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| | Wildfires, Public Utilities, & Plaintiff's Bar |
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< | -- By RafaelMiranda - 22 Feb 2024 |
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> | -- By RafaelMiranda - 29 May 2024 |
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< | Lahaina is a small quiet coastal town off the northwest coast of Maui, Hawaii. In late August 2023, a large fire burned down the vast majority of the town. At a high level the causes are clear: climate change, dry-brush and deteriorating infrastructure. Within weeks of the devastation, tort lawyers descended rapidly on the large island (about twice the size of Manhattan), seeking clients to prepare lawsuits against Maui’s largest utility company—Hawaii Electric. As a law student taking Torts right now, I wish there was a substantive alternative to tort attorneys—working on contingency—litigating against utility companies defended by white shoe firms billing by the hour. |
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> | Wildfire Litigation: |
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< | Good & Bad (Plaintiffs Bar) |
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> | Modern Wildfire litigation, in the American context, is a form of personal injury litigation mostly composed of mass torts with smaller subsets of class action claims. Defendants are typically public utility companies whereas plaintiffs are split into two categories: subrogation plaintiffs (insurance companies) and individual plaintiffs (i.e.anything or anyone else). The role for public entities is outside the scope of this paper however it is enough to note that public entities are often defendants and/or cross-claimants. |
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< | Attorneys representing plaintiffs in wildfire proceedings often work on contingency, meaning they don’t get paid until the cases settle. The upside is a low barrier to entry for plaintiffs regardless of income, when you factor in something financially destabilizing, such as a wildfire burning down your house, the low barrier to entry is appealing. The process is often very formulaic and the vast majority of the claims go straight to settlement—which means less time in limbo—a great feature for families who may have just lost everything… |
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> | Liability for wildfires generally falls to the investor-owned public utility companies who fight tooth and nail to avoid strict liability . At the ground level wildfire litigation is simple, plaintiffs’ attorneys unite against a larger entity—and once proceedings are initiated and after the discovery process has matured—there is often a mediation protocol through which most claims settle.[1] |
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< | On the other hand, from experience—a lot of mass tort attorneys are cheap, by that I mean they cut corners anywhere they can. From grammar errors on a settlement agreement to creating complicated, convoluted settlement schemes that may not always pay their clients adequately. (see https://www.wsj.com/business/pg-e-fire-victims-will-soon-receive-final-compensation-they-wont-be-made-whole-925d4eff) |
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> | A less addressed concern is at what point could insurance companies and real estate development companies become much more liable for wildfire damage? In other words, what are the implications of expanding liability to the entities who create residential developments in high-risk fire zone. |
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> | A New Defendant & Defense Practices? |
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< | Defense Practice |
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> | Historically, wildfire risk maps created by public entities were used by insurance companies in conjunction with other metrics for purposes of calculating fire coverage in specific areas. As wildfires became much more common, the risk perimeters increased faster than new maps could be created, combined with external pressures such as rising housing costs, created a scenario where a large percentage of residences in California live in zones at risk for damage from wildfires.[2] |
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< | PG&E, SDG&E, SCE, PacifiCorp? , and Hawaii Electric have a few things in common: they’re public utility companies, they are facing or have already faced liability in the tens of millions for negligence related to wildfires, and they’re all represented by high powered law firms charging thousands of dollars. |
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> | Currently, most defendants in wildfire litigation are related to investor-owned utility companies but I believe as financial exposure stemming from wildfires increase–homeowners, businesses, tort attorneys should begin to ask themselves, why shouldn’t one target the entities which placed the homes in fire zones in the first place? |
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< | These companies spend hundreds of thousands in lawyers fees to do three things: 1. Settle without trial to the extent possible 2. Settle through a meditation protocol 3. Settle privately outside the steps 1 and 2 for the lowest amount possible. There isn’t a positive attribute to these types of arrangements, of course big law firms open new matters for mega companies across the US every day—however there is something uniquely distasteful about a private-public utility from doing the same, especially one whose product is keeping the lights on. |
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> | Avenues For Lawsuits
I believe when confronted with the question as to whether plaintiff resource capital should pivot to targeting insurance and residential development companies, the decision ought to be made in the affirmative. This isn’t to say, this type of defendant would be easy or necessarily guaranteed to earn an attorney more money—rather targeting insurance & development companies for their liability in developing residential complexes within high-risk fire zones has the potential to create a more substantive changes in both land-use policy and wildfire mitigation policies since the defendants are much broader in scope as opposed to investor-owned utility companies. |
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< | Discovery….when I worked for a firm in Southern California, the job evolved from assisting with administrative tasks related to the countless depositions our firm set up to managing the mediation protocol set up jointly between plaintiffs and defendants to “streamline” the settlement process. The process was incredibly bleak. We worked day and night with experts whose sole job was ensuring the costs plaintiffs reported could be cut down by at least 50%. There was a coldness to the process which everyone ignored as long as they clocked in, billed their hours, and went home. I was particularly upset at the extent to which some of these “experts'”.. waffled on minimal costs—those which plaintiffs reported byt couldn’t be supported (such as the loss of $1000 in the fire). By the time, our side and plaintiff’s side engaged in 2 back and forths, the billable hours spent on that back and forth cost more than the amount everyone was disagreeing on. |
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> | Hurdles
The most significant hurdle in winning against this new form of defendant is establishing a chain of decisions, routines, and practices that showcase the existence and extent of negligence on part of insurance companies when creating fire-risk assessment maps and furthermore illustrating how the ignorance and/or dismissal of these maps by residential development companies contributed significantly to the damage brought on by wildfires.
