PG&E Bankruptcy Proceeds As Virus Delays Calif. Cases

By Dorothy Atkins
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Law360 (March 18, 2020, 7:41 PM EDT) -- A California bankruptcy judge has indicated that the novel coronavirus outbreak likely won't delay PG&E Corp.'s efforts to emerge from Chapter 11 to meet a deadline to access billions in state funds, while dozens of other high-profile cases in the San Francisco Bay Area were delayed or put on hold.

Earlier this week, U.S. Bankruptcy Judge Dennis Montali announced that all currently scheduled bankruptcy hearings, including the March 25 hearing in PG&E's bankruptcy, would proceed, but they will be held telephonically through April 30. He also said he would continue to issue rulings "as usual" and that he would work remotely as necessary.

The utility company is running up against a June 30 deadline to emerge from bankruptcy in order for PG&E to share in a $21 billion state-administered wildfire fund.

PG&E filed for Chapter 11 protection in January 2019, buckling under an estimated $30 billion in potential liabilities tied to its alleged role in causing wildfires that killed 130 people and destroyed billions of dollars in property in 2017 and 2018. In December 2019, it struck a $13.5 billion deal with the tort claimants committee representing wildfire victims.

PG&E said in a statement Wednesday that it doesn't expect the COVID-19 outbreak to disrupt its business operations or Chapter 11 proceedings. The utility added that it expects to have its reorganization plan confirmed by the June 30 deadline.

"We understand that the federal courts have been closed to the public," the statement said. "However, proceedings will continue to [be] held with participants dialing in over the phone."

While PG&E's bankruptcy is moving forward, judges presiding over other high-profile legal disputes across Northern California issued orders pushing back deadlines and delaying hearings and trials in response to the widespread court closures that followed multiple counties issuing "shelter in place" orders. The orders require non-essential businesses to close and order residents to stay home to curb the spread of COVID-19.

In Silicon Valley on Tuesday, Superior Court Judge Raymond Swope paused a discrimination case involving a proposed class of about 4,140 women who allege Oracle paid them on average $14,000 less annually than their male colleagues.

Judge Swope was expected to decide a pending class certification bid before a hearing on summary judgment motions that was scheduled for April 3. But on Tuesday, he delayed the hearing until May 21, citing potential staffing shortages and public safety concerns.

In San Francisco on Wednesday, U.S. District Judge Richard Seeborg vacated an April 6 jury trial over claims by American Eagle pilots that their union treated Trans World Airlines pilots preferentially after American Airlines' acquisition of TWA. The judge set the next status conference in the case for May 7.

The union's counsel, Jeffrey B. Demain of Altshuler Berzon LLP, told Law360 on Tuesday that he expected the trial to be continued in light of San Francisco County's shelter in place order. He added that he didn't know if anyone would be able to predict when it would take place.

"Everyone is scrambling," he said.

On Wednesday, U.S. District Judge William Alsup also granted a request by defense counsel to temporarily pause a jury trial until April 13 over criminal hacking charges against Russian national Yevgeniy Nikulin.

The trial began March 10, but the defense team argued that the prosecution's witness, Secret Service Special Agent Richard LaTulip, had potentially been exposed to the new coronavirus and could put the public at risk.

Meanwhile, the Ninth Circuit said Tuesday that oral arguments currently scheduled for March, April and May are being evaluated "one at a time" and the Ninth Circuit will issue orders in those cases giving direction to the parties on whether the cases will be submitted without argument.

Over the next three months, Ninth Circuit panels were expected to hear oral arguments from Seattle to Pasadena in dozens of cases, including a securities class action against Tesla Inc. and the Trump administration's appeal of an order blocking regulations that would scrap time limits on detaining immigrant minors.

The appeals court was also expected to hear multiple appeals in lawsuits filed by the families of terrorist attack victims against Google LLC, Facebook Inc. and Twitter Inc. The suits accuse the tech companies of being liable for allowing terrorists to use social networks as a tool for propaganda and recruiting.

The wave of closures came after nearly all courthouses in the Golden State resisted closing up shop last week, despite the president's national emergency declaration and despite warnings by state public health officials that the new coronavirus was actively spreading through multiple densely populated California counties.

As of Tuesday afternoon, there were a total of 598 positive COVID-19 cases in the state and 13 deaths, according to the latest statistics published by the California Department of Public Health.

--Editing by Emily Kokoll.

For a reprint of this article, please contact reprints@law360.com.

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Case Information

Case Title

PG&E Corporation


Case Number

3:19-bk-30088

Court

California Northern

Nature of Suit

Date Filed

January 29, 2019

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