San Bruno PG&E Blast: DLA Piper, Sen. Mitchell Urged to Resign CPUC Settlement Negotiations for Conflict of Interests, Confidentiality Breach
SAN FRANCISCO (Oct. 23, 2012) — The City of San Bruno, the City and County San Francisco and consumer advocates today called on Sen. George Mitchell and his law firm DLA Piper to decline to serve as mediator in the California Public Utilities Commission’s four cases against PG&E for the deadly San Bruno pipeline explosion.
They also put DLA Piper and Sen. Mitchell on notice that they should not accept any additional confidential information from anyone in the negotiations.
The Utility Reform Network (TURN), CPUC’s Division of Ratepayer Advocates (DRA), and the cities of San Bruno and San Francisco said Mitchell’s law firm, DLA Piper, has a significant conflict of interest and received confidential information regarding the parties’ negotiation positions.
The parties are part of CPUC settlement negotiations with PG&E as a result of the utility’s negligence in causing the death of 8 San Bruno residents, horribly injuring dozens more and destroying 38 homes in the heart of the city on Sept. 9, 2010, with an explosion and fire caused by the utility’s faulty pipeline.
In a letter today, the parties called upon DLA Piper and Mitchell to step aside in favor of a mediator free of any conflicts of interest.
The letter noted the parties learned last week that DLA Piper “represents a large insurance carrier that potentially may be required to pay costs incurred by Pacific Gas and Electric Company (PG&E) related to the San Bruno explosion.” The letter continued “this representation is incompatible with DLA Piper’s duty of impartiality as mediator in this matter.”
The letter also states that the parties also learned that DLA Piper had received confidential information regarding their negotiations and was representing an insurance company that may be required to pay claims from the explosion.
“Your receipt of such highly sensitive confidential information was a breach of the Confidentiality Agreement…(that) provided that none of the contents of the settlement discussions was to be disclosed to any person outside the negotiations “without the consent of all Parties,” the letter stated.
“Consequently, you should neither have been offered, nor should you have accepted, any information from any party regarding the negotiation positions of the parties.” Furthermore, ….you should not accept any additional information from any party that relates to any of the confidential settlement discussions..”
The letter concludes, “[F]or the sake of promoting public confidence in the fairness of these proceedings, we respectfully call on DLA Piper to decline to serve….”
San Bruno Mayor Jim Ruane said DLA Piper’s conflict and receipt of confidential information “automatically eliminates them as an unbiased party in mediating a settlement fair to the people and City of San Bruno.”
“Representation of a client whose financial interests will be impacted by the outcome of the mediation is incompatible with DLA Piper’s duty of impartiality,” Ruane said. “Because DLA Piper represents a large insurance carrier that may end up paying costs incurred by PG&E related to the San Bruno explosion, there is an obvious conflict that prevents DPA Piper and Sen. Mitchell from serving.”
Tom Long of TURN said the CPUC should start fresh with a mediator without a conflict of interest who would not be privy to confidential information in advance.
“By violating confidentiality and unilaterally imposing DLA Piper as mediator without even asking the opinion of four of the six negotiating parties, the CPUC management has doomed this mediation even before it has started,” Long said.
“I have the highest regard for Sen. Mitchell, but the legitimacy of an enforcement action involving one of the deadliest gas pipeline catastrophes in California history must be beyond reproach,” said San Francisco City Attorney Dennis Herrera. “What’s at stake in these proceedings is the safety of millions of Californians, and they deserve a process untainted by even the appearance of bias.”
“We have the utmost respect for Senator Mitchell,” said Karen Paull of the DRA. “But these proceedings have been marred by improper interference with prosecution of the enforcement cases, and with the parties’ settlement efforts. Unfortunately, the plan to bring in Senator Mitchell to mediate is tainted by these actions.” The groups want Mitchell to step aside in favor of a new mediator chosen by all the parties-after all the parties agree to mediate, not before.
The San Francisco Chronicle, the San Jose Mercury News, and other major California newspapers have all criticized the back-door deal leading to DLA Piper.