Berkshire-owned utility's wildfire lawsuits head to Oregon Supreme Court

By Jonathan Stempel

Nov 3 (Reuters) - The Oregon Supreme Court will on Tuesday review a verdict that could expose Berkshire Hathaway's BRKa.N PacifiCorp utility to tens of billions of dollars of potential damages over its role in four Oregon wildfires in 2020.

Oregon residents and business owners are seeking to reverse a decision by a mid-level state appeals court that wiped out $1.25 billion of awards against PacifiCorp because of an error in how jurors were instructed.

Claimants said the Portland-based utility's equipment and its negligent failure to shut down power lines during a Labor Day weekend windstorm caused the Santiam Canyon, Echo Mountain Complex, South Obenchain and 242 fires to damage more than 2,000 properties.

PacifiCorp has denied negligence, and said victims should not sue as a group because the fires were more than 100 miles (161 km) from each other.

In 2023, during the litigation's first phase, jurors found PacifiCorp at fault for all four fires, after Judge Steffan Alexander in the Multnomah County Circuit Court instructed them that they "may assume that the evidence at trial applies to all class members."

The judge later oversaw a series of "mini-trials" awarding 201 plaintiffs the $1.25 billion, including for emotional distress. More than 1,000 additional plaintiffs still await trial.

But on April 8, the Oregon Court of Appeals set aside the jury's liability verdict and the judgments, saying much of the evidence concerned "particular issues concerning particular wildfires" and ignitions within the largest fire, Santiam Canyon. It also suggested that Alexander reconsider class certification, effectively returning the litigation to square one.

Class actions can allow greater recoveries at lower cost than if plaintiffs must sue individually. The state Supreme Court could reinstate the judgments, or uphold the court of appeals and return the matter to Alexander.

UNDERMINING THE 'REGULATORY COMPACT'

Berkshire Chief Executive Greg Abel has said large wildfire payouts endanger the "regulatory compact" under which utilities accept close government oversight, as a condition of being allowed to generate reasonable returns on invested capital and spend more on infrastructure that customers need.

Letting utilities charge customers more, however, often draws opposition from regulators and politicians who don't want rates to go up.

In seeking to restore the original jury verdict, lawyers for fire victims said the appeals court was wrong to focus on a single, isolated sentence in Alexander's jury instructions.

The lawyers said evidence common to the fires included PacifiCorp's decision to skimp on safety by failing to insulate power lines, trim trees and vegetation, or have any plan to proactively shut off power before it was too late.

PacifiCorp countered that Alexander's instruction ignored "critical differences" among the fires, and wrongly excused victims from having to prove their individual claims.

Through June 30, PacifiCorp reached about $2.3 billion of settlements with wildfire claimants outside the certified class.

It also agreed in February to pay $575 million to resolve US government claims over six Oregon and California wildfires that burned federal land.

Berkshire, then led by Warren Buffett, bought PacifiCorp for $5.1 billion in 2006.