willfully causing four of the 2020 Northern Oregon fires that didn’t involve the Douglas County fires, but the state government has been missing in action.

California, with a political and regulatory culture similar to Oregon’s, has done better. The California Department of Forestry and Fire Protection, which is responsible for fire protection on state lands, promptly issued reports, finding that California’s largest electric utility, Pacific Gas & Electric, had ignited most of that state’s fires in 2017 and 2018. While this liability plunged PG&E into bankruptcy, many state agencies worked together to ensure that the legal proceedings moved quickly so that victims could obtain timely relief.

District attorneys in seven counties prosecuted PG&E for killing 84 people in the 2018 Camp Fire and structured three civil settlements of its responsibility for three other post-2018 fires. The California PUC investigated the 2017 and 2018 fires, issued a scathing report on the utility’s disregard for safety, and fined PG&E $1.9 billion. The company pleaded guilty to 84 counts of manslaughter, agreed to satisfy the PUC’s fine, and paid roughly $129 million to local jurisdictions pursuant to the district-attorney-driven settlements. The California Legislature adopted an emergency measure establishing a utility-funded wildfire fund to resolve future wildfire claims and encourage PG&E to resolve its claims within 18 months. Gov. Gavin Newsom signed the legislation and then guided PG&E, the PUC, the victims’ lawyers, the shareholders and the courts to resolve the case and pay out a record $13.5 billion to the victims.

Oregon’s government hasn’t done anything similar for its citizens. The situation appears to be the same in Hawaii, where the local utility, Hawaiian Electric, seems to be on the same litigation defensive after the August 2023 Maui fires.

There is a set of straightforward solutions that requires all parties to adopt best practices, resolve legal battles expeditiously and compensate victims promptly. As a first step, state legislatures should direct and fund their agencies to investigate and issue prompt reports on the cause of wildfires. The states should adopt wildfire-fund legislation similar to California’s emergency law that permitted PG&E to reorganize and stabilize the utility market. But states shouldn’t exonerate and protect the utilities from liability for their destruction of the land and homes and killing and injuring people.

Legislatures should create a legal docket system that resolves utility-caused fire claims in a single coordinated proceeding, on a one-year timetable to trial. Utilities should be legislatively pushed to resolve claims within 12 months, via wildfire-fund mechanisms, rather than engage in a prolonged legal fight. And state judges should set trial dates within a year of the claim filing until the legislatures adopt the 12-month legal docket system.

State legislatures should also strip away governmental immunity from PUCs and subject them to liability, creating a powerful incentive for balancing climate-change and fire-safety considerations in the public interest. Finally, states should require utilities to replace their unsafe old equipment by set dates. The end of 2024 would be a reasonable target. This would be expensive, but the costs of the status quo are far greater.

Windstorms will continue, and the aging and increasingly dangerous electric-utility infrastructure will cause fires. Governments and utilities must join together to take necessary measures to update their equipment and ensure that those who suffer injury or loss are quickly and completely compensated.

Messrs. Rivkin and Julian are attorneys based respectively in Washington and San Francisco. They represented the Tort Claimants Committee in the PG&E bankruptcy case and now represent homeowners, commercial landowners and wineries in their litigation against PacifiCorp in Oregon.

Source: https://www.wsj.com/articles/how-to-be-ready-for-wildfires-utilities-update-equipment-and-strip-puc-legal-immunity-6d1290c4

Trial lawyers exact billions from companies that sell and distribute perfectly lawful products.

By David B. Rivkin, Jr., and O. H. Skinner

August 17, 2023, in the Wall Street Journal

Hawaii’s Supreme Court hears oral arguments Thursday in Honolulu v. Sunoco, a lawsuit brought by the state’s largest city against a group of energy companies. Honolulu alleges that the defendants have created a “public nuisance” by producing fossil fuels that emit greenhouse gases when burned. The companies argue that they are already subject to federal regulation, which supersedes any claim under state law.

Activist groups are increasingly attempting to use public-nuisance lawsuits to impose policies that they’ve failed to persuade lawmakers to enact. The list of industries under assault is long and growing. One set of public-nuisance actions targets firearm manufacturers. It was launched on behalf of local governments in New York state by plaintiff lawyers, with the firm Napoli Shkolnik, fresh from a successful action against pharmaceutical companies, serving as lead counsel. Other cases pursue chemical companies for producing so-called forever chemicals, which have been lawfully used for decades in making and packaging countless household and personal-hygiene products.

