Gantner v. PG&E Corp., Case No. 20-cv-02584-HSG
| Decision Date | 26 March 2021 |
| Docket Number | Case No. 20-cv-02584-HSG |
| Court | U.S. District Court — Northern District of California |
| Parties | GANTNER, Plaintiffs, v. PG&E CORPORATION, et al., Defendants. |
Bonny E. Sweeney, Seth R. Gassman, Hausfeld LLP, Brian Samuel Clayton Conlon, Nicholas A. Carlin, Phillips, Erlewine, Given & Carlin LLP, San Francisco, CA, Michael William Malter, Robert Glenn Harris, Binder & Malter LLP, Santa Clara, CA, for Plaintiffs.
Jane Kim, Peter J. Benvenutti, Thomas B. Rupp, Keller and Benvenutti LLP, San Francisco, CA, for Defendant PG&E Corporation.
Peter J. Benvenutti, Thomas B. Rupp, Keller & Benvenutti LLP, San Francisco, CA, for Defendant Pacific Gas & Electric Company.
ORDER AFFIRMING BANKRUPTCY COURT'S DISMISSAL ORDER
Re: Dkt. No. 7
Pending before the Court is Appellant Anthony Gantner's ("Appellant") appeal of the Bankruptcy Court's March 10, 2020 order that dismissed his class action complaint. Dkt. No. 7 ("Appellant Brief") and Dkt. No. 9 ("Reply"). Appellees PG&E Corporation and Pacific Gas and Electric Company (collectively, "Debtors") moved to dismiss Appellant's complaint in the Bankruptcy Court and oppose the current appeal. Dkt. No. 8 ("Opposition"). For the following reasons, the Court AFFIRMS the Bankruptcy Court's dismissal of Appellant's complaint.
On January 29, 2019, the Debtors commenced voluntary cases for relief under chapter 11 of title 11 of the United States Code ("Bankruptcy Code") in the United States Bankruptcy Court for the Northern District of California ("Bankruptcy Court"). Significantly, the Debtors needed to propose a plan of reorganization that satisfied the requirements of A.B. 1054, including its June 30, 2020 deadline for plan confirmation. In light of the "increased risk of catastrophic wildfires," A.B. 1054 created the "Go-Forward Wildfire Fund" as a multi-billion dollar safety net to compensate future victims of public utility fires and thereby "reduce the costs to ratepayers in addressing utility-caused catastrophic wildfires," support "the credit worthiness of electrical corporations," like the Debtors, and provide "a mechanism to attract capital for investment in safe, clean, and reliable power for California at a reasonable cost to ratepayers." A.B. 1054 § 1(a). For the Debtors to qualify for the Go-Forward Wildfire Fund, however, A.B. 1054 required, among other things, the Debtors to obtain an order from the Bankruptcy Court confirming a plan of reorganization by June 30, 2020. See A.B. 1054 § 16, ch. 3, 3292(b). After more than sixteen months of negotiations among a variety of stakeholders, and following confirmation hearings that spanned several weeks, the Debtors' Plan of Reorganization dated June 19, 2020 ("Plan")1 was confirmed by the Bankruptcy Court on June 20, 2020 and became effective on July 1, 2020 ("Effective Date").
On December 19, 2019, Appellant filed a class action complaint and initiated an adversary proceeding before the Bankruptcy Court. BR Dkt. No. 1 ("Compl.").2 Appellant's single negligence claim arises from certain planned power outages, known as public safety power shutoff ("PSPS") events. Id. He seeks damages for losses, such as loss of habitability, loss of food items, and loss of productivity, that he and putative class members incurred as a result of five post-petition PSPS events that took place in October and November 2019. Id. ¶¶ 3, 85; Dkt. No. 1-5 (Bankruptcy Court's March 30, 2020 Memorandum Decision ("Mem. Decision")) at 2. The proposed class is defined as "All California residents and business owners who had their power shutoff [sic] by PG&E during the October 9, October 23, October 26, October 28, or November 20, 2019 Outages and any subsequent voluntary Outages PG&E imposes on its customers during the course of litigation." Compl. ¶ 85.
Debtors moved to dismiss Appellant's complaint, BR Dkt. No. 7, and the Bankruptcy Court granted the motion without leave to amend, finding that Appellant's claim is preempted by California Public Utilities Code § 1759 (" § 1759"). Mem. Decision at 7-11. This appeal followed.
District courts have jurisdiction to hear appeals from final judgments, orders, and decrees of bankruptcy judges. 28 U.S.C. § 158. A district court reviews a bankruptcy court's decision by applying the same standard of review used by circuit courts when reviewing district court decisions. In re Greene , 583 F.3d 614, 618 (9th Cir. 2009). The district court reviews the bankruptcy court's findings of fact for clear error and its conclusions of law de novo.
