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3. November 2, 2017-Misstatement No. 11 

264. Later on the same call, an analyst asked the Company for more detail about 

3 PG&E' s vegetation management practices. President and COO Nickolas Stavropoulos replied as 

4 

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8 

9 

10 

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follows: 

[ANALYST:] And then, l guess, can you discuss your vegetation 

practices for trees that are located near power lines? I guess 

we've seen sort of end reports that have come out for some of your 

peers that they sort of track vegetation that's within certain 

distances from the lines, and they basically make their decisions on 

what to do based on sort of updates. 

[Stavropoulos:] Thank you for the question. So as Geisha 

mentioned, we have a very aggressive vegetation management 

program across our 70,000-mile -- square mile territory. We 

manage about 123 million trees that are near and adjacent to our 

facilities. And over the last 2 years, we've doubled the amount 

that we've invested in veg[etation] management. That includes 

line clearing to remove parts of trees that are adjacent to our 

facilities as well as removal of dead and dying trees. So the 

program involves year-round effort to identify these dead and 

dying trees through inspection processes where we use foot and 

aerial patrols; we use LiDAR, which is light, detecting and ranging 

technology, to identify the trees that need to be worked. We 

inspect all of our overhead lines every year, and we do second 

patrols in high fire danger areas at least twice a year. In some 

areas, we do as often as 4x a year. So it's a very aggressive 

program. There are specific requirements around line clearing, and 

it depends upon the voltage of the lines. And it can range up to feet 

[sic] to as much a sort of 18 inches away from the facility. So there 

are all sorts of different requirements, depending upon where the 

facilities are located and the voltage of the facilities. 

265. This statement was materially false and/or misleading because PG&E did not 

20 "doubl[e] the amount that we've invested in veg[etation] management." As explained in Section 

21 VI.B., supra, PG&E's Vegetation Management Balancing Accounts for the relevant years 

22 indicate that PG&E spent $194,094,406 on vegetation management in 2015, $198,735,579 in 

23 2016, and $201,456,193 in 2017. Moreover, the lack of improvement to PG&E's vegetation 

24 management practices was confirmed by PG&E's own Vegetation Program Manager Richard 

25 Yarnell, who reportedly testified under oath that, even by April 10, 2017: "PG&E-to the best o 

26 my knowledge, we have not made any changes as a result ofth[e Butte] fire," i.e., since 

27 September 2015. 

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1 266. Second, PG&E failed to comply with safety regulations specifically related to 

2 vegetation management. By representing that it "inspect[s] all of [its] overhead lines every year," 

3 and inspects some trees "twice" or "4x" each year, Stavropoulos falsely created the impression 

4 that PG&E would prevent many safety violations from occurring, especially in "high fire danger 

5 areas" such as those where the North Bay Fires and Camp Fire erupted. In reality, safety 

6 violations were so pervasive that they evidently caused both ignition points of the Camp Fire as 

7 well as at least eleven fires at the same time in seven different counties. In touting its "very 

8 aggressive vegetation management program," the statement actionably omitted the widespread 

9 failure of these measures to bring PG&E into compliance. Indeed, if PG&E had been properly 

10 "inspect[ing] all of our overhead lines "every year," "twice a year," or "4x a year," many of the 

11 causes of the North Bay Fires and Camp Fire would have been discovered and the fires 

12 prevented. For instance, in addition to the fires caused by dead or dying trees, Cal Fire found that 

13 the Cascade Fire was caused "by sagging power lines coming into contact" and the Blue Fire wa 

14 caused when "a PG&E power line conductor separated from a connector." 

15 267. As another example, in the afternoon of November 8, 2018, PG&E's aerial 

16 inspection of the 115 kilovolt transmission line that caused the Camp Fire discovered "damage to 

17 a transmission tower" carrying that electrical line. PG&E has also acknowledged a second 

18 ignition point for the Camp Fire that exhibited damaged and downed poles, vegetation on top of 

19 downed wires, and other signs of safety violations. Cal Fire has determined that PG&E caused 

20 both of these ignition points. 

21 268. Third, PG&E has admitted that it did not "inspect all of our overhead lines every 

22 year," much less "twice a year" or "4x a year," because at the time this statement was made, it 

23 did not inspect Tower :27/222 of the Caribou-Palermo transmission line since August 2014. 

24 This lack of annual inspection contributed to Tower :27/222's failure on November 8, 2018, 

25 which was part of the Camp Fire's first ignition point. 

26 269. Fourth, this statement materially omitted the true risk that PG&E would cause 

27 wildfires serious enough to imperil the Company's financial condition. 

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4. November 5, 2017-Misstatement No. 12 

270. At all relevant times, PG&E's Media Relations department maintained a news 

3 website named Currents,98 providing news, information, and commentary about PG&E' s 

4 activities, including the delivery of electricity and the operation, maintenance, and safety of the 

5 Company's electric services. Through the website, PG&E repeatedly touted the safety of its 

6 power lines, the Company's vegetation management program, and its purported success 

7 mitigating wildfire risk. 

8 271. In one such article, dated November 5, 2017 and titled "Facts About PG&E's 

9 Wildfire and Prevention Safety Efforts," PG&E reassured investors that "PG&E meets or 

10 exceeds all applicable federal and state vegetation clearance requirements."99 

11 272. This statement was materially false and/or misleading because PG&E did not 

12 "meet" - much less "exceed" - "all applicable ... state vegetation clearance requirements." 

13 273. First, according to reports released in subsequent corrective disclosures, including 

14 on May 25 and June 8, 2018, PG&E violated relevant wildfire safety laws, including California 

15 Public Resources Code Section 4293, multiple times. See Section VII.D.4., infra. 

16 274. Second, Cal Fire found sufficient evidence of violations of state law to refer 

17 PG&E to the relevant district attorneys for eleven of the North Bay fires. See Sections IX.D.4-5, 

18 irifra. 

19 275. Third, investigations into the causes of the Camp Fire have already disclosed 

20 evidence that this most destructive and deadly wildfire in California history was caused by 

21 PG&E violating California Public Resources Code Section 4293 and California Public Utilities 

22 Code Section 451, among other safety regulations. Indeed, Cal Fire has found that PG&E 

23 

24 

25 

26 

27 

28 

98 Currents, PG&E, http://www.pgecurrents.com. 

99 On November 14, 2017, PG&E spokesperson Greg Snapper repeated this false and 

misleading reassurance verbatim in an NBC article titled "Utility Company's Risk Assessment at 

Issue in NorCal Wildfires." See Jaxon Van Derbeken, Utility Company's Risk Assessment at 

Issue in NorCal Wildfires, NBC Universal Media (Nov. 14, 2017), 

https ://www.nbcconnecticut.com/troubl eshooters/nati onal-investigations/PGE-Risk-Assessmentat-Issue-in-N orth-B ay-Wildfires-4 5 73 56963 .html. 

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1 equipment was responsible for both ignition points of the Camp Fire and has since reported 

2 PG&E to the Butte County District Attorney based on evidence of safety violations. 

3 276. Fourth, it has been documented that PG&E actually knew that it was not in 

4 compliance with relevant safety laws and best practices at the time of this statement. Tn 

5 proceedings related to PG&E' s criminal probation before Judge Alsup, PG&E has admitted "that 

6 as of June 2017, there were 3,962 unworked trees which PG&E had identified in 2016 as 

7 hazardous with the potential to 'fall into or otherwise impact the conductors, towers or guy wires 

8 before the next inspection cycle."' See if 104. 

9 277. Fifth, this statement materially omitted the true risk that PG&E would cause 

10 wildfires serious enough to imperil the Company's financial condition. 

11 278. Thus, this statement was materially false and/or misleading because of PG&E's 

12 numerous and widespread violations of safety regulations, including regulations specifically 

13 related to vegetation management - regulations which were essential for preventing devastating 

14 wildfires. See Section VI.F.4. As Judge Alsup held, PG&E's "unsafe conduct has led to 

15 recurring deadly wildfires caused by its electrical system" and the "large number of trees that 

16 should have been removed by PG&E but weren't ... was a major contributing factor, maybe the 

17 single-biggest factor, in causing the fires in 2017 and 2018 in Northern California." In fact, 

18 PG&E's violations were so pervasive that they evidently caused multiple North Bay Fires all at 

19 the same time in seven different counties, and then caused both of the Camp Fire's two ignition 

20 points a year later - therefore the violations cannot be explained away as an isolated lapse. 

21 279. This statement regarding compliance was reviewed and authorized by Defendant 

22 Kane, in her capacity as PG&E's Chief Ethics and Compliance Officer. Kane was responsible 

23 for both "overseeing ... implementation" of PG&E's compliance and "overseeing ... 

24 compliance reporting," including this news release. Because of her senior position within the 

25 Company, Kane had ultimate authority to control the content of this statement. 

26 

27 

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5. May 25, 2018- Misstatement No. 13 

280. On May 25, 2018, PG&E issued a press release to respond to Cal Fire's reports 

3 regarding some of the October 2017 North Bay Fires (see Section VII.D.4, infra), to reassure 

4 investors that PG&E had met all state regulations concerning fire safety. The press release stated: 

5 • Following Governor Brown's January 2014 Drought State 

of Emergency Proclamation and the California Public 

6 Utilities Commission's Resolution ESRB-4, PG&E has 

added enhanced measures to address areas particularly 

7 affected by drought and bark beetles including: 

8 • Increased foot and aerial patrols along power lines in high 

9 

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13 

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18 

19 

20 

fire-risk areas; 

• Removed approximately 236,000 dead or dying trees in 

2016 and 140,000 dead or dying trees in 2017; these tree 

removals were in addition to approximately 30,000 trees 

removed per year prior to the drought; 

• Launched daily aerial fire detection patrols during high fire 

season to improve fire spotting and speed of fire response; 

• Since 2014, provided $11 .4 million to local Fire Safe 

Councils (FSCs) for fuel reduction projects in 

communities; and 

• Provided $1.7 million to local FSCs for 28 highly 

programmable remote-sensing cameras for critical fire 

lookout towers. 

• PG&E meets or exceeds regulatory requirements for pole 

integrity management, using a comprehensive database to 

manage multiple patrol and inspection schedules of our 

more than two million poles. 

281. This statement was materially false and/or misleading because PG&E did not 

21 "meet" - much less "exceed" - "regulatory requirements for pole integrity management." 

22 According to a report released in a subsequent corrective disclosure, PG&E violated California's 

23 safety regulations multiple times. Indeed, on June 8, 2018, Cal Fire disclosed that its 

24 "investigators have determined that 12 Northern California wildfires in the October 2017 Fire 

25 Siege were caused by electric power and distribution lines, conductors and the failure of power 

26 poles." In fact, at least one of the North Bay Fires - the Sulphur Fire - "was caused by the failur 

27 of a PG&E owned power pole" evidencing "violations of state law" sufficient to be referred to 

28 the relevant district attorney. Further, Cal Fire found enough evidence of violations of state law 

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1 to refer PG&E to the relevant district attorneys for eight of these twelve North Bay fires. See 

2 Section VII.D.5., infra. 

3 282. Second, PG&E acknowledged that an aerial patrol of the Camp Fire's origin later 

4 the same day showed "damage to a transmission tower" or pole that PG&E failed to maintain, as 

5 well as a second ignition point that exhibited damaged and downed poles, in violation of Section 

6 451. Thus, PG&E did not "meet[] or exceed[] regulatory requirements for pole integrity 

7 management" - regulations which were essential for preventing devastating wildfires. PG&E' s 

8 representation to the contrary was materially false and/or misleading. Cal Fire has since 

9 confirmed that PG&E equipment was responsible for both of the Camp Fire's ignition points, 

10 and referred its investigations to the relevant district attorney based on evidence of safety 

11 violations. 

12 283. Overall, this statement was materially false and/or misleading because of PG&E's 

13 numerous and widespread violations of safety regulations - regulations which were essential for 

14 preventing devastating wildfires. In fact, PG&E' s violations were so pervasive that they 

15 evidently caused multiple North Bay Fires all at the same time in seven different counties, and 

16 then caused both of the Camp Fire's two ignition points a year later- therefore the violations 

17 cannot be explained away as an isolated lapse. This statement materially omitted the true risk 

18 that PG&E would cause wildfires serious enough to imperil the Company's financial condition. 

19 284. It has additionally been documented that PG&E actually knew that it was not in 

20 compliance with relevant safety laws and best practices at the time of this statement. In 

21 proceedings related to PG&E' s criminal probation before Judge Alsup, PG&E has admitted "that 

22 as of June 2017, there were 3,962 unworked trees which PG&E had identified in 2016 as 

23 hazardous with the potential to 'fall into or otherwise impact the conductors, towers or guy wires 

24 before the next inspection cycle."' See if 104. 

25 285. This statement regarding compliance was reviewed and authorized by Defendant 

26 Kane, in her capacity as PG&E's Chief Ethics and Compliance Officer. Kane was responsible 

27 for both "overseeing ... implementation" of PG&E's compliance and "overseeing ... 

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1 compliance reporting," including this press release. Because of her senior position within the 

2 Company, Kane had ultimate authority to control the content of this statement. 

3 

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F. While the Truth Regarding PG&E's Role in Causing the North Bay Fires 

Emerged, the Company Made Additional False and Misleading Statements 

and Omissions Regarding Compliance with Wildfire-Related Safety 

Regulations, Including Its ESRB-8 Shutoff Protocol 

286. As detailed below (see Section VII.D., infra), PG&E's share price declined 

precipitously as the truth about its responsibility for the North Bay Fires emerged. As liabilities 

for the North Bay Fires threatened the Company's financial viability, Defendants would realize 

that the Company needed a legislative bailout to avoid bankruptcy. As a result, PG&E needed 

the public, including investors, to believe that it would prioritize safety thereafter. 

1. June 8, 2018 - Misstatement No. 14 

287. On June 8, 2018, Cal Fire announced its conclusions that PG&E caused the 

preponderance of the North Bay Fires (see Section VTI.D.5, infra), PG&E's share price 

continued its decline, and its financial situation deteriorated. Later that day, PG&E issued a 

press release to respond to Cal Fire's report, falsely and misleadingly reassuring investors that 

PG&E had met all state regulations concerning fire safety. The press release, titled "PG&E 

Responds to Latest CAL FIRE Announcement" stated, in relevant part: 

Programs Overall Met State's High Standards 

We look forward to the opportunity to carefully review the 

CAL FIRE reports to understand the agency's perspectives. 

