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WEIL, GOTSHAL & MANGES LLP

Stephen Karotkin (pro hac vice) 

(stephen.karotkin@weil.com) 

Ray C. Schrock, P.C. (pro hac vice) 

(ray.schrock@weil.com) 

Jessica Liou (pro hac vice) 

(jessica.liou@weil.com) 

Matthew Goren (pro hac vice) 

(matthew.goren@weil.com) 

767 Fifth Avenue 

New York, NY 10153-0119 

Tel: 212 310 8000 

Fax: 212 310 8007 

Attorneys for Debtors and Debtors in Possession

KELLER & BENVENUTTI LLP

Tobias S. Keller (#151445) 

(tkeller@kellerbenvenutti.com) 

Peter J. Benvenutti (#60566) 

(pbenvenutti@kellerbenvenutti.com) 

Jane Kim (#298192) 

(jkim@kellerbenvenutti.com) 

650 California Street, Suite 1900 

San Francisco, CA 94108 

Tel: 415 496 6723 

Fax: 650 636 9251 

UNITED STATES BANKRUPTCY COURT 

NORTHERN DISTRICT OF CALIFORNIA 

SAN FRANCISCO DIVISION 

In re: 

PG&E CORPORATION,

 - and - 

PACIFIC GAS AND ELECTRIC 

COMPANY,

Bankruptcy Case 

No. 19-30088 (DM) 

Chapter 11 

(Lead Case) 

(Jointly Administered) 

DEBTOR’S PRELIMINARY RESPONSE 

IN OPPOSITION TO MOTION BY THE 

CITY AND COUNTY OF SAN 

FRANCISCO FOR DETERMINATION 

THAT AUTOMATIC STAY DOES NOT 

APPLY UNDER §362(b)(4) OR IN THE 

ALTERNATIVE, FOR RELIEF FROM 

THE AUTOMATIC STAY UNDER 

§362(d)(1) 

Related to Dkt. No. 1535 

Date: May 9, 2019 

Time: 9:30 a.m. 

Place: United States Bankruptcy Court 

 Courtroom 17, 16th Floor 

 San Francisco, CA 94102 

Judge: Hon. Dennis Montali 

Debtors.

 Affects PG&E Corporation 

 Affects Pacific Gas and Electric Company 

 Affects both Debtors 

* All papers shall be filed in the Lead Case, 

No. 19-30088 (DM). 

Case: 19-30088 Doc# 1869 Filed: 05/07/19 Entered: 05/07/19 09:23:25 Page 1 of

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Introduction 

Pacific Gas and Electric Company (the “Utility”), as debtor and debtor in possession in the 

above-captioned chapter 11 cases, respectfully submits this preliminary response in opposition to the 

City and County of San Francisco’s (“CCSF”) Motion, which seeks a declaration that the automatic 

stay of section 362 of title 11 of the United States Code (the “Bankruptcy Code”) does not apply to, 

or, in the alternative, should be lifted from, a prepetition action commenced by CCSF against the 

Utility at the Federal Energy Regulatory Commission (“FERC”). See Dkt. No. 1535. 

The Utility recognizes that it is subject to a wide range of regulatory obligations and is in no 

way attempting to shirk those responsibilities while in chapter 11. Nor is the Utility challenging 

FERC’s exclusive jurisdiction over the rates, terms and conditions of tariffs, or contending that this 

Court should preside over such matters instead of FERC.1 Indeed, the Utility has not sought to 

enjoin separate, currently ongoing proceedings pending before FERC that involve, among other 

things, essentially the same regulatory subject matter that CCSF’s Motion seeks leave to prosecute. 

A preliminary conference in those proceedings is scheduled for May 9, 2019 at 10:00 a.m. EDT. See

Exhibits A–C hereto (FERC orders terminating settlement procedures, extending time standards, and 

setting preliminary conference, respectively). Significantly, however, CCSF’s Motion concerns an 

action before FERC that, unlike the other FERC proceedings, was not only initiated via a complaint 

filed by CCSF, but also seeks damages for prepetition conduct. The FERC proceeding at issue here 

is thus subject to the automatic stay as a prepetition action commenced by CCSF against the Utility 

in furtherance of CCSF’s pecuniary interests. 

