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

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 

KELLER & BENVENUTTI LLP 

Tobias S. Keller (#151445) 

(tkeller@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 

Attorneys for Debtors

and Debtors in Possession

UNITED STATES BANKRUPTCY COURT 

NORTHERN DISTRICT OF CALIFORNIA 

SAN FRANCISCO DIVISION 

In re: 

PG&E CORPORATION,

 - and - 

PACIFIC GAS AND ELECTRIC 

COMPANY,

Case No. 19-30088 (DM)

Chapter 11 

(Lead Case) (Jointly Administered) 

DEBTORS’ RESPONSE AND 

OBJECTION TO TCC’S APPLICATION 

TO EXPAND THE SCOPE OF BAKER & 

HOSTETLER LLP’S RETENTION 

[Relates to Dkt. Nos. 934 and 4018] 

Date: October 22, 2019 

Time: 10:00 a.m. (Pacific Time) 

Place: United States Bankruptcy Court 

 Courtroom 17, 16th Floor 

 San Francisco, CA 94102 

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# 4210 Filed: 10/15/19 Entered: 10/15/19 14:25:39 Page 1 of

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PG&E Corporation (“PG&E Corp.”) and Pacific Gas and Electric Company (the 

“Utility”), as debtors and debtors in possession (collectively, the “Debtors”) in the above-captioned 

chapter 11 cases (the “Chapter 11 Cases”), hereby submit this response and objection (the 

“Objection”) to the Application of the Official Committee of Tort Claimants for Entry of an Order 

(i) Confirming the Scope of Employment of Baker & Hostetler LLP, or Alternatively (ii) Amending the 

Order Approving Application of the Official Committee of Tort Claimants Pursuant to 11 U.S.C. 

§ 1103 and Fed. R. Bankr. P. 2014 and 5002, for an Order Authorizing Retention and Employment of 

Baker & Hostetler LLP, Effective as of February 15, 2019 (Doc. No. 1331) [Dkt. No. 4018] (the 

“TCC Application”).1 

1

 Capitalized terms used but not herein defined shall have the meanings ascribed to such terms in the 

TCC Application. 

Case: 19-30088 Doc# 4210 Filed: 10/15/19 Entered: 10/15/19 14:25:39 Page 2 of

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Preliminary Statement 

 Pursuant to the TCC Application, the Tort Claimant Committee (the “TCC”) seeks 

authority to have its attorneys, Baker & Hostetler LLP (“Baker”), fully participate in the State Court 

Litigation relating to the Tubbs Fire, where it acknowledges that it is not a party. Moreover, the TCC 

seeks to have Baker “draft pleadings and memoranda in connection with the State Court Litigation, 

assist in discovery, and participate in the litigation, including paying costs associated with the State 

Court Litigation...[and] Baker anticipates that some of the pleadings and memoranda may be filed by 

the plaintiffs in the State Court Litigation.” TCC Application ¶ 12. In addition, the TCC Application 

states that “there will be a number of expert witnesses that will be employed in connection with the 

State Court Litigation...[and] Baker intends to employ the experts required for the State Court 

Litigation...[and] expert costs will be reflected on Baker’s invoices, fee statements and fee 

applications as a cost and paid as a pass through cost by Baker.” Id. at ¶ 15. The TCC Motion goes on 

to state: “Some of the aforementioned expert witnesses have or will be retained by counsel for the 

State Court Litigation plaintiffs, but will be paid [by the Debtors’ estates].” Id. 

 Accordingly, what the TCC Application asks this Court to approve is for the Debtors’ 

estates and all other parties in interest to bankroll the costs that individual plaintiffs otherwise would 

incur in the State Court Litigation to prosecute their own claims against the Debtors. The TCC 

Application seeks to do this even while acknowledging that the TCC itself is not a party to the State 

Court Litigation and, accordingly, has no standing to participate. Because it is not a party, the TCC 

does not (and cannot) contend that Baker will perform services beyond those that are already being 

performed by numerous capable plaintiffs’ lawyers whose clients are parties. Rather, the TCC 

apparently seeks to have Baker ghost-write pleadings to be “filed by the plaintiffs” who are already 

competently represented and thereby shift to the Debtors’ estates costs that otherwise would be 

incurred by those plaintiffs in the prosecution of their own claims. The TCC proposes to carry out this 

cost-shifting, at the expense of the Debtors’ estates, even for the costs of expert witnesses who already 

have been retained by those State Court plaintiffs. Notably, the TCC Application cites no authority for 

the extraordinary relief it is seeking because no such authority exists. 

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 As noted in this Court’s order modifying the stay with respect to the State Court 

Litigation, the automatic stay was modified solely as to the alleged Preference Plaintiffs listed on 

Schedules A and B to the order to “prosecute their claims...against the Debtors.” Dkt No. 3644 

at ¶ 1. The order did not authorize the TCC to participate in those preference trials, much less to 

front the costs of litigation of those trials and impose all of those costs on the Debtors’ estates. 

