With Wildfires Come Lawyers, But Past Survivors Have A Message: Buyers Beware
Attorneys in the fast-growing wildfire litigation industry are racing to recruit victims of fires ravaging parts of Northern California, and they're promising to take on a familiar target: PG&E.
In July, the utility disclosed that its equipment may have sparked two fires this year, including the Dixie Fire, the largest single-origin fire in California history, which to date has engulfed nearly 1,400 square miles, destroying 1,282 structures and forcing thousands to evacuate.
Prominent plaintiffs’ attorneys have swooped in even as the fire burns. As part of their campaign, they've plowed money into social media and launched websites touting their credentials. They've held a steady stream of in-person and virtual town hall meetings, flying in from across California and around the country to lure in potential clients with everything from free food to face time with famed anti-PG&E activist Erin Brockovich. Some have already begun the process of setting up shop in the small mountain towns of Quincy and Susanville, where many evacuees are stuck in limbo, staying in motels or with friends as they try to figure out what’s next.
These lawyers claim they have experience getting massive settlements out of PG&E for survivors of earlier fires. But many of those families, who turned to these same lawyers after losing their homes and loved ones, still sleep in cars and trailers and now say they see a replay of the broken promises they say have traumatized them a second time. They offer a warning for today's fire victims: Buyer beware.
"It's like a free-for-fall," said Victoria Gann, who lived in Paradise for 20 years before the Camp Fire destroyed the Sierra Nevada town in 2018. Three years later, she still lives in a trailer.
Gann is among the 70,000 survivors of wildfires sparked by PG&E equipment between 2015 and 2018 who were promised $13.5 billion in a settlement with the utility. Nearly two years later, most of those fire survivors have yet to receive a dime. "It's only a disaster for the people it happened to. For everyone else, it seems to be a cash windfall," she said.
The rush of attorneys into rural Northern California prompted Plumas County District Attorney David Hollister to publish and distribute pamphlets urging fire victims not to rush as they hire lawyers and contractors. It includes ethics guidance from the California State Bar Association.
"The last thing we want is for people to be revictimized," Hollister told KQED and NPR's California Newsroom. "This is a big life-changing decision. So take a step back and make a good choice that's going to protect you going forward."
Lawyers haven’t delivered, survivors say
The push by lawyers to sign up new survivors as clients has become something of a grim fire season tradition in California. Among the most prolific lawyers is Mikal Watts, a trial lawyer from Corpus Christi, Texas, who once told a community forum of fire victims in Sonoma County wine country that he wanted to “be your daddy."
On Wednesday, Watts could be found holding court at the Quincy Public Library, addressing those fleeing the Dixie Fire in person, with Brockovich and more fire victims joining on Zoom. "They have a ton of lawyers," Watts said of PG&E, telling his audience the company was prepared to "crush you like a bug."
"The way you level out the playing field is you assemble 16,000 people," said Watts, who represented 16,000 survivors of PG&E fires during the company's recent bankruptcy. "Now all of a sudden, you've got their attention and they're quaking in their boots."
But there's rising concern among survivors of past fires who say these lawyers do not deliver what they promise. In December 2019, Watts, along with other attorneys currently recruiting Dixie Fire survivors as clients, announced a settlement with PG&E that promised $13.5 billion in compensation for approximately 70,000 fire victims of the Camp Fire and other fires sparked by the company's equipment between 2015 and 2018. But payments have been slow to come. In May, KQED and NPR's California Newsroom revealed that in its first year of operation, the PG&E Fire Victim Trust spent more than $50 million on overhead, with the trustee, retired California Appeals Court Justice John Trotter, charging $1,500 an hour (he now claims to make $125,000 a month). Since then, payments have sped up — with the trust saying it's put approximately $740 million in the hands of fire victims.
But because half of the settlement came in the form of PG&E stock rather than cash, Trotter said it's unlikely that fire survivors will get the amount that was promised. With the utility implicated in starting new fires every year, its stock price has languished. When KQED and NPR's California Newsroom asked Trotter in August when fire victims would be made whole, he said "they never will."
Having to deal with the trust's stock component is "unbearable," he told us. When pressed, Trotter also said that in his decades as a trustee, he had never seen a victims’ settlement that included stock in the company that had harmed them.
A “horrible” fire settlement
In his Sept. 1 letter to fire victims who were promised money in the 2019 settlement, Trotter made an oblique reference to Watts, saying some lawyers "eager to have their clients vote to approve PG&E's emergence from bankruptcy, set unrealistic timelines for payments to be made after the Trust's creation," before quoting a description of Watts from a recent article in The Wall Street Journal. In his letter, Trotter said the trust was currently worth "approximately $2.5 billion less than promised." (PG&E is set to fund the trust with a final $700 million cash installment after this fire season.) So far, the trust hasn't sold any of its 478 million shares, which comprise a quarter of all PG&E stock.
Watts declined to be interviewed for this story. In an email to KQED and NPR's California Newsroom, he did not address the discrepancy directly but said Trotter was "an honorable man in whom I have the utmost respect and confidence." The PG&E bankruptcy settlement "was the second-largest tort settlement in American history at that time," he added, "one I am very proud to have worked [on] with fine lawyers across California to achieve on behalf of all our clients."
Watts continues to boast of the scale of relief he said he brokered for fire survivors. A website from his group offering legal services declares that he "led the negotiations with PG&E to raise the settlement negotiation from $8.4 billion to $13.5 billion, the largest settlement in bankruptcy history," though the trust has never been worth that much in the year since PG&E funded it.
PG&E also declined to be interviewed and sent a statement.
"We empathize with the ongoing hardships many victims face, and remain steadfast in our commitment to make it safe for our customers and communities," the statement read. “To deliver on this commitment, we are hardening our system, piloting new technologies, and taking other aggressive action to increase system safety.”
Geoff Reed, a survivor of the 2018 Camp Fire, didn't mince words when asked about the deal that Watts helped craft.
"The plan is horrible," he said. Reed and his two daughters, who were 4 and 3 at the time of the fire, have lived in a cramped apartment in Redding since they lost everything. His older girl has nightmares from witnessing dead bodies during their escape from Paradise as the fire burned all around them. His younger daughter constantly worries that another blaze will come for them.
Reed said that, fresh off the experience of fleeing the fire, he signed up with Watts's group after attending a town hall meeting featuring Brockovich, who gained fame for exposing PG&E's water contamination cover-up in Hinkley, a desert town in San Bernardino County. Reed later learned that Brockovich was acting as a paid non-attorney spokesperson for the legal group headed up by Watts along with Doug Boxer, the son of former U.S. Senator Barbara Boxer.
"They hired Brockovich as a media mercenary and everybody fawns over her and flocks to her. I did," Reed said. After he signed up, Reed says Brockovich stopped returning his calls. Jarred by the experience, he switched to a different legal group.
When KQED interviewed Brockovich last year, she responded to allegations that she has been unresponsive: “I travel a lot. There could be moments where I’m backlogged or I didn’t get back to somebody. I’m not going to sit here and tell you that I’m perfect.”
As fire survivors voted on their settlement last year, Brockovich penned an opinion piece in The San Francisco Chronicle urging them to vote in support of the settlement, and was quoted in two PG&E press releases touting the deal.
Reed called it “a legal con job. I know the outcome, as do thousands of us." Reed said he'd received an initial $6,667 from the trust but was expecting far more: "I thought we settled for $13.5 billion. Why didn't PG&E put $13.5 billion in it?"
According to Trotter, PG&E funded the Fire Victim Trust when shares were worth $9. That's well below the $14.13 implied price they paid per share, a value derived by dividing the $6.75 billion in stock they were promised by the 478 million shares that PG&E actually gave them in the settlement.
Lawyers backed by Wall Street
As word of Watts and Boxer's forum at the Quincy library leaked out on social media, a member of a Facebook group for 2015-2018 fire survivors posted a screenshot with the caption "Ka-Ching," drawing dozens of comments.
"The sharks are circling again," commented Stephen Muser.
"No thx. We're 3 years of waiting ourselves with the Campfire," wrote Patricia Wenner.
Some even suggested that past fire survivors attend the event.
"All of us Camp Fire folks should join and ask questions about our claims—," commented Eva Shepherd.
Another commenter referenced the revelation last year that Watts had accepted litigation funding from some Wall Street hedge funds negotiating against the interests of fire survivors, including his own clients.
When KQED was first to report on those ties, some fire victims and ethics experts said it raised red flags, adding that Watts should have disclosed them to his clients. At a town hall meeting last year, this reporter asked Watts if he had accepted funding from the hedge fund Centerbridge Partners. He indicated that he had not. But when KQED neared publication on a story about it, Watts changed course, admitting to accepting the litigation funding from Centerbridge and others, and ultimately submitting a written disclosure to clients. In his email to KQED and NPR's California Newsroom for this story, Watts said there was no conflict of interest because he does not have a single line of financing. "I have access to funds from multiple sources relating to different kinds of cases I litigate across the country," he said.
Last year, The Wall Street Journal reported that that particular line of credit was worth $100 million, but toward the end of Wednesday's recruitment event, Watts quoted a much larger amount, which he later told KQED stems from multiple lines of credit.
"I mentioned I've got access to a lot of money that I borrow from New York banks — $400 million of access so I can spend whatever it takes," Watts told the audience. "They made up this cockamamie deal about Mikal's loans are backed up by people that own part of PG&E and this and that. It's all a bunch of nonsense."
He told the audience of Dixie Fire survivors that he had refinanced the loans "to clean it all up."
"They'll come after me but don't worry about it. It's all white noise," Watts concluded.
Digital flyers for the event included a photo of Brockovich, who appeared on the Zoom but never spoke and dropped off the livestream midway through.
Free food brings in wildfire survivors
Watts is hardly the only attorney working to land recent fire victims as clients. KQED and NPR's California Newsroom counted at least two dozen law firms posting ads and launching websites aimed at survivors of the Dixie Fire. They offer to represent them for damages ranging from property loss, emotional distress and displacement costs.
Last month, one firm organized a barbeque meal of smoked tri-tip and butterhorn rolls. For days, a flyer advertising it made the rounds of social media: "FREE DINNER," it read. In smaller type below, it specified: "For those displaced due to the Dixie Fire Come Hungry!'
As ash fell from the sky, evacuee Sandy Sullens said she was there to learn more about what resources might be available to her.
"We want to hear what's being done and how they can help if you have insurance and you don't get very much," said Sullens, who recently lost her home of 51 years when the Dixie Fire destroyed the town of Greenville.
"It's the same story over and over and over again. PG&E. We're not sure," Sullens said.
The event was organized by a local attorney, Bret Cook, who is partnering with Potter Handy, a law firm based in San Diego. The firm recently came under scrutiny in San Francisco's Chinatown for allegedly filing frivolous lawsuits against small businesses using the Americans with Disabilities Act. The city's district attorney, Chesa Boudin, had floated the possibility of filing charges for criminal extortion against the firm, though no such charges were made in court.
Potter, who represented 200 victims of the Camp Fire, did not return an email seeking comment on his San Francisco litigation. But in an interview in Quincy he admitted to the flaws of the wildfire deal.
"It's frustrating because of the bankruptcy," Potter said. "The clients in the Camp Fire got shortchanged in the bankruptcy process and so that was frustrating, frankly. It's rewarding to help them out but those clients still haven't been fully paid."
Not far from the food, Potter Handy attorneys had placed a stack of legal contracts for potential victims to review.
The contract states the terms: a contingency that would leave the lawyers with 25% of any potential reward.
Cook has been the Sullens's lawyer for years.
"We're just providing some food for people evacuated from the Dixie Fire. It's a way to give back to the community," said Cook, who also lost his home and law office in Greenville. "It was a way of putting a little smile on their face.”
When asked if they're here to enlist clients, Cook demurred.
"We're not doing that, necessarily. People are asking us. And we're certainly not going to say no. As I call around, having an avenue to rebuild brings them a sense of hope," Cook said. "Some are ready to move to that next step and I want to make ourselves available in that case."
Copyright 2021 KQED
Paul Boger of KUNR in Reno, Nevada, contributed reporting from Quincy.