PG&E is aggressively fighting what could be the costliest fallout yet from the deadly pipeline blast in San Bruno -- a lawsuit payout to explosion survivors that could reach billions of dollars.
In recent court documents Pacific Gas & Electric unveiled its strategy against the hundreds who have sued since the Sept. 9, 2010, explosion and are seeking punitive damages in addition to millions of dollars in compensation for burned homes and family members who died.
The utility has said it accepts responsibility for the blast that killed eight people and destroyed 38 homes but argues in the papers that it was simply an accident. PG&E says the survivors and their lawyers haven't produced evidence showing the utility is guilty of the wrongdoing required to trigger punitive damages, which serve to penalize and deter bad behavior.
Lawyers for the victims dispute that, arguing there is plenty of documentation to support their contention that the explosion was preventable and that the utility botched its response.
PG&E expects to spend more than $200 million to settle compensation lawsuits, but it is clearly determined to avoid the possibility of punitive damages, which could run into the billions.
The civil trial in the case is set to start in July; PG&E outlined its litigation strategy in documents filed April 6 in which the utility urged a San Mateo County Superior Court judge to reject punitive damages.
In the documents, PG&E lays out in detail its argument that the explosion was accidental. Federal investigators, however, slammed the utility for a list of failures that led to blast, ranging from shoddy records to lack of quality control.
The company admits installing in 1956 the segment of gas line that blew up but says there's no proof it had anything to do with making the pipe. That detail is crucial because the pipe was missing a weld and broke open along a shoddily sealed seam.
The utility also argues that the explosion set into motion meticulous emergency plans, rigorously executed by well-trained staff. In short, there was little it could have done better to respond to the tragedy, not even had if it had installed valves to automatically stop the flow of flaming gas.
"Within five minutes of the rupture, the vast majority of devastation had occurred," wrote PG&E lawyer John Lyons. "Once the rupture occurred, PG&E could not have prevented any of these effects and immediate catastrophic consequences."
PG&E spokesman David Eisenhauer said the fight over punitive damages is slowing the process of getting compensation to San Bruno residents.
"We want to get the victims the compensation that they deserve," he said in an interview. "This will expedite and streamline the process."
Federal investigators and lawyers for the survivors have drawn a less shining image of the utility. Plaintiffs attorney Mike Danko said PG&E knew the pipe had serious defects yet chose not to perform high-pressure water safety tests, which are expensive and disruptive.
"Instead, it turned a blind eye. Then, to suit its own purposes, it repeatedly spiked the pressure in the line," Danko said. "Is it any surprise that it blew?"
He also noted the disorder of the utility's emergency response. Two off-duty employees went to the scene, after fighting traffic, and cranked shut, by hand, the gas valves 90 minutes after the blast. By not having automatic and remotely activated valves, the company left the residents and firefighters to fend for themselves, Danko said.
"If PG&E didn't think shut-off valves were a good idea in San Bruno, where would they be a good idea?" Danko asked.
The National Transportation Safety Board slammed the utility for missing pipeline records as well as an inadequate emergency response. The board said the deficiencies in the section of pipe that exploded would have been visible to the naked eye.
San Mateo County Superior Court Judge Steven Dylina is expected to decide at a June 22 hearing whether to toss out punitive damages.
'Make the jury mad'
Punitive damages are awarded in about 5 percent of civil cases in the country, said Joshua Davis, a litigation expert and head of the University of San Francisco School of Law's Center for Law and Ethics. Attorneys must clear a high standard to show a callous disregard for safety.
"You've got to make the jury mad to get them to award punitive damages," said Davis, who is not involved in the case. "They've got to be really mad."
The full breadth of the survivors' case is still under wraps. But it is likely to rest heavily on the words of those who lost the most, such as Sue Bullis, whose son, husband, mother-in-law and dog died in the flames.
"I remember dreaming that my son was alive, and the brief moment when I woke up and believed it to be true, only to remember the next moment that he was gone, and being crushed by that realization all over again," she said in testimony to the California Public Utilities Commission. "PG&E took my family away from me, and there is nothing that anyone can ever do that will ever get them back."
Contact Joshua Melvin at 650-348-4335. Follow him at Twitter.com/melvinreport.