Based on the information we have so far, we continue to 

believe our overall programs met our state's high standards. 

For example, PG&E meets or exceeds regulatory 

requirements for pole integrity management, using a 

comprehensive database to manage multiple patrol and 

inspection schedules of our more than two million poles. 

Similarly, under PG&E's industry-leading Vegetation 

Management Program, we inspect and monitor every PG&E 

overhead electric transmission and distribution line each year, 

with some locations patrolled multiple times. We also prune or 

remove approximately 1 .4 million trees annually. 

288. Because PG&E's compliance violations would soon cause the Camp Fire, the 

28 most destructive and deadly wildfire in California history, PG&E's "Vegetation Management 

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1 Program" and "pole integrity management" decidedly did not meet California's "High 

2 Standards." Investigations into the causes of the Camp Fire have already uncovered evidence 

3 that it was caused by PG&E violating California Public Resources Code Section 4293 and 

4 California Public Utilities Code Section 451, among other safety regulations. Indeed, Cal Fire 

5 has found that PG&E equipment was responsible for both ignition points of the Camp Fire and 

6 has since reported PG&E to the Butte County District Attorney based on evidence of safety 

7 violations. 

8 289. First, the Camp Fire was described in initial communications between firefighters 

9 and dispatch as a vegetation fire "underneath the transmission lines," which vegetation should 

10 have been cleared by PG&E pursuant to Section 4293. 

11 290. Second, PG&E acknowledged that an aerial patrol of the Camp Fire's origin later 

12 the same day showed "damage to a transmission tower" or pole that PG&E failed to maintain, in 

13 violation of Section 451. 

14 291. Third, PG&E has also acknowledged a second ignition point for the Camp Fire 

15 that exhibited damaged and downed poles, vegetation on top of downed wires, and other signs of 

16 safety violations. Cal Fire has since confirmed that PG&E equipment was responsible for both of 

17 the Camp Fire's ignition points, and referred its investigations to the relevant district attorney 

18 based on evidence of safety violations. 

19 292. Fourth, it has been documented that PG&E actually knew that it was not in 

20 compliance with relevant safety laws and best practices at the time of this statement. In 

21 proceedings related to PG&E' s criminal probation before Judge Alsup, PG&E has admitted "that 

22 as of June 2017, there were 3,962 unworked trees which PG&E had identified in 2016 as 

23 hazardous with the potential to 'fall into or otherwise impact the conductors, towers or guy wires 

24 before the next inspection cycle."' See if 104. 

25 293. Fifth, this statement materially omitted the true risk that PG&E would cause 

26 wildfires serious enough to imperil the Company's financial condition. 

27 294. Thus, PG&E did not "meet[] or exceed[] regulatory requirements for pole 

28 integrity management" or "Vegetation Management" - regulations which were essential for 

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1 preventing devastating wildfires. See Section VI.F.4. As Judge Alsup held, PG&E's "unsafe 

2 conduct has led to recurring deadly wildfires caused by its electrical system" and the "large 

3 number of trees that should have been removed by PG&E but weren't ... was a major 

4 contributing factor, maybe the single-biggest factor, in causing the fires in 2017 and 2018 in 

5 Northern California." PG&E's representation to the contrary was materially false and/or 

6 misleading. 

7 295. This statement regarding compliance was reviewed and authorized by Defendant 

8 Kane, in her capacity as PG&E's Chief Ethics and Compliance Officer. Kane was responsible 

9 for both "overseeing ... implementation" of PG&E's compliance and "overseeing ... 

10 compliance reporting," including this press release. Because of her senior position within the 

11 Company, Kane had ultimate authority to control the content of this statement. 

12 

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2. June 8, 2018 - Misstatement No. 15 

296. The same press release contained a further false and/or misleading statement: 

To address the growing threats posed by wildfires and 

extreme weather, and in light of the wildfires throughout 

our state last year, PG&E has launched the Community 

Wildfire Safety Program to help keep our customers and 

communities safe. Among the key components of the new 

program are ... 

• Public Safety Power Shutoff: As a last resort, a program to 

proactively turn off electric power for safety when 

extreme fire danger conditions occur, while helping 

customers prepare and providing early warning 

notification, when and where possible. 

297. PG&E's representation that it "has launched ... a program to proactively turn off 

electric power for safety when extreme fire danger conditions occur" was false and misleading. 

It was false because the touted program, which would eventually become its ESRB-8 Shutoff 

Protocol, was illusory; hence, PG&E never "launched" it. Further, it misleadingly omitted that 

any guidelines PG&E did develop were a mere pretense of safety that the Company did not 

follow. Even when all seven relevant "extreme fire danger conditions" did "occur," weighing 

strongly in favor of shutting off PG&E's transmission lines near the Jarbo Gap on November 7 

and 8, 2018, PG&E flouted its own supposed program. PG&E's failure to shut off its 

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1 transmission line caused the Camp Fire: the most destructive and deadly wildfire in California 

2 history. By touting a wildfire safety program PG&E did not adhere to, and where its 

3 nonadherence would risk devastating wildfires, PG&E misrepresented existing and material facts 

4 to investors. 

5 298. This press release regarding compliance was reviewed and authorized by 

6 Defendant Kane, in her capacity as PG&E's Chief Ethics and Compliance Officer. Kane was 

7 responsible for both "overseeing ... implementation" of PG&E's compliance and "overseeing .. 

8 . compliance reporting," including this press release. Because of her senior position within the 

9 Company, Kane had ultimate authority to control the content of this statement. 

10 

11 

3. September 27, 2018- Misstatement No. 16 

299. On July 16, 2018, the CPUC enacted Resolution ESRB-8, which required PG&E 

12 to adopt, promulgate and follow "de-energization policy and procedures" to "de-energize power 

13 lines" in the face of unprecedented wildfire threats "to ensure public safety." It was the 

14 Company's official announcement of its de-energization policy and procedures implementing 

15 Resolution ESRB-8, detailed below, that materially misled investors. 

16 300. On or about September 27, 2018, PG&E announced the full details of its ESRB-8 

17 Shutoff Protocol in a filing with CPUC100 that was also posted on its website. 101 The ESRB-8 

18 Shutoff Protocol stated: 

19 PG&E' s Community Wildfire Safety Program implements 

additional precautionary measures intended to reduce wildfire 

20 threats. It includes ... executing protocol.5 to temporarily turn off 

electric power for safety when extreme fire danger conditions are 

21 occurring." 

22 

23 

24 

25 

26 

27 

28 

Public Safety Power Shutoff is one component of the Community 

Wildfire Safety Program. PG&E has created a set of procedures 

100 PG&E Public Safety Power Shutoff Policies and Procedures, CPUC website (Sept. 2018), 

http:/ /cpuc.ca.gov/uploadedFiles/CPUC _Public_ Website/Content/News_ Room/Public-SafetyPower-Shutoff-Policies-and-Procedures-September-2018. pdf. 

101 PG&E Public Safety Power Shutoff Policies and Procedures, PG&E website (Sept. 2018), 

https://www.pge.com/pge_global/common/pdfs/safety/emergency-preparedness/naturaldisaster/wildfires/Public-Safety-Power-Shutoff-Policies-and-Procedures-September-2018.pdf. 

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for . .. [d]etermining what combination of conditions necessitates 

turning off lines for safety. 

PG&E will take a combination of many criteria into consideration, 

including: 

• "Extreme" fire danger threat level, as classified by the 

National Fire Danger Rating System 

• A Red Flag Warning declared by the National Weather 

Service 

• Low humidity levels, generally 20 percent and below 

• Sustained winds above approx. 25 mph and wind gusts in 

excess of approx. 45 mph 

• Site-specific conditions such as temperature, terrain and 

local climate 

• Critically dry vegetation that could serve as fuel for a 

wildfire 

• On-the-ground, real-time observations from PG&E field 

14 crews 

15 (Emphasis original.) 

16 301. PG&E's representation that it had "implement[ed] additional precautionary 

17 measures" including "determining what combination of conditions necessitates turning off lines 

18 for safety" was false and misleading. It was false because the ESRB-8 Shutoff Protocol was 

19 illusory; hence, PG&E did not "implement" it, as required by law. Further, it misleadingly 

20 omitted that any guidelines PG&E did develop were a mere pretense of safety that the Company 

21 did not follow. Even when all seven relevant "criteria" weighed in favor of shutting off PG&E's 

22 transmission lines near the Jarbo Gap on November 7 and 8, 2018, PG&E nevertheless flouted 

23 its protocol. PG&E' s failure to shut off its transmission line caused the Camp Fire: the most 

24 destructive and deadly wildfire in California history. By touting a wildfire safety program 

25 PG&E did not adhere to, where its nonadherence would risk devastating wildfires, PG&E 

26 misrepresented existing and material facts to investors. 

27 302. This statement regarding compliance was reviewed and authorized by Defendant 

28 Kane, in her capacity as PG&E's Chief Ethics and Compliance Officer. Kane was responsible 

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1 for both "overseeing ... implementation" of PG&E's compliance and "overseeing ... 

2 compliance reporting," including this report. Because of her senior position within the Company, 

3 Kane had ultimate authority to control the content of this statement. 

4 

5 

4. October 9, 2018- Misstatement No. 17 

303. On October 9, 2018 Cal Fire announced its conclusions that PG&E equipment 

6 caused another of the North Bay Fires, known as the Cascade Fire. Later the same day, PG&E 

7 issued a press release to respond to Cal Fire's report, falsely and misleadingly reassuring 

8 investors that PG&E had met all state regulations concerning fire safety. The press release, titled 

9 "PG&E Responds to Cascade Wildfire Announcement" stated, in relevant part: 

10 [W]e are continuing to focus on implementing additional 

precautionary measures intended to further reduce wildfire 

11 threats, such as working to remove and reduce dangerous 

vegetation, improving weather forecasting, upgrading 

12 emergency response warnings, [and] making lines and poles 

,,;,tronger in high fire threat areas, and taking other actions to 

13 make our system, and our customers and communities, even 

safer in the face of a growing wildfire threat. 

14 

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304. It was false and misleading for PG&E to tout "implementing additional 

precautionary measures ... to remove and reduce dangerous vegetation" and "mak[e] lines and 

poles stronger in high fire threat areas." Indeed, just one month later, PG&E would cause the 

Camp Fire through its failure to remove vegetation and maintain its poles, in violation of 

California Public Resources Code Section 4293 and California Public Utilities Code Section 451, 

among other safety regulations. 

305. As noted above, the Camp Fire was described in initial communications between 

firefighters and dispatch as a vegetation fire "underneath the transmission lines," which 

vegetation should have been cleared by PG&E under Section 4293. Second, PG&E 

acknowledged that an aerial patrol of the Camp Fire's origin later the same day showed "damage 

to a transmission tower" or pole that PG&E failed to maintain, as well as a second ignition point 

that exhibited damaged and downed poles, in violation of Section 451. PG&E' s representation 

to the contrary was materially false and/or misleading. Indeed, Cal Fire has found that PG&E 

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1 equipment was responsible for both ignition points of the Camp Fire and has since reported 

2 PG&E to the Butte County District Attorney based on evidence of safety violations. 

3 306. Moreover, PG&E was not "making lines and poles stronger in high fire threat 

4 areas." For example, PG&E never performed planned safety work on, or otherwise updated, the 

5 100 year-old Caribou-Palermo transmission line even though it knew that its lines and poles wer 

6 weak and that "the likelihood of failed structures happening is high" (i]l36). The same 

7 transmission line would soon cause the Camp Fire's first ignition point, as found by Cal Fire and 

8 accepted by PG&E (iJ138). 

9 307. Further, this statement materially omitted the true risk that PG&E would cause 

10 wildfires serious enough to imperil the Company's financial condition. 

11 308. This statement regarding compliance was reviewed and authorized by Defendant 

12 Kane, in her capacity as PG&E's Chief Ethics and Compliance Officer. Kane was responsible 

13 for both "overseeing ... implementation" of PG&E's compliance and "overseeing ... 

14 compliance reporting," including this press release. Because of her senior position within the 

15 Company, Kane had ultimate authority to control the content of this statement. 

16 

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5. October 9, 2018- Misstatement No. 18 

309. The same PG&E press release contained a further false and/or misleading 

statement: 

To address the growing threats posed by wildfires and extreme 

weather, and in light of the wildfires throughout our state last 

year, PG&E has launched the Community Wildfire Safety 

Program to help keep our customers and communities safe by 

implementing additional precautionary measures intended to 

further reduce wildfire threats. Among the key components of 

the new program are ... 

• Public Safety Power Shutoff: As a last resort, a program to 

proactively turn off electric power for safety when 

extreme fire danger conditions occur, while helping 

customers prepare and providing early warning 

notification, when and where possible. 

310. PG&E's representation that it "has launched" and "implement[ed] ... a program 

27 to proactively tum off electric power for safety when extreme fire danger conditions occur" was 

28 

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1 false and misleading. It was false because the touted program, its ESRB-8 Shutoff Protocol, was 

2 illusory from the beginning; hence, PG&E never "launched" or "implement[ ed]" it. 

3 311. Further, it misleadingly omitted that any guidelines PG&E did develop were a 

4 mere pretense of safety that the Company did not follow. Even when all seven relevant "extrem 

5 fire danger conditions" did "occur," weighing in favor of shutting off PG&E's transmission lines 

6 near the Jarbo Gap on November 7 and 8, 2018, PG&E nevertheless flouted its supposed 

7 program. 

8 312. PG&E' s failure to shut off its transmission line caused the Camp Fire: the most 

9 destructive and deadly wildfire in California history. By touting a wildfire safety program 

10 PG&E did not adhere to, where its nonadherence would risk devastating wildfires, PG&E 

11 misrepresented existing and material facts to investors. 

12 313. This statement regarding compliance was reviewed and authorized by Defendant 

13 Kane, in her capacity as PG&E's Chief Ethics and Compliance Officer. Kane was responsible 

14 for both "overseeing ... implementation" of PG&E's compliance and "overseeing ... 

