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Buffett’s PacifiCorp Now Faces $30 Billion Fire Claim Demand
2024-04-29 21:54:42.637 GMT
By Rachel Graf
(Bloomberg) -- Berkshire Hathaway Inc.’s PacifiCorp now
faces a demand for $30 billion from victims of Oregon’s 2020
Labor Day wildfires, an escalation of a legal onslaught on the
largest grid operator in the western US.
While the amount sought in an amended complaint filed
Monday is about two and a half times what the utility is worth,
it’s also much bigger than the payout PacifiCorp might be
expected to face based on claims resolved so far.
Read More: Wildfires Are Upending Some of the Safest Bets
on Wall Street
The growing liabilities for PacifiCorp prompted Berkshire
Chairman Warren Buffett to warn in his annual letter to
investors that wildfires have turned utilities across the
western US into risky investments. Utilities in California,
Colorado, Hawaii and Texas have also faced billions in fire
liabilities.
A jury already found PacifiCorp liable in 2023 for its role
in the fires, but victims must undergo separate trials to
determine individual damages. The new filing in state court in
Portland formally adds the names of 1,000 residents who are
covered by a class action case over the destruction of about
2,500 properties in western Oregon.
Jurors so far have awarded 36 plaintiffs a total of about
$220 million — an average of $6 million per person. That’s far
less than the $30 million per person that victim lawyers are
seeking in Monday’s filing, which asks for up to $5 million to
compensate for actual losses and as much as $25 million for
psychological trauma.
Read More: PacifiCorp Fire Victim Who Leapt in River
Awarded $9 Million
PacifiCorp, which is appealing last June’s verdict of gross
negligence, previously lambasted the amount of damages sought by
the plaintiffs.
“The idea that any of the numerous plaintiffs with minimal
economic damages and no physical injuries are nevertheless
entitled to $25 million in noneconomic damages is delusional,”
PacifiCorp lawyers wrote in an October court filing.
Lawyers for plaintiffs declined to comment on Monday’s
filing.
Berkshire said in a recent regulatory filing that it faces
fire claims in Oregon and California of about $8 billion. That
includes demands from state and US government agencies totaling
more than $1 billion for various firefighting and cleanup costs.
Read More: Berkshire Shows Unusual Risk Appetite in
Wildfire Court Fight
The utility was accused at last year’s trial of failing to
heed weather warnings and shut off electricity in its service
areas ahead of a wind storm that toppled power lines.
What Bloomberg Intelligence Says
“We think a settlement in the mid- to high-single-digit
billions is the most likely outcome. Both sides have incentive
to settle. Going to trial with all class plaintiffs is risky for
PacifiCorp as it’s already lost the first three jury trials,
with verdict amounts that point to potential damages in the low-
to middle-double-digit billions. Plaintiffs have an incentive as
well, because PacifiCorp has viable arguments on appeal to
eliminate non-economic damages.”
— Elliot Stein, Senior Litigation Analyst
To read the full report, click here
PacifiCorp, which has settled some claims over the 2020
fires, has said it’s confident the 2023 liability verdict will
be overturned on appeal. But the litigation has spooked
investors, hurting the company’s bonds and its credit rating.
The company replaced its chief executive officer last
summer and is exploring options with Oregon regulators and
lawmakers to minimize its wildfire exposure, including recouping
its litigation losses from customers and capping damages for
non-economic claims.
--With assistance from Mark Chediak.
