Pacific Gas & Electric Co. v. Superior Court

Filed 7/26/18 (unmodified opn. attached)
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
THIRD APPELLATE DISTRICT
(Sacramento)
----
PACIFIC GAS AND ELECTRIC COMPANY et al., C085308
Petitioners, (Super. Ct. No. JCCP4853)
v. ORDER DENYING
PETITION FOR
THE SUPERIOR COURT OF SACRAMENTO REHEARING AND
COUNTY, MODIFYING OPINION
Respondent; [NO CHANGE IN
JUDGMENT]
RICHARD ABI-HABIB et al.,
Real Parties in Interest.
THE COURT:
Real parties in interest have filed a petition for rehearing with this court. It is
ordered that the published opinion filed herein on July 2, 2018, be modified as follows:
1. At page 5 of the slip opinion, in the first full paragraph beginning with “At the
hearing on the motion for summary adjudication,” add the word “clearly” so
the first sentence reads as follows:
1
At the hearing on the motion for summary adjudication, plaintiffs argued
clearly for the first time that punitive damages are appropriate because (1) PG&E
has a nondelegable duty to operate its power lines safely, (2) PG&E sought to
delegate responsibility for this duty to independent contractors, and (3) PG&E
failed to ensure that contractors hired employees who were qualified and properly
trained, such that (4) PG&E’s conduct demonstrates conscious disregard of the
safety of others, whether or not PG&E was aware of its contractors’ alleged
deficiencies.
There is no change in the judgment. Real parties in interest’s petition for
rehearing is denied.
BY THE COURT:
/S/
MAURO, Acting P. J.
/S/
MURRAY, J.
/S/
RENNER, J.
2
Filed 7/2/18 (unmodified version)
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
THIRD APPELLATE DISTRICT
(Sacramento)
----
PACIFIC GAS AND ELECTRIC COMPANY et al., C085308
Petitioners, (Super. Ct. No. JCCP4853)
v.
THE SUPERIOR COURT OF SACRAMENTO
COUNTY,
Respondent;
RICHARD ABI-HABIB et al.,
Real Parties in Interest.
ORIGINAL PROCEEDING in mandate. Petition Granted. Allen H. Sumner,
Judge.
Quinn, Emanuel, Urquhart & Sullivan, Kathleen M. Sullivan, Robert Feldman and
Daniel H. Bromberg for Petitioners.
No appearance for Respondent.
Dreyer, Babich, Buccola, Wood, Campora, Steven M. Campora, Robert A.
Buccola, Catia G. Saravia; Corey, Luzaich, de Ghetaldi, Nastari & Riddle, Dario de
1
Ghetaldi, Amanda L. Riddle; Cotchett, Pitre & McCarthy and Frank M. Pitre for Real
Parties in Interest.
This coordinated proceeding arises out of the Butte Fire, a devastating wildfire
that swept through Calaveras and Amador counties in September 2015. The fire started
when a tree came into contact with an overhead power line owned and operated by
petitioners Pacific Gas and Electric Company and PG&E Corporation (together, PG&E
or the company). Real parties in interest (plaintiffs) brought suit against PG&E, seeking
punitive damages under Public Utilities Code section 2106 and Civil Code section 3294.1
PG&E sought summary adjudication of plaintiffs’ request for punitive damages under
section 3294 only. The trial court denied the motion.
PG&E seeks writ relief from the trial court’s order. We conclude there are no
triable issues of fact which, if resolved in plaintiffs’ favor, could subject PG&E to
punitive damages under section 3294.2 Accordingly, we grant the petition.
I. BACKGROUND
A. The Butte Fire
The Butte Fire started on September 9, 2015, near Butte Mountain Road in
Jackson, California.3 The fire spread rapidly through drought-stricken Amador and
Calaveras counties. By the time the blaze was contained some three weeks later, the fire
had consumed more than 70,868 acres, damaging hundreds of structures and claiming
two lives. It is undisputed that the fire started when a gray pine (the subject tree) came
into contact with one of PG&E’s power lines.
1 Undesignated statutory references are to the Civil Code.
2We express no opinion as to PG&E’s potential liability for punitive damages under
Public Utilities Code section 2106.
3 The Butte Fire was named for its point of origin near Butte Mountain Road.
2
B. The Litigation
More than 2,050 plaintiffs brought suit against PG&E and others. Plaintiffs’
complaints were consolidated in a Judicial Council Coordinated Proceeding in
Sacramento Superior Court. A master complaint was filed on behalf of plaintiffs (many
of whom have been named as real parties in interest) who suffered personal injuries and
losses to real and personal property as a result of the fire. The master complaint names
PG&E, ACRT, Inc. (ACRT) and Trees, Inc. as defendants. According to the master
complaint, ACRT and Trees, Inc. (together, contractors) provided vegetation
management services to PG&E as independent contractors.
The master complaint alleges that PG&E and the contractors failed to properly
maintain the power line and adjacent vegetation. According to the master complaint, the
events leading to the Butte Fire were set into motion when two trees were removed from
a stand near the power line, leaving the subject tree exposed and unsupported. The
master complaint alleges that the removal of the two trees left the subject tree open and
leaning to the south, towards the path of the sun and the nearby power line. The subject
tree is alleged to have been approximately 44 feet tall and seven inches in diameter.
Under the circumstances, the master complaint avers, it was foreseeable that the subject
tree would fail and come into contact with the power line, producing sparks that could—
and tragically, did—ignite a wildfire.
The master complaint asserts causes of action against PG&E for negligence,
wrongful death and survival, inverse condemnation, public nuisance, private nuisance,
premises liability, trespass, violation of Public Utilities Code section 2106 and violation
of Health and Safety Code section 13007. The master complaint seeks punitive damages
from PG&E under Public Utilities Code section 2106 and section 3294.
C. The Motion for Summary Adjudication
PG&E moved for summary adjudication of the request for punitive damages under
section 3924, arguing that plaintiffs could not raise a triable issue of material fact to
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support the request under any theory. In support of the motion, PG&E presented
evidence that contractors’ employees visited the area near the subject tree several times
over the course of the year preceding the fire, but did not identify the subject tree as a
danger or report any compliance issue to PG&E. PG&E also presented evidence that the
company has expended substantial resources to establish vegetation management
programs intended to prevent or minimize the risk of wildfire. According to PG&E, the
existence of such programs affirmatively disproves any inference that PG&E acted with
conscious disregard for the safety of others, thereby negating a necessary element of
plaintiffs’ claim for punitive damages.
Plaintiffs opposed the motion, arguing that contractors’ employees are unqualified
and improperly trained, and PG&E’s vegetation management programs are superficial
and ineffective. According to plaintiffs, these programs are little more than window
dressing, designed to create the appearance of an effective risk management program and
attention to public safety. In support of their opposition, plaintiffs submitted evidence
that PG&E’s risk and compliance committee merely assumed that the company’s risk
mitigation measures were functioning as intended, but failed to take steps to ensure that
this was the case. Plaintiffs also submitted evidence that PG&E failed to ensure that
contractors’ employees were qualified and properly trained to identify vulnerable trees,
such as the subject tree. According to plaintiffs, the evidence established that “the Butte
Fire was the result of PG&E’s years of continued, conscious disregard for ensuring the
proper functioning of risk management controls that [PG&E] knew were essential to
safeguard the public and their property from the risk of wildfire.”