 As this Court is well-aware, in circumstances where the automatic stay is modified 

to permit prepetition litigation to proceed, that litigation proceeds in the normal course, with the 

parties bearing their own costs. It is not an opportunity for those parties asserting claims against a 

debtor to impose their costs of litigation on the debtor’s estate, nor should that be permitted. 

 Here, the TCC’s motivation is clear. It seeks authority for its attorneys to effectively 

litigate the individual preference claims, draft pleadings and memoranda, and retain and pay 

experts in the place of the plaintiffs’ attorneys, all to be funded by the Debtors’ estates. This is 

completely unprecedented and inappropriate, and should not be countenanced by the Court. 

The TCC Application Should Be Denied 

Pursuant to the TCC Application, the TCC seeks to expand the scope of Baker’s 

previously approved retention beyond that permitted by the Bankruptcy Code so that the Debtors’ 

estates – their other creditors and stakeholders – finance the cost of a small group of individual 

claimants litigating the allowance of their claims against the Debtors in a non-bankruptcy forum. 

Notably, the TCC is not even a party to the litigation and, of course, it does not and cannot 

represent the individual plaintiffs in the State Court Litigation.2

The powers and duties of an official committee appointed under the Bankruptcy 

Code are set forth in section 1103 of the Bankruptcy Code. An official committee may, among 

other things, advise their constituency of their determinations regarding a chapter 11 plan and 

perform other services that are in the interests of the group represented. 11 U.S.C. § 1103(c); see 

also G-I Holdings, Inc. v. Bennet (In re G-I Holdings, Inc.), Civ. No. 02-3626 (SRC), 2008 U.S. 

2

 At no time when the stay relief was being considered by this Court did the TCC or any of the 

attorneys for the individual Preference Plaintiffs even suggest to the Court or any other party their 

intent to have the Debtors’ estates fund even a portion of their litigation in state court. 

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Dist. LEXIS 43218, at *34 (D.N.J. May 30, 2008) (finding “the Committee is a creature of 

bankruptcy law; it is created solely for the purpose of facilitating the bankruptcy process. Such a 

committee exists to advise the creditors of their rights and the proper course of action in the 

Bankruptcy proceeding”) (internal citations and quotation marks omitted). Notably, the only 

provision of the Bankruptcy Code that explicitly authorizes an official committee to participate in 

litigation is limited to bankruptcy proceedings. Section 1109(b) of the Bankruptcy Code provides, 

in relevant part, that “[a] party in interest, including... a creditors’ committee... may raise and may 

appear and be heard on any issue in a case under this chapter.” 11 U.S.C. § 1109(b); Official 

Comm. of Unsecured Creditors of WorldCom, Inc. v. SEC, 467 F.3d 73, 79 n.4 (2d Cir. 2006) 

(stating that “the phrase ‘in a case under this chapter’ indicates that § 1109 applies only to 

bankruptcy proceedings”) (internal citations omitted). 

Neither the Bankruptcy Code nor applicable law, however, provides any authority 

for any official committee to litigate the individual claims of creditors within its constituency, let 

alone use the estate to fund the litigation of such claims in a non-bankruptcy forum. See In re 

Cont’l Airlines, Inc., 57 B.R. 839, 841 (Bankr. S.D. Tex. 1985) (stating that is clear a debtor is not 

required to finance claims litigation against itself). Official committees in a bankruptcy case do not 

have the authority to act as agents or representative plaintiffs for the individual members of the 

constituency they represent. See Shaw & Levin v. Gulf & W. Indus., Inc. (In re Bohack Corp.), 607 

F.2d 258, 262 n.4 (2d Cir. 1979) (“although the creditors committee represents the interests of all 

creditors, its main function is to advise the creditors of their rights and the proper course of action 

in the Bankruptcy proceeding.”); see also G-I Holdings, Inc, 2008 U.S. Dist. LEXIS 43218, at *34 

(finding “the powers and duties set forth by § 1102 and § 1103 relate exclusively to proceedings in 

bankruptcy. For these reasons a committee should be limited to taking actions in connection with 

the bankruptcy case”). 

Here, the TCC Application states that the TCC has requested that “Baker draft 

pleadings and memoranda in connection with the State Court Litigation, assist in discovery, and 

participate in the litigation, including paying costs associated with the State Court Litigation” and 

furthers seeks authority for Baker to “employ the experts required for the State Court Litigation” 

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and to have those “expert costs...reflected on Baker’s invoices, fee statements and fee applications 

as a cost and paid as a pass through cost by Baker.” TCC Application at ¶¶ 12, 15. This requested 

expansion by the TCC is plainly designed to have the Debtors’ estates rather than the attorneys 

representing the individual plaintiffs fund the lion’s share of the costs of the State Court Litigation. 

Of course, the TCC Application cites no authority for the novel relief being requested, nor 

demonstrates any other cognizable reason why Baker should actively participate in the litigation 

being pursued by individual plaintiffs, much less have all of those costs borne by the Debtors’ 

estates and other economic stakeholders. 