15 compliance reporting," including this press release. Because of her senior position within the 

16 Company, Kane had ultimate authority to control the content of this statement. 

17 

18 

6. November 8, 2018- Misstatement No. 19 

314. On November 8, 2018, the Camp Fire started after PG&E decided not to shut off 

19 its power. Before the public became aware of PG&E's true role in causing the Camp Fire, the 

20 Company announced via its official Twitter.com account at 6: 14 p.m. that day: "PG&E has 

21 determined that it will not proceed with plans today for a Public Safety Power Shutoff in portion 

22 of 8 Northern CA counties, as weather conditions did not warrant this safety measure." 102 

23 315. This statement was affirmatively false: weather conditions did, in fact, warrant a 

24 shutoff. As detailed above, all seven criteria that PG&E deemed relevant, including those related 

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102 PG&E Twitter Account Post (Nov. 8, 2018 3:14PM), 

https ://twitter. com/PGE4 Me/ status/I 0606 7200092926 7713. 

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1 to weather conditions, weighed in favor of a shutoff under PG&E' s ESRB-8 Shutoff Protocol. 

2 See Section IV.H., supra. 

3 316. This statement regarding compliance was reviewed and authorized by Defendant 

4 Kane, in her capacity as PG&E's Chief Ethics and Compliance Officer. Kane was responsible 

5 for both "overseeing ... implementation" of PG&E's compliance and "overseeing ... 

6 compliance reporting," including this announcement. Because of her senior position within the 

7 Company, Kane had ultimate authority to control the content of this statement. 

8 VIII. MATERIALITY UNDER THE EXCHANGE ACT 

9 317. PG&E' s reassurances to investors about its safety, prudence, and compliance with 

10 the law were especially important to investors because of California's legal regime known as 

11 inverse condemnation. As described in more detail above (see Section VI.A.5., supra), PG&E is 

12 strictly liable for the property costs of wildfires it caused. However, during the Class Period, it 

13 could be reimbursed for those costs by ratepayers by petitioning CPUC and showing that it had 

14 acted as a prudent manager. On such a showing, CPUC could have rate payers reimburse PG&E 

15 for some or all of its liability. 

16 318. PG&E's investors understood that PG&E would bear the costs of wildfires it 

17 caused, and that PG&E' s ability to pass some or all of those costs on to ratepayers was limited 

18 by PG&E' s prudence. For example, an analyst report issued by Evercore ISi on December 21, 

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2017 stated: 

On the 3Q 17 call PCG indicated company operations were 

conducted properly leading up to and after the fire, but they still 

had little information regarding the cause of the fire or potential 

shareholder exposure. 

* * * 

PCG reiterated the company routinely inspects, maintains, and 

replaces poles, and tests and treats wood poles on a frequency that 

significantly exceeds CPUC requirements. The company claims to 

have one of, if not the most comprehensive vegetation 

management programs in the country. Further, the company 

doubled its vegetation management spending in 2016 due to the 

drought and tree mortality crisis in California. That being said, we 

still do not know and likely will not know what caused the various 

fires for some time, whether or not PCG's equipment was solely 

or partly the cause, and whether or not the facts will support a 

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ruling at CPUC that PCG acted prudently should they be 

successfully sued under inverse condemnation. 

319. In light of these provisions of California law, PG&E' s repeated reassurances to its 

investors - e.g., that it complied with relevant safety regulations, doubled its vegetation 

management spending, inspected all of its powerlines every year, and would adhere to a formal 

ESRB-8 Shutoff Protocol - effectively communicated that the Company would be able to 

recover any property damage liabilities from wildfires caused by its systems, through the CPUC. 

Those reassurances, when revealed to have been false and misleading, impacted the Company's 

valuation by at least the amount of damage it caused by starting or exacerbating the North Bay 

and Camp Fires. The impact of these misstatements, and their importance to the Company's 

financial condition, is underscored by PG&E' s decision to file for Chapter 11 bankruptcy based 

on its anticipated $30 billion in potential liabilities tied to the North Bay and Camp Fires, and 

related concern that as a result, neither PG&E Corporation nor the Utility would be able "to 

continue as going concerns." 

320. In total, PG&E's share price declined $55.60 per share on the nine corrective 

disclosures and/or materializations of concealed risk herein alleged. Given that the Company had 

between approximately 514.4 and 518.6 million shares outstanding from October 24, 2017 to 

October 25, 2018, the losses caused by PG&E's fraud under the Exchange Act were in the 

billions of dollars. 

IX. LOSS CAUSATION UNDER THE EXCHANGE ACT 

A. Defendants' False and Misleading Statements Artificially Inflated the Price 

of PG&E's Securities 

321. As a result of their purchases of PG&E's securities during the Class Period, Lead 

23 Plaintiff and the other Class members suffered economic loss, i.e., damages, under the federal 

24 securities laws. Defendants' false and misleading statements had the intended effect and caused 

25 PG&E securities to trade at artificially inflated levels throughout the Class Period, reaching as 

26 high as $71.56 per share on September 11, 2017 - a month before the truth started to emerge on 

27 October 12, 2017. 

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B. PG&E's Safety Violations Caused the Devastating North Bay Fires 

322. PG&E caused the North Bay Fires. Of the eighteen fires for which Cal Fire has 

3 determined the cause, it has determined that seventeen were caused by PG&E equipment. 

4 323. Of these seventeen fires, Cal Fire determined that eleven were due to PG&E's 

5 violation of California safety regulations. Under California law, PG&E bears the cost for the 

6 destruction caused by these fires unless it can show to CPUC that its violations were 

7 "reasonable." Together, these fires were responsible for more than 100,000 acres of land 

8 devastated, more than 2,000 structures destroyed, and at least 9 of the 44 North Bay Fire 

9 fatalities. 

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324. Six more of the North Bay Fires were also deemed to have been caused by PG&E 

electrical lines; though Cal Fire found no specific evidence of safety violations for these six fires, 

PG&E may still be found liable under California's legal regime known as inverse condemnation, 

which provides strict liability for utilities when their power lines are involved in wildfires that 

lead to property damage. Together, these fires were responsible for an additional more than 

50,000 acres of land devastated, more than 800 structures destroyed, and at least 13 of 44 

fatalities. Necessarily, these six fires would have been more easily contained, and accordingly 

less destructive, if not for the fires caused by PG&E' s violations and inadequate safety 

· 103 practices. 

C. PG&E's Safety Violations Caused the Devastating Camp Fire 

325. At or about 6:29 a.m. on November 8, 2018, the Camp Fire was started in Pulga, 

21 California by faulty PG&E equipment on Pulga Road and Camp Creek Road, near the Jarbo 

22 Gap. 104 A second ignition point, also caused by faulty PG&E equipment, began approximately 

23 15 minutes later near the community of Concow. The combined Camp Fire soon devastated 

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103 Similarly, another of the North Bay Fires known as the Tubbs fire (which burned 36,807 

acres, destroyed 5,636 structures, and resulted in 22 fatalities) would have been more easily 

contained, and accordingly less destructive, if not for the fires caused by PG&E' s violations and 

inadequate safety practices at the same time. 

104 Camp Fire Incident Update (Nov. 25, 2018 7:00AM), 

http://cdfdata.fire.ca.gov/admin8327985/cdf/images/incidentfile2277 _ 4326.pdf. 

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1 several surrounding communities, largely destroying Paradise, Concow, Magalia, and Parkhill. 

2 The Camp Fire incinerated 153,336 acres, destroyed 18,804 structures, and killed at least 85 

3 people. 

4 326. As noted above, Cal Fire has concluded that PG&E caused both of the Camp 

5 Fire's two ignition points under circumstances evidencing violations of safety regulations and 

6 referred its investigation to the Butte County District Attorney. 

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D. As the Market Learned About the Effects and Extent of PG&E's Inadequate 

Safety Practices, the Price of PG&E's Securities Fell Dramatically 

327. On or about October 8, 2017, eighteen major wildfires known as the North Bay 

Fires started in California, burning at least 249,000 acres and devastating properties across nine 

California counties. 

1. October 12, 2017 - Corrective Disclosure and/or Materialization of 

Concealed Risk 

(a) The Market Began to Learn the Extent and Effects of PG&E's 

Responsibility for the North Bay Fires 

328. It was not until Thursday, October 12, 2017 that the market began to understand 

that PG&E's safety regulation violations were likely a proximate cause of the North Bay Fires. 

On that date, CPUC sent PG&E a litigation hold letter informing the Company of its "obligation 

to preserve all evidence with respect to the Northern California wildfires in Napa, Sonoma, and 

Solano Counties." Although this letter was made public on October 12, 2017, it "affirm[ed] a 

verbal communication" of the same obligation by CPUC Safety Enforcement Division Program 

Manager Charlotte TerKeurst to PG&E "at approximately 6:00 p.m. on October 10, 2017." The 

public disclosure on October 12, 2017 also revealed that "Ms. TerKeurst reminded PG&E of the 

need to preserve all evidence, and PG&E acknowledged that it would do so." 

329. Further, the disclosure made clear that PG&E (a) "must preserve any factual or 

physical evidence ... includ[ing] all failed poles, conductors and associated equipment from 

each fire event" and (b) "must inform all employees and contractors that they must preserve all 

electronic (including emails) and non-electronic documents related to potential causes of the 

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1 fires, vegetation management, maintenance and/or tree-trimming." This was the first 

2 indication that PG&E failures caused any of the North Bay Fires. 

3 330. On this news that PG&E would likely bear at least some responsibility for the 

4 fires, PG&E's stock dropped $4.65 per share, from a closing price of $69.15 on October 11 to a 

5 closing price of $64.50 on October 12, or -6. 7%, with unusually heavy trading volume of almost 

6 13 million shares (compared to a Class Period daily average trading volume of 3.5 million105

). 

7 The price of PG&E securities, however, remained artificially inflated. 

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(b) Market Commentators Confirmed the Cause of PG&E's Share 

Price Decline on October 12, 2017 

331. The following morning, news outlets began to report that PG&E was being 

connected with the causes of some of the North Bay fires. For example, at 10:54 a.m. on October 

13, 2017, CNBC published an article titled "PG&E shares plunge on concern its power lines may 

have started California wildfires." 106 The article began by observing: "The California Public 

Utilities Commission sent a letter on Thursday to PG&E reminding them to preserve 'all 

evidence with respect to the Northern California wildfires in Napa, Sonoma and Solano 

Counties,' according to multiple reports." It continued to note that PG&E's share price decline 

occurred "on concerns its power lines may have started the massive wildfires that have ravaged 

California recently." The article also repeated market commentary that the decline in PG&E's 

share price reflected investors' understanding that PG&E was financially responsible for the 

North Bay Fires: 

The drop in the stock "reflects the following assumptions: 1) the 

fire was caused by PCG' s negligence, 2) insurance coverage for 

3rd party liabilities will be very limited, 3) damage costs per acre 

far larger than those for the 2015 Butte fire and 4) material fines 

and penalties will be assessed," Christopher Turnure, an analyst at 

JPMorgan, said in a note Thursday. "We appreciate the severity of 

the fires and the legal challenges of operating in California, but 

estimate this loss of value as approaching a worst-case scenario for 

PCG shares." 

105 This average excludes alleged corrective disclosure and/or materialization of risk dates. 

106 This article was published prior to the Company's corrective disclosure later that day, 

discussed infra. 

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1 332. Similarly, on the same date, SF Gate published an article observing: "[T]he state 

2 agency that regulates utilities has told PG&E to save every piece of damaged equipment 

3 from the area as evidence for the investigations to come." The article concluded by stating 

4 that PG&E's vegetation management practices caused the North Bay Fires: "In all, the company 

5 spent $198 million in 2016 on 'vegetation management.' But those efforts and that money6 all of it coming from PG&E's customers - may not have been enough." 107 

7 333. Investors started to be concerned regarding whether PG&E violated any 

8 regulations (e.g., failed to adequately trim trees) with respect to the North Bay Fires. For 

9 example, Wells Fargo stated in its analyst report the very next day: 

10 Yesterday (10/12), shares ofPCGunderperformed the S&P 

Utilities by roughly 720 bps. We attribute the material decline in 

11 price to the revelation that the company's power lines might have 

played a role in the Northern California fires. Over the weekend 

12 Northern California experienced winds in excess of 70 miles per 

hour, which could have caused trees to impact power lines that 

13 could have sparked fires particularly given the very dry vegetation. 

While there is still significant uncertainty in what caused the fires, 

14 apparently investigators are looking into the role of PCG's 

infrastructure. The concern for investors is whether PCG did 

15 not adequately trim trees around their power lines it is our 

understanding that in California utilities are required to clear 

16 vegetation within 10 feet of power lines. In the absence of 

inadequate tree trimming, we think that property damage 

17 attributable to PCG's infrastructure should be largely covered 

by insurance. 

18 

334. Similarly, an October 13, 2017 report by a Guggenheim stock analyst stated that 

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the decline was caused by "media reports linking the company to some of the most destructive 

wildfires experienced in CA, which continued to burn." 

107 David R. Baker, PG&E Spent Millions on Fire Prevention; It May Not Have Been Enough, 

San Francisco Gate (Oct. 13, 2017), https://www.sfgate.com/bayarea/article/PG-E-millions-fireprevention-Santa-Rosa-wildfires-12277237.php. 

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2. October 13-16, 2017 - Corrective Disclosure and/or Materialization of 

Concealed Risk 

(a) The Market Continued to Learn the Extent and Effects of 

PG&E's Responsibility for the North Bay Fires 

335. Late on October 13, 2017, PG&E filed a Form 8-K with the SEC shortly before 

5 the close of trading. Therein, the Company stated in relevant part: 

6 Investigation of Northern California Fires 

7 Since October 8, 2017, several catastrophic wildfires have started 

and remain active in Northern California. The causes of these fires 

8 are being investigated by the California Department of Forestry 

and Fire Protection (Cal Fire), including the possible role of 

9 power lines and other facilities of Pacific Gas and Electric 

Company's (the "Utility"), a subsidiary of PG&E Corporation. 

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It currently is unknown whether the Utility would have any 

liability associated with these fires. The Utility has 

approximately $800 million in liability insurance for potential 

losses that may result from these fires. If the amount of 

insurance is insufficient to cover the Utility's liability or if 

insurance is otherwise unavailable, PG&E Corporation's and 

the Utility's financial condition or results of operations could 

be materially affected. 