In anticipation of the hearing, the trial court issued a lengthy tentative ruling
granting the motion for summary adjudication. The tentative ruling found that, “in most
instances, plaintiffs fail to contend much less offer evidence supporting, any connection
between the alleged failings in PG&E’s [vegetation management] programs and the Butte
Fire.” The tentative ruling further found that, “much of the evidence plaintiffs cite as
4
failings in PG&E’s management of its power lines does not support a finding that PG&E
acted with ‘malice’—that it was aware of the dangerous consequences of its conduct and
deliberately failed to avoid those consequences.” Accordingly, the trial court tentatively
found that plaintiffs’ evidence was insufficient as a matter of law to raise a triable issue
of fact as to their entitlement to punitive damages.
At the hearing on the motion for summary adjudication, plaintiffs argued for the
first time that punitive damages are appropriate because (1) PG&E has a nondelegable
duty to operate its power lines safely, (2) PG&E sought to delegate responsibility for this
duty to independent contractors, and (3) PG&E failed to ensure that contractors hired
employees who were qualified and properly trained, such that (4) PG&E’s conduct
demonstrates conscious disregard of the safety of others, whether or not PG&E was
aware of its contractors’ alleged deficiencies. Relying on Romo v. Ford Motor Co.
(2002) 99 Cal. App. 4th 1115 (Romo I), cert. granted and judgment vacated by Ford Motor
Co. v. Romo (2003) 538 U.S. 1028, plaintiffs’ counsel argued that California law does not
permit PG&E to “shield itself” from punitive damages liability by delegating
responsibility for safeguarding the public against the risk of wildfire to independent
contractors. (Romo I, supra, at p. 1140.)
After the hearing, the trial court invited the parties to submit supplemental briefs
addressing plaintiffs’ newly articulated theory. Following further briefing, the trial court
changed its tentative ruling and denied the motion for summary adjudication. The trial
court explained, “PG&E was aware of the risk and the need for those inspecting or
removing trees to be qualified. Its contracts required ACRT and Trees[, Inc.] to use
qualified personnel. Plaintiffs offer evidence the inspectors were in fact not qualified,
and this resulted in their failure to identify the danger posed by the Subject Tree.
Plaintiffs, however, offer no evidence PG&E was on notice of this.” The trial court
asked, “Does the fact PG&E deferred to its contractors to assure their employees were
qualified amount to clear and convincing proof (1) PG&E was aware of the probable
5
dangerous consequences of its conduct, and (2) deliberately failed to avoid those
consequences?” The trial court concluded, “The court is not prepared to hold no
reasonable jury could so find.” Accordingly, the trial court denied PG&E’s motion for
summary adjudication.
D. The Petition for Writ of Mandate
PG&E filed a petition for writ of mandate, prohibition, or other relief, challenging
the trial court’s denial of summary adjudication as to the request for punitive damages.
We reviewed PG&E’s petition and supporting papers and issued an order to show cause.4
II. DISCUSSION
PG&E contends the trial court erred in denying the motion for summary
adjudication of plaintiffs’ request for punitive damages under section 3294. We agree.
A. Standard of Review
“An order denying a motion for summary adjudication may be reviewed by way of
a petition for writ of mandate. [Citation.] Where the trial court’s denial of a motion for
summary judgment will result in trial on non-actionable claims, a writ of mandate will
issue. [Citations.] Likewise, a writ of mandate may issue to prevent trial of
nonactionable claims after the erroneous denial of a motion for summary adjudication.
[¶] Since a motion for summary judgment or summary adjudication ‘involves pure
matters of law,’ we review a ruling on the motion de novo to determine whether the
moving and opposing papers show a triable issue of material fact. [Citations.] Thus, the
appellate court need not defer to the trial court’s decision. ‘ “We are not bound by the
4 PG&E also filed a “motion for stay of trial, calendar preference, and expedited hearing
date” with this court. PG&E subsequently filed an unopposed motion to withdraw the
portion of the earlier motion seeking a stay of the trial. PG&E’s unopposed motion to
withdraw is granted. PG&E’s motion for calendar preference and expedited hearing are
granted.
6
trial court’s stated reasons, if any, supporting its ruling; we review the ruling, not its
rationale.” ’ [Citations.]” (Travelers Casualty & Surety Co. v. Superior Court (1998) 63
Cal. App. 4th 1440, 1450, fn. omitted.)
“A summary adjudication motion is subject to the same rules and procedures as a
summary judgment motion. Both are reviewed de novo.” (Lunardi v. Great-West Life
Assurance Co. (1995) 37 Cal. App. 4th 807, 819.) A party is entitled to summary
judgment or summary adjudication “if all the papers submitted show that there is no
triable issue as to any material fact and that the moving party is entitled to judgment as a
matter of law.” (Code Civ. Proc., § 437c, subd. (c).) “In deciding whether a material
factual issue exists for trial, we ‘consider all of the evidence set forth in the papers,
except the evidence to which objections have been made and sustained by the court, and
all inferences reasonably deducible from the evidence.’ [Citation.]” (Duarte v. Pacific
Specialty Insurance Company (2017) 13 Cal.App.5th 45, 52.) We view the evidence in
the light most favorable to the nonmoving party. (Ibid.)
A defendant “moving for summary judgment bears the burden of persuasion that
there is no triable issue of material fact and that [the defendant] is entitled to judgment as
a matter of law.” (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal. 4th 826, 850
(Aguilar).) A defendant’s initial burden in moving for summary judgment is to come
forward with evidence to make a prima facie showing that there is no triable issue of
material fact (ibid.), where the material facts are determined by the pleadings.
(Fisherman’s Wharf Bay Cruise Corp. v. Superior Court (2003) 114 Cal. App. 4th 309,
320.) If the defendant meets that burden of production, the burden shifts to the plaintiff
to make a showing that there is a triable issue of material fact. (Ibid.) “There is a triable
issue of material fact if, and only if, the evidence would allow a reasonable trier of fact to
find the underlying fact in favor of the party opposing the motion in accordance with the
applicable standard of proof.” (Aguilar, supra, at p. 850.)
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B. Standard of Proof
Punitive damages may be recovered under section 3294 “where it is proven by
clear and convincing evidence that the defendant has been guilty of oppression, fraud, or
malice.” (§ 3294, subd. (a), italics added.) In reviewing a summary judgment or
summary adjudication ruling on a claim for punitive damages, we view the evidence
presented through the prism of the substantive clear and convincing evidentiary burden.
(American Airlines, Inc. v. Sheppard, Mullin, Richter & Hampton (2002) 96 Cal. App. 4th
1017, 1048 (American Airlines); see also Basich v. Allstate Ins. Co. (2001) 87
Cal. App. 4th 1112, 1121 [“on a motion for summary adjudication with respect to a
punitive damages claim, the higher evidentiary standard applies. If the plaintiff is going
to prevail on a punitive damages claim, he or she can only do so by establishing malice,
oppression or fraud by clear and convincing evidence”]. )
Under the clear and convincing standard, the evidence must be “ ‘ “ ‘so clear as to
leave no substantial doubt’ ” ’ ” and “ ‘ “ ‘sufficiently strong to command the
unhesitating assent of every reasonable mind.’ ” ’ ” (Shade Foods, Inc. v. Innovative
Products Sales & Marketing, Inc. (2000) 78 Cal. App. 4th 847, 891.) Although the clear
and convincing evidentiary standard is a stringent one, “it does not impose on a plaintiff
the obligation to ‘prove’ a case for punitive damages at summary judgment [or summary
adjudication].” (American Airlines, supra, 96 Cal.App.4th at p. 1049; see also Johnson
& Johnson v. Superior Court (2011) 192 Cal. App. 4th 757, 761.) Even so, “where the
plaintiff’s ultimate burden of proof will be by clear and convincing evidence, the higher
standard of proof must be taken into account in ruling on a motion for summary judgment
or summary adjudication, since if a plaintiff is to prevail on a claim for punitive damages,
it will be necessary that the evidence presented meet the higher evidentiary standard.”
