Court Opinion

ID: 6345076
Source: CourtListenerOpinion
Date Created: 2022-05-27 20:00:26.371378+00
Date Added: 2024-06-11T09:12:49.514127
License: Public Domain

NOT FOR PUBLICATION                           FILED
                    UNITED STATES COURT OF APPEALS                       MAY 27 2022
                                                                      MOLLY C. DWYER, CLERK
                                                                       U.S. COURT OF APPEALS
                           FOR THE NINTH CIRCUIT

OSCAR DE LA ROSA; et al.,                       No.    21-55269

                Plaintiffs-Appellants,          D.C. Nos.
                                                3:17-cv-02433-BAS-JLB
 v.                                             3:18-cv-01389-BAS-JLB
                                                3:18-cv-01390-BAS-JLB
SAN DIEGO GAS & ELECTRIC                        3:18-cv-01561-BAS-JLB
COMPANY,

                Defendant-Appellee.             MEMORANDUM*

OSCAR DE LA ROSA; et al.,                       No.    21-55315

                Plaintiffs-Appellees,           D.C. Nos.
                                                3:17-cv-02433-BAS-JLB
 v.                                             3:18-cv-01389-BAS-JLB
                                                3:18-cv-01390-BAS-JLB
SAN DIEGO GAS & ELECTRIC                        3:18-cv-01561-BAS-JLB
COMPANY,

                Defendant-Appellant.

                   Appeal from the United States District Court
                      for the Southern District of California
                   Cynthia A. Bashant, District Judge, Presiding

                       Argued and Submitted April 12, 2022
                              Pasadena, California

      *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
Before: PAEZ and BADE, Circuit Judges, and CARDONE,** District Judge.

      Plaintiffs, a group of U.S. Marines, were severely injured when a gas line

exploded during a training exercise at Camp Pendleton, a Marine Corps base.

Plaintiffs assert that Defendant San Diego Gas & Electric Company (SDG&E) is

liable for their injuries because it was aware of longstanding problems with the

Camp Pendleton gas lines but continued to supply gas to the base. The district

court granted summary judgment for SDG&E on the grounds that California law

preempted Plaintiffs’ claims, and, alternatively, that Plaintiffs had not shown that

SDG&E had notice of the condition of the gas line.

      Plaintiffs appeal the district court’s entry of summary judgment, and

SDG&E cross-appeals from the district court’s denial of its motions to dismiss.1

We have jurisdiction under 28 U.S.C. § 1291, and we conclude that California

Public Utilities Code section 1759 preempts Plaintiffs’ claims. Therefore, we

dismiss for lack of subject matter jurisdiction, and we do not address the other

issues on appeal.

      **
             The Honorable Kathleen Cardone, United States District Judge for the
Western District of Texas, sitting by designation.
       1
         SDG&E moved to dismiss under Federal Rule of Civil Procedure 12(b)(7),
arguing that the United States was a required party under Rule 19, and then moved
to dismiss on the grounds that Plaintiffs’ claims were not justiciable under the
political question doctrine. The district court denied both motions.

                                          2
      We review questions of subject matter jurisdiction de novo. Naruto v.

Slater, 888 F.3d 418, 421 (9th Cir. 2018). In a case that involves multiple

jurisdictional questions, “there is no mandatory ‘sequencing of jurisdictional

issues.’” Sinochem Int’l Co. v. Malay. Int’l Shipping Corp., 549 U.S. 422, 431

(2007) (quoting Ruhrgas AG v. Marathon Oil Co., 526 U.S. 574, 584 (1999)). We

agree with the district court that Plaintiffs’ claims are preempted, but as a matter of

subject matter jurisdiction, not summary judgment.

      The California Public Utilities Commission (PUC) has broad power to

regulate utilities, including the ability to “fix rates [and] establish rules.” San

Diego Gas & Elec. Co. v. Superior Ct. (Covalt), 920 P.2d 669, 681 (Cal. 1996).

Section 1759 of the California Public Utilities Code protects the PUC’s authority

by restricting courts’ jurisdiction “to review, reverse, correct, or annul any order or

decision of the commission . . . or to enjoin, restrain, or interfere with the

commission in the performance of its official duties.” Cal. Pub. Util. Code

§ 1759(a).