336. On these disclosures, PG&E's share price continued to decline. From its opening 

16 price of $63 .95 per share that day to its closing price of $53 .43 per share at the end of the next 

17 trading day (Monday, October 16, 2017), PG&E's stock declined $10.52 per share, or 

18 approximately 16.5%. Over the same period, it experienced unusually heavy trading volume of 

19 over 68.5 million shares. The price of PG&E securities, however, remained artificially inflated. 

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(b) Market Commentators Confirmed the Cause of PG&E's Share 

Price Decline on October 13, 2017 

337. Investors understood the Company's October 13, 2017 8-K filing as a disclosure 

that PG&E's conduct with respect to causing the North Bay Fires was greater in severity than 

previously disclosed and was a proximate cause of at least some of the North Bay Fires. Becaus 

the market understood that PG&E would be reimbursed for damages by fires it innocently 

caused, the Company's discussion of liability signaled to the market that at least some of the 

North Bay Fires were caused by PG&E's negligence or worse. For example, a Guggenheim 

stock analyst published a report that day reacting to this news, noting that PG&E "had slid even 

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1 further in the early afternoon actually as well, following the company's 8-K disclosing the 

2 utility's $800mm in liability insurance, which we noted had not been disclosed previously (since 

3 it had been renewed following the Butte fire)." 

4 338. PG&E's announcement and resulting share price decline were proximately caused 

5 by PG&E's inadequate safety practices and violations that resulted in the North Bay Fires. 

6 

7 

8 

9 

3. December 20, 2017 - Corrective Disclosure and/or Materialization of 

Concealed Risk 

(a) The Market Continued to Learn the Extent and Effects of 

PG&E's Responsibility for the North Bay Fires 

339. On December 20, 2017, after the market closed, PG&E filed a press release on 

10 Form 8-K with the SEC titled "PG&E Announces Suspension of Dividend, Citing Uncertainty 

11 Related to Causes and Potential Liabilities Associated with Northern California Wildfires." The 

12 filing also included, as exhibit 99.1, a press release in which the Company announced that it 

13 would be suspending its quarterly cash dividend. In the press release, PG&E stated in pertinent 

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part: 

SAN FRANCISCO, Calif.-PG&E Corporation (NYSE: PCG) 

today announced that its Board of Directors has determined to 

suspend the quarterly cash dividend on the Corporation's 

common stock, beginning with the fourth quarter of 2017, citing 

uncertainty related to causes and potential liabilities associated 

with the extraordinary October 2017 Northern California 

wildfires. 

In addition, the Board of Directors of the Corporation's utility 

subsidiary, Pacific Gas and Electric Company, determined to 

suspend the dividend on the utility's preferred stock, beginning 

with the three-month period ending Jan. 31, 2018, citing the 

same uncertainty. 

No causes have yet been identified for any of the unprecedented 

wildfires, which continue to be the subject of ongoing 

investigations. 

However, California is one of the only states in the country in 

which courts have applied inverse condemnation to events caused 

by utility equipment. This means that if a utility's equipment is 

found to have been a substantial cause of the damage in an event 

such as a wildfire - even if the utility has followed established 

inspection and safety rules - the utility may still be liable for 

property damages and attorneys' fees associated with that 

event. 

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"After extensive consideration and in light of the uncertainty 

associated with the causes and potential liabilities associated with 

these wildfires as well as state policy uncertainties, the PG&E 

boards determined that suspending the common and preferred 

stock dividends is prudent with respect to cash conservation and is 

in the best long-term interests of the companies, our customers and 

our shareholders," said PG&E Corporation Chair of the Board 

Richard C. Kelly. 

340. On this news, PG&E's share price fell $6.62, or 12.95%, to close at $44.50 on 

December 21, 2017, the following trading day. The stock experienced heavy trading volume, 

with over 52 million shares trading hands. 

341. Though PG&E had previously intertwined safety, fires, and its dividend (see 

iJ232), investors were shocked by this unexpected suspension of the dividends due to 

Defendants' intervening false reassurances of progress on safety and compliance with safety 

regulations. Only six months prior, on May 31, 2017, PG&E had announced that it was 

increasing its dividend due to the Company's ''progre.<ii!i, on safety." Even more recently, for 

example on October 31, 2017, PG&E had reassured investors that it ''follows all applicable 

federal and state vegetation clearance requirements and performs regular power line tree 

safety activities in accordance with industry standards, guidelines, and acceptable procedures 

that help to reduce outages or fires caused by trees or other vegetation." And on November 2, 

2017, PG&E had repeatedly reassured investors that it had "doubl[edf' its vegetation 

management expenditures. Accordingly, the true likelihood of PG&E's responsibility for the 

North Bay Fires remained concealed from the market, and the price of PG&E securities 

remained artificially inflated. 

(b) Market Commentators Confirmed the Proximate Cause of 

PG&E's Share Price Decline on December 20, 2017 

342. When PG&E announced it would suspend its dividend entirely, investors 

24 understood that as a revelation that Defendants' prior representations regarding its safety 

25 operations may have been misleading and PG&E would bear a higher than expected level of 

26 responsibility, and thus liability, for the North Bay Fires. 

27 343. For example, a RBC Capital Markets analysts report issued on December 21, 

28 2017, stated: "We downgrade PCG to Sector Perform following the Board's decision to suspend 

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1 the dividend. This unexpected decision suggests greater risk than we had assumed 

2 surrounding regulatory treatment of the October 2017 Northern California wildfires." 

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On the 3Ql 7 call PCG indicated company operations were 

conducted properly leading up to and after the fire . ... PCG 

also indicated they found instances of wires down, vegetation near 

PCG facilities and some broke poles. PCG reiterated the company 

routinely inspects, maintains, and replaces poles, and tests and 

treats wood poles on a frequency that significantly exceeds CPUC 

requirements. The company claims to have one of, if not the most 

comprehensive vegetation management programs in the country. 

345. PG&E' s suspension of its dividend and resulting share price decline were 

proximately caused by PG&E's inadequate safety practices and violations that resulted in the 

North Bay Fires. 

4. May 25, 2018 - Corrective Disclosure and/or Materialization of 

Concealed Risk 

(a) The Market Continued to Learn the Extent and Effects of 

PG&E's Responsibility for the North Bay Fires 

346. On May 25, 2018, Cal Fire issued a press release announcing the cause of four 

wildfires in Butte and Nevada counties ("May 2018 Press Release"), stating in relevant part: 

CAL FIRE Investigators Determine Cause of Four Wildfires in 

Butte and Nevada Counties 

Sacramento - After extensive and thorough investigations, CAL 

FIRE investigators have determined that four Northern California 

wildfires in last year's October Fire Siege were caused by trees 

coming into contact with power lines. The four fires, located in 

Butte and Nevada counties, are the first fire investigations from 

last October to be completed. 

CAL FIRE investigators were dispatched to the fires last year and 

immediately began working to determine their origin and cause. 

The Department continues to investigate the remaining 2017 fires, 

both in October and December, and will release additional reports 

as they are completed. 

The October 2017 Fire Siege involved more than 170 fires and 

charred more than 245,000 acres in Northern California. More than 

11,000 firefighters from 17 states helped battle the blazes. 

Below is a summary of the four completed investigations: 

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• The La Porte Fire, in Butte County, started in the early 

morning hours of Oct. 9 and burned a total of 8,417 acres, 

destroying 74 structures. There were no injuries to civilians 

or firefighters. CAL FIRE has determined the fire was 

caused by tree branches falling onto PG&E power lines. 

CAL FIRE investigators determined there were no 

violations of state law related to the cause of this fire. 

• The McCourtney Fire, in Nevada County, started the 

evening of Oct. 8 and burned a total of 7 6 acres, destroying 

13 structures. There were no injuries to civilians or 

firefighters. CAL FIRE has determined the fire was caused 

by a tree falling onto PG&E power lines. The investigation 

found evidence that PG&E allegedly failed to remove a 

tree from the proximity of a power line, in violation of 

the state Public Resources Code section 4293. 

• The Lobo Fire, in Nevada County, started the evening of 

Oct. 8 and burned a total of 821 acres, destroying 4 7 

structures. There were no injuries to civilians or 

firefighters. CAL FIRE has determined the fire was 

caused by a tree contacting PG&E power lines. The 

investigation found evidence that Public Resources 

Code section 4293, which requires adequate clearance 

between trees and power lines, was allegedly violated. 

• The Honey Fire, in Butte County, started in the early 

morning hours of Oct. 9 and burned a total of 76 acres. 

There were no injuries to civilians or firefighters and no 

structures were destroyed. CAL FIRE has determined the 

fire was caused by an Oak branch contacting PG&E 

power lines. The investigation found evidence that 

Public Resources Code 4293, which requires adequate 

clearance between trees and power lines, was allegedly 

violated. 

The McCourtney, Lobo, Honey investigations have been referred 

to the appropriate county District Attorney's offices for review. 

347. Then, early on May 29, 2018, prior to the start of trading, PG&E filed a Current 

Report on Form 8-K with the SEC. Rather than contradicting any of Cal Fire's findings, the 

filing quoted extensively from the May 25, 2018 Cal Fire release described above, including the 

role of PG&E equipment in starting all four of the relevant North Bay Fires, Cal Fire's findings 

that three of the fires were caused by violations of California safety laws, and Cal Fire's decision 

to refer criminal investigations regarding these three fires to the relevant district attorneys' 

offices. The filing also stated: "It is reasonably possible that facts could emerge that lead PG&E 

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1 Corporation and the Utility to believe that a loss is probable, resulting in an accrued liability in 

2 the future, the amount of which could be substantial." 

3 348. On this news, PG&E's share price fell $2.32, or 5.19%, to close at $42.34 on May 

4 29, 2018, the following trading day. The stock experienced unusually high trading volume that 

5 day, with over 5.7 million shares changing hands on May 29, 2018. The price of PG&E 

6 securities, however, remained artificially inflated. 

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(b) Market Commentators Confirmed that the News Regarding 

Safety Violations Proximately Caused PG&E's Share Price 

Decline on May 25-29, 2018 

349. Analysts were surprised by the results of the Cal Fire reports. For example, 

Deutsche Bank stated in its May 28, 2018 report: 

From the investor perspective the market should not be particularly 

surprised that PG&E' s lines have been found to be involved in 

starting the fires. That said, the fact that this was the case in all 

four of the fires - and that violations were found in three of the 

four instances - will likely be seen as a negative data point. 

Reading through the LaPorte fire investigation for other data 

points, investors may be concerned to note that the wind speeds 

around the time of the ignition do not seem to have been 

particularly high - with a maximum gust of 29 mph. 

350. One Citigroup analyst wrote on May 29, 2018 that the new Cal Fire reports 

specifically "link the fires to [PG&E's] equipment," "claim improper vegetation management for 

three of the fires," and were "suggesting negligence" on PG&E's part. Based on this, the Cal Fire 

reports "will support 'causation' and likely lead to [PG&E] bearing the liability for damages 

under Inverse Condemnation." Moreover, the analyst noted that PG&E might even be liable for 

"Gross Negligence," and could be barred from recovering costs from ratepayers insofar as it 

would be "tough to meet" the "prudent manager" standard that is necessary for such a recovery. 

351. Accordingly, the new information contained in these disclosures, including the 

severity of PG&E's conduct and the role of its violations of California safety laws in causing the 

North Bay Fires, proximately caused PG&E's share price decline. 

352. Defendants, however, continued to mislead investors regarding the extent of 

PG&E' s safety deficiencies and the impact thereof. 

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5. June 8, 2018 - Corrective Disclosure and/or Materialization of 

Concealed Risk 

353. On Friday, June 8, 2018, after the market closed, Cal Fire issued another press 

release announcing the causes of twelve wildfires in Mendocino, Humboldt, Butte, Sonoma, 

Lake, and Napa Counties, stating in relevant part: 

CAL FIRE Investigators Determine Causes of 12 Wildfires in 

Mendocino, Humboldt, Butte, Sonoma, Lake, and Napa 

Counties 

Sacramento - After extensive and thorough investigations, CAL 

FIRE investigators have determined that 12 Northern California 

wildfires in the October 2017 Fire Siege were caused by electric 

power and distribution lines, conductors and the failure of power 

poles. 

The October 2017 Fire Siege involved more than 170 fires and 

burned at least 245,000 acres in Northern California. About 11,000 

firefighters from 17 states and Australia helped battle the blazes. 

CAL FIRE investigators were dispatched to the fires last year and 

immediately began working to determine their origin and cause. 

CAL FIRE investigators continue to investigate the remaining 

2017 fires, both in October and December, and will release 

additional reports as they are completed. The cause of four 

Northern California fires were released on May 25. 

Below is a summary of the findings from the 12 completed 

investigations: 

The Redwood Fire, in Mendocino County, started the evening of 

Oct. 8 and burned a total of 36,523 acres, destroying 543 

structures. There were nine civilian fatalities and no injuries to 

firefighters. CAL FIRE has determined the fire started in two 

locations and was caused by tree or parts of trees falling onto 

PG&E power lines. 

The Sulphur Fire, in Lake County, started the evening of Oct. 8 

and burned a total of 2,207 acres, destroying 162 structures. There 

were no injuries. CAL FIRE investigators determined the fire 

was caused by the failure of a PG&E owned power pole, 

resulting in the power lines and equipment coming in contact with 

the ground. 

The Cherokee Fire, in Butte County, started the evening of Oct. 8 

and burned a total of 8,417 acres, destroying 6 structures. There 

were no injuries. CAL FIRE investigators have determined the 

cause of the fire was a result of tree limbs coming into contact with 

PG&E power lines. 

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The 37 Fire, in Sonoma County, started the evening of Oct. 9 and 

burned a total of 1,660 acres, destroying 3 structures. There were 

no injuries. CAL FIRE investigators have determined the cause of 

the fire was electrical and was associated with the PG&E 

distribution lines in the area. 

The Blue Fire, in Humboldt County, started the afternoon of Oct. 

8 and burned a total of 20 acres. There were no injuries. CAL 

FIRE investigators have determined a PG&E power line conductor 

separated from a connector, causing the conductor to fall to the 

ground, starting the fire. 

The Norrbom, Adobe, Partrick, Pythian and Nuns fires were part 

of a series of fires that merged in Sonoma and Napa counties. 

These fires started in the late-night hours of Oct. 8 and burned a 

combined total of 56,556 acres, destroying 1355 structures. There 

were three civilian fatalities. 