(American Airlines, supra, at p. 1049.) Likewise, in reviewing the trial court’s denial of
PG&E’s motion for summary adjudication, “we view the evidence with the higher burden
of proof in mind.” (Johnson & Johnson, supra, at p. 762.) Summary judgment or
8
summary adjudication “ ‘ “on the issue of punitive damages is proper” only “when no
reasonable jury could find the plaintiff’s evidence to be clear and convincing proof of
malice, fraud or oppression.” ’ ” (Ibid.)
C. Section 3294
As noted, section 3294 permits an award of punitive damages “where it is proven
by clear and convincing evidence that the defendant has been guilty of oppression, fraud,
or malice.” (§ 3294, subd. (a).) Plaintiffs contend PG&E acted with malice.
Malice is defined by section 3294, subdivision (c)(1) as “conduct which is
intended by the defendant to cause injury to the plaintiff or despicable conduct which is
carried on by the defendant with a willful and conscious disregard of the rights or safety
of others.” “Despicable conduct” is conduct that is “ ‘so vile, base, contemptible,
miserable, wretched or loathsome that it would be looked down upon and despised by
most ordinary decent people.’ ” (Mock v. Michigan Millers Mutual Ins. Co. (1992) 4
Cal. App. 4th 306, 330.) Such conduct has been described as having the character of
outrage frequently associated with crime. (Tomaselli v. Transamerica Ins. Co. (1994) 25
Cal. App. 4th 1269, 1287.) “Conscious disregard” means “ ‘that the defendant was aware
of the probable dangerous consequences of his conduct, and that he willfully and
deliberately failed to avoid those consequences.’ ” (Hoch v. Allied-Signal, Inc. (1994) 24
Cal. App. 4th 48, 61.) Put another way, the defendant must “have actual knowledge of the
risk of harm it is creating and, in the face of that knowledge, fail to take steps it knows
will reduce or eliminate the risk of harm.” (Ehrhardt v. Brunsick, Inc. (1986) 186
Cal. App. 3d 734, 742.)
Section 3294’s malice requirement has evolved over time. As another panel of
this court explained in Lackner v. North (2006) 135 Cal. App. 4th 1188, 1210-1211
(Lackner): “The definition of malice has not always included the requirement of willful
and despicable conduct. Prior to 1980, section 3294 did not define malice. It was
construed to mean malice in fact, which could be proven directly or by implication
9
[citations] and could be established by conduct that was done only with ‘a conscious
disregard of the safety of others.’ ”
Our Supreme Court addressed the then existing malice requirement in Taylor v.
Superior Court (1979) 24 Cal. 3d 890 (Taylor). In that case, the court affirmed that a
conscious disregard for the rights or safety of others may constitute malice within the
meaning of section 3294, but clarified that, “In order to justify an award of punitive
damages on this basis, the plaintiff must establish that the defendant was aware of the
probable dangerous consequences of his conduct, and that he willfully and deliberately
failed to avoid those consequences.” (Taylor, supra, at pp. 895-896.) The Taylor court
also acknowledged, with apparent approval, this court’s conclusion in G.D. Searle & Co.
v. Superior Court (1975) 49 Cal. App. 3d 22, 32 that mere reckless disregard or
misconduct cannot be enough to sustain an award of punitive damages because, “ ‘The
central spirit of the exemplary damage statute, the demand for evil motive, is violated by
an award founded upon recklessness alone.’ ” (Taylor, supra, at p. 895, quoting G.D.
Searle & Co. v. Superior Court, supra, at p. 32.)
The Legislature amended section 3294 in 1980. (Lackner, supra, 135 Cal.App.4th
at p. 1211; Stats. 1980, ch. 1242, § 1, pp. 4217-4218.) Among other things, the
Legislature added subdivision (b), which “limited the circumstances under which an
employer could be held liable for punitive damages ‘based upon acts of an employee.’ ”
(College Hospital Inc. v. Superior Court (1994) 8 Cal. 4th 704, 712-713 (College
Hospital), quoting § 3294, subd. (b); see also White v. Ultramar, Inc. (1999) 21 Cal. 4th
563, 572 [“The drafters’ goals [in amending section 3294 to add subdivision (b)] were to
avoid imposing punitive damages on employers who were merely negligent or reckless
and to distinguish ordinary respondeat superior liability from corporate liability for
punitive damages”]. ) The Legislature also defined the terms “oppression,” “fraud,” and
“malice,” adopting the definition of malice set forth in Taylor. (§ 3294, subd. (c);
Lackner, supra, at p. 1211.)
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The Legislature revisited section 3294 in 1987. (College Hospital, supra, 8
Cal.4th at p. 713; Stats. 1987, ch. 1498, §§ 1-7, pp. 5777-5782.) As relevant here, the
Legislature increased the plaintiffs’ burden of proving punitive damages to “clear and
convincing evidence.” (College Hospital, supra, at p. 713.) As previously discussed, the
statute now “ ‘requires a finding of high probability . . . “ ‘so clear as to leave no
substantial doubt,’ [and] ‘sufficiently strong to command the unhesitating assent of every
reasonable mind.’ ” ’ ” (Lackner, supra, 135 Cal.App.4th at p. 1211.) The Legislature
also refined the definition of “malice” by adding the terms “despicable” and “willful.”
(Stats. 1987, ch. 1498, § 5, p. 5780; Lackner, supra, at p. 1211 [“As amended, malice,
based upon a conscious disregard of the plaintiff’s rights, requires proof that the
defendant’s conduct is ‘despicable’ and ‘willful’ ”].)
Our Supreme Court considered the effect of the 1987 amendments in College
Hospital, noting: “By adding the word ‘willful’ to the ‘conscious-disregard’ prong of
malice, the Legislature has arguably conformed the literal words of the statute to existing
case law formulations. (See [Taylor], supra, 24 Cal. 3d 890, 895-896 [malice involves
awareness of dangerous consequences and a willful and deliberate failure to avoid
them].) However, the statute’s reference to ‘despicable’ conduct seems to represent a
new substantive limitation on punitive damage awards. Used in its ordinary sense, the
adjective ‘despicable’ is a powerful term that refers to circumstances that are ‘base,’
‘vile,’ or ‘contemptible.’ (4 Oxford English Dict. (2d ed. 1989) p. 529.) As amended to
include this word, the statute plainly indicates that absent an intent to injure the plaintiff,
‘malice’ requires more than a ‘willful and conscious’ disregard of the plaintiffs’ interests.
The additional component of ‘despicable conduct’ must be found.” (College Hospital,
supra, 8 Cal.4th at p. 725.)
“Because punitive damages are imposed ‘for the sake of example and by way of
punishing the defendant’ (§ 3294, subd. (a)), they are typically awarded for intentional
torts such as assault and battery, false imprisonment, intentional infliction of emotional
11
distress, defamation, nuisance intentionally maintained, fraud, trespass, conversion, civil
rights violations, insurer’s breach of covenant of good faith, wrongful termination and job
discrimination, and products liability cases.” (Lackner, supra, 135 Cal.App.4th at p.