Public-nuisance lawsuits also attack beverage companies for using plastic bottles, leading to litter on beaches. School districts are suing tech companies claiming that their social-media platforms endanger children. Several cities have sued Hyundai and Kia alleging that certain cars they make are “too easy to steal.”

The financial stakes are high. The opioid cases—brought against drug manufacturers, distributors and retail pharmacy chains—have generated more than $55 billion in settlements. (Last week the U.S. Supreme Court stayed a settlement between plaintiffs and bankrupt Purdue Pharma, pending an appeal that the justices will hear in December.) The litigation against “forever chemicals” manufacturers, which is still in the early stages, has already led to more than $11 billion in tentative settlements. Given the apocalyptic rhetoric around climate change and gun violence, lawsuits against gun and energy companies, if successful, could yield hundreds of billions of dollars in damages.

Their lawsuits feature profoundly flawed theories of liability that threaten the fabric of U.S. law. Under traditional common law, a paradigmatic public nuisance suit involves clearly unlawful conduct, such as running a brothel or drug house in a residential neighborhood, blocking a public right of way, or operating a factory that emits noxious smells. Defendants in such lawsuits are the agents directly responsible for causing the alleged harm.

These new ideological public-nuisance suits target products or activities that didn’t violate any law or regulation at the time they were produced and used. The defendants are manufacturers and distributors rather than individuals who committed specific wrongful acts. Such claims often feature freestanding state-law causes of action, available to local governments that otherwise lack legal authority to bring other public enforcement actions. That enables plaintiff lawyers, working with local governments, to make an end-run around state governments, pushing “progressive” policies, even in conservative states.

As long as the threat of litigation lingers over every industry under the sun, plaintiff lawyers will have the ability to intimidate market participants and reshape the economy without ever scoring a conclusive win in a courtroom (never mind a legislature). Even corporate giants that can afford to fight sometimes find it more economical to settle a meritless claim. Litigation options and their attendant costs are even worse for small and midsize businesses, like local car dealers, gasoline stations and beverage distributors.

There have been some major litigation setbacks to this public-nuisance campaign. In 2021 the Second U.S. Circuit Court of Appeals dismissed a New York City suit against international oil companies that sought to recover, as the court put it, “damages caused by those companies’ admittedly legal commercial conduct in producing and selling fossil fuels around the world.” The same year, the Oklahoma Supreme Court tossed an opioid case against Johnson & Johnson.

But because such lawsuits are usually driven by state law, there is no opportunity for a conclusive nationwide win at the U.S. Supreme Court covering all these lawsuits; the battles have to be waged on a state-by-state basis. Federal constitutional issues arise in cases against some industries—the First Amendment for social media, the Second Amendments for gun makers. There are also some instances in which federal common law or regulatory statutes like the Clean Air Act pre-empt the application of state public-nuisance laws. That was the basis on which the Second Circuit threw out the New York case and is one of the key arguments before the Hawaii Supreme Court.

Fortunately, there are other available remedies. State legislatures could bar cities and counties from hiring plaintiff lawyers to prosecute public nuisance suits on a contingency basis, which would constitute an excellent remedial measure. They could also forbid local governments from bringing public-nuisance cases at all, or at least against manufacturers and distributors of products circulating in interstate commerce, or require approval from state officials such as the attorney general.

Conservative states would likely lead the way in enacting such reforms. These public-nuisance lawsuits harm the economy and are antithetical to American democracy, which requires decisions about economic regulation to be made by politically accountable officials, not by courts. And having governmental entities delegate litigation control to plaintiff lawyers amounts to a government-deputized shakedown of disfavored industries.

Mr. Rivkin practices appellate and constitutional law in Washington. He served at the Justice Department and the White House Counsel’s Office in the Reagan and George H.W. Bush administrations. Mr. Skinner is executive director of Alliance For Consumers. He has served as solicitor general and handled consumer cases in the Arizona Attorney General’s Office.

Source: https://www.wsj.com/articles/public-nuisance-gun-pharma-car-theft-pollution-fossil-fuels-trial-lawyer-settlement-abuse-power-f45a8581