CAL FIRE investigators determined the Norrbom Fire was 

caused by a tree falling and coming in contact with PG&E 

power lines. 

CAL FIRE investigators detennined the Adobe Fire was 

caused by a eucalyptus tree falling into a PG&E powerline. 

CAL FIRE investigators determined the Partrick Fire was 

caused by an oak tree falling into PG&E powerlines. 

CAL FIRE investigators determined the Pythian Fire was 

caused by a downed powerline after PG&E attempted to 

reenergize the line 

CAL FIRE investigators determined the Nuns Fire was caused 

by a broken top of a tree coming in contact with a power line. 

The Pocket Fire, in Sonoma County, started the early morning 

hours of Oct. 9 and burned a total of 17,357 acres, destroying 6 

structures. There were no injuries. CAL FIRE has determined the 

fire was caused by the top of an oak tree breaking and coming into 

contact with PG&E power lines. 

The Atlas Fire, in Napa County, started the evening of Oct. 8 and 

burned a total of 51,624 acres, destroying 783 structures. There 

were six civilian fatalities. CAL FIRE investigators determined the 

fire started in two locations. At one location, it was determined a 

large limb broke from a tree and came into contact with a PG&E 

power line. At the second location, investigators determined a tree 

fell into the same line. 

CAL FIRE's investigations have been referred to the 

appropriate county District Attorney's offices for review in 

eight of the 12 fires - Sulphur, Blue, Norrbom, Partrick, 

Pythian, Adobe, Pocket and Atlas - due to evidence of alleged 

violations of state law. 

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1 354. While this news release did not discuss specific violations found, it disclosed that 

2 the causes of the fires involved PG&E equipment and vegetation, as well as the facts that Cal 

3 Fire referred its investigations to the relevant district attorneys of five counties due to evidence 

4 Cal Fire discovered of state law violations. 

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(a) The Market Learned the Truth of PG&E's Continued, Unsafe 

Use of Reclosers 

355. By stating that "CAL FIRE investigators determined the Pythian Fire was caused 

by a downed powerline after PG&E attempted to reenergize the line," this press release revealed 

that the Pythian Fire had been proximately caused by PG&E's use ofreclosers. 

(b) The Market Continued to Learn the Extent and Effects of 

PG&E's Safety Violations and Responsibility for the North 

Bay Fires 

356. On Saturday, June 9, 2018, Bloomberg published an article entitled "PG&E May 

Face Criminal Charges After Probe of Deadly Wildfires." The article reported, in part, that 

following an investigation into the causes of wildfires "that altogether killed 44 people, 

consumed thousands of homes and racked up an estimated $10 billion in damages" in October 

2017, California's fire agency "found evidence of alleged violations of law by PG&E in 

connection with" the fires. Specifically, the state's investigation found "that PG&E equipment 

caused at least 12 of the wine country blazes." 

357. Early on Monday, June 11, 2018, prior to the start of trading, PG&E filed a 

Current Report on Form 8-K with the SEC. Rather than contradicting any of Cal Fire's findings, 

the filing quoted extensively from the June 8, 2018 Cal Fire release described above, including 

the role of PG&E equipment in starting all 12 of the relevant North Bay Fires and Cal Fire's 

decision to refer criminal investigations regarding eight of the fires to the relevant district 

attorneys' offices "due to evidence of alleged violations of state law." The filing also admitted 

that Defendants expected to "record a significant liability for losses associated with" at least 14 

of the North Bay Fires, as follows: 

Although the Utility's analysis is ongoing regarding the fires that 

were the subject of the June 8, 2018 and May 25, 2018 CAL FIRE 

news releases: 

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• for the La Porte, McCourtney, Lobo, Honey, Redwood, 

Sulphur, Cherokee, Blue, Pocket and Sonoma/Napa merged 

fires (which include Nuns, Norrbom, Adobe, Partrick and 

Pythian), based on the current state of the law on inverse 

condemnation, the information currently available to the 

Utility, and the CAL FIRE determinations of cause, PG&E 

Corporation and the Utility currently expect that they 

will record a significant liability for losses associated 

with such fires in PG&E Corporation and the Utility's 

condensed consolidated financial statements to be included 

in their Form 10-Q for the quarterly period ending June 30, 

2018 (the "Q2 financial statements"); and 

• for the Atlas and Highway 37 fires, PG&E Corporation and 

the Utility do not believe a loss is probable at this time, 

given the information currently available. However, it is 

reasonably possible that facts could emerge that lead 

PG&E Corporation and the Utility to believe that a loss 

is probable, resulting in the accrual of a liability in the 

future, the amount of which could be significant. 

358. Following these disclosures, PG&E's share price fell $1.69, or 4.08%, to close at 

$39.76 on June 11, 2018, the following trading day. The stock experienced unusually high 

trading volume that day, with over 12.6 million shares trading hands on June 11, 2018. The 

price of PG&E securities, however, remained artificially inflated. 

(c) Market Commentators Confirmed that the Number and Range 

of Safety Violations Proximately Caused PG&E's Share Price 

Decline on June 8-11, 2018 

359. The market was surprised by the number and range of alleged violations of safety 

laws in the Cal Fire report. For example, in J.P. Morgan's analyst report on June 10, 2018, it 

stated that "[w]ith this batch of reports, we find the range of 'alleged' law violations 

noteworthy. CAL FIRE opined on law regarding not just vegetation management but also 

pole and conductor failure and the re-energizing of equipment by the company." Deutsche 

Bank also stated in its June 10, 2018 analyst report that "[o]verall, Friday's data points are 

likely to be read as another negative for PCG, given the high percentages of incidents 

blamed on the company's lines and referred to DAs." Guggenheim further reiterated its "Sell" 

recommendation on June 10, 2018 because "[o]ut of the 16 fires now investigated thus far, PCG 

was found to have allegedly violated state law in 11 of those instances with Cal Fire 

referring its evidence to the District Attorney - likely a strong indictment to potential 

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1 criminal and civil cases/lawsuits against the company." The analyst from Guggenheim noted 

2 that "all signs seem to point to PCG being imprudent operators in the majority of instances, 

3 which would therefore mean it should assume liability." Accordingly, the number and range of 

4 safety violations proximately caused PG&E's Share Price Decline on June 8-11, 2017. 

5 360. On June 11, 2018, Bloomberg published an article reporting: "The company said 

6 Monday it expects to record a' significant liability' for fires, and the shares plunged the most in 

7 five months at the open" of trading. The article also noted that "[t]he alleged violations could 

8 also expose PG&E to criminal charges only two years after the San Francisco company was 

9 convicted of breaking safety rules that led to a deadly gas pipeline explosion in San Bruno, 

10 California." 

11 361. Accordingly, the new information contained in these June 8 and 11 disclosures, 

12 including the severity of PG&E's conduct, the role of its violations of California safety laws in 

13 causing the North Bay Fires, and the "significant liability" it would incur as a result, proximately 

14 caused PG&E' s share price decline. 

15 362. Defendants, however, continued to mislead investors regarding the extent of 

16 PG&E' s safety deficiencies and the impact thereof. 

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6. November 8-9, 2018- Corrective Disclosure and/or Materialization of 

Concealed Risk 

363. The Camp Fire began in the early morning of November 8, 2018 and grew 

steadily throughout the day. However, as of the close of trading that day, no prominent news 

sources had reported that PG&E may have caused it. 

(a) The Market Began to Learn the Extent and 

Effects of PG&E's Responsibility for the Camp Fire 

364. After the close of trading on November 8, 2018, PG&E announced via its official 

24 Twitter.com account that it had decided not to implement its procedure for shutting power lines 

25 during dangerous weather conditions. This communication was the first indication that PG&E' s 

26 equipment and decisions may have contributed to the Camp Fire, undermining the Company's 

27 assurances to investors that it would comply with safety regulations and prioritize safety, detaile 

28 above. While the announcement began to disclose the truth regarding PG&E's responsibility for 

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1 the Camp Fire, it also contained a further false reassurance that PG&E' s decision was because 

2 "weather conditions did not warrant this safety measure," as detailed above. 

3 365. Also after the close of trading on November 8, 2018, PG&E filed an Electric 

4 Incident Report with the CPUC stating that PG&E had experienced a problem with its Caribous Palermo high-voltage transmission line on "Pulga Rd. Pulga, Butte County" only fourteen 

6 minutes before the Camp Fire began, "in the area of the Camp Fire." The same report 

7 acknowledged that an aerial patrol later in the day showed "damage" to the same transmission 

8 tower. However, this information undermining PG&E' s statements about compliance and 

9 prioritizing safety during the Class Period would not be reported by major news outlets until the 

10 next day, November 9, 2018. 

11 366. On this news, PG&E's share price fell $7.88, or approximately 19.7% to close at 

12 $39.92 on November 9, 2018, the following trading day. The stock experienced unusually high 

13 trading volume of 23,627,100 shares. The price of PG&E securities, however, remained 

14 artificially inflated. 

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(b) Market Commentators Confirmed the Cause of PG&E's 

November 9, 2018 Share Price Decline 

367. Market commentators confirmed that PG&E's share price declined due to news 

connecting PG&E to the Camp Fire, the true risk of which was concealed by PG&E's false and 

misleading statements and omissions. 

368. On November 9, 2018, CNBC published an article entitled "Shares of electricity 

provider PG&E have worst day since 2002 as wildfires ravage California." 108 The article noted 

that "Shares of PG&E plunged more than 16 percent on Friday as wildfires continued to rage 

through California. This was the biggest one-day decline for the stock since Aug. 8, 2002 .... " 

It further observed: "PG&E also traded 23.6 million shares, about five time [sic] its average 30-

day volume." The article was initially published at 1 :03 p.m. Eastern Time (i.e., prior to the 

108 Fred Imbert, Shares of Electricity Provider PG&E Have Worst Day Since 2002 as 

Wildfires Ravage California, CNBC (Nov. 9, 2018), https://www.cnbc.com/2018/11/09/sharesof-electri ci ty-provi der-p ge-p 1 unge-as-wil dfires-ravage-californi a. html. 

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1 close of trading) and updated at 4: 19 p.m. the same day (after the close of trading), yet made no 

2 mention of PG&E's Electric Incident Report tying the Company's equipment to the origin of the 

3 Camp Fire. 

4 369. On November 9, 2018, Deutsche Bank described how investors were 

5 "understandably concerned" given the emerging news of the Camp Fire and S.B. 901 'slack of 

6 provisions regarding 2018 wildfires: 

7 While there has been no specific indication of utility lines being 

involved in these ignitions, investors are understandably concerned 

8 considering that the recently passed wildfire bill (SB901) left 

utilities particularly exposed to 2018 fires if their infrastructure 

9 ends up being implicated. This is due to the fact that the so-called 

stress test or customer harm threshold is only applicable to 2017 

10 fire losses. Meanwhile, the new reasonableness standard which the 

CPUC will use to determine eligibility for recovery of liability 

11 costs from customers only kicks in from 2019. 

12 370. A Barclays report from the same day supported the conclusion that investor 

13 concern regarding the Camp Fire and its lack of coverage by S.B. 901 were contributing to the 

14 stock price drop: 

15 We believe the lack of explicit language for 2018 wildfires in 

SB 901 may be increasing market pressure. SB 901 specifically 

16 addresses 2017 wildfire liability by tasking the CPUC with 

creating a cap on IOU [Investor-Owned Utility] liability to ensure 

17 safe and affordable service. The bill addresses wildfire liability in 

2019 and beyond by creating a securitization mechanism. 

18 However, specific language addressing 2018 liability coverage is 

noticeably absent. The general consensus among CA stakeholders 

19 is that 2018 will be treated in a similar fashion to 2017, however 

the lack of a specific prescription may be heightening investor 

20 concern if the Camp Fire is found to be started by PCG. 

21 371. While this report stated that there was no indication yet that electrical equipment 

22 had caused the Camp Fire, it emphasized that PG&E' s decision not to de-energize its lines could 

23 become a source ofliability if PG&E equipment was found to be involved: "we expect PCG's 

24 decision not to de-energize lines after warning of high fire risk will be investigated if the fire is 

25 found to have been sparked by PCG equipment." 

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7. November 9-12, 2018- Corrective Disclosure and/or Materialization 

of Concealed Risk 

(a) The Market Continued to Learn the Extent and Effects of 

PG&E's Responsibility for the Camp Fire 

372. Because PG&E had concealed the extent of its safety violations and failures to 

5 prioritize safety, the market was shocked to learn how much evidence supported the conclusion 

6 that PG&E had not only caused the Camp Fire, but did so in a manner that violated state safety 

7 regulations. Thus, investors began to learn the true likelihood and extent to which PG&E would 

8 bear financial responsibility for the Camp Fire's destruction, i.e., without eligibility for 

9 reimbursement by ratepayers. See Section VIII, supra. 

10 373. After the close of trading on Friday, November 9, 2018, news outlets began to 

11 report that there was evidence PG&E caused the Camp Fire based on PG&E' s incident report the 

12 previous evening. The first such report, written by Pulitzer Prize-winning journalist Matthias 

13 Gafni and published in Mercury News, occurred at 5:49 p.m. EST on November 9, 2018. 109 

14 374. On Saturday, November 10, 2018, it was reported that the town of Paradise was 

15 destroyed as the Camp Fire continued to spread. 110 It was further reported that the fire had raced 

16 through the communities of Concow and Magalia, causing at least nine fatalities and the loss of 

17 at least 6,453 homes and 260 commercial buildings. 111 The Camp Fire grew in size and severity 

18 over the weekend, with reports on Saturday that it had already consumed 70,000 acres and was 

19 only 5 percent contained-with winds pushing it toward Chico and Yankee Hill. By Sunday 

20 November 11, 2018, it was reported that more than 200 people were missing, the death toll had 

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109 Matthias Gafni, PG&E Power Lines May Have Sparked Deadly Camp Fire, According To 

Radio Transmissions, Mercury News (updated Nov. 12, 2018 12:03 PM), 

https :/ /www.mercurynews.com/2018/ 11 /09 /pge-power-lines-may-have-sparked-deadl y-buttecounty-wil dfire-according-to-radi o-transmi ssi ons/. 