1212.) By contrast, “cases involving unintentional torts are far fewer and the courts have
had to consider various factors in determining whether the defendant’s conduct was
despicable. Thus, punitive damage awards have been reversed where the defendant’s
conduct was merely in bad faith and overzealous [citations], or the defendant took action
to protect or minimize the injury to the plaintiff.” (Ibid.) We have found no case
considering an award of punitive damages in circumstances similar to those presented
here.
D. Analysis
In reviewing a summary adjudication, “we apply the same three-step analysis
required of the trial court: We first identify the issues framed by the pleadings, since it is
these allegations to which the motion must respond. Secondly, we determine whether the
moving party has established facts which negate the opponents’ claim and justify a
judgment in the movant’s favor. Finally, if the summary judgment motion prima facie
justifies a judgment, we determine whether the opposition demonstrates the existence of a
triable, material factual issue.” (Torres v. Reardon (1992) 3 Cal. App. 4th 831, 836.)
1. The Master Complaint
The master complaint alleges that PG&E contracted with contractors to provide
vegetation management services in Amador and Calaveras counties. According to the
master complaint, “Those services include, but are not limited to, assessing, monitoring,
inspecting, trimming, cutting, maintaining, managing, and/or replacing vegetation
surrounding and in close proximity to the lines and facilities operated by PG&E to
[e]nsure that those power lines operate safely and consistently with State and Federal
regulations.” The master complaint describes ACRT as “an Ohio corporation doing
business all over the United States as a utility vegetation management consulting and
12
training company.” The master complaint describes Trees, Inc. as “a Delaware
corporation doing business all over the United States as a utility vegetation management
company.”
The master complaint alleges that “defendants” inspected a stand of gray pines
near the power line in October 2014. Two trees from the exterior of the stand were
targeted for removal. The two trees were removed in January 2015, leaving the subject
tree exposed and leaning towards the power line. According to the master complaint, “It
is commonly known that when a stand is altered and interior trees previously captured are
then exposed to open spaces, they are prone to failure. It is also well understood that
trees have a physical orientation toward the path of the sun and this can have significant
consequences for maintaining safety.” Within less than a year, the subject tree made
contact with the power line and ignited the Butte Fire.
The master complaint alleges that “defendants” failed “to properly train and to
supervise employees and agents responsible for maintenance and inspection of the
distribution lines and/or vegetation areas near those lines.” The master complaint further
alleges that PG&E has a pattern and practice of disregarding public safety, as
demonstrated by other fires attributed to PG&E’s power lines, various regulatory actions
against PG&E by the California Public Utilities Commission, and the rupture of a PG&E
gas line in San Bruno in September 2010. According to the master complaint, “The
deaths, injuries, and damage occasioned by the Butte Fire are the result of the ongoing
policies, practices, and/or financial decisions made by [PG&E] [which has] acted with a
conscious disregard for public safety, and created a corporate culture that places a priority
for profits above safety in their business operations.”
The master complaint seeks punitive damages from PG&E on the grounds that it
“acted willfully, wantonly, with . . . malice, and/or with a knowing, conscious disregard
for the rights and or safety of others.” The master complaint avers that punitive damages
13
are appropriate “for the sake of example” and seeks an award “sufficient to punish . . .
PG&E . . . for [its] despicable conduct.”
2. PG&E’s Showing
In seeking summary adjudication, PG&E submitted evidence that the company
devotes significant resources to vegetation management programs, which are intended to
minimize the risk of wildfire. According to PG&E, the company spends more than $190
million per year on vegetation management operations, which target a roughly 70,000
square mile service area, with nearly 135,000 miles of overhead power lines.
PG&E’s vegetation management operations encompass a variety of programs and
initiatives, including routine annual patrols, quality assurance and quality control
programs, a vegetation management improvement initiative, a vegetation management
catastrophic event memorandum account (CEMA) program, and a public safety and
reliability program. We discuss the routine annual patrol program momentarily, in the
context of PG&E’s fire mitigation activities in the area near the subject tree. (See Section
II.D.2.b, infra.) We briefly describe PG&E’s other vegetation management programs
below.
a. Vegetation Management Programs
PG&E established the quality assurance department in 2000. The quality
assurance department conducts twice yearly audits to determine whether the company’s
vegetation management programs are functioning as intended. As relevant here, the
audits sample areas along the power lines to ensure that trees comply with applicable
regulations and PG&E’s internal standards.
PG&E established a separate quality control program in 2002. The quality control
program evaluates PG&E’s contractors for compliance with applicable regulations and
PG&E’s internal standards.
PG&E implemented the vegetation management improvement initiative in 2006.
The vegetation management improvement initiative offers independent contractors
14
incentives to work more efficiently, for example, by encouraging them to remove trees
that would otherwise require continuous annual maintenance.
PG&E established the public safety and reliability program as part of the
vegetation management improvement initiative. The public safety and reliability
program was created to identify trees with the highest risk of failure in order to prevent
them from coming into contact with power lines. As part of the public safety and
reliability program, the company maintains a tree failure database which identifies trees
with the highest potential to fail and locations where such failure-prone trees are most
likely to come into contact with power lines.
PG&E established the CEMA program in 2014 in response to a state of emergency
due to severe drought conditions. The CEMA program encompasses several initiatives
intended to mitigate the risk of fire from drought affected trees. As part of the CEMA
program, the company conducts aerial patrols in selected areas during fire season,
searching for trees showing signs of defect, decay or decline. If such trees are found,
ground patrols are dispatched to the area to inspect the trees and mitigate any issues.
As part of the CEMA program, the company uses another independent contractor,
Quantum Spatial, to collect data using Light Detection and Ranging (LiDAR) and
hyperspectral imaging. Quantum Spatial analyzes and interprets the data, which can be
used to assess the relative health of a tree. If Quantum Spatial determines that a tree tall
enough to strike the power lines is dead, dying or non-compliant, this information is
passed along to an independent inspection company, such as ACRT, which is then
required to visit the tree and mitigate the issue.
b. Routine Annual Patrols: ACRT and Trees, Inc.
PG&E estimates that approximately 55 million trees have the potential to come
into contact with its power lines. As noted, PG&E addresses this risk, in part, by
15
conducting routine annual patrols of all such trees.5 PG&E contracts with inspection
companies to assess potentially non-compliant trees and prescribe any work that needs to
be done, such as trimming or removal. PG&E contracts with tree-trimming companies to
perform the work prescribed by the inspectors. As noted, ACRT was PG&E’s inspection
company in Amador County, where the fire originated, and Trees, Inc. was PG&E’s tree-
trimming company.
PG&E’s contract with ACRT provides that, “Contractor shall diligently perform
all [w]ork in a proper and professional manner in accordance with the requirements of all
applicable federal, state, and/or local laws, rules, ordinances, and regulations, in
accordance with the approved principles of modern Arboriculture, and to the satisfaction
of PG&E.” PG&E’s contract with Trees, Inc. similarly provides that, “Contractor shall
diligently perform all [w]ork in a proper, appropriate and professional manner, in
accordance with [a]ll [a]pplicable [r]equirements [defined to include applicable law,
industry standards, and PG&E’s vegetation management standards] and approved
principles of modern Arboriculture.”