In re Harmon , 250 F.3d 1240, 1245 (9th Cir. 2001). "Dismissal under Rule 12(b)(6) is appropriate only where the complaint lacks a cognizable legal theory or sufficient facts to support a cognizable legal theory." Mendiondo v. Centinela Hosp. Med. Ctr. , 521 F.3d 1097, 1104 (9th Cir. 2008). To survive a Rule 12(b)(6) motion, a plaintiff must plead "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly , 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). A claim is facially plausible when a plaintiff pleads "factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). "In a case requiring a federal court to apply California law, the court ‘must apply the law as it believes the California Supreme Court would apply it.’ " Kairy v. SuperShuttle Int'l , 660 F.3d 1146, 1150 (9th Cir. 2011). The bankruptcy court's decision to dismiss a complaint without leave to amend is reviewed for abuse of discretion. In re Tracht Gut, LLC , 836 F.3d 1146, 1150 (9th Cir. 2016).
The question presented by this appeal is whether Appellant's negligence claim, if allowed to proceed, would impermissibly hinder or interfere with the supervisory and regulatory policies of the California Public Utilities Commission ("CPUC") in violation of California Public Utilities Code § 1759. Appellant argues that California Public Utilities Code § 2106 makes Debtors liable for damage caused by their negligence, and that § 1759 does not preempt his negligence claim. App. Br. at 3-4. Debtors respond that the Bankruptcy Court properly dismissed Appellant's complaint on the ground that Appellant's action would interfere with the CPUC's regulatory authority to authorize PSPS events, contrary to § 1759. Opp. at 9. The Court reviews this question de novo. See Kairy , 660 F.3d at 1150.
Section 1759 provides that:
No court of this state, except the Supreme Court and the court of appeal, to the extent specified in this article, shall have jurisdiction to review, reverse, correct, or annul any order or decision of the commission or to suspend or delay the execution or operation thereof, or to enjoin, restrain, or interfere with the commission in the performance of its official duties, as provided by law and the rules of court.
In effect, § 1759 "declares that no court except [the California] Supreme Court has jurisdiction to review any order or decision of the Public Utilities Commission (hereafter the commission) or to interfere with the commission in the performance of its duties." San Diego Gas & Electric Co. v. Superior Court , 13 Cal.4th 893, 902, 55 Cal.Rptr.2d 724, 920 P.2d 669 (1996) (" Covalt "). At the same time, § 2106 "authorizes an action in superior court for damages caused by any unlawful act of a public utility." Id.3
"The California Supreme Court has on a number of occasions addressed the tension between Public Utilities Code § 1759 and the public and private remedies provided for in Chapter 11 of that Code, and has consistently applied a three-part test to resolve any conflict." Kairy , 660 F.3d at 1150. In Covalt , the California Supreme Court articulated this three-part test in an effort "to resolve conflicts between actions brought against a public utility under Public Utilities Code § 2106 and the jurisdiction-stripping provision in § 1759." Kairy , 660 F.3d at 1149. In doing so, the California Supreme Court reaffirmed the "the primacy of section 1759 and the correspondingly limited role of section 2106." Covalt , 13 Cal.4th at 917, 55 Cal.Rptr.2d 724, 920 P.2d 669. "[A]n action for damages against a public utility pursuant to section 2106 is barred by section 1759 not only when an award of damages would directly contravene a specific order or decision of the commission, i.e., when it would ‘reverse, correct, or annul’ that order or decision, but also when an award of damages would simply have the effect of undermining a general supervisory or regulatory policy of the commission, i.e., when it would ‘hinder’ or ‘frustrate’ or ‘interfere with’ or ‘obstruct’ that policy." Id. at 918, 55 Cal.Rptr.2d 724, 920 P.2d 669. Accordingly, in deciding whether an action is barred by § 1759, a court must ask: "(1) whether the PUC had the authority to adopt a regulatory policy on the subject matter of the litigation; (2) whether the PUC had exercised that authority; and (3) whether action in the case before the court would hinder or interfere with the PUC's exercise of regulatory authority." Kairy , 660 F.3d at 1150.4
The California Public Utilities Code gives electric utilities regulated by the CPUC authority to shut off electric power in order to protect public safety. See Cal. Pub. Util. Code §§ 399.2(a), 451. In 2018, the CPUC promulgated de-energization guidelines that apply to all investor-owned utilities, including Debtors. See Resolution Extending De-Energization Reasonableness, Notification, Mitigation & Reporting Requirements in Decision 12-04-024 to All Elec. Inv. Owned Utilities., No. ESRB-8, 2018 WL 3584003, at...
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