California Court of Appeals, First District, Third Division
City and County of San Francisco Super. Ct. No. CGC12523596 Honorable Richard A. Kramer Trial Judge
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Walter Hamilton & Koenig, Peter John Koenig Walter Herbert Walker III; Kabateck Brown Kellner, Brian S. Kabateck Richard L. Kellner Scott M. Malzahn; Meisel & Krentsa and Andrew H. Meisel for Plaintiffs and Appellants.
Orrick Herrington & Sutcliffe, Eric Matthew Hairston Scott Anthony Westrich and Joseph M. Malkin for Defendants and Respondents.
Plaintiffs Filomena Guerrero et al., sued Pacific Gas and Electric Co. Company for deceptively representing to California Public Utilities Commissionand the public how much revenue it required to provide safe and reliable natural gas service. The class action complaint sought restitution and disgorgement of profits for PG&E’s wrongful diversion
of more than $100 million in rates it collected over a thirteen year period that should have been expended on natural gas pipeline safety projects.
PG&E demurred. It argued that Public Utilities Code section 1759foreclosed plaintiffs’ claims because the PUC had exercised jurisdiction over PG&E’s rates, and a judgment for plaintiffs in a civil action would interfere with the continuing jurisdiction of the PUC in pending regulatory matters against PG&E. The trial court sustained PG&E’s demurrer without leave to amend. Plaintiffs appeal from the ensuing judgment.
We agree with the trial court that this putative class action would interfere with the PUC’s performance of its duties and affirm the judgment for PG&E.
On September 9, 2010, a PG&E natural gas pipeline exploded in San Bruno, CA, causing death, great physical injuries, and extensive property damage. Following the explosion, various governmental entities commenced investigations into the incident and into PG&E’s business practices. As plaintiffs alleged, the Public Utilities Commission “initiated its own investigation and retained an independent firm, Overland Consulting, LLC, ... to review PG&E’s gas transmission safety-related activities from a financial and regulatory audit prospective. The PUC and Overland examined PG&E’s natural gas transmission and storage expenditures over the prior 15 years to determine whether the amounts that the PUC had authorized for gas pipeline safety investments were actually spent on safety investments. Authorized revenue was compared with actual costs for operations and maintenance expenses, capital expenditures, and rate-base expenditures. [The] audit also compared authorized revenue requirements to actual revenue and actual return-on-equity to authorized levels.”
Plaintiffs filed this action against PG & E seeking redress for PG&E’s alleged misappropriation of over $100 million in authorized rates that it should have used for safety-related projects. According to the complaint, PG&E misrepresented and concealed material facts from plaintiffs when it used money collected from ratepayers to pay shareholders and provide bonuses to its executives instead of spending the money on infrastructure and safety measures. Additionally, the class alleged that PG&E’s negligent handling of the pipe that exploded in San Bruno was unlawful and arose from PG&E’s corporate culture that valued profits over safety. Plaintiffs ...