PG&E’s contracts also require that contractors hire personnel with specified
qualifications, depending on their duties. For example, a consulting utility forester with
ACRT is required to have “at least two years’ experience in line clearance tree pruning
work or equivalent experience as determined by the PG&E Representative.” An
associate’s degree in forestry, arboriculture, or a related field is desired, but not required.
PG&E’s contracts also require that ACRT and Trees, Inc. train their employees on
vegetation management programs and practices.
5 As we shall discuss, the routine patrol cycle was extended to fifteen months in 2013.
(See Section II.D.3.a, infra.)
16
c. Vegetation Management Activities in the Area Near the Subject Tree
Joy Mellera was a consulting utility forester with ACRT. Mellera conducted a
routine patrol of the area near the subject tree on October 17, 2014. She recommended
that two trees be removed, recording her recommendations on an electronic work request.
Trees, Inc. removed the two trees on January 6, 2015, recording the activity on another
electronic form. Both forms were transmitted to PG&E. Neither form indicates that the
subject tree presented any danger or had the potential to grow or fall into the power line
before the next annual patrol.6
Contractors performed an additional inspection and other work in the area near the
subject tree in April and July 2015. Contractors generated electronic forms documenting
these efforts, some of which were considered by the trial court in ruling on the motion.
None of the forms contain any indication that the subject tree presented a danger.
PG&E also presented evidence that Quantum Spatial collected hyperspectral
imaging and LiDAR data in the area near the gray pine during the summer of 2015.
Although the data was not delivered to PG&E until after the Butte Fire, the subject tree
was not identified by Quantum Spatial as dead, dying, or non-compliant.
3. Plaintiffs’ Showing
In opposing summary adjudication, plaintiffs submitted evidence that PG&E
views wildfire as the single greatest threat to the company’s business, and the gray pine
as the species of tree posing the greatest risk of wildfire. According to plaintiffs, PG&E
demonstrated conscious disregard for the rights and safety of others by failing to ensure
6 Plaintiffs’ objected to the trial court’s consideration of the forms, arguing they were
inadmissible hearsay. The trial court overruled some of plaintiffs’ objections and
sustained others. The trial court considered the form deemed inadmissible as hearsay for
the limited purpose of determining whether the form gave notice to PG&E that the
subject tree posed a danger. As we shall discuss, plaintiffs fail to show that the trial court
abused its discretion in ruling on any evidentiary objection. (See Section II.D.5, infra.)
17
the proper functioning of risk management controls and fire mitigation measures
designed to protect the public from the known risk of wildfire.
Plaintiffs submitted evidence that PG&E’s risk management controls were flawed
in numerous respects. Among other things, plaintiffs argued that PG&E’s risk and
compliance committee was ineffective, its quality assurance and quality control audits
unreliable, and its instructions to contractors inconsistent with the goal of mitigating fire
risk. Plaintiffs also submitted evidence that PG&E made no changes to its risk
management controls and fire mitigation measures as a result of the Butte Fire. Of
greatest significance, plaintiffs submitted evidence that PG&E failed to ensure that
ACRT’s employees were properly trained. We discuss the evidence that PG&E failed to
train or ensure the training of ACRT’s employees momentarily (see Section II.D.3.b,
infra), pausing first to consider plaintiffs’ other challenges to PG&E’s risk management
controls and fire mitigation measures.
a. Flawed Risk Management Controls and Fire Mitigation Measures
In opposing summary adjudication, plaintiffs submitted evidence that PG&E’s risk
and compliance committee did not directly verify that company’s fire mitigation
measures were functioning as intended. Instead, the committee expected that each of the
departments responsible for implementing the measures would evaluate their efficacy and
report to the committee. According to plaintiffs, the committee’s bureaucratic structure,
which delegates responsibility for managing wildfire risk to individual departments
within PG&E, demonstrates conscious disregard for the rights and safety of others,
stemming “from the highest levels of PG&E.”
Plaintiffs also submitted evidence that PG&E extended the routine patrol cycle to
fifteen months in 2013, resulting in more non-compliant and hazardous trees in the area
near the subject tree. However, it was undisputed that PG&E returned to an annual patrol
cycle in 2014, and inspected the gray pine in October 2014.
18
Plaintiffs also submitted evidence that PG&E instructed ACRT to hire people
lacking the minimum education and experience specified in its contract.7 However, the
undisputed evidence established that these people were seasonal CEMA inspectors,
whose primary responsibility was to search for drought-affected trees. There was no
showing that the subject tree was a drought-affected tree.
Plaintiffs also submitted expert opinion evidence that the audits performed by the
quality assurance department and quality control program were scientifically unreliable.
According to plaintiffs’ expert, PG&E “confused the sampling units between their design
and implementation,” “used an incorrect formula for sample size planning,” and “failed
to calculate the actual margin of error of their estimates after samples were selected, only
reporting estimated percentages.” Additionally, the expert opined, “PG&E failed to
exploit key information about the location of risk from year to year in improving their
sampling methods” and “ignored estimation of the total number of trees in a district that
posed fire risks due to (potential) facility contact thereby creating a false sense of whether
the level of tree/line potential contact was acceptable.” There was, however, no showing
that PG&E’s audit methodology contributed to the Butte Fire.
Plaintiffs also argued that PG&E’s vegetation management improvement initiative
created perverse incentives for contractors to refrain from identifying or working on
potentially hazardous trees. 8 However, there was no showing that the vegetation
management initiative contributed to the Butte Fire.
7 In response, PG&E explained that PG&E and ACRT decided to recruit CEMA
inspectors from a larger applicant pool when ACRT was unable to find inspectors
meeting the criteria specified in the contract.
8 PG&E responds that the initiative sought to reduce the routine patrol workload by
working selected trees more efficiently, not by refraining from doing the work at all. For
example, a tree that might otherwise require annual or bi-annual pruning could be
19
Plaintiffs also argued that PG&E’s use of LiDAR to search for dead, dying or non-
compliant trees was ineffective because the company did not receive Quantum Spatial’s
analysis of the data until after the fire season was over. However, there was no showing
that the subject tree was identified as dead, dying or non-compliant.
b. Failure to Train or Ensure Training
In opposing the motion for summary adjudication, plaintiffs argued that PG&E
understood that properly trained personnel were essential to controlling the risk of
wildfire, but demonstrated conscious disregard for the rights and safety of others by
failing to confirm that contractors “trained their own employees on the risks presented by
the gray pine, specifically in the foothills.” (Emphasis omitted.) Specifically, plaintiffs
submitted evidence that PG&E does not train contractors on managing vegetation near
power lines, and does not ensure that contractors provide appropriate training to their
employees.
Plaintiffs also submitted evidence that Mellera was not trained to recognize the
danger posed by the subject tree. Of greatest significance, Mellera was not trained to
identify trees that might become unstable due to the ratio between height and diameter,
and was not trained to evaluate whether removing trees from the edge of a stand would be
likely to affect interior, adjacent trees. According to plaintiffs’ expert witness, certified
arborist Kenneth Menzer, “A properly trained and educated inspector, properly
evaluating the subject tree, should have marked the tree for removal.”
removed, thereby eliminating the need to work the same tree year after year.
Alternatively, contractors could clear a larger distance between trees and power lines,
thereby reducing the need for future work.
