Freezing temperatures and power outages ended in Texas only a few days ago, but it is clear that the impact and damage to human life and property caused by the winter storm will be documented in a blizzard of civil litigation.
Nearly a dozen lawsuits have been filed over the past few days – including two wrongful death complaints in Houston and a class action by Houston area residents – against the Electric Reliability Council of Texas and a handful of large power suppliers. Lawyers involved in those cases predict hundreds more seeking billions of dollars in damages will be lodged over the next couple of months.
Doyle Austin
A class action complaint filed Tuesday accused Houston-based electric company Griddy of price gouging and deceptive trade practices when it charged some customers $9,000 for a week of power – 120 times its usual fee. The lawsuit seeks $1 billion in damages.
Nearly all the lawsuits name ERCOT as a defendant, but legal experts say the power grid operator is a quasi-government-operated non-profit corporation and has successfully argued in the past that it has sovereign immunity from these kind of civil lawsuits.
But lawyers who specialize in energy litigation say that there are a handful of companies that are clearly vulnerable to liability and damages, including retail power suppliers such as Griddy, electric power distributors and natural gas midstream companies.
Four Texas companies – CenterPoint Energy, American Electric Power, Entergy Texas and Griddy – have already been sued in separate lawsuits.
While the initial lawsuits – and there will be hundreds of them – against the energy companies filed by individuals will get the most public attention, legal experts say that the biggest cases – those pitting energy companies against each other over contract breaches – are several months away from being lodged.
Multiple energy industry lawyers say that power generating companies, such as Vistra Energy and NRG Energy, have clear legal and financial claims against the operators of the natural gas pipelines who failed to provide their gas-powered plants with the fuel they needed to produce electricity and to power transmission lines.
“Natural gas producers and pipeline operators are in the bullseye – all for different reasons,” a corporate energy lawyer told The Texas Lawbook under the condition of not being identified. “They had contracts to deliver gas and the plaintiffs’ lawyers are going to say those contracts were broken.”
To underscore the potential breadth of the legal disputes involved, six corporate law firms in Texas declined to be interviewed for this article because they were hired by energy companies during the past three days in anticipation of future litigation. Four prominent energy lawyers spoke to The Texas Lawbook under the condition that they not be identified because the power and gas companies they represent declined to give them permission to make public comments.
In the meantime, individual complaints are mounting.
“We are being inundated by owners of small businesses, executives at large businesses and homeowners who clearly have been damaged by some in the energy industry who ignored warnings and put profits ahead of safety,” said San Antonio trial lawyer Mikal Watts.
“Business claims fall into two categories – those businesses that have been physically damaged by pipe eruptions and those who are losing money because of business interruption,” Watts said.
The family of former Negro League baseball player Doyle Austin filed a wrongful death complaint in Harris County District Court Monday against ERCOT and CenterPoint after his family found the 94-year-old man who died last week of “hypothermia as a direct result of the power outage.”
The lawsuit accuses ERCOT and CenterPoint of gross negligence.
“ERCOT and CenterPoint could have weatherized and updated their generation, transmission and distribution facilities in order to prevent cold weather failures … but consciously chose not to do so,” the lawsuit by Austin’s family states.
A critical argument for plaintiffs, according to lawyers, is a 2011 report by the Federal Energy Regulatory Commission that slammed the Texas Public Utility Commission, which supervises ERCOT, for not “instituting cold weather preparedness” measures regarding the power grid.
“This is just outrageous,” said Houston lawyer Larry Taylor, who represents Austin’s daughter, Linda Brown, the lead plaintiff in the case. “These energy companies have had ample time to do something about this and they chose not to be accountable.”
Doyle Austin
Taylor, who is managing partner of the Cochran Law Firm in Texas and who grew up only a few blocks from Austin’s home, said his law firm has been contacted by dozens of families and businesses “who want to hold those energy companies responsible.”
On Saturday, Houston trial lawyer Tony Buzbee filed a $100 million suit arguing that the blackouts caused by Entergy and ERCOT caused the death of an 11-year-old boy from Conroe.
Buzbee’s lawsuit also cites the 2011 FERC report calling for the weatherization of transmission lines and generators and claims that the energy providers “put profits over the welfare of people.”
Watts said he expects hundreds of additional lawsuits will be filed by homeowners and businesses against their insurance carriers over their coverage – or lack thereof.
“The big question is whether the insurance companies will be forced to subsidize the negligence of the energy companies or will the insurance companies bring the energy companies into the litigation as defendants,” Watts said. “The Texas courts are going to be busy with this litigation for a long time.”