PORTLAND, Ore. — In a Multnomah County court last week, jurors delivered a major verdict against northwest utility company Pacific Power for its role in starting massive wildfires over the 2020 Labor Day weekend.
The jury awarded $73 million in damages to the 17 named plaintiffs in the class action lawsuit, covering both the value of property lost and the plaintiffs' pain and suffering.
On top of that, the jury awarded another $18 million in punitive damages to the named plaintiffs — likely just the beginning of those punitive awards. The jury determined that punitive damages should also be awarded to the wider class, meaning other people affected by the fires who are not named in the lawsuit. That could include thousands of other wildfire survivors, potentially pushing total damages into the billions of dollars.
But those wildfire survivors will likely be able to keep very little, if any, of the punitive damages awarded. Instead, most will go to the state of Oregon, the federal government and the plaintiffs' attorneys.
Punitive damages fall under Oregon state law ORS 31.735, "Distribution of punitive damages." Under that law, 30% is payable to the person who wins the case, and they pay attorneys out of that share. The lion's share, 60%, is payable to the Oregon Attorney General's office for the "Criminal Injuries Compensation Account." The final 10% goes to help fund the state court system.
After that, the federal Internal Revenue Service gets involved. If, hypothetically speaking, a wildfire survivor gets to keep 30% of their share and needed to pay half of that to their attorneys, they end up with just 15% of "their" punitive damages. Under federal tax code, those funds then become part of the survivor's gross income for the year, becoming taxable by the IRS. After taxes, the survivor may not be keeping a dime.
One veteran lawyer in Portland told The Story that they often don't mention punitive damages during smaller civil lawsuits. They don't want to give the jury the impression that they will be doling out money to the plaintiffs via punitive damages, when most of those funds up going to the government.
Meanwhile, there's the potential that Pacific Power's considerable liability will end up getting pushed upon customers.
PacifiCorp, the utility's parent company, submitted a filing last week asking regulators to defer the costs associated with the lawsuit until a later date. They claim it's a preventative measure for "financial stability." But if approved, the request would potentially give the company the option to pass off the cost of those damages to ratepayers.
The company said that the initial $90 million it owes after the verdict is the result of "unique and unforeseen circumstances outside of the Company's reasonable control."
The Oregon Public Utility Commission will have to decide if PacifiCorp's request is appropriate — and if so, how much money could conceivably be passed on to customers.
A spokesperson for the commission said next steps for the filing have not been determined, and it could be months or years to make a decision. The full scope of Pacific Power's financial liability in the case is still unknown while the jury determines how much the company owes in damages for the entire class.
After the initial verdict came down, Pacific Power released a statement vowing to file an appeal — a prospect that could likewise extend the timeline.
"We are proud to have told the story of our incredible employees, who meet the call to service every day in support of our communities and customers and did so in the face of the preexisting, lightning caused Beachie Creek fire that roared into the Santiam Canyon causing widespread damage that weekend," Pacific Power said in part. "The company plans to pursue appeals, and we are confident we will prevail."