20
4. PG&E Met Its Initial Burden
Based on our independent review, we conclude that PG&E has carried its initial
burden of showing the nonexistence of any triable issue of material fact on the issue of
malice. PG&E presented evidence that (1) the company devotes substantial resources to
vegetation management programs intended to mitigate the risk of wildfire, (2) the
company hired contractors to conduct routine patrols in the area near the subject tree, and
(3) contractors’ employees visited the area near the subject tree on several occasions, and
did not report anything that should have put PG&E on notice that the subject tree posed a
danger. PG&E’s evidence negates any inference that the company acted despicably, and
with willful and conscious disregard for the rights and safety of others, and was sufficient
to shift the burden to plaintiffs to present admissible evidence creating a triable issue of
material fact as to malice.
Plaintiffs challenge PG&E’s prima facie showing, arguing the trial court should
have sustained their numerous objections to PG&E’s supporting evidence. Specifically,
plaintiffs argue the trial court should have sustained their objections to the declarations of
April Kennedy, Stephen Tankersley, Eric Woodyard and Niel Fischer.9 According to
plaintiffs, the foregoing declarations “were largely incompetent, lacking foundation
because they contained statements not within the personal knowledge of the declarants,
but rather derived from documents that they may or may not have reviewed and which
they could not authenticate, or because PG&E’s counsel provided them with the
9 Kennedy is a supervising program manager in the company’s vegetation management
program, overseeing the Central Valley region, which includes Jackson, California. Prior
to his retirement in 2015, Tankersley was the senior manager of vegetation management
operations. Woodyard is a program manager for vegetation management, overseeing
technology and innovation. Fischer is a supervising program manager for vegetation
management. In 2015, Fischer was a principal program manager for vegetation
management, overseeing the CEMA program.
21
information.” As support for their argument, the substance of which is set forth in full
above, plaintiffs direct our attention to their complete set of evidentiary objections, which
spans more than 50 pages, and the transcript of the hearing on the motion for summary
adjudication. Plaintiffs do not discuss their specific objections to specific declarations,
and do not elaborate on their reasons for believing the trial court erred.
“ ‘Pursuant to the weight of authority, appellate courts review a trial court’s
rulings on evidentiary objections in summary judgment proceedings for abuse of
discretion. [Citations.]’ [Citation.] The party challenging a trial court’s evidentiary
ruling has the ‘burden to establish such an abuse, which we will find only if the trial
court’s order exceeds the bounds of reason. [Citation.] “Where a trial court has
discretionary power to decide an issue, an appellate court is not authorized to substitute
its judgment of the correct result for the decision of the trial court.” [Citation.] We will
only interfere with the lower court’s judgment if appellant can show that under the
evidence offered, “ ‘no judge could reasonably have made the order that he did.’ ” ’
[Citation.]” (Duarte v. Pacific Specialty Insurance Company, supra, 13 Cal.App.5th at
p. 52, fn. omitted.)
Plaintiffs have failed to show any abuse of discretion. As PG&E observes, each of
the challenged declarations was made by a present or former PG&E manager with
personal knowledge of one or more aspects of the company’s vegetation management
programs. Each of the declarants averred under penalty of perjury that the facts stated in
their declarations were true and correct, based on their personal knowledge of PG&E’s
operations and their review of records used in the course of their employment. The trial
22
court was entitled to accept these assertions of personal knowledge.10 (Cf. People ex rel.
Owen v. Media One Direct, LLC (2013) 213 Cal. App. 4th 1480, 1484.)
Each of the declarants also averred that the documents attached to their respective
declarations were true and correct copies of records maintained by PG&E in the ordinary
course of its business. The trial court could reasonably conclude that the documents
attached to the challenged declarations were sufficiently authenticated and admissible as
business records. (See People ex rel. Owen v. Media One Direct, LLC, supra, 213
Cal.App.4th at p. 1484 [authentication adequate where declarant averred that she
reviewed files relating to the matter and attached documents were true and correct copies
of pertinent correspondence]; and see Jazayeri v. Mao (2009) 174 Cal. App. 4th 301, 322
[“The witness need not have been present at every transaction to establish the business
records exception; he or she need only be familiar with the procedures followed”].)
Plaintiffs have failed to show that the trial court abused its discretion in overruling
and/or impliedly overruling their objections to PG&E’s supporting evidence. We
therefore reject plaintiffs’ challenge to the trial court’s evidentiary rulings, and conclude
that PG&E carried its initial burden of showing the nonexistence of any triable issue of
material fact on the issue of malice. (Aguilar, supra, 25 Cal.4th at p. 850.)
10 Plaintiffs argue without citation to the record that “PG&E’s witnesses admitted in
deposition that they did not have personal knowledge of many of the ‘facts’ they stated in
their declarations.” “We have no duty to search the record for evidence and may
disregard any factual contention not supported by proper citations to the record.” (Air
Couriers Internat. v. Employment Development Dept. (2007) 150 Cal. App. 4th 923, 928;
see Cal. Rules of Court, rule 8.204(a)(1)(C); Sharabianlou v. Karp (2010) 181
Cal. App. 4th 1133, 1149 [“we will not scour the record on our own in search of
supporting evidence”].)
23
5. Plaintiffs Failed to Raise a Triable Issue of Material Fact
Having concluded that PG&E carried its initial burden, we next consider whether
plaintiffs presented sufficient evidence to raise a triable issue of fact as to malice. Based
on our independent review, we conclude they did not.
“ ‘ “Punitive damages are appropriate if the defendant’s acts are reprehensible,
fraudulent or in blatant violation of law or policy. The mere carelessness or ignorance of
the defendant does not justify the imposition of punitive damages. . . . Punitive damages
are proper only when the tortious conduct rises to levels of extreme indifference to the
plaintiff’s rights, a level which decent citizens should not have to tolerate.” ’ ”
(American Airlines, supra, 96 Cal.App.4th at p. 1051; see also Tomaselli v. Transamerica
Ins. Co. (1994) 25 Cal. App. 4th 1269, 1288, fn. 14 [“ ‘[P]unitive damages should not be
allowable upon evidence that is merely consistent with the hypothesis of malice, fraud,
gross negligence or oppressiveness. Rather some evidence should be required that is
inconsistent with the hypothesis that the tortious conduct was the result of a mistake of
law or fact, honest error of judgment, over-zealousness, mere negligence or other such
noniniquitous human failing’ ”].)
Even viewing the evidence as favorably to plaintiffs as we can, plaintiffs fail to
demonstrate the existence of a triable issue of material fact with respect to malice.
Plaintiffs argue that PG&E evinces a cavalier attitude towards public safety, which
justifies an award of punitive damages. They point to numerous potential shortcomings
in PG&E’s risk management controls and fire mitigation efforts, raising thought-
provoking questions about the efficacy of the risk and compliance committee’s reporting
structure, the wisdom of the decision to extend the routine patrol cycle in 2013 and
loosen hiring standards for seasonal CEMA inspectors, the soundness of the company’s
audit methodologies and incentives for reducing patrol workload, and the timeliness of
Quantum Spatial’s delivery of LiDAR data. But these criticisms, whatever their merits,
do not amount to clear and convincing proof that PG&E acted with malice. At most,
24
plaintiffs’ evidence shows “ ‘ “mere carelessness or ignorance,” ’ ” which is insufficient
to establish malice. (American Airlines, supra, 96 Cal.App.4th at p. 1051.) We therefore
conclude, as the trial court did, that no reasonable jury could find plaintiffs’ challenges to
PG&E’s risk management controls and fire mitigation efforts to be clear and convincing
proof of malice.