Moreover, because the regulatory issues raised in CCSF’s complaint are already the subject 

of other pending FERC proceedings, there is no harm in declining CCSF’s request to lift the stay. In 

addition, the prepetition damages that CCSF seeks may be rendered entirely moot if FERC decides 

the regulatory dispute in favor of the Utility in the other proceedings. CCSF’s damages claims are 

 

1

 While the Utility acknowledges FERC’s response to CCSF’s Motion, see Dkt. No. 1831, this 

preliminary opposition is not intended to address the contentions set forth in that submission. 

The Utility will provide more fulsome briefing on the issues raised in the Motion and in FERC’s 

response in accordance with any schedule the Court may deem appropriate. 

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thus no reason to lift the stay, particularly where CCSF may not recover any judgment until the 

claims administration process—a point CCSF concedes in its Motion. Accordingly, the Motion 

should be denied in all respects. 

Argument 

CCSF’s Motion concerns a proceeding initiated by a complaint that CCSF filed at FERC on 

January 28, 2019, the day before the Utility filed for chapter 11 protection. See Complaint, City & 

Cty. of S.F. v. Pac. Gas & Elec. Co., No. EL19-38-000 (F.E.R.C. Jan. 28, 2019) (the “Complaint 

Proceeding”).2 CCSF’s complaint seeks: (i) prospective injunctive or declaratory relief to enforce 

alleged obligations on the grounds that the Utility has implemented an open-access Wholesale 

Distribution Tariff (“Tariff”) on discriminatory terms by allegedly failing to provide “secondary” 

service; (ii) retroactive damages for the purported harms occasioned by these alleged failures to 

provide non-discriminatory terms; and (iii) any other relief that is “necessary or appropriate” to 

address the alleged Tariff violations. See id. at 1. In short, the Complaint Proceeding seeks relief 

that, if granted, would redound solely to the pecuniary benefit of CCSF in its capacity as a utility 

service provider in competition with the Utility in the electricity market, a commercial reality 

recognized by CCSF in its own pleadings. See id. at 2 (recognizing that “PG&E has always served a 

dual role—both as a competitor of the City and as a provider of wholesale distribution service that 

the City must use to serve its customers”). 

The regulatory issues involved in the Complaint Proceeding—whether the Utility has acted 

discriminatorily and unreasonably under the Tariff by allegedly failing to provide “secondary” 

service—are among the subjects at issue in separate proceedings at FERC that are currently set for 

trial early next year (the “QF Proceedings”). The Complaint Proceeding, however, departs from the 

QF Proceedings in two material respects. First, unlike the QF Proceedings—which arose in the 

context of a quarterly filing submitted to FERC by the Utility pursuant to its regulatory 

obligations—the Complaint Proceeding is a prepetition action brought by CCSF as a competitor of 

the Utility seeking to promote its own interests, firmly placing it within the automatic stay’s 

 

2

 Of course, CCSF was aware that the Utility would be seeking chapter 11 protection given the 

Utility’s announcements preceding the filing. 

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protections. See 11 U.S.C. § 362(a)(1) (staying “the commencement or continuation . . . of a 

judicial, administrative, or other action or proceeding against the debtor that was or could have been 

commenced” before the filing of a petition for relief). 

Second, in addition to declaratory and injunctive relief, the Complaint Proceeding also seeks 

to recover damages for alleged prepetition harms incurred by CCSF based on the Utility’s purported 

failure to perform under the Tariff. As such, CCSF’s action for damages simply does not fall within 

the governmental regulatory exception to the automatic stay. In construing section 362(b)(4) of the 

Bankruptcy Code, the Ninth Circuit applies two alternative tests—the pecuniary purpose and public 

policy tests—to determine whether an action falls outside the stay. Contrary to CCSF’s assertions, 

see Mot. at 10, section 362(b)(4) of the Bankruptcy Code only applies if a party seeking its benefit is 

able to prove that the government action at issue passes both of these tests. See In re Dingley, 852 

F.3d 1143, 1147 (9th Cir. 2017) (“If the court determines that the government’s action is intended 

either to protect the government’s pecuniary interest in the debtor’s property or to adjudicate private 

rights, the government regulatory exemption will not apply and the automatic stay will be 

imposed.”) (emphasis added). 

