Of Blackouts and Lawsuits

Class-action claims for widespread utility service interruptions are a growing trend.

During the dog days of summer, a severe heat wave settles over the service territory of an electric utility. Electricity demand reaches an all-time peak as customers turn their air conditioners to the highest setting. Service interruptions occur throughout the utility's territory as high loads and low voltages cause breakers to trip, fuses to operate, transformers to overheat, and equipment to fail. When the heat at last subsides, the utility wants to repair its damaged image among customers and its worsened relationship with regulators.

But what kind of legal exposure does a utility face as a result of losses caused by the blackout-such as spoiled food and damaged electrical equipment for residential customers, and business interruption for commercial customers? Is that exposure limited to individual claims by disgruntled customers, or can the claims of all customers be litigated in a single proceeding to secure an aggregate damages award on behalf of all affected customers ()?

Plaintiffs today are all too quick to cry negligence when they have suffered a loss. Whether the case can be litigated as a class action will vastly affect the legal exposure facing the utility, literally making the difference between a claim of hundreds versus millions of dollars. Blackout class actions have been brought against utilities in Texas, Louisiana, Illinois, Arizona, New York, and New Jersey, and at least two have resulted in multi-million dollar settlements-all of which suggests that class actions for widespread service interruptions are a growing trend.