Arguing by analogy to Romo I, plaintiffs maintain that the problems with PG&E’s
risk management controls and fire mitigation measures were symptoms of a larger
problem: a corporate culture that prioritizes profits over safety. According to plaintiffs,
the company as a whole acted despicably, and with willful and conscious disregard for
the rights and safety of others, by deciding, as a matter of corporate policy, to abdicate
responsibility for ensuring the efficacy of PG&E’s risk management controls and fire
mitigation measures to others. The trial court found plaintiffs’ analogy to Romo I to be
persuasive. We do not.
Romo I arose out of a car accident that resulted in the deaths of three members of
the Romo family. (Romo I, supra, 99 Cal.App.4th at p. 1124.) During the accident, the
family car, a 1978 Ford Bronco, rolled over several times. As the car rolled, a steel
portion of the roof collapsed, killing the car’s driver. A fiberglass portion of the roof
broke loose, striking and killing two passengers. Three remaining passengers survived
with injuries. (Ibid.)
The surviving family members sued Ford on products liability and negligence
theories, seeking compensatory and punitive damages. (Romo I, supra, 99 Cal.App.4th at
p. 1124.) Following a four-month trial, the jury returned a verdict of approximately $6
million in compensatory damages and $290 million in punitive damages.11 (Id. at p.
11 The Court of Appeal for the Fifth Appellate District subsequently struck down the
punitive damages verdict on remand after the U.S. Supreme Court’s opinion in State
Farm Mut. Ins. v. Campbell (2003) 538 U.S. 408 in Romo v. Ford Motor Co. (2003) 113
25
1125.) The trial court then reduced the compensatory damages to approximately $5
million based on comparative fault and granted a motion for a new trial on the issue of
punitive damages. (Ibid.) Both sides appealed. (Ibid.)
On appeal, Ford argued that the plaintiffs failed to present sufficient evidence of
malicious or despicable conduct. (Romo I, supra, 99 Cal.App.4th at p. 1139.)
Specifically, Ford argued that the plaintiffs failed to present clear and convincing proof
that “ ‘at least one particular Ford employee, officer, director or managing agent had the
requisite malicious state of mind in 1978.’ ” (Ibid.) The court rejected Ford’s argument,
characterizing it as a “fundamental misconception of the required proof.” (Ibid.) The
court then offered an overview of the “managing agent” requirement found in section
3294, subdivision (b), noting: “In most of the cases in which the ‘managing agent’ issue
has resulted in reversal of a punitive damage award, initial liability arises from a
particular tortious act of an employee of the corporation. [Citations.] Defendant has
cited no case, and our own research has failed to disclose any case, in which a series of
corporate actions and decisions, such as the design, production, and marketing of an
automobile, has been found inadequate to support an award of punitive damages on the
basis that the multitude of employees involved in various aspects of the process were not
high enough in the corporate chain of command. When the entire organization is
involved in the acts that constitute malice, there is no danger a blameless corporation will
be punished for bad acts over which it had no control, the primary goal of the ‘managing
agent’ requirement. [Citation.]” (Romo I, supra, at p. 1140.)
The court continued, “There is no requirement that the evidence establish that a
particular committee or officer of the corporation acted on a particular date with ‘malice.’
A corporate defendant cannot shield itself from liability through layers of management
Cal.App.4th 738, 763 (Romo II). The Romo II court issued remittitur reducing the award
to $23.7 million, or five times the total compensatory damages figure. (Ibid.)
26
committees and the sheer size of the management structure. It is enough if the evidence
permits a clear and convincing inference that within the corporate hierarchy authorized
persons acted despicably in ‘willful and conscious disregard of the rights or safety of
others.’ [Citation.]” (Romo I, supra, 99 Cal.App.4th at pp. 1140-1141.)
The court also rejected Ford’s argument that the plaintiffs failed to “ ‘present
evidence of any “malicious or despicable” conduct with respect to the design and
production of the 1978 Bronco,’ ” stating: “This ignores the fact that the design and
production of the vehicle was the despicable conduct: we think it obvious that putting on
the market a motor vehicle with a known propensity to roll over and, while giving the
vehicle the appearance of sturdiness, consciously deciding not to provide adequate crush
protection to properly belted passengers (in the words of a corporate memo introduced in
evidence, ‘penalizing’ passengers for wearing a seatbelt) constitutes despicable conduct.
Such conduct could kill people. The question is not whether the conduct, if it occurred,
was despicable, the question is whether there is sufficient evidence from which a rational
trier of fact could find that the knowing conduct occurred.” (Romo I, supra, 99
Cal.App.4th at p. 1141.)
Applying these standards, the court found that the plaintiffs presented substantial
evidence permitting an inference that Ford willfully and consciously ignored the dangers
inherent in its Bronco design, resulting in the deaths of three persons. (Romo I, supra, 99
Cal.App.4th at p. 1141.) Among other things, the court found that the plaintiffs presented
clear and convincing evidence that Ford’s policymakers ignored the company’s own
internal safety standards, created a false appearance of the presence of an integral roll-
bar, and declined to test the strength of the roof before placing the car in production. (Id.
at p. 1148.) On this record, the court found that there was substantial evidence permitting
a reasonable trier of fact to conclude that Ford’s decision to put an unreinforced
fiberglass roof on the 1978 Bronco was despicable. (Id. at pp. 1144-1145.)
27
Relying on Romo I, plaintiffs argue that they need not show that any particular
managing agent acted with malice, because the company as a whole consciously and
willfully adopted risk management controls and fire mitigation measures which, like the
design and production of the 1978 Bronco, were themselves despicable. We have no
quarrel with the notion that an inference of corporate malice can be based on the
existence of a company policy that willfully, consciously, and despicably disregards the
rights and safety of others. (Romo I, supra, 99 Cal.App.4th at pp. 1144 [substantial
evidence supported an inference of corporate malice where policymakers decided to
disregard safety standards to bring product to market]; see also Neal v. Farmers Ins.
Exchange (1978) 21 Cal. 3d 910, 923 [substantial evidence supported an inference of
corporate malice where insurer’s denial of coverage was “part of a conscious course of
conduct, firmly grounded in established company policy”].) We likewise accept the
premise that corporate malice can be shown, in the case of a large corporation, “by
piecing together knowledge and acts of the corporation’s multitude of managing agents.”
(Romo I, supra, at p. 1141.) But plaintiffs would have us go one step further and hold
that a company policy that fails to protect against a known risk of harm necessarily raises
an inference of corporate malice, since the existence of the policy establishes the
company’s state of mind with respect to the risk. Put another way, plaintiffs would have
us conclude that an unsuccessful risk management policy necessarily reflects a conscious
and willful company decision to ignore or disregard the risk. This we decline to do.
That PG&E adopted policies that failed to prevent the Butte Fire does not, without
more, raise a triable issue as to malice. Although plaintiffs need not produce a “smoking
gun,” they must nevertheless present evidence that “permits a clear and convincing
inference that within the corporate hierarchy authorized persons acted despicably in
‘willful and conscious disregard of the rights or safety of others.’ ” (Romo I, supra, 99
Cal.App.4th at p. 1141.) Plaintiffs have failed to present any such evidence.
28
Romo I illustrates the point. There, the plaintiffs offered evidence that Ford’s
decision-makers disregarded the determination of the company’s own safety engineers
that unreinforced fiberglass should never be used for components comprising the
passenger compartment, and no utility vehicle should be produced without a roll bar.