I believe that the history of tobacco litigation in the United States can be quite instructive here. Referencing the recitals of the Master Settlement Agreement (MSA), we see the “bite”(bite as in the background of the agreement which made it so large) of the settlement in my view stems from the 40+ lawsuits by State against the tobacco companies–put alternatively, the settlement came not from the influx of numerous tort claims (though private lawsuits played a role) but rather from public entities themselves. However, it is fair to say that there is nothing necessarily insightful about proclaiming that the avenue towards a more fundamental battle related to wildfire litigation should stem from government bodies in the same way that tobacco litigation went forward. In other words what am I saying here? Well, I believe that unique to wildfire litigation is the robust community and ecosystem of plaintiffs’ attorneys make adjudicating wildfire claims on a more fundamental level (that is against developers and insurance companies) much more collaborative. In essence, I believe that the “bite” from wildfire could stem from the collaborative opportunities available precisely because the environment unique to wildfire litigation.
--+Complications and way forward?
Attorneys representing plaintiffs in wildfire proceedings often work on contingency, meaning they are not paid until the cases settle. The upside is a low barrier to entry for plaintiffs regardless of income, when you factor in something financially destabilizing, such as a wildfire burning down your house, the low barrier to entry is appealing. I believe more research specifically on the potential for negligence claims against development companies and insurance companies is needed. Nonetheless, I do believe in 10 or 20 years we are likely to see a surge in claims regarding liability around the built environments made available to people. |
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< | Bad Incentives |
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> | Citations: |
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< | Defense firms love public utilities because they are large institutional clients that will almost always pay a premium and on time. Moreover, for some states (such as CA), they have a monopoly on services that ensures that even if they go bankrupt, they’ll always have consumers. When you factor in the sheer amount of billables that litigating a mass tort brings—with thousands of plaintiffs and a few hundred different plaintiffs attorneys—it’s frankly a money machine yet it does little to make people who lost everything whole. |
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> | 1. Inverse Condemnation FactSheet?
See https://www.counties.org/sites/main/files/file-attachments/inverse_condemnation_fact_sheet_league__csac.pdf |
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< | On the flip side, different plaintiffs firms are typically rife with infighting on various matters such as “who should be elected as leadership plaintiffs” or if both sides create a protocol on what documents should become part of the minimum readiness threshold for mediation. The intra-party dynamics of the wildfire plaintiff bar can at times, essentially only serve to delay settlement for their clients and typically eats up both time and money. |
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> | 2. See Statement from Ricardo Lara, Insurance Commissioner in CA re: Moratorium on Insurance Coverage Drops following multiple seasons of wildfires in California
URL: https://www.insurance.ca.gov/01-consumers/140-catastrophes/MandatoryOneYearMoratoriumNonRenewals.cfm. As mentioned in the essay, the moratorium on insurance coverage drops due to wildfire risk highlights the relationship between fire assessment maps and underwriting for homes in fire-zone areas. |
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> | Other Resources Referenced: |
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The best route to improvement, it seems to me, begins by getting the next draft into relationship with the literature. Has no one ever written about complex civil litigation before? Was there nothing to learn about the subject that interests you resulting from empirical analysis, legal history, game theory, the cases themselves? Are your own personal experience and (uncited) press stories about one fire the best possible sources?
The next draft improves by being a result of your learning, rather than recollecting. Get into one aspect of the literature about complex tort fee litigation. Read what there is to read. Frame a question and answer it. Help the reader to understand why the question you chose was important, and how she could take your question further on her own. Yours is an excellent topic. An essay worthy of it, and of you, will result.
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> | 1. MASS TORT CLASS ACTIONS – PAST, PRESENT, AND FUTURE in NYU Law Review- Lahav, Alexandra D
1. Titles - H.R.7462 - 118th Congress (2023-2024): Wildfire Insurance Coverage Study Act of 2023-Rep. Waters Maxine [D-CA-43
1. Understanding Mass Personal Injury Litigation | RAND URL: https://www.rand.org/pubs/research_briefs/RB9021.html
1. Examining the existing definitions of wildland-urban interface for California-Kumar, Mukesh and Others |
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