(Bloomberg) — Berkshire Hathaway Inc.'s PacifiCorp won an appeals court challenge to a 2023 jury verdict in a wildfire case that exposed the company to billions of dollars in losses.
A three-judge panel of an Oregon state appeals court ruled Wednesday that a Portland judge improperly handled the trial as a class action — which could potentially wipe out more than $1 billion already awarded to fire victims and force them to start over to pursue damages.
The decision is a major reprieve for the utility. PacifiCorp, which calls itself the largest grid operator in the western U.S. The utility has been under mounting pressure after being blamed for igniting a series of wildfires that devastated Oregon in September 2020.
The company has embarked on an all-out effort to curb the firm's wildfire liabilities — both present and future — by lobbying for new state laws that cap payouts to victims and pass the utility's costs to its customers.
In the first major wildfire case against a utility to go to a trial, the company was found grossly negligent for failing to shut off electricity in its service areas before a windstorm.
The appeals court found that the judge's error in his instruction to the jury was "prejudicial to PacifiCorp" and sent the case back him for further proceedings.
PacifiCorp hailed the ruling in a statement.
"There are no winners in wildfire," the company said. "However, the court's decision supports PacifiCorp's longstanding belief that this process was prejudicial and not appropriate for managing wildfire litigation. The company remains open to resolving reasonable claims and will continue to defend against unsupported claims."
The lead lawyers for the fire victims called the decision "a procedural setback, not a judgment on PacifiCorp's conduct."
"The court rejected PacifiCorp's efforts to win this appeal on the merits," the attorneys said in a statement. "Instead, what the court addressed was a single jury instruction, charting several paths forward — including fixing that instruction and trying the case again. PacifiCorp will not escape having to answer to wildfire survivors."
The 2023 verdict and an ongoing series of damages trials for home and business owners have rattled PacifiCorp bondholders, upended the company's credit rating and prompted a warning from the utility last year that it may need to shut operations in Oregon.
Theodore Boutrous, a lawyer for the company, said Wednesday's ruling is "very significant" because it will void the damages already awarded and halt a lineup of mini-trials to determine damages for more than 1,000 fire victims.
The ruling will help the company to argue to the trial judge that it's inappropriate for victims of different fires across distant areas to be grouped together, and ultimately will give PacifiCorp better leverage to reach settlements, the lawyer said.
He also said the company will now get a chance to contest its responsibility for one of the most damaging fires after state authorities concluded PacifiCorp's equipment wasn't to blame for the blaze.
"We're really well-positioned here to have a fair process for everyone," Boutrous said.
The company has reached settlements for more than $2 billion, including with individual plaintiffs, insurers, wineries and the federal government.
Featured imaged: Smoke rises from the ground in a neighborhood destroyed by wildfire in Talent, Oregon in 2020. Photographer: David Ryder/Getty Images via Bloomberg.
See also:
- Insurance organizations launch community wildfire mitigation toolkit
- APCIA launches wildfire resource for homeowners
- Even low-risk homes are caught up in California's insurance crisis
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