110 Anna Sciacca and Lisa Krieger, 'Our Town Has Burned': Most of Paradise is Lost After 

Camp Fire Ravages the Area, Enterprise Record (Nov. 10, 2018), 

https://www.chicoer.com/2018/11/10/our-town-has-burned-most-of-paradise-is-lost-after-campfire-ravages-the-area/. 

lll Id. 

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1 risen to 29, and the fire-which had by then consumed 111,000 acres-was only 25 percent 

2 contained. 112 

3 375. Then on Monday, November 12, 2018, the next trading day, it was reported that 

4 Betsy Ann Cowley, a property owner in Pulga, received an email from PG&E the day before the 

5 Camp Fire ignited; the email communicated that the Utility needed access to her property to 

6 repair a transmission line that was "sparking." It was further reported that the incident occurred 

7 near the origin point of the Camp Fire, with Cowley's property next to the junction of Pulga and 

8 Camp Creek Road. 

9 376. On this news, PG&E's share price fell $6.94, or 17.385%. to close at $32.98 on 

10 November 12, 2018. The stock experienced a trading volume of 44,033,200 on November 12, 

11 2018. The price of PG&E securities, however, remained artificially inflated. 

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(b) Market Commentators Confirmed the Cause of PG&E's 

November 9-12, 2018 Share Price Decline. 

377. Investors were concerned over this evidence that PG&E's safety violations likely 

caused the Camp Fire, including the impact on PG&E' s likely liability of Cowley's comments to 

the press regarding PG&E's knowledge of transmission line problems in the area. As a result, 

PG&E's stock price continued to drop. As the San Francisco Chronicle reported on November 

12, 2018, "Cowley's revelation came as shares of Pacific Gas and Electric Co. 's parent company 

plummeted Monday amid concerns from investors about the utility's liability connected to the 

Camp Fire." 113 

378. Similarly, a Wells Fargo analyst report observed the same day that "[t]he Camp 

Fire is in PCG' s service territory and there are initial indications that the company's transmission 

infrastructure may have been a root cause of the fire pending an investigation by Cal Fire." 

112 Melody Gutierrez, More than 200 Remain Missing in Camp Fire, San Francisco Chronicle 

(Nov. 8, 2018), https://www.sfchronicle.com/california-wildfires/article/100-missing-in-CampFire-butte-county-death-toll-133 82433 .php. 

113 J.D. Morris and Kurtis Alexander, Homeowner 's Claim on PG&E Work Raises Questions 

on Camp Fire's Origin, San Francisco Chronicle (Nov. 12, 2018), 

https://www.sfchronicle.com/california-wildfires/article/PG-E-stock-hammered-on-wildfirefallout-13384830.php. 

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1 379. A Macquarie Research analyst report on November 13, 2018 estimated PG&E's 

2 fire-related liabilities at $8 billion, while noting that the real measure of PG&E' s liability could 

3 be higher given that the Camp Fire was not yet contained: 

4 We've reduced our [target price] to US$45 from US$57, is based 

on 10.4x our '20E EPS vs 13.6x previously. Our new [target price] 

5 reflects incremental -US$8bn in fire-related liabilities, which we 

hope proves excessive given the stress test included in the SB901, 

6 but we have no way to assess the potential liabilities as the fire is 

only 30% contained. 

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380. A November 13, 2018 Bloomberg Intelligence report remarked that the analyst 

expected PG&E' s liability to exceed its total equity valued absent additional assistance from 

the California government, and that such a bailout was not certain: "Unless mitigated by 

regulators, we expectPG&E's write-offs could exceed the company's total equity. California's 

utility owners are dangerously squeezed between two forces: Onerous inverse-condemnation rule 

makes utilities liable for most of the billions in fire damage, but powerful political resistance 

prevents customer bills from rising much above inflation." 

8. November 13-14, 2018- Corrective Disclosure and/or Materialization 

of Concealed Risk 

(a) The Market Continued to Learn the Extent and Effects of 

PG&E's Responsibility for the Camp Fire 

381. After the close of trading on November 13, 2018, PG&E released a Form 8-K that 

showed a much bleaker picture of PG&E's deteriorating financial situation than investors had 

reason to expect, even calling into question its ability to remain solvent in the face of mounting 

evidence of its liability for the Camp Fire. The SEC filing admitted, among other things, that 

PG&E' s and the Utility's revolving credit facilities were fully drawn and that its liability for the 

Camp Fire could exceed its insurance: 

Item 2.03. Creation of a Direct Financial Obligation or an 

Obligation Under an Off-Balance Sheet Arrangement of a 

Registrant 

As of November 13, 2018, Pacific Gas and Electric 

Company ("Utility"), a subsidiary of PG&E Corporation, and 

PG&E Corporation have aggregate borrowings outstanding under 

their respective revolving credit facilities of $3 .0 billion and $300 

million, respectively .... No additional amounts are available 

under the Utility's and PG&E Corporation's respective 

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revolving credit facilities. 

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Item 8.01 Other Events. 

Camp Fire 

On November 8, 2018, a wildfire began near the city of 

Paradise, Butte County, California (the "Camp Fire"), located in 

the service territory of the Utility .... 

As previously reported, during the third quarter of 2018, 

PG&E Corporation and the Utility renewed their liability insurance 

coverage for wildfire events in an aggregate amount of 

approximately $1 .4 billion for the period from August 1, 2018 

through July 31, 2019 .... 

While the cause of the Camp Fire is still under 

investigation, if the Utility's equipment is determined to be the 

cause, the Utility could be subject to significant liability in excess 

of insurance coverage that would be expected to have a material 

impact on PG&E Corporation's and the Utility's financial 

condition, results of operations, liquidity, and cash flows. 

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382. On this news, PG&E's share price fell $7.13, or 21.791 %. to close at $25.59 on 

November 14, 2018. The stock experienced high trading volume of 53,543,100. The price of 

PG&E securities, however, remained artificially inflated. 

(b) Market Commentators Confirmed the Cause of PG&E's Share 

Price Decline on November 14, 2018 

383. Analyst commentary attributed the drop in PG&E's stock price to news about 

19 PG&E' s insufficient insurance coverage and deteriorating financial situation, including the 

20 chance of bankruptcy, revealed in PG&E's Form 8-K disclosures published after the market 

21 closed the previous day. 

22 384. CNBC reported that PG&E's Form 8-K disclosures were responsible for the drop 

23 in stock price on November 14, 2018: 

24 Shares of utility PG&E fell 21 percent on Wednesday after the 

company said that if its equipment is responsible for the "Camp 

25 Fire" burning in Northern California, the cost of the damage would 

exceed its insurance coverage and harm its financial health . ... 

26 "With these borrowings, the entire credit facility has been drawn 

and PG&E now has $3.5 billion of cash on its balance sheet," Citi 

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analyst Praful Mehta wrote in a note Wednesday. "We think the 

primary driver could be a concern around a downgrade to a noninvestment grade credit rating and the liquidity requirements as a 

result of the downgrade." 114 

385. Similarly, a November 14, 2018 Bloomberg Intelligence report also connected 

PG&E's Form 8-K disclosures to its share price decline afterward, stating that the filing 

indicated the Company's own concern about bankruptcy: 

The abrupt drawdown of its entire $3.3 billion in revolving 

credit suggests to us that PG&E (PCG -22 % ) is concerned 

about a near-term cash and credit crunch. The company warned 

of bankruptcy earlier this year, and the situation is more 

desperate now. If found liable for California's Camp Fire, which 

may match or surpass 2017's $15 billion in damages, the total 

exceeds PG&E's book equity and annual revenue. 

9. November 15, 2018 - Corrective Disclosure and/or Materialization of 

Concealed Risk 

(a) The Market Continued to Learn the Extent and Effects of 

PG&E's Responsibility for the Camp Fire 

386. On November 15, 2018, Cal Fire announced that it had identified a second 

ignition point for the Camp Fire. 115 This news further evidenced the extent of PG&E' s 

responsibility for the Camp Fire, undermining the Company's assurances to investors that it 

would comply with safety regulations and prioritize safety, detailed above. 

387. On this news, PG&E's share price fell $7.85, or 30.676%. to close at $17.74 on 

November 15, 2018. The stock experienced its highest trading volume during the Class Period 

of 107,155,700 on November 15, 2018. 

114 Thomas Franck, PG&F, Plunges 21 % Amid Disclosure ofan 'F,lectric Incident' Just 

Before Wilc(fire, CNBC (Nov. 14, 2018), https://www.cnbc.com/2018/11/14/pge-plunges20percent-after-di scl osing-an-el ectri c-inci dent-just-before-fire. html. 

115 Andre Byik, Camp Fire Investigation Leads To Possible Second Origin Awcry From Pulga, 

Enterprise-Record (updated Nov. 15, 2018 10:06 PM), 

https://www.chicoer.com/2018/11/15/camp-fire-investigation-leads-to-another-area-away-frompulga/. 

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(b) Market Commentators Confirmed the Cause of PG&E's Share 

Price Decline on November 15, 2018 

388. Market commentary confirmed that the November 15, 2018 decline in PG&E's 

share price was due to mounting evidence of PG&E' s liability for the Camp Fire and chance of 

bankruptcy, the true risk of which was concealed by PG&E's false and misleading statements 

and omissions. Indeed, PG&E' s share price declined until CPUC President Michael Picker 

commented after the close of trading that day that he did not want the Company to become 

bankrupt. A Bloomberg article reported: "His comments capped a roller-coaster week for PG&E 

shares. They lost about two-thirds of their value during several days of free fall, then partially 

rebounded Friday after Picker said he doesn't want the company to slide into bankruptcy." 116 

389. A J.P. Morgan report from November 16, 2018 noted that the market was affected 

by continued uncertainty over California's willingness to aid PG&E: 

if one assumes for sake of argument a $30Bn grand total of 

liabilities for the 2017-18 events for PCG, a 40 year 

amortization of securitized debt would still only be $10/month 

for the average customer; this would be even less if a 

multibillion dollar stress test cap was absorbed by the 

company; it is a small price to pay for safe electric service and 

environmental goals. We remain focused on upcoming 

policymaker statements on the issue, and the pending CPUC 

implementation of securitization and stress-test mandates created 

with SB901. We acknowledge the long and challenging road ahead 

for investors, but see too much at stake for the state to realistically 

abandon utilities given the above considerations 

* * * 

390. As a result of Defendants' wrongful acts and omissions, and the precipitous 

21 decline in the market value of the Company's securities, Lead Plaintiff and other Class members 

22 have suffered significant losses and damages. 

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116 David R. Baker, Mark Chediak & Romy Varghese, PG&E State Review Puts Board 

Shuffle and Breakup on the Table, Bloomberg (updated Nov. 17, 2018 12:00AM), 

https:/ /www.bloomberg.com/news/articles/2018-11-16/pg-e-soars-after-regulator-eases-concernon-bankruptcy-risk. 

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SCIENTER UNDER THE EXCHANGE ACT 

391. The public was surprised to learn the extent to which PG&E had misled everyone 

3 about its lack of safety procedures related to wildfire prevention and responsibility for the North 

4 Bay and Camp Fires. Based on the extensive, widespread, and egregious nature of PG&E's 

5 underlying noncompliance and disregard for safety, there is a strong inference that PG&E itself, 

6 and the officers who spoke on its behalf and controlled its public statements, knew or should 

7 have known the truth. As detailed below, they either knew the material, adverse facts about 

8 PG&E' s lack of safety undermining and contradicting their public representations, or were 

9 culpably reckless in avoiding knowledge of and/or disregarding that reality. Thus, throughout 

10 the Class Period, Defendants acted with scienter (a) by making false and misleading statements 

11 and omissions about PG&E's financial health and compliance with relevant safety rules and 

12 regulations while having actual knowledge of their false or misleading nature, and/or (b) by 

13 acting in a deliberately reckless manner. 

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A. PG&E Knew that Its Safety Practices Continued to Violate the Law Even 

After PG&E Was on Notice of the Butte Fire Safety Violations 

392. As detailed above, PG&E's safety lapses caused the 2015 Butte Fire when a tree 

came into contact with PG&E's power line due to PG&E violating multiple safety regulations. 

At the time, the Butte Fire was the seventh most destructive wildfire in California history; it 

killed two people, destroyed 921 homes, and destroyed more than 70,000 acres over 22 days. As 

noted above (iJiJ127-28) and described in more detail below (iJ569), PG&E had a company policy 

to perversely incentivize its contractors to clear less vegetation than is safe. 

393. Even after PG&E caused the disastrous Butte Fire through its serious fire safety 

lapses, PG&E made no changes at all to improve its vegetation management or compliance with 

safety regulations. In a deposition transcript that has not yet been made publicly available, 

PG&E' s Vegetation Program Manager Richard Yarnell reportedly testified under oath: 

"PG&E-to the best of my knowledge, we have not made any changes as a result of this fire." 

Despite being on notice of its dangerous safety violations, neither the Company nor its officers 

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1 made any changes to improve safety or compliance. Thus, they either knew, or should have 

2 presumed, that its violations continued unabated. 

3 394. On March 5, 2019, Judge Alsup, presiding over PG&E's criminal probation, 

4 issued a revised Order to Show Cause relating to PG&E's lack of compliance with vegetation 

5 management and other safety regulations. The Order contained the following findings 

6 summarizing the results of the federal court's probe into PG&E' s actual knowledge of safety 

7 violations leading up to the North Bay and Camp Fires: 

8 PG&E' s filings have included several relevant admissions. 

Significantly, PG&E acknowledged "that vegetation contact is the 

9 primary risk driver with respect to ignitions on its distribution 

lines." ("Vegetation" means trees and limbs in this context.) In 

10 2016 alone, PG&E experienced approximately 1,400 wires down 

caused by vegetation contact. As PG&E reported to the CPUC, 

11 during 2015 and 2016, vegetation contact with conductors was the 

leading cause of the 486 fire ignitions associated with PG&E 

12 facilities, causing 37% of those fires. PG&E further admitted that 

as of June 2017, there were 3,962 unworked trees which PG&E 

13 had identified in 2016 as hazardous with the potential to "fall into 

or otherwise impact the conductors, towers or guy wires before the . . l ,,117 14 next mspect10n eye e. 

15 395. Thus, PG&E has admitted its actual knowledge from 2015 to 2017 that its 

16 vegetation management practices did not comply with California safety regulations on the order 

17 of thousands of violations per year. PG&E has further admitted to actually knowing that its 

18 violations have caused hundreds of wildfires per year since 2015. However, PG&E never 

19 disclosed to investors that their own internal compliance reviews showed a lack of compliance 

20 on a huge scale. 

