(Bloomberg) — Berkshire Hathaway Inc.’s PacifiCorp now faces a demand for $30 billion from victims of the 2020 Labor Day wildfires in Oregon, an escalation of a legal attack on the largest grid operator in the western U.S.
Most read by Bloomberg
While the amount sought in an amended lawsuit filed Monday is about two and a half times the utility’s value, it is also much higher than the payout PacifiCorp could expect based on the claims resolved so far.
Read more: Wildfires are upending some of Wall Street’s safest bets
The growing liabilities for PacifiCorp prompted Berkshire Chairman Warren Buffett to warn in his annual letter to investors that wildfires have made utilities across the western United States risky investments. Utilities in California, Colorado, Hawaii and Texas are also facing billions of dollars in fires.
A jury found PacifiCorp liable for its role in the fires as early as 2023, but victims must undergo separate trials to determine individual damages. The new filing in state court in Portland officially adds the names of 1,000 residents affected by a class-action lawsuit over the destruction of about 2,500 properties in western Oregon.
So far, jurors have awarded a total of about $220 million to 36 plaintiffs – an average of $6 million per person. That’s far less than the $30 million per person that victims’ lawyers are seeking in Monday’s filing, which calls for up to $5 million in compensation for actual losses and up to $25 million for psychological ones Trauma is required.
Read more: PacifiCorp fire victim who jumped into river awarded $9 million
PacifiCorp, which is appealing last June’s verdict on grounds of gross negligence, had previously sharply criticized the amount of damages sought by the plaintiffs.
“The idea that any of the numerous plaintiffs with minimal economic damages and no physical harm would still be entitled to $25 million in non-economic damages is delusional,” PacifiCorp’s lawyers wrote in an October court filing.
Attorneys for the plaintiffs declined to comment on Monday’s filing.
Berkshire said in a recent regulatory filing that the company faces about $8 billion in fire damage in Oregon and California. These include claims from state and U.S. government agencies totaling more than $1 billion for various firefighting and cleanup costs.
Read more: Berkshire shows unusual risk-taking in wildfire litigation
In last year’s trial, the utility was accused of ignoring weather warnings and shutting off power in its service areas before a storm brought down power lines.
What Bloomberg Intelligence says
“We believe an agreement in the mid to high single-digit billion range is the most likely outcome. Both sides have an incentive to come to an agreement. It is risky for PacifiCorp to go to trial with all plaintiffs because the company has already lost its first three jury trials and the verdict amounts suggest potential damages in the low to mid-double-digit billions. The plaintiffs also have an incentive because PacifiCorp has strong arguments to eliminate non-economic damages in the appeal process.”
— Elliot Stein, senior process analyst
To read the full report, click here
PacifiCorp, which settled some claims related to the 2020 fires, is confident the 2023 liability verdict will be overturned on appeal. But the litigation has spooked investors and dented the company’s bonds and credit rating.
The company replaced its chief executive last summer and is exploring options with Oregon regulators and lawmakers to minimize wildfire risk, including recovering its litigation losses from customers and limiting damages for noneconomic claims.
– With support from Mark Chediak.
Most read by Bloomberg Businessweek
©2024 Bloomberg LP