Pacific Gas & Electric Company (PGEC) (NYSE: PCG)
$90 Million Settlement Reached in San Bruno Gas Explosion Lawsuit
On Apr. 21, 2017, a judge granted preliminary approval to a $90 million settlement designed to save lives and prevent another disaster akin to what happened in San Bruno, by focusing on corporate reform. The settlement, which is one of the largest derivative settlements ever achieved, promotes a new governance structure directly designed to improve PG&E’s ability to prevent the reoccurrence of another disaster.
The lawsuit arose amid Pacific Gas and Electric’s lax oversight that on Sept. 9, 2010, resulted in a disastrous explosion of gas transmission line 132 in San Bruno, California killing eight people and injuring dozens more, leaving a community destroyed. In stark contrast with PG&E’s pledge to provide “safe, reliable and responsible delivery of energy,” the company fostered a culture of non-compliance with safety requirements, according to the complaint.
Experts say the approach of this settlement will save lives and will "be effective in substantially reducing safety failures in the future."
Image courtesy TheBrockenInaGlory via WikiMedia Commons.
Hagens Berman filed a shareholder derivative action against the officers and directors of Pacific Gas & Electric Company (“PGEC”) on behalf of PG&E Corporation (“PG&E”) alleging that the officers and directors intentionally or recklessly breached their fiduciary duties by failing to take action to address safety issues in its gas transmission pipelines.
The suit alleges that for decades the defendants’ ignored safety violations and diverted funds earmarked for pipeline replacement to political lobbying and advertising, all of which ultimately culminated in a Sept 9, 2010, explosion in San Bruno, California that killed eight people and caused dozens of injuries. Their behavior also caused substantial economic losses for the companies, for which Hagens Berman seeks recovery on PG&E’s behalf.
For example, the complaint alleges that between 2004 and 2009, PGEC received more “probable violation” safety citations than all of the other utilities in the state combined, despite operating only 42 percent of gas pipelines. The complaint also lays out a number of incidents preceding the San Bruno explosion that attorneys say should have caused the defendants to take action to protect the companies and the public, including:
- In July 2005, corrosion of pipe installed in 1948 caused an explosion and the complete destruction of a home in Los Altos, Calif.
- In 2007, an internal safety audit conducted by PGEC showed that the company had serious issues, including falsified records relating to reported gas leaks.
- In 2008, the California Public Utilities Commission conducted an audit in Fresno, Calif. and reported training issues related to personnel working on gas leaks.
Hagens Berman’s suit asks the court to order the defendants to compensate the companies for financial losses as well as return their salaries during the time period in which the alleged breach of fiduciary duty took place.
Long term shareholders, who have held and continue to hold PG&E stock since before September 9, 2010 may contact Reed R. Kathrein for more information by emailing PGEC@hbsslaw.com.
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