CCSF is not able to pass either test, and section 362(b)(4) of the Bankruptcy Code thus does 

not except the Complaint Proceeding from the automatic stay. The Complaint Proceeding fails the 

pecuniary purpose test because CCSF’s alleged injuries rest on claims of discriminatory treatment 

and associated damages that are specific to CCSF’s pecuniary interest. In short, CCSF’s claims are 

commercial in nature and seek to recover property of the Utility’s estate. CCSF does not even 

contest this point, and instead argues that “FERC itself has no pecuniary interest in the pending 

proceedings.” Mot. at 11. But FERC’s interest (or non-interest) in the outcome of the Complaint 

Proceeding is irrelevant to the question of whether that proceeding is excepted from the automatic 

stay. CCSF, not FERC, is the entity that “commence[d] or continu[ed]” the Complaint Proceeding, 

and CCSF, not FERC, is thus the entity that is subject of the section 362(b)(4) analysis. The fact that 

FERC is asked to adjudicate the Complaint Proceeding is of no more moment than if CCSF had 

asked any other tribunal to adjudicate the dispute. The Complaint Proceeding is an action for 

damages, and as such, “is pursued solely to advance a pecuniary interest” of CCSF, with the result 

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that “the stay will be imposed.” In re Universal Life Church, Inc., 128 F.3d 1294, 1297 (9th Cir. 

1997). 

The Complaint Proceeding fares no better under the public policy test. It is undeniable that 

CCSF principally seeks to adjudicate its private rights by pursuing a declaration of its rights and a 

damages action. The Complaint Proceeding is, at bottom, an action brought by CCSF in its capacity 

as an electrical service provider that seeks to vindicate its commercial interests in a broader dispute 

with one of its competitors. It follows that under either of the Dingley formulations, the Complaint 

Proceeding does not fall within the scope of section 362(b)(4) of the Bankruptcy Code, and is thus 

automatically stayed. 

Nor should the Court lift the stay on the Complaint Proceeding. There is no urgency to move 

forward with this action now. First and foremost, the regulatory issues in dispute are already set to 

be litigated in the QF Proceedings at FERC. Moreover, if FERC sides with the Utility on these 

regulatory issues, then CCSF’s claim for damages in the Complaint Proceeding will be moot and 

continued litigation would have been a pointless distraction and a waste of resources. And as 

recognized by CCSF itself, if FERC sides with CCSF, then any claim for damages that may flow 

from that decision “for excessive charges the Utility has previously imposed . . . can and will be 

determined by this court through its claim procedures.” Mot. at 18. Because the regulatory aspects 

of the Complaint Proceeding are already before FERC in the QF Proceedings, and because any 

damages that may arise from this dispute would be payable only through the claims process, there is 

no need to lift the stay here, particularly given the many other claimants whose damages claims are 

stayed. Judicial economy would be better served by denying stay relief and addressing CCSF’s 

damages claims against the Utility, if any remain, in the normal claims process once FERC resolves 

the underlying regulatory disputes between the parties, via the QF Proceedings, as is customary in 

chapter 11. Indeed, doing otherwise would undermine judicial economy, as it would virtually 

guarantee protracted litigation before FERC over a damages claim that may never need to be 

litigated, with all of the expense and disruption inherent in that process. 

In sum, there is no question that the automatic stay applies to CCSF’s prosecution of the 

Complaint Proceeding. Only in the event that FERC finds for CCSF on the regulatory dispute at 

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5 Weil, Gotshal & Manges LLP 767 Fifth Avenue New York, NY 10153-0119

issue in the QF Proceedings should the Court even consider lifting the stay for litigation of whether 

and in what amount CCSF may be entitled to damages—although the more appropriate course at that 

juncture would be to attempt to resolve any such claim through the bankruptcy claims process. In 

any case, CCSF loses nothing if the Complaint Proceeding remains stayed, as it should be. 

Permitting litigation of the Complaint Proceeding now, before a bar date has even been set, is 

premature and places CCSF on an unequal footing with other creditors while achieving no material 

benefit at this time. 

Conclusion 

For the foregoing reasons, CCSF’s Motion should be denied in its entirety. Alternatively, the 

Utility respectfully requests that this Court schedule a final hearing and set a briefing schedule for 

the Utility to submit a full opposition to CCSF’s Motion. 

Dated: May 7, 2019 

WEIL, GOTSHAL & MANGES LLP 

KELLER & BENVENUTTI LLP 

By: /s/ Peter J. Benvenutti 

 Peter J. Benvenutti 

 Attorneys for the Debtors and Debtors in 

 Possession

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