(Romo I, supra, 99 Cal.App.4th at pp. 1144-1145.) The plaintiffs also offered evidence
to support an inference that Ford’s decision-makers disregarded safety policies dictating
that crush resistance should have been higher, and declined to conduct pre-production
testing. (Ibid.) Here, by contrast, there was no evidence, let alone clear and convincing
evidence, that the company consciously compromised standards that might have
prevented harm to plaintiffs or willfully declined to conduct risk assessments that could
have revealed weaknesses in the company’s approach to a known risk. (Romo I, supra, at
pp. 1144-1145 [describing evidence that policymakers disregarded recommendations of
safety engineers and opted to forego routine testing in order to bring the product to
market more quickly].) Although plaintiffs dismiss the company’s risk management
controls and fire mitigation efforts as a mere “façade,” they fail to produce clear and
convincing evidence from which a reasonable jury could find that PG&E consciously
disregarded the risk of wildfire or willfully ignored fire safety standards.
Nor could a reasonable jury find that plaintiffs presented clear and convincing
evidence that PG&E acted maliciously in hiring contractors or delegating training
responsibility to them. Plaintiffs do not discuss this theory in their return. Nevertheless,
no evidence suggests that ACRT or Trees, Inc. were manifestly unfit or unqualified. Nor
does the evidence suggest that PG&E engaged in low bidding or other pricing behavior
that might cast doubt on the bona fides of the company’s contractual arrangements with
contractors. Nor does the evidence suggest that PG&E was aware of facts that should
have put the company on notice that contractors were not fulfilling their contractual
obligation to properly train employees. Although there is potentially evidence from
which a reasonable jury could infer that PG&E should have devised better methods for
29
ensuring that contractors’ employees were properly trained, such evidence, at most,
supports a theory that PG&E acted carelessly or negligently, not despicably, with
conscious and willful disregard for the rights and safety of others. (Taylor, supra, 24
Cal.3d at p. 894-895 [“ ‘Something more than the mere commission of a tort is always
required for punitive damages. There must be circumstances of aggravation or outrage,
such as spite or ‘malice,’ or a fraudulent or evil motive on the part of the defendant, or
such a conscious and deliberate disregard of the interests of others that his conduct may
be called willful or wanton’ ”].)
We acknowledge that there may be circumstances in which a company policy of
outsourcing essential corporate duties to independent contractors could contribute to an
inference of malice. But we cannot agree with the trial court that PG&E’s unstated
policy or practice of deferring to contractors to properly train their own employees could
lead a reasonable jury to find by clear and convincing evidence that PG&E acted with
malice. As we have suggested, nothing in the record supports an inference that PG&E
willfully or consciously disregarded the need for contractors to use properly trained
employees. To the contrary, PG&E required that contractors hire qualified employees,
train their employees on vegetation management programs and practices, and “diligently
perform all [w]ork in a proper and professional manner . . . in accordance with the
approved principles of modern Arboriculture.” No reasonable jury could find by clear
and convincing evidence that PG&E acted with malice in failing to ensure that
contractors complied with these requirements. Contrary to plaintiffs’ previously
articulated theory, on this record there was nothing despicable in PG&E’s assumption
that contractors were training their employees as required.
PG&E’s nondelegable duty to maintain the power lines in a safe condition does
not convince us otherwise. “The nondelegable duties doctrine prevents a party that owes
a duty to others from evading responsibility by claiming to have delegated that duty to an
independent contractor hired to do the necessary work. The doctrine applies when the
30
duty preexists and does not arise from the contract with the independent contractor.”
(SeaBright Ins. Co. v. US Airways, Inc. (2011) 52 Cal4th 590, 600-601.) As relevant
here, the nondelegable duty rule means that PG&E may be vicariously liable for
compensatory damages arising from contractors’ negligence, irrespective of fault.
(Srithong v. Total Investment Co. (1994) 23 Cal. App. 4th 721, 727 [“the nondelegable
duty rule is a form of vicarious liability because it is not based on the personal fault of the
landowner who hired the independent contractor. Rather, the party charged with a
nondelegable duty is ‘held liable for the negligence of his agent, whether his agent was
an employee or an independent contractor’ ”]; see also Snyder v. Southern California
Edison Co. (1955) 44 Cal. 2d 793, 798 and 801 [public utilities owe nondelegable duties
to the public, but their liability “ ‘extends only to negligence in the failing to take the
necessary precautions, failing to adopt a reasonably safe method, or in failing to produce
a result which it is the duty of the employer-contractee to have attained’ ”].) No authority
suggests that the existence of a nondelegable duty alters the analysis under section 3924,
and we decline to so hold.
Plaintiffs suggest other bases for affirming the trial court’s order, including
PG&E’s involvement in another wildfire in 1994 (the “Rough and Ready Fire”) and the
San Bruno pipeline explosion. As the trial court recognized, a jury may consider
PG&E’s entire course of conduct in assessing its culpability. (See generally Johnson v.
Ford Motor Co. (2005) 35 Cal. 4th 1191, 1206, fn. 6 [“By placing the defendant’s
conduct on one occasion into the context of a business practice or policy, an individual
plaintiff can demonstrate that the conduct toward him or her was more blameworthy and
warrants a stronger penalty to deter continued or repeated conduct of the same nature”].)
However, “[a] defendant’s dissimilar acts, independent from the acts upon which liability
was premised, may not serve as the basis for punitive damages. A defendant should be
punished for the conduct that harmed the plaintiff, not for being an unsavory individual
or business.” (State Farm Mut. Ins. v. Campbell, supra, 538 U.S. at p. 422; see also
31
Holdgrafer v. Unocal Corp. (2008) 160 Cal. App. 4th 907, 930 [“State Farm’s
proscription of dissimilar conduct to prove the amount of a punitive damages award also
applies to evidence offered to prove that the defendant is guilty of malice, fraud or
oppression and is therefore subject to such an award”].) The trial court properly
concluded that plaintiffs’ evidence concerning the Rough and Ready Fire and San Bruno
explosion was too dissimilar to raise a triable issue of material fact as to PG&E’s conduct
with respect to the Butte Fire. The trial court also properly concluded that the company’s
post-tort conduct failed to demonstrate that PG&E acted with malice.
“ ‘Where there is no evidence that gives rise to an inference of actual malice or
conduct sufficiently outrageous to be deemed equivalent to actual malice, the trial court
need not, and indeed should not, submit the issue of punitive damages to the jury.’ ”
(Kolstad v. American Dental Association (1999) 527 U.S. 526, 539.) Here, there is no
evidence that PG&E acted maliciously in setting policies designed to minimize the risk of
wildfire or engaging contractors to assist in the company’s fire mitigation efforts.
Accordingly, there are no triable issues as to whether PG&E is properly subject to
punitive damages under section 3294, and PG&E is entitled to summary adjudication on
that issue.
32
III. DISPOSITION
Let a peremptory writ of mandate issue directing the respondent court to vacate its
decision denying the motion for summary adjudication of petitioners Pacific Gas and
Electric Company and PG&E Corporation, and to enter a new order granting summary
adjudication in favor of those parties.
The parties shall bear their own costs in this writ proceeding. (Cal. Rules of
Court, rule 8.493(a)(1)(B).)
/S/
RENNER, J.
We concur:
/S/
MAURO, Acting P. J.
/S/
MURRAY, J.
33