In another chapter of the ongoing litigation triggered by the effects of Winter Storm Uri, the Houston [14th] Court of Appeals has partially granted the utilities’ petition for writ of mandamus to order the MDL pretrial judge to grant their Rule 91a motions to dismiss.
In re Oncor Electric Delivery Co. LLC; Oncor Electric Deliverty Co. NTU LLC; AEP Texas, Inc.; American Electric Power Co.; Centerpoint Energy Houston Electric, LLC; and Centerpoint Energy, Inc. (No. 14-23-00095; April 2, 2024) arose from the MDL judge’s denial of the defendant utilities’ motions to dismiss four bellwether cases representing thousands of claimants alleging damages from Winter Storm Uri. Plaintiffs allege various theories of liability, including negligence, gross negligence, tortious interference with plaintiff’s contracts with their retail electric providers, civil conspiracy, and infliction of a private nuisance. The utilities moved to dismiss the claims under Rule 91a for having no basis in law or fact. The MDL judge granted the utilities’ motions as to tortious interference with a contract and civil conspiracy, concert of action, and indivisible injury but denied the motions as to Plaintiffs’ negligence, gross negligence, and nuisance claims. The utilities sought mandamus relief.
In an opinion by Chief Justice Christopher, the court of appeals granted mandamus in part. The petition presented the court with an issue of first impression: whether a court can consider the “filed-rate doctrine,” which generally immunizes a utility from liability in contract or tort for occurrences arising under the terms of a publicly-filed tariff, on a Rule 91a motion to dismiss. Plaintiffs argued that it could not because the tariff’s reasonableness and applicability cannot be decided at the pleadings stage, at which plaintiff’s allegations and inferences reasonably drawn therefrom must be taken as true. The court rejected this argument because the statutory and regulatory scheme under which the utilities file tariffs specifies the utilities’ duties in an emergency situation and shields them from liability for negligence, unless Plaintiffs can prove that the tariff was unreasonable. That scheme thus precludes Plaintiffs’ common-law negligence theory and bars their claims for damages based on ordinary negligence. The court thus ordered the MDL judge to dismiss Plaintiffs’ negligence claims.
As the court observed, however, the tariff does not apply to gross negligence or intentional misconduct. Defendants argued that the tariff’s force majeure provision relieved them of liability under these theories as well, but the court disagreed. The issue, the court reasoned, was not whether the storm invoked the force majeure clause of the tariff, but whether the utilities’ response to the disaster—“intentional decisions by individual Defendants made both before and during Winter Storm Uri that were known to other Defendants and caused multiple operational failures which combined to cause the failure of the ERCOT grid”—arise to the level of gross negligence. Here the court found that Plaintiffs’ pleadings asserted the essential elements of a gross negligence and intentional misconduct claims and that the utilities failed to negate them. Consequently, the MDL judge did not err by denying the utilities’ Rule 91a motions as to these claims.
Turning to the private nuisance claims, the court noted that there are three different causes of action that may lead to liability for private nuisance: intentional conduct, negligence, and abnormally dangerous or ultra-hazardous activities (i.e., strict-liability nuisance). Having dispensed with Plaintiffs’ negligence claims under the filed-rate doctrine, the court quickly ruled out Plaintiffs’ negligent nuisance claims. It next eliminated nuisance based on abnormally dangerous or ultra-hazardous activities, since transmitting and distributing electricity is not one of those. But the court preserved Plaintiffs’ intentional nuisance claims, as it did their gross negligence and intentional misconduct claims.
This is an important decision that narrows the scope of the Winter Storm Uri litigation and puts Plaintiffs to a significantly higher burden of proof in the litigation (i.e., clear and convincing evidence for gross negligence). It remains to be seen whether Plaintiffs believe they can carry that burden. What seems a bit odd here is, by the terms of the tariff, Plaintiffs’ may assert gross negligence claims but not ordinary negligence claims. But in order to establish gross negligence, don’t Plaintiffs have to prove the four elements of ordinary negligence first? Is there a contradiction in the filed-rate doctrine? Beyond those questions, can Plaintiffs really show that the utilities intended to cause harm? How would such a showing be made? In any event, we suspect we’ll see this case again at the summary judgment stage.
