Large power generators in Texas scored a huge, multibillion-dollar defense victory Thursday when a Houston appeals court ruled that wrongful death, personal injury and property damage cases against the generators have “no basis in law or fact.”
A three-justice panel of the First Court of Appeals in Houston ruled that “Texas does not currently recognize a legal duty owed by wholesale power generators to retail customers to provide continuous electricity to the electric grid, and ultimately to the retail customers, under the allegations pleaded here by the retail customers.”
The decision, according to legal experts, will lead to the dismissal of power generators such as Luminant, NRG, Exelon and Sempra Energy Resources from hundreds of lawsuits filed by those impacted by Winter Storm Uri in February 2021, which blasted unprecedented sub-freezing temperatures and precipitation across Texas for more than four days and led to scores of deaths due to power outages.
Thursday’s ruling is a huge blow to thousands of victims and their families who filed lawsuits claiming negligence and gross negligence by hundreds of energy companies for failing to winterize and maintain their equipment, failing to supply electricity to the power grid by not securing adequate fuel supply and failing to properly train workers to ensure against generator outages that occurred during Winter Storm Uri.
The wrongful death, personal injury and property damage lawsuits were consolidated for pretrial purposes into a multidistrict litigation before Harris County District Judge Sylvia Matthews, who dismissed plaintiffs’ allegations of tortious interference with a contract and civil conspiracy but allowed the negligence claims to move forward to trial.
Judge Matthews then selected five bellwether cases that were a representative cross section of the hundreds of cases filed.
Lawyers representing the power generators filed a mandamus petition with the Houston Court of Appeals arguing that Judge Matthews abused her discretion in not dismissing the negligence charges.
In a 33-page opinion, the First Court of Appeals agreed, stating that wholesale power generators “are now statutorily precluded by the legislature from having any direct relationship with retail customers of electricity” and “can have no legal relationship with retail customers as a matter of law.”
“We are not aware of any controlling Texas authority under this current statutory scheme, and the retail customers have cited none, that holds that a wholesale power generator owes a legal duty to continuously supply electricity to the grid and thus ultimately to retail customers — who must contract with retail electric providers to purchase their electricity,” Chief Justice Terry Adams wrote for the unanimous panel.
Chief Justice Adams said the Texas legislature “could have codified the retail customers’ asserted duty of continuous electricity on the part of wholesale power generators into law.”
“But it chose not to do so. And we may not impose our own judicial meaning on these statutes by adding words and creating relationships and duties that are not contained in the plain language of the statutes,” Chief Justice Adams wrote. “Based on the current state of our jurisprudence in Texas and the plain language of the controlling deregulatory statutes, we conclude that Texas does not currently recognize a legal duty owed by wholesale power generators to retail customers to provide continuous electricity to the electric grid, and ultimately to the retail customers, under the allegations pleaded here by the retail customers.”
“If we created a new duty for wholesale power generators to supply continuous electricity to the grid, and ultimately to the retail customers, we would upend the carefully-crafted framework that the legislature has implemented,” Chief Justice Adams wrote. “And legislative silence on this new asserted duty does not give us the power to legislate from the bench.”
Jackson Walker partner Tré Fischer, who serves as liaison counsel for the corporate defendants in the Winter Storm Uri MDL, said the Houston appeals court’s ruling “is an important decision confirming the roles and responsibilities of not only generators, but all participants in the ERCOT market.”
“While directly applicable to the five ‘bellwether cases, it effectively resolves the claims against the more than 350 generators named as defendants in these cases and also should substantially inform the resolution of the remaining claims against the other defendants,” Fischer said.
Lawyers for the plaintiffs said Thursday that they are still reviewing the decision and plan to file a notice of appeal in the coming weeks.
Leading the litigation for the power generator Luminant are Gibson Dunn attorneys Allyson Ho, Michael Raiff, Elizabeth Kiernan and Stephen Hammer. Baker Botts lawyers Macey Reasoner Stokes, John Anaipakos, George Fibbe and J. Mark Little represent NRG and Calpine.
The case is In Re Luminant Generation, NRG Texas Power, Calpine. The case number is 01-23-00097.