21 396. In the time period of 2017 to 2018, after the North Bay Fires and leading up to the 

22 Camp Fire, PG&E' s notice of its numerous and widespread safety violations was even stronger. 

23 For example, PG&E had known about the dangerous noncompliance of its Caribou-Palermo 

24 transmission line - the same line whose failure would cause the Camp Fire's first ignition point -

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117 Second Order to Show Cause Why PG&E's Conditions of Probation Should Not Be 

Modified, PG&E Criminal Proceedings (N.D. Cal. Mar. 5, 2019), ECF No. 1027. 

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B. Safety Was Core to PG&E's Operations, and the Exchange Act Individual 

Defendants Were Directly Involved in It 

397. In a January 16, 2019 filing to the CPUC, PG&E stated unequivocally that safety 

is its "core business," and as such, was the "focus" of Defendant Williams's activities as CEO: 

"Since the Utility is the sole operating subsidiary of PG&E Corporation, the activities of the 

PG&E Corporation CEO and President focus on the Utility's core business, including most 

notably safety."118 

398. During the Class Period, PG&E repeatedly acknowledged that "[s]afety is at the 

heart of everything we do at PG&E" (Geisha Williams, July 27, 2017 Analyst Call), that safety 

was PG&E's "top priority" (Patrick Hogan, November 18, 2015 California Senate SubCommittee Hearing), and that "[n]othing is more important than the safety of our customers, 

employees and the communities we serve" (Kevin Dasso, vice president of Electric Asset 

Management, May 10, 2017 Press Release). PG&E further represented to the public that PG&E' 

safety and compliance were closely monitored by the Company's management and the Exchange 

Act Individual Defendants. For instance, the PG&E Board's Finance Committee was alleged in 

a separate lawsuit over the Butte Fire - where litigation is still ongoing - to have been "actively 

involved in, and responsible for, assisting the Boards in their oversight of safety risk through its 

review of strategies to manage the largest individual risks identified in the enterprise risk 

management program," including the risk of "wildfire." Indeed, because the Company faced the 

possibility of strict liability for property damages caused by wildfires, and such liability could 

not only be extraordinary but also non-reimbursable if its officers had not acted "prudently," 

wildfire safety was a particular focus of the Exchange Act Individual Defendants, who spoke 

personally on the subject with investors and regulators throughout the Class Period. Further, 

118 Summary of Corporate Structure of Pacific Gas and Electric Company (U 39 M) and 

PG&E Corporation (Cal. Public Utilities Commission filed Jan. 16, 2019), 

http://docs.cpuc.ca.gov/PublishedDocs/Efile/GOOO/M263/K658/263658434.PDF. 

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1 Defendants' repeated misrepresentations about PG&E' s safety and compliance record concerned 

2 the Company's core operations. Therefore, the Exchange Act Individual Defendants, by virtue of 

3 the importance of safety to the Company and their positions as its leaders, reasonably had 

4 knowledge about PG&E's safety and regulatory failures during the Class Period. 

5 399. As discussed in Sections Vl.C. and Vl.D., supra, the Exchange Act Individual 

6 Defendants repeatedly spoke to investors on the specifics of PG&E's vegetation management 

7 procedures and results. For example, they kept investors apprised about how many hundreds of 

8 thousands of trees the Company was trimming and removing, including how many thousands 

9 were "dead or dying." Not only that, but the Exchange Act Individual Defendants also inflated 

10 these numbers over time without explanation, raising the number of trees supposedly trimmed or 

11 removed from 1.2 million to 1 .4 million. In both reporting and inflating these numbers, the 

12 Exchange Act Individual Defendants showed they knew that vegetation management and 

13 compliance was important to investors on a granular level. 

14 400. A core operation concerns a company's primary products or services, and it 

15 extends to matters of importance that might significantly impact the company's bottom line. 

16 There is no question that PG&E' s safety policies and procedures were critically important to the 

17 Company's operations. In addition to the fact that PG&E repeatedly acknowledged this reality, it 

18 is also notable that PG&E is potentially facing $30 billion of liability or more due to its failures, 

19 and that California's regulatory regime imposes significant liability for PG&E' s vegetation 

20 management and other safety failures. This is strong evidence of the centrality of the Company's 

21 wildfire safety and compliance regime. 

22 401. In a separate lawsuit that was filed in connection with the Butte Fire, it was 

23 publicly alleged - based on discovery and deposition testimony that has not yet been publicly 

24 revealed - that Exchange Act Individual Defendants Williams and Hogan both served on an 

25 Executive Officer Risk & Compliance Committee that was charged with monitoring vegetation 

26 management issues. Further, according to the parties litigating against PG&E for injuries caused 

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1 by the 2015 Butte Fire, Defendant Hogan's and another individual's119 deposition testimony 

2 purportedly showed that "PG&E knows and accepts that 1-in-100 trees will be non-compliant, 

3 and that 1-in-1000 will be touching its powerlines." As noted above, this means noncompliance 

4 for approximately 1.2 million trees in PG&E's territory of 123 million trees, approximately 

5 123,000 of which are safety violations in the nature of trees touching its powerlines at any given 

6 time. See Section IV.F.4. 

7 402. Just months before the North Bay Fires broke out, United States District Judge 

8 Thelton E. Henderson in the Northern District of California ordered that PG&E work with 

9 federal prosecutors to retain a monitor to oversee the Company's compliance and ethics 

10 programs, and implement "policies and procedures that address threats caused by vegetation," in 

11 light of the deadly San Bruno explosion. Order at 3, PG&E Criminal Proceedings, (N.D. Cal. 

12 Jan. 26, 2017), ECF No. 916 (the "San Bruno Order"). As part of the sentencing process, PG&E 

13 had promised the Court that Defendant Julie Kane - as Chief Ethics and Compliance Officer of 

14 the Company - "reports directly to PG&E Corporation's Chairman and CEO" regarding PG&E's 

15 compliance efforts, and that "PG&E's senior executives" regularly reviewed the Company's 

16 safety and compliance, such that "high-level personnel of the organization ensure its 

17 effectiveness." Id., Defs Sentencing Memo. at 6-7, PG&E Criminal Proceedings (N.D. Cal. Jan. 

18 9, 2017), ECF No. 906. Accordingly, Exchange Act Individual Defendants Kane, Earley, and 

19 Williams had actual knowledge of PG&E's lack of compliance. 

20 403. Because the Defendants represented that they closely monitored PG&E' s 

21 critically important safety and compliance, and because PG&E' s fire safety practices resulted in 

22 thousands of fire safety violations during the Class Period, they knew - or were deliberately 

23 reckless in not knowing - that PG&E' s level of safety with respect to vegetation management 

24 and wildfire prevention did not comport with state law. 

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119 Court filings identify this individual as Dean McFarren, PG&E's Quality Assurance 

Supervisor. 

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C. The Federal Court Overseeing PG&E's Probation, Including Safety 

Monitoring, Has Uncovered Additional Facts Supporting Scienter 

404. As described above, see supra Section IV.F.2., PG&E was convicted of five 

felony counts for knowingly and willfully violating federal safety standards in causing the deadly 

San Bruno explosion in September 2010. On January 26, 2017, Judge Henderson sentenced 

PG&E to an expansive program of probation, including a corporate compliance and ethics 

monitorship program, 10,000 hours of community service, expenditure of $3 million to inform 

the public of its criminal conduct, and a mandate to refrain from any further criminal behavior. 

San Bruno Order. 

405. The first condition to PG&E's probation is that it "Not Commit Another Federal, 

State, or Local Crime During the Term of the Probation." PG&E did not object to this term in its 

responsive sentencing memorandum. PG&E Sentencing Memorandum at 15, PG&E Criminal 

Proceedings (N.D. Cal. Jan. 9, 2017), ECF No. 906. PG&E reassured the Court, prosecutors, the 

public, and its investors that it would not engage in further criminal acts, including criminally 

negligent or reckless safety violations. This condition of PG&E's probation applied to PG&E's 

electrical operations and gas operations alike. Accordingly, as of January 8, 2017, PG&E had an 

unusual motive to deceive investors and conceal its lack of compliance with safety regulations: it 

needed investors to believe it was meeting the terms of its probation. 

406. On August 14, 2017, Judge Alsup was assigned to preside over the criminal case 

and PG&E's resulting probation. 

407. After the deadly Camp Fire, Judge Alsup ordered the parties on November 27, 

2018 to answer the following questions by December 31, 2018: 

1. What requirements of the judgment herein, including the 

requirement against further federal, state, or local crimes, might be 

implicated were any wildfire started by reckless operation or 

maintenance of PG&E power lines? 

2. What requirements of the judgment herein might be implicated 

by any inaccurate, slow, or failed reporting of information about 

any wildfire by PG&E? 

3. What specific steps has the monitor herein taken to monitor and 

improve PG&E safety and reporting with respect to power lines 

and wildfires? 

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4. Provide an accurate and complete statement of the role, if 

any, of PG&E in causing and reporting the recent Camp Fire 

in Butte County and all other wildfires in California since the 

judgment herein. 

408. On December 5, 2018, Judge Alsup requested "that the Office of the California 

Attorney General advise the Court of its view on one aspect of this question, namely, the extent 

to which, if at all, the reckless operation or maintenance of PG&E power lines would 

constitute a crime under California law." In response, the Attorney General of California 

replied that PG&E' s actions or failures to act could constitute a range of criminal violations if th 

Utility was found to be "reckless" in causing California wildfires. 120 The listed potential 

offenses ranged from "misdemeanor offenses related to vegetation and power lines" to "impliedmalice murder and involuntary manslaughter." 

409. On January 17, 2019, Judge Alsup issued a tentative finding that "the single most 

recurring cause of the large 2017 and 2018 wildfires attributable to PG&E's equipment has been 

the susceptibility of PG&E's distribution lines to trees or limbs falling onto them during 

high-wind events." 121 

410. On January 30, 2019, Judge Alsup held a probationary hearing to determine 

whether PG&E's conduct had violated the terms of its probation. Part of the hearing concerned 

PG&E' s failure to inform the probation officer that the Butte County District Attorney's Office 

was investigating PG&E's role starting several of the North Bay Fires, that the District Attorney 

considered criminal prosecution, and that it executed a settlement with PG&E to avoid such 

prosecution. The court made a "find[ing] that PG&E violated the conditions of probation," 

with sentencing to be determined at a later date. 122 Judge Alsup also reminded the Company: 

[O]ne of the conditions of probation is you will not commit 

another federal, state, or local crime. It doesn't have to be a 

pipeline or a natural gas. It can be any crime. You cannot - you've 

120Attorney General's Amicus Brief Regarding PG&E's Potential Criminal Liability, PG&E 

Criminal Proceedings (N.D. Cal. Dec. 28, 2018), ECF No. 954. 

121 U.S. Response to Court's Order to Show Cause and Request for Comment, PG&E 

Criminal Proceedings (N.D. Cal. Jan. 17, 2019), ECF No. 970. 

122 Transcript of Proceedings, PG&E Criminal Proceedings (N.D. Cal. Jan. 31 2019), ECF 

No. 999. 

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got to be on your absolute best behavior. No more crimes .... 

That's what PG&E is up against now. 

411. During the hearing, Judge Alsup reportedly stated: "[T]here is one very clear-cu 

pattern here: That PG&E is starting these fires . ... PG&E, according to Cal Fire, started the 

fire. Global warming did not start the fire. According to Cal Fire, PG&E started it, all 17 of 

them." Judge Alsup continued, "what do we do[?] Does the judge just tum a blind eye and say, 

'PG&E, continue your business as usual. Kill more people by starting more fires'?" 123 Judge 

Alsup heard testimony from PG&E' s probation officer, Jennifer Hutchings, concerning the 

Honey Fire - one of the North Bay Fires for which Cal Fire found evidence of a safety violation 

and referred further criminal investigation to the relevant district attorney for Butte County. 

Probation Officer Hutchings testified: "I discovered that there had actually been an extensive 

investigation done by Butte County, that they were fully prepared to bring criminal charges 

against Pacific Gas and Electric; that Pacific Gas and Electric had entered into a settlement 

agreement with them in order to avoid these charges being brought." The court then made a 

"find[ing] that PG&E violated the conditions of probation as charged in the Form 12." 

Thereafter, the court turned to address whether it "should not impose further condition on PG&E 

to help protect the public from possible further other crimes of the offender," including the 

following exchange with PG&E representative: 

The Court: 

PG&E: 

Okay. When you say "mitigate," why can't the risk 

[of wildfire] be zero? Why is it that PG&E should 

be permitted to start a single wildfire?" 

Well, the answer to the first question is bringing the 

risk to zero is an incredibly complicated series of 

policy decisions that have to factor in reliability, 

cost, safety, and there's a tremendous amount of 

analysis that goes into how best to, for instance, 

make vegetation management decisions and how 

aggressive vegetation management should be versus 

the cost of123 Transcript of Proceedings, PG&E Criminal Proceedings (N.D. Cal. Jan. 31 2019), ECF 

No. 999. 

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The Court: So why is it PG&E says all the time "Safety is our 

number one thing"? I hear it all the time, "Safety. 

Safety. Safety," but it's not really true. Safety is 

not your number one thing. 

At the conclusion of this proceeding, PG&E accepted that full compliance with safety 

regulations, rather than "mitigation," was both possible and PG&E' s goal: "[U]ltimately we 

agree with Your Honor's goal. We think that Your Honor's goal of trying to eliminate the risk is 

exactly what we all need to be working towards." 

412. On February 6, 2019, attorneys for fire victims provided a submission to Judge 

Alsup in response to the January 30, 2019 probationary hearing. 124 The submission compiled 

data from PG&E' s regulators which demonstrated that the Company posed a far greater risk to 

the public than its peers. For example, according to the submission, Southern California Edison 

("SoCalEd") serves 15 million people across approximately 50,000 square-miles, operating and 

maintaining 91,375 miles of distribution lines and 1,433,336 electric poles. By comparison, 

PG&E services approximately 16 million people throughout a 70,000-square-mile service area, 

operating and maintaining between 81,000 miles and 115,000 miles of distribution lines and 

2,400,000 electric poles. Yet, despite these similarities in service size and miles of distribution 

lines, PG&E's electrical equipment caused 1,208 more wildfires than SoCalEd's equipment 

between 2014 to 2017 as self-reported to the CPUC. In total, PG&E's equipment caused 1,552 

wildfires, while SoCalEd only caused 344 fires over the same time period. Put differently, 

PG&E's equipment caused 4.5 times more wildfires than SoCalEd. PG&E's equipment was als 

responsible for more large-scale fires, including 43 more fires than SoCalEd that burned between 

10-99 acres, three more between 100-299 acres, and two more between 300-999 acres. 

