NJ - Appeals Court Says Power-Outage Victims May Sue GPU Energy

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New Jersey Appeals Court Says Power-Outage Victims May Sue GPU Energy

Source: Knight Ridder/Tribune Business News Publication date: 2000-06-15

Jun. 15--Business owners and residents who suffered financial losses when 100,000 customers were left without power during a weeklong heat wave last summer can bring a class-action lawsuit against GPU Energy, a state appeals court decided yesterday.

The ruling is the first in New Jersey to allow a class-action lawsuit against a utility company, lawyers involved with the case said.

Delighted by the ruling, Frank S. Gaudio, the Red Bank lawyer handling the class action, said, "This is the first time the utilities' feet are being held to the fire and they are answering for these damages in a class action."

He said his clients have losses ranging from $50 to $40,000. And because there are allegations of consumer fraud, Gaudio can seek three times the actual value of damage as well as punitive damages.

"One client, who owns a seafood restaurant, had to throw out thousands and thousands of dollars worth of lobster and other types of fish. This is not just about ice cream that had to be thrown out," said Gaudio. He said the power outages were caused by poor maintenance and poor weather forecasting, not an unexpected act of God as the utilities had claimed.

GPU had argued that the Board of Public Utilities, the state agency that set rates and regulates the industry, should hear the customers' claims. The BPU conducted an investigation into the blackout during the week of July 4, but said it is not its role to settle claims brought by individual customers.

Yesterday, a three-judge panel of the Appellate Division of Superior Court unanimously ruled the BPU's decision not to hear the class-action claims was proper because the agency resolves only regulatory questions. The court said the utility company customers should have their day in court.

"The events in issue raise only ordinary questions of negligence," states the decision written by Judge Michael Patrick King and joined by Judges Philip Carchman and Steven Lefelt.

When the case goes back for trial, the jury will have to determine whether GPU acted reasonably and whether it breached its duty to its customers. Those issues, the appeals court said, are beyond the scope of the BPU.

Douglas S. Eakeley, the lawyer for GPU Inc., said he was pleased the BPU investigation found GPU provided "safe, adequate and proper service."

"We didn't want judges and juries replacing the BPU," said Eakeley.

In November, the BPU issued a report critical of the GPU and other utility companies for creating mass confusion by not promptly informing officials and customers of when and where blackouts would occur.

Since the outages, GPU has announced plans to accelerate spending by tens of millions of dollars to upgrade its system to cope with rising demand for electricity.

Stephen B. Genzer, of the New Jