Edison International officers and directors misled the company’s investors about the effectiveness of its efforts to reduce the risk of wildfire in the months and years before the devastating Eaton fire, a shareholder lawsuit claims.
The lawsuit, filed last week in U.S. District Court in Los Angeles, points to repeated statements that the utility made in federal regulatory reports that said it had reduced the risk of a catastrophic wildfire by more than 85% since 2018 by increasing equipment inspections, tree trimming and other work aimed at stopping fires.
The complaint also raises doubts about news releases and other statements that Edison made soon after the start of Eaton fire, which killed 18 people and destroyed thousands of homes and businesses in Altadena.
“We take all legal matters seriously,” said Jeff Monford, a spokesman for Edison. “We will review this lawsuit and respond through the appropriate legal channels.”
The lawsuit claims that Edison’s early statements on the Eaton fire — in which it detailed why it believed its equipment was not involved in the fire’s start — were wrong.
“Edison obfuscated the truth by making false and misleading statements concerning its role in the fire,” the lawsuit claims.
More recently, Pedro Pizarro, the chief executive of Edison International, said the leading theory for the fire’s start was the reenergization of an unused, decades-old transmission line in Eaton Canyon.
The investigation by state and local fire investigators into the official cause of the deadly fire is continuing.
The lawsuit was filed as a derivative action in which shareholders sue a company’s officers and directors on behalf of the company, claiming they had breached their fiduciary duties. It seeks financial damages from Pizarro, Chief Financial Officer Maria Rigatti and members of the company’s board of directors. Money recovered would go to the company.
It also directs Edison “to take all necessary actions” to reform its corporate governance procedures, comply with all laws and protect the company and its investors “from a recurrence of the damaging events.”
The lawsuit was brought by Charlotte Bark, a shareholder of Edison International, the parent company of Southern California Edison.
“Prior to the outbreak of the Eaton Fire, the Company had a long history of not prioritizing the safety of those who lived in the areas it serviced, and paying fines as a result,” the lawsuit states. Since 2000, it says, Edison has paid financial penalties of $1.3 billion for violating utility safety regulations.
The complaint points to an October regulatory report that was the focus of a Times report. In the article, state regulators criticized some of Edison’s wildfire mitigation efforts, including for falling behind in inspecting transmission lines in areas at high risk of fires.
The lawsuit lists the major destructive wildfires that investigators said were sparked by Edison’s equipment in recent years, including the Bobcat and Silverado fires in 2020, as well as the Coastal and Fairview fires in 2022.
“The recurring wildfire incidents connected to the Company display that the Board has repeatedly failed to mitigate a risk that materially threatens Edison,” the complaint states.
The lawsuit accuses Pizarro, Rigatti and the company’s board of directors of “gross mismanagement” and claims that the defendants “unjustly enriched” themselves.
“Because the Individual Defendants failed to carry out their respective duties, the compensation they received was excessive and undeserved,” the suit states.
It asks the court for an order that would require the officers and directors to pay restitution, including returning the compensation they received that was tied to how well the company performed.