Similarly, since 2014, the electrical equipment of San Diego Gas & Electric ("SDG&E") caused 

109 wildfires with only one wildfire burning over 10 (and below 300) acres. By contrast, PG&E 

caused 1,552 wildfires during that same timeframe with 68 of those fires burning over 10 acres. 

124 Submission of Attorneys Pitre and Campora in Response to Order dated Jan. 30, 2019, 

PG&E Criminal Proceedings (N.D. Cal. Feb. 6, 2019), ECF No. 1005. 

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1 413. On March 5, 2019, Judge Alsup issued a revised order to show cause as to why 

2 the court should not modify the terms of PG&E' s probation in light of subsequent 

3 submissions. 125 Judge Alsup' s Revised Order further found that this "record demonstrates that 

4 PG&E's performance with respect to vegetation management has been dismal." Although 

5 PG&E had previously balked at new conditions of probation that would require full compliance 

6 on the grounds that they would be impossible to achieve, Judge Alsup's March 5, 2019 order 

7 rejected that notion: 

8 To address PG&E' s complaints that the vegetation-management 

conditions proposed in the January 9 order would be unduly 

9 expensive, require superhuman efforts, and exceed the 

requirements of state and federal law, the above conditions would 

10 now simply require full compliance with existing law and with the 

metrics proposed in PG&E' s own wildfire mitigation plan. This 

11 order rejects PG&E's back-up contention that "perfect 

compliance" with Section 4293 is impossible due to "densely 

12 forested, highly dynamic, living environments, in which conditions 

can rapidly change" (Dkt. No. 1016 at 9). The record 

13 demonstrates that PG&E's performance with respect to 

vegetation management has been dismal. And, not only does the 

14 offender provide no evidentiary support for its claim, but anyone 

who knows the terrain and its vegetation knows that it takes years 

15 for trees to grow to the height of PG&E' s lines. Regular 

inspections could easily spot trees that are high enough to present a 

16 hazard. If state or federal law is too strict, moreover, PG&E' s 

remedy would be to seek the relaxation of such laws through its 

17 well-oiled lobbying efforts .... The proposed conditions would 

help ensure that, going forward, funds are adequately allocated to 

18 PG&E' s vegetation management and wildfire mitigation costs. 126 

19 414. On April 2, 2019, Judge Alsup held a hearing on his second order to show cause 

20 in PG&E's probation proceedings. At the hearing, Judge Alsup stated: 

21 PG&E over several years allowed the trees that needed to be 

removed to be built up and did not remove them, did not trim them 

22 so that we wound up with a large number of trees that should have 

been removed by PG&E but weren't. And that was a major 

23 contributing factor, maybe the single-biggest factor, in causing the 

fires in 2017 and 2018 in Northern California. 127 

125 Second Order to Show Cause Why PG&E's Conditions of Probation Should Not Be 

Modified, PG&E Criminal Proceedings (N.D. Cal. Mar. 5, 2019), ECF No. 1027. 

126 Second Order to Show Cause Why PG&E's Conditions of Probation Should Not Be 

Modified, PG&E Criminal Proceedings (N.D. Cal. Mar. 5, 2019), ECF No. 1027. 

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127 Transcript of Proceedings at 6-7, PG&E Criminal Proceedings (N.D. Cal. Apr. 2, 2019), 

ECF No. 1047. 

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1 Judge Alsup also explained "as we've gotten into the evidence, and I've studied quite a lot of it, 

2 again I want to say it's quite clear that PG&E ... let the tree budget wither so that a lot of trees 

3 that should have been taken down were not." He concluded, "[t]his is a crisis, a crisis that 

4 California faces on these wildfires, and PG&E is the single-most culpable entity in the mix. 

5 PG&E has started more than - way more than its share of these fires. . . This is a problem of 

6 your own making." 

7 415. Under these circumstances, PG&E' s violation of court-imposed probation and 

8 California law, while under monitoring and reporting obligations regarding its purported 

9 compliance throughout the Class Period, support strong inferences that Defendants knew, or 

10 were severely reckless in not knowing, that it failed to comply with relevant laws and regulations 

11 when making the false and misleading statements detailed above. 

12 416. As a result, on April 3, 2019, Judge Alsup issued an Order Adopting New 

13 Conditions of Probation. The court modified the terms of PG&E's probation to require it to (i) 

14 "fully comply with all applicable laws concerning vegetation management and clearance 

15 requirements"; (ii) "fully comply with the specific targets and metrics set forth in its" 2019 

16 Mitigation Plan, and (iii) not issue dividends until it was in compliance with all applicable 

17 vegetation management requirements, among other conditions. 128 

18 417. On May 7, 2019, Judge Alsup conducted a sentencing hearing for PG&E's 

19 violation of probation. In a colloquy with PG&E's new CEO William D. Johnson, the Court 

20 stated: "one of the biggest problems we've had is that PG&E has been starting a lot of fires, and 

21 they had that horrible explosion in San Bruno, and T just don't think PG&E has put safety 

22 first." He further reminded the new CEO: "your company admitted that it started 17 of those 

23 fires in 2017 just in the Wine Country." 129 

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128 Order Adopting New Conditions of Probation, PG&E Criminal Proceedings (N.D. Cal. 

Apr. 3, 2019), ECF No. 1040. 

129 Transcript of Proceedings at 11, PG&E Criminal Proceedings, (N.D. Cal. May 7, 2019), 

ECF No. 1061. 

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1 418. During the sentencing hearing, Judge Alsup also observed that while there are 

2 other causes of fire, "no one has started more fires than PG&E." 

3 419. The magnitude of PG&E's failures show that the Company and Exchange Act 

4 Individual Defendants either knew these facts, or were deliberately reckless in not knowing 

5 them. The inference of scienter is made even stronger when combined with the fact that safety 

6 was a core operation of PG&E's, as discussed in Section X.B., supra. 

7 

8 

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D. PG&E's Noncompliance with Safety Regulations Was Well-Known 

Throughout the Company, Including at the Highest Levels, with Real-Time 

Access to a Database of Known Safety Violations 

1. PG&E Recorded Its Violations of Safety Regulations in a 

Sophisticated Database, Readily Accessible by the Exchange Act 

Individual Defendants 

420. PG&E maintained a database of inspection data to document the condition of its 

12 power lines, which provided its personnel with ready access to information about instances of 

13 noncompliance with state safety regulations. In a November 8, 2017 article about its pole 

14 management and maintenance efforts, PG&E stated that it "uses a comprehensive database to 

15 manage these multiple patrol and inspection schedules of our 2.4 million poles."130 

16 421. This information was used to develop the company's Mobile Asset Inspection 

17 application that provided "electric power inspectors in the field with real-time information 

18 including maps, customer information, safety and access information." 131 The system was 

19 developed in 2016 and had become sophisticated enough by 2017 to win Information Week's IT 

20 Excellence Award in the Data and Analytics category. 132 The article further states that 

21 "[s]atellite maps were layered with the location of PG&E's two million electric poles along 

22 with decades' worth of data on each individual pole." 133 PG&E's 2016 Corporate 

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13° Facts about PG&E Pole Management and Maintenance, Currents, PG&E (Nov. 8, 2017), 

http:/ /www.pgecurrents.com/201 7 /11 /08/facts-about-pge-pol e-management-and-maintenance/. 

131 Press Release, PG&E, Innovative App for PGE Field Crews Earns Information Week IT 

Excellence Award (May 22, 2017), http://investor.pgecorp.com/news-events/pressreleases/press-release-details/2017 /Innovative-App-for-PGE-Field-Crews-EarnsInformati on Week-IT-Excellence-A ward/ default. aspx. 

m Id. 

133 Id 

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1 Responsibility and Sustainability Report announced that a Margaret Mooney Award for 

2 Innovation was awarded to its "Data Visualization-Google Earth SAP team, which created a 

3 new technology that provides work crews with a dramatically enhanced data visualization of 

4 work in progress." The report further mentioned "[t]he development of an SAP-based 

5 compliance tool that can analyze trends and inform [PG&E's] risk management efforts." Thus, 

6 PG&E used sophisticated software that kept track of its safety regulation noncompliance for its 

7 powerlines and poles in real time. 

8 422. PG&E assigns a unique "pole SAP ID number" that corresponds to each pole's 

9 data. 134 According to an Information Week article about PG&E's mobile application, "[t]he 

10 status of a pole's inspection is tracked in SAP [database technology] so the inspection team 

11 knows when it's time to inspect each pole. That information flows into the enterprise platform 

12 PG&E built, which pushes electronic lists to inspectors' iPad Pros." 135 The data collected is 

13 extensive enough to enable "an enterprise data and analytics organization that is using advanced 

14 analytics to predict when poles will fail." 136 And by 2017, the PG&E Corporate Responsibility 

15 and Sustainability Report mentions that the company's "SAP-based tool" was used to analyze 

16 trends in environmental compliance. Thus, PG&E' s records of safety regulation violations were 

17 stored in a readily accessible database. Defendants Earley, Williams, Stavropoulos, Kane, Johns, 

18 and Hogan each had easy access to this database. 

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423. Furthermore, in its submissions to Judge Alsup in the Company's criminal 

probation, PG&E represented that it conducts quality assurance audits to obtain "real time" 

assessments of its vegetation management compliance: 

PG&E has also implemented checks on its contractors' vegetation 

management work as another way to monitor compliance. For 

example, PG&E conducts audits and reviews of its vegetation 

134 PG&E Pole Data Request Form, PG&E (Aug. 9, 2017), 

https :/ /www.pge.com/pge _global/ common/pdfs/ safety /yard-safety /powerlines-and-trees/pol edata-request-form pdf 

135 Lisa Morgan, PG&E 's Winning Recipe for a Mobile Asset Inspection App, 

Information Week (June 29, 2017), https://www.informationweek.com/big-data/pgandeswinning-reci pe-for-a-mobile-asset-inspection-app/d/d-id/13 29251. 

136 Id 

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management program to assess the quality of contractors' work 

and compliance with PG&E's standards and legal requirements, 

including Public Resource Code§ 4293. PG&E's audit and review 

process consists primarily of two programs, Quality Control 

("QC") and Quality Assurance ("QA") ..... 

PG&E's QA audits are designed to obtain a "real-time" 

assessment of PG&E's vegetation management program and 

whether the conditions in its service territory are consistent 

with PG&E's legal obligations. To ascertain a true "real-time" 

condition of the program, audits are performed throughout the 

year. ... The audits indicate whether any identified issues pose 

compliance violations or potential violations ( e.g., potential 

violation may occur within 90 days ). 137 

424. Further, in those same criminal probation proceedings, Judge Alsup found that 

PG&E has admitted "that as of June 2017, there were 3,962 unworked trees which PG&E had 

identified in 2016 as hazardous with the potential to 'fall into or otherwise impact the 

conductors, towers or guy wires before the next inspection cycle."' Such a precise admission 

confirms the existence of such a database, awareness of its contents showing that vegetation 

management violations were widespread during the Class Period, and access to that information 

by the highest levels. 

425. Consequently, it is clear that PG&E was noncompliant with safety regulations 

concerning vegetation management and pole integrity, and that such facts would have been 

documented electronically, stored in an accessible SAP database, and available to PG&E 

personnel throughout the Company in real-time. Defendants Earley, Williams, Stavropoulos, 

Kane, Johns, and Hogan each had easy access to this database. 

2. PG&E Instituted a Culture Among Its On-the-Ground Employees of 

Reporting Problems up the Corporate Chain, Which Upper 

Management Was Aware of and Monitored 

426. PG&E repeatedly touted the culture among its lower-level employees that 

encouraged reporting safety problems up the chain of management. Further, the Exchange Act 

Individual Defendants touted their knowledge and familiarity with this practice at the Company, 

137 PG&E Response to Request for Information at 12, PG&E Criminal Proceedings (N.D. Cal. 

Feb. 22, 2019), ECF No. 1016. 

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1 indicating either they personally received information of safety violations this way, or they knew 

2 where to find such information but deliberately avoided it. 

3 427. On August 18, 2016, PG&E issued a press release titled "PG&E Becomes First 

4 Natural Gas Utility to Receive Process Safety." It contained a description of an internal 

5 Company policy termed "The Corrective Action Program, a program that empowers 

6 employees at all levels of PG&E to speak up and identify issues that are in need of 

7 improvement." 

8 428. On November 4, 2016, PG&E hosted a conference call with analysts to discuss its 

9 financial results for the third quarter of 2016. In his prepared remarks, Earley elaborated on 

10 PG&E' s culture of encouraging "every employee" to report safety violations up the chain of 

11 command, as follows: 

12 We also wanted to make sure that every employee felt 

comfortable raising concerns, no matter how big or small, so 

13 we made a number of changes to encourage all employees to 

speak up when something doesn't seem right. For example, we 

14 worked with our unions to develop a non-punitive selfreporting policy. 

15 

We've also adapted the nuclear industry's corrective action 

program across the Company, to make it easy for employees to 

report things that need to be fixed. In fact, employees can now 

report corrective action items through a simple app on their 

smart devices. And we've created a number of awards to 

publicly recognize employees when they do speak up, so that 

we are encouraging and reinforcing that behavior. 

* * * 

The improvements we have made in safety and reliability over 

the last six years have put us in a position to deliver strong 

financial results going forward. 

Earlier this year, we announced our first dividend increase in 

six years, and we have committed to achieving a roughly 60% 

payout ratio by 2019. Combined with our expected rate based 

growth, we are confident we can deliver a strong overall return for 

our shareholders. 

16 

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429. Thus, PG&E went significantly beyond making employees feel safe "report[ing] 

things that need to be fixed." The CEO himself took credit for "mak[ing] sure that every 

employee felt comfortable raising concerns" and "encourag[ing] all employees to speak up" 

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