To be clear, the Debtors do not object to the TCC monitoring the State Court 

Litigation. That, however, hardly equates to a roving mandate for Baker to be a primary litigant in 

non-bankruptcy tort litigation and a means to force the Debtors’ other stakeholders to finance 

litigation on behalf of a small subset of individual, discrete claims against the Debtors being 

pursued in state court. 

Further, by definition and by virtue of the stay relief afforded to the Preference 

Plaintiffs and not to other tort claimants asserting claims in connection with the wildfires, the 

Preference Plaintiffs occupy a position separate and distinct from other tort claimants represented 

by the TCC. Indeed, the Preference Plaintiffs are pursuing individual actions against the Debtors 

with respect to one fire, independent of other tort claimants. The interests of an individual 

Preference Plaintiff may run contrary to other litigants or the TCC’s other constituents, creating an 

obvious conflict of interest for the TCC. 

Courts have disqualified committee counsel for such conflicts and, in some 

circumstance, when there is even the appearance of a conflict. See Adorno & Yoss LLP v. U.S. Tr. 

(In re 3DFX Interactive, Inc.), 2008 Bankr. LEXIS 4027, *12-14 (9th Cir. B.A.P. Feb. 6, 2008) 

(upholding the Bankruptcy Court’s decision to disqualify committee counsel when counsel also 

represented an individual creditor in a matter that had the potential to impact recoveries to other 

creditors); see also In re Electro-Optix, U.S.A., Inc., 130 B.R. 621, 622 (Bankr. S.D. Fla. 1991) 

(disqualifying committee counsel because it also represented the largest unsecured creditor in the 

bankruptcy which representation created “an appearance of impropriety”); In re Oliver’s Stores, 

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79 B.R. 588, 590 (Bankr. D.N.J. 1987) (Because the court found it "very likely" that actual 

conflicts of interest between the creditors’ committee and individual committee members could 

arise, it denied applicants’ motion to represent individual creditors.). 

In In re Continental, in denying an official committee’s motion to represent 

individual claimants and to speak on behalf of those individuals in claims litigation, the Bankruptcy 

Court found that “it is clear that a debtor is not required to finance litigation against itself designed 

to maximize claims against the estate.” Cont’l Airlines, Inc., 57 B.R. at 841 (citing Newman & 

Bisco v. Realty Assocs. Sec. Corp., 173 F.2d 609 (2d Cir. 1949); In re New York, N.H. & H.R. Co., 

46 F. Supp. 214 (D. Conn. 1942), aff'd sub nom. Conn. Ry. and Lighting Co. v. Palmer, 132 F.2d 

670 (2d Cir. 1942)). In fact, unlike here where the TCC is seeking to have the Debtors finance 

litigation in a forum other than the Bankruptcy Court, that case involved claims litigation in the 

Bankruptcy Court, yet the court still found that allowing the “Committee and its counsel to serve in 

such a role expands the meaning and intent of the Bankruptcy Code in a manner for which it was 

neither intended, nor for which there is any clear case precedent to be found.” Id. 

Moreover, for Baker to participate in the litigation, draft pleadings for the plaintiffs, 

and employ the experts required for the State Court Litigation and have those expert costs paid as a 

pass through cost, undermines the longstanding bedrock principle known as the American Rule, 

which states “that the prevailing party may not recover attorneys’ fees as costs or otherwise.” 

Alyeska Pipeline Serv. Co. v. Wilderness Soc'y, 421 U.S. 240, 245 (1975). Because the American 

Rule “has roots in our common law reaching back to at least the 18th century, [courts] will not 

deviate from the American Rule absent explicit statutory authority.” Baker Botts L.L.P. v. 

ASARCO LLC, 135 S. Ct. 2158, 2164 (2015) (internal citations and quotations omitted); see also In 

re Dailey, 289 B.R. 157, 159 (Bankr. D. Mont. 2003) (applying Alyeska and the American Rule in 

the 9th Circuit and stating that the “Supreme Court in Alyeska went to considerable lengths to trace 

the development of the ‘American Rule’”); In re LCO Enterprises, Inc., 180 B.R. 567, 569 (B.A.P. 

9th Cir. 1995), aff'd, 105 F.3d 665 (9th Cir. 1997) (same). Long standing precedent and legal 

principles make it clear that a party cannot be forced to fund the costs of litigation against itself and 

neither specific and explicit statutory provisions nor the clear Congressional intent required to 

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circumvent the American Rule are present here. The fact that the TCC is an official committee 

does not at all compel a different result here. 

Conclusion 

The Debtors and all of their other economic stakeholders should not be required to 

finance the costs of specific plaintiffs litigating the allowance of their claims against the Debtors in 

state court. The TCC Application should be denied. 

Dated: October 15, 2019 

 WEIL, GOTSHAL & MANGES LLP 

 KELLER & BENVENUTTI LLP

 

/s/ Stephen Karotkin

 Stephen Karotkin 

Attorneys for Debtors and Debtors in Possession

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