The Texas Supreme Court ruled Friday that the Winter Storm Uri lawsuits brought by thousands of individuals and small businesses against electric transmission and distribution utilities in Texas are legally flawed, but the justices allowed lawyers for the plaintiffs to amend their lawsuits to fix the legal issues and even provided a roadmap for their possible success.
In a unanimous decision, the state’s highest court dismissed allegations of intentional nuisance and gross negligence against Oncor Electric Delivery, CenterPoint Energy and American Electric Power, but the decision to allow the plaintiffs to replead their gross negligence claims is viewed by attorneys for the plaintiffs as a significant victory because it keeps their lawsuits alive and moving forward.
Lawyers for the utilities argue the ruling is a win for their clients because it significantly raises the hurdles that the plaintiffs must overcome to win their cases at trial.
“The Texas Supreme Court makes clear that it is possible to hold electric utilities on the ERCOT grid liable for deaths, injuries and serious property damage under a gross negligence theory, but only if the plaintiff can show that the utility could have made a different choice while still obeying the ERCOT rules,” said Dallas lawyer Chrysta Castañeda. “The plaintiff will also have to show that the utility was consciously indifferent to the likelihood that its choices would result in death, personal injury or serious property damage.”
Nearly 15,000 Texans and small business owners sued the utilities, seeking billions of dollars in damages for claims including wrongful death, personal injury and property damage stemming from Winter Storm Uri when subzero and single-degree temperatures and frozen precipitation bedeviled Texas for four days in February 2021.
RELATED: When it Comes to Ann Saucer, Never Doth the Lady Protest Too Much
The lawsuits alleged that Oncor, CenterPoint and American Electric lied to their customers during Winter Storm Uri by telling them there would be rolling blackouts but that the companies made the intentional decision to keep providing power to certain preferred neighbors while leaving other communities in the dark for days, which led to severe injuries and death.
In oral arguments before the Texas Supreme Court earlier this year, Dallas lawyer Ann Saucer said it was the companies — not regulators — that decided not to heed a decade of warnings to be better prepared for such a catastrophic storm and because they provided power to “favored customers” or communities over others — conduct that lawyers say led to the deaths of 246 people.
Vinson & Elkins partner Michael Heidler, who represents the utilities, argued that his clients were following the rules and orders of Texas regulators when they decided where to implement power blackouts, a process also known as load shed.
Heidler told the justices that decisions made by the utilities during Winter Storm Uri “were restrained by ERCOT protocols” and that the companies have “no common law duty,” as alleged by the plaintiffs, because the utilities are a highly regulated industry. He told the court the utilities were merely following the rules that the Texas Public Utility Commission implemented.
In the opinion written by Justice Debra Lehrmann, the court ruled that defendants “must in some way have been the source of the nuisance” for “intentional-nuisance liability to attach.” She wrote that the storm, not the actions of the utilities, was the source of the nuisance and that the allegation that the utilities “failed to adequately respond to and mitigate the harm caused by the temperatures” is not a basis for an intentional-nuisance claim.
RELATED: Four Years Later, Zero Jury Trials for 30,000 Victims of Historic Storm
On the gross negligence charge, Justice Lehrmann wrote that the plaintiffs “have made no effort to allege that the Utilities could have acted differently while still complying with the ERCOT guidelines.”
ERCOT is the Electric Reliability Council of Texas, which is a quasi-governmental body involved in the regulation of the power industry in Texas.
“But the plaintiffs here needed to allege that the utilities, in implementing ERCOT’s load-shed orders, could have meaningfully acted differently and thereby lessened the injuries that resulted from Winter Storm Uri despite the applicable legal restrictions,” Justice Lehrmann wrote. “In other words, they must at least allege that the Utilities could have reduced the injuries the storm caused while complying with applicable legal requirements and guidelines and yet chose not to do so, demonstrating conscious indifference to the resulting injuries.”
Saucer, who is a partner at the Nachawati Law Group, said the plaintiffs’ lawyers “can and will replead gross negligence.”
“We plan to explain in detail why the TDUs were grossly negligent,” Saucer said. “These companies could do what they were told by regulators to do and still not cause the deaths of hundreds of people. They were supposed to do rolling blackouts, but they didn’t.”
The case now returns to the trial court in Houston.
The case is In re Oncor, No. 24-0424.