Summer 2023

Beyond Inverse Condemnation in Wildfire Litigation: An Oregon Jury Finds Utility Liable For Negligence, Trespass And Nuisance

Marisa Miller, Sheppard Mullin

John Yacovelle, Sheppard Mullin

Kazim Naqvi, Sheppard Mullin

On June 10, 2023, a jury in Portland, Oregon found PacifiCorp and Pacific Power (collectively, “PacifiCorp”) liable for negligence, trespass, and nuisance based on a series of four wildfires that occurred during Labor Day weekend in 2020. PacifiCorp prevailed against the plaintiffs on the claim of inverse condemnation. With respect to the tort-based claims, the jury awarded approximately $72 million in compensatory damages to 17 plaintiffs. The jury later found PacifiCorp liable for $18 million in punitive damages, or one quarter of the compensatory damages that the jury awarded to the 17 plaintiffs. The jury’s liability findings apply to a broader class of owners, whose damages will need to be individually proven in a yet-to-be defined second phase of proceedings. Post-verdict motion practice and appeals may affect the jury’s findings.

The underlying cases are consolidated under the lead case, Jeanyne James, et al. v. PacifiCorp, et al., in the Circuit Court of the State of Oregon for the County of Multnomah, Case No. 20-CV-33885. The lawsuits allege that the National Weather Service issued weather warnings in Oregon for September 7, 2020, indicating hot, dry winds from the east would top 75 miles per hour, resulting in extreme fire conditions. The lawsuits further allege that despite this fire risk, PacifiCorp failed to shut off power to customers during a windstorm, and its energized powerlines subsequently fell, igniting surrounding vegetation in communities across Oregon. The plaintiffs claim that the downed power lines resulted in fires that killed nine people, burned more than 1,875 square miles, and damaged approximately 5,000 homes and other structures. Plaintiffs advanced causes of action for negligence, trespass, nuisance, and inverse condemnation, and sought $125,000,000 in damages. The 17 named plaintiffs included 15 individuals, a family trust, and Northwest River Guides, a rafting company outfitter.

PacifiCorp defended the claims, in part, by disputing causation, pointing to the weather, including lightning and a historic wind event, as the fires’ cause, rather than PacifiCorp’s power lines. PacifiCorp also argued that the plaintiffs could not establish “but for” causation, meaning that the fires would still have occurred despite PacifiCorp’s alleged conduct related to its power lines. PacifiCorp further contended that the plaintiffs could not establish that PacifiCorp’s actions caused the fires on a class-wide basis, resulting in damage to the properties of each and every class member. It is notable that no official cause of the fires has been determined.

The jury trial began on April 25, 2023 and lasted seven weeks. In the verdict, the jury awarded $67.5 million in noneconomic damages against PacifiCorp, including between $12,000 and $5 million for each of the 17 plaintiffs. In a 23-question verdict, the jury found that PacifiCorp’s negligence resulted in private and public nuisance and constituted trespass. The jury, however, found that PacifiCorp was not liable for inverse condemnation, or the intentional taking of property for public use.

On June 14, 2023, the jury also ordered PacifiCorp to pay $18 million in punitive damages to the 17 plaintiffs.[1] The jury determined the amount of punitive damages for any future trial proceedings should be one-quarter of whatever is eventually awarded for property damage and non-economic damages (e.g., pain and suffering).

Following the verdict, PacifiCorp issued a statement recognizing the losses that Oregonians suffered and citing lightning as the cause of the fires.  PacifiCorp further stated that it intends to pursue appeals.

It is particularly notable that the jury did not find PacifiCorp liable for inverse condemnation, despite its other findings. In Oregon, the elements of an inverse condemnation claim are: “(1) a taking of private property (2) by an agency or subdivision of the state having the power of eminent domain, and (3) the property must be property that is subject to being taken for a public use.”[2] A claim of inverse condemnation requires “a showing that the governmental acts alleged to constitute a taking of private property were done with the intent to take the property for a public use.”[3] Thus, in the instant case, while the jury found PacifiCorp liable for reckless and willful conduct in its failure to de-energize its power lines, it did not find that PacifiCorp intentionally took private property for public use.

This intent standard for inverse condemnation claims in Oregon differs from those in other states. In California, for example, there is no intent element, and inverse condemnation claims are strict liability claims. To succeed on an inverse condemnation theory in California, a plaintiff must prove that: (1) a public improvement, as deliberately designed and constructed, (2) of a public entity, (3) proximately caused damage to a private property, and (4) that damage was in furtherance of a “public use.”[4] In both California and Oregon, a plaintiff who prevails on an inverse condemnation claim is entitled to recover reasonable costs and attorneys’ fees.[5]

The lack of any intent element in California for inverse condemnation claims has led to a rise in wildfire litigation against utilities and other entities alleged to have been involved in the cause of wildfires in California. However, as shown in the PacifiCorp case, even without the inclusion of strict liability claims, such wildfire cases can lead to large jury verdicts based in large part on noneconomic damages. If inverse condemnation applies, a mandatory award of reasonable attorneys’ fees and costs will accompany a damages award. Defendants faced with such lawsuits should take note of PacifiCorp and carefully assess the risk of such cases in light of available claims and defenses in their respective jurisdictions.

[1] In Oregon, punitive damages cannot be awarded “unless it is proven by clear and convincing evidence that the party against whom punitive damages are sought has acted with malice or has shown a reckless and outrageous indifference to a highly unreasonable risk of harm and has acted with a conscious indifference to the health, safety and welfare of others.” ORS 31.730(1).

[2] City of Ashland v. Hoffarth, 84 Or. App. 265, 270, rev. den., 303 Or. 483 (1987).

[3] Vokoun v. City of Lake Oswego, 335 Or. 19, 27 (2002).

[4] Cal. Const., art. I, § 19; San Diego Gas Electric Co. v. Superior Court, 13 Cal. 4th 893, 939-40 (1996); Customer Co. v. City of Sacramento, 10 Cal. 4th 368, 376-77 (1995); City of Los Angeles v. Superior Court, 194 Cal. App. 4th 210, 221 (2011).

[5] Cal. Civ. Proc. Code § 1036; Or. Rev. Stat. Ann. § 20.085.

Reprinted Courtesy of Sheppard Mullin’s Construction & Infrastructure Law Blog.