What Are the Most Common Defenses Utility Companies Use?

What Are the Most Common Defenses Utility Companies Use?

When wildfires devastate California communities, the aftermath often leaves victims seeking justice. Utility companies, like PG&E, are frequently at the center of wildfire lawsuits for their part in sparking these disasters, but they rarely accept responsibility without a fight. 

They hire legal teams with complex defenses to reduce accountability or avoid paying damages. Understanding the most common defenses utility companies use is essential for anyone seeking compensation for wildfire-related losses due to corporate negligence.

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How Utility Companies Defend Themselves Against Wildfire Lawsuits

1. Act of God Defense
   One of the most commonly used arguments is the claim that the wildfire was caused by an “Act of God.” This term refers to natural disasters or events that are beyond human control, such as lightning strikes, extreme weather, or earthquakes. 

Utility companies may argue that the fire would have occurred regardless of their actions because of these uncontrollable natural factors. For example, in cases of high winds bringing down power lines, companies may point to extreme weather reports to argue that no preventative measure they could have taken would have stopped the wildfire. 

While this defense can sometimes apply, it’s often up to legal teams to show that the company failed to uphold safety standards, even in light of these natural risks.

2. Comparative Negligence
   Utility providers often attempt to shift some of the blame to other parties, including property owners, government agencies, or other corporations. This is known as comparative negligence. 

For example, if they can prove the homeowner failed to clear flammable vegetation near a power line, they may argue that the victim shares responsibility for the fire's spread.

They may also blame public agencies for poor forest management or suggest that other individuals or companies contributed to the disaster. This defense reduces the amount of compensation they are expected to provide.

However, proving this blame-shifting tactic requires strong evidence and extensive investigation.

3. Compliance With Regulations
   Another common defense is that the utility company complied with all relevant safety standards, inspections, and regulatory requirements. They may argue that state oversight bodies, such as the California Public Utilities Commission (CPUC), reviewed their practices and equipment and found no significant violations.

The argument here is that they adhered to the law as it stood at the time and should not be held responsible for any wildfires that occurred. Legal teams often counter this defense by demonstrating that compliance with regulations doesn’t necessarily mean that everything was done to prevent the fire. 

Regulations set minimum standards, but companies may still be negligent if they fail to go beyond these requirements to protect the public.

4. Inverse Condemnation Challenge
   California recognizes a legal principle called inverse condemnation. Under this doctrine, utility companies can be held strictly liable for damages if their equipment is determined to have caused a wildfire, even if they weren’t negligent. 

While this law benefits victims by streamlining their ability to recover, utility companies often challenge its application.

They argue that inverse condemnation forces them to bear an unfair financial burden and could lead to higher consumer costs. Utility companies frequently push to reform or repeal this law and may engage in lengthy appeals to delay or reduce their liability exposure under its provisions.

5. Preemption by State or Federal Laws
   Sometimes, utility companies argue that state or federal laws preempt or override local wildfire claims. This means they may assert that specific regulatory decisions or policies prevent victims from holding them responsible in court.

For instance, they might claim that disputes about power line maintenance fall under federal jurisdiction due to energy and infrastructure regulations, effectively removing the case from California courts. This tactic is often used to complicate proceedings and drag out the litigation process while they attempt to defer blame.

6. Settlement Offers With Strings Attached
   While not a legal defense in the classic sense, utility companies frequently use settlement offers to limit their financial liability. They may establish compensation funds or portals for affected individuals to submit claims directly. These offers often come with strings attached, such as waivers preventing victims from pursuing additional lawsuits.

Those who accept these settlements may inadvertently give up the chance to receive the full compensation they deserve, as these portals are typically designed in the company’s favor. 

This method prioritizes the utility company’s financial interests over fairly resolving the claims of wildfire victims.

7. Equipment Exoneration
   Another defense is the claim that their equipment or infrastructure did not cause the fire. The utility company may contest the findings of fire investigators and argue that the official cause of the wildfire was wrong. 

They might present alternate scenarios or introduce their own investigators to cast doubt on whether their equipment failed or contributed to the fire. 

For example, they might argue that a fire started miles away from their infrastructure or that arson, not faulty power lines, was to blame. Challenging causation can delay proceedings and complicate efforts to hold the company accountable.

8. Lack of Direct Connection
   Utility companies sometimes contend that even if their actions or infrastructure started a fire, their connection to the losses sustained by specific plaintiffs is indirect. They may challenge whether their negligence directly caused a particular individual or business to suffer damages.

For instance, if a wildfire spread rapidly over vast distances, they might argue that intervening factors, such as unusual topography or unexpected weather shifts, were responsible for worsening the damages. 

This defense attempts to dilute their accountability and requires victims to demonstrate a direct relationship between the company’s failures and the harm they experienced.

California Laws Protecting Wildfire Victims

California maintains specific laws holding utility companies accountable when they contribute to wildfires. The state imposes strict liability in some cases under the inverse condemnation doctrine. 

Additionally, the CPUC enforces detailed maintenance and wildfire prevention standards, ensuring a mechanism exists to monitor utility company behavior.

However, legal protections often require a fight to enforce. Utility companies, to minimize their liability, are armed with vast resources, legal teams, and public relations strategies. 

Victims must have representational help to counter these defenses effectively.

How Utility Companies Use Bankruptcy as a Shield

Filing for bankruptcy has become a frequent defense for utility companies facing enormous financial liability for wildfires. This strategy allows them to pause lawsuits, restructure debts, and limit payouts to victims who have lost homes, businesses, and livelihoods.

Bankruptcy shields these companies by temporarily halting legal actions against them. Under bankruptcy laws, victims cannot pursue lawsuits or collect on judgments while the company reorganizes its finances. 

This creates delays for wildfire victims. It can take years to negotiate or distribute compensation, frustrating an already difficult situation.

Utility companies also use bankruptcy to limit how much they have to pay. 

Instead of facing individual lawsuits, utilities can propose setting up a fund to compensate wildfire victims collectively. While this might seem straightforward, these funds often fall short of covering the full damages. 

Companies negotiate the total amount with bankruptcy courts, seeking to minimize payments to protect their operations. California wildfires have led to some of the largest utility bankruptcies in history. PG&E, for example, declared bankruptcy in 2019 after being linked to multiple wildfires, including the devastating Camp Fire. During the bankruptcy process, PG&E created a compensation fund for victims. 

However, much of the settlement was paid out in company stock, not cash. This left many victims with less financial relief than they expected, while the company retained the ability to continue operating.

Bankruptcy courts sometimes side with utility companies when determining the outcome of cases. For instance, courts may approve lower payouts to fire victims by claiming the company’s survival is necessary to maintain essential services like electricity. 

Victims often feel caught between their own needs and broader arguments about public benefit. Filing for bankruptcy also allows utility companies to shield their shareholders and executives. 

While victims may never receive full compensation, companies use reorganization to protect profits and high-level employees. Critics argue this creates an unfair balance, where victims bear more of the financial burden than those responsible.

Wildfire victims should understand that bankruptcy filings don’t erase the company’s responsibility. Legal teams can still investigate and present evidence to prove negligence. 

However, the process becomes more complicated and requires a detailed approach to ensure victims receive fair compensation despite the corporate shield of bankruptcy. Utility bankruptcy is a legal strategy, but it raises concerns about accountability and fairness. 

This tactic often delays justice and limits payouts, leaving wildfire victims in financial limbo, wondering if they will ever receive the help they deserve.

Why Preparing for Utility Defenses Matters

Utility companies rarely settle lawsuits without mounting a strong defense. Their lawyers specialize in tactics intended to discredit claims, shift blame, or underpay victims. Knowing their strategies arms wildfire victims with the knowledge to approach their case from an informed position.

Holding the guilty party accountable is essential to securing fair compensation if you've lost your home, business, or property in a California wildfire linked to corporate negligence. 

The process may be complex, but it’s also necessary for rebuilding your life and preventing future disasters.

How to Seek Justice for Your Losses

For those ready to act, Bernheim Law Firm is here to help. With a strong history of litigating against utility companies and holding them accountable for wildfire destruction, our team includes a dedicated California wildfire attorney focused on securing the compensation victims deserve. 

Call us today at (800) WILDFIRE for a consultation. Together, we’ll face these challenges and work toward justice for the losses you’ve endured.