      While this jurisdictional limit most obviously applies to direct challenges to

PUC decisions, section 1759 also bars private suits against public utilities if

awarding damages would “have the effect of undermining a general supervisory or

regulatory policy of the commission.” Covalt, 920 P.2d at 683 (discussing Waters

v. Pac. Tel. Co., 523 P.2d 1161 (Cal. 1974)). Thus, the question of whether a

                                            3
utility regulation preempts a suit against a public utility company implicates a

court’s subject matter jurisdiction. Kairy v. SuperShuttle Int’l, 660 F.3d 1146,

1156 (9th Cir. 2011); see also Wilson v. S. Cal. Edison Co., 184 Cal. Rptr. 3d 26,

41 (Ct. App. 2015) (“[S]ection 1759 is a statute involving subject matter

jurisdiction, and divests trial courts of jurisdiction to entertain lawsuits that would

interfere with the PUC’s regulation of utilities.”).

      The PUC regulation at issue in this case is SDG&E Tariff Rule 26 (Rule 26),

which states in relevant part:

      The consumer shall, at the Consumer’s own risk and expense, furnish,
      install and keep in good and safe condition all Consumer Equipment
      as defined in Rule No. 1. Company shall not be responsible for the
      selection, installation, operation, maintenance, or condition of any
      Consumer Equipment or for any injuries or damages resulting
      therefrom . . . .

Consumer Equipment is defined as “[a]ll equipment for receiving and utilizing gas

from the Company, including, but not limited to, any and all pipes . . . downstream

of the Service Delivery Point.” The Service Delivery Point is the point “where the

Utility’s pipe connects to the customer’s house line, usually the meter location.”

      Rule 26 bars Plaintiffs’ claims. California courts determine whether section

1759 preempts a cause of action by applying the three-step “Covalt test,” in which

the court asks: “(1) whether the PUC had the authority to adopt a regulatory policy

on the subject matter of the litigation; (2) whether the PUC had exercised that

authority; and (3) whether action in the case before the court would hinder or

                                           4
interfere with the PUC’s exercise of regulatory authority.” Kairy, 660 F.3d at 1150

(citing Covalt, 920 P.2d at 687–95).

      On the first Covalt step, the PUC clearly had the authority to limit SDG&E’s

liability. See Waters, 523 P.2d at 1164 (“[L]imitations upon liability . . . ha[ve]

long been considered to be a proper subject for commission regulation . . . .”). On

the second step, the PUC exercised that authority when it approved Rule 26. See

Davis v. S. Cal. Edison Co., 186 Cal. Rptr. 3d 587, 604 (Ct. App. 2015) (stating

that the PUC exercises its authority when it approves a tariff rule).

      On the third step, permitting Plaintiffs to recover would interfere with the

PUC policy expressed in Rule 26. Plaintiffs argue that SDG&E had a duty to shut

off Camp Pendleton’s gas supply because it had known for many years that the

base’s gas lines were poorly mapped and made with brittle, leak-prone materials,

and because, just three months earlier, a bulldozer had struck the gas line at issue

here, thereby putting SDG&E on notice that the gas line was inadequately buried.

Assuming that SDG&E was fully aware of these dangerous conditions, and that its

decision to supply Camp Pendleton with gas despite this knowledge breached its

common law duty of care, Plaintiffs’ theory of recovery would make SDG&E

broadly responsible for injuries resulting from the “operation, maintenance, or

condition” of Consumer Equipment. Liability under these circumstances would

                                          5
hinder the policy of Rule 26, meaning that Plaintiffs’ claims are preempted. See

Kairy, 660 F.3d at 1153; Waters, 523 P.2d at 1166.

      Plaintiffs’ arguments that Rule 26 and section 1759 must be understood in

the context of the PUC’s broader regulatory regime do not change this result.2

Plaintiffs contend that, in light of both the PUC’s general commitment to public

safety and the fact that there are arguably other exceptions to Rule 26’s limitation

on liability, Rule 26 does not immunize SDG&E from the consequences of its own

negligence. However, their sweeping theory of liability would be the exception

that swallows the rule.3

      DISMISSED.

      2
        We grant Plaintiffs’ request to take judicial notice of SDG&E Tariff Rule
11 and PUC General Order No. 58A. See S. Bay United Pentecostal Church v.
Newsom, 985 F.3d 1128, 1132 n.1 (9th Cir. 2021).
      3
        Because existing state law adequately informs our decision here, we
decline Plaintiffs’ request to certify questions to the California Supreme Court.
See Marinelarena v. Garland, 6 F.4th 975, 977 (9th Cir. 2021).

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