(Bloomberg) — Berkshire Hathaway Inc.'s PacifiCorp is now facing a $30 billion demand from victims of the 2020 Labor Day wildfires in Oregon, an escalation of a legal attack on the largest grid operator in the western US.
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While the amount sought in an amended complaint filed Monday is about two and a half times what the utility is worth, it is also far greater than the payout PacifiCorp is expected to pay based on the to claims resolved to date.
Read more: Wildfires disrupt some of Wall Street's safest bets
The growing liabilities for PacifiCorp prompted Berkshire Chairman Warren Buffett to warn in his annual letter to investors that wildfires have made utilities in the western U.S. risky investments. Utilities in California, Colorado, Hawaii and Texas have also faced billions in fire liabilities.
A jury found PacifiCorp liable for its role in the fires in 2023, but victims must undergo separate trials to determine individual damages. The new filing in Portland court formally adds the names of 1,000 residents covered by a class action lawsuit over the destruction of about 2,500 properties in western Oregon.
Jurors have so far awarded 36 plaintiffs a total of about $220 million – an average of $6 million per person. That's far less than the $30 million per person requested by victims' advocates on Monday, which calls for up to $5 million in compensation for actual losses and as much as $25 million for psychological trauma.
Read more: PacifiCorp fire victim who jumped into river gets $9 million
PacifiCorp, which is appealing against last June's gross negligence ruling, previously criticized the amount of compensation claimed by the plaintiffs.
“The idea that any of the many plaintiffs with minimal economic damages and no physical injuries is still entitled to $25 million in non-economic damages is a delusion,” PacifiCorp attorneys wrote in a court filing in October.
Lawyers for the plaintiffs declined to comment on Monday's filing.
Berkshire said in a recent filing with the regulator that it faces fire claims in Oregon and California of about $8 billion. That includes demands from state and U.S. government agencies totaling more than $1 billion for various firefighting and cleanup costs.
Read more: Berkshire shows unusual risk appetite in wildfire lawsuit
The utility was accused at last year's trial of failing to heed weather warnings and shutting off electricity in its service areas in anticipation of a wind storm that toppled power lines.
What Bloomberg Intelligence Says
“We believe a settlement in the mid- to high-single-digit billions is the most likely outcome. Both parties have an incentive to reach an agreement. Filing a lawsuit with all class plaintiffs is risky for PacifiCorp because it has already lost its first three jury trials, with verdict amounts indicating potential damages in the low to mid-double-digit billions. Plaintiffs also have an incentive because PacifiCorp has viable arguments on appeal to eliminate non-economic damages.”
— Elliot Stein, senior process analyst
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PacifiCorp, which settled a number of claims over the 2020 fires, has said it is confident the 2023 liability verdict will be overturned on appeal. But the lawsuit has spooked investors, damaging the company's bonds and its credit rating.
The company replaced its CEO last summer and is working with Oregon regulators and lawmakers to explore options to minimize wildfire exposure, including recovering litigation losses from customers and limiting damages for non-economic claims.
–With help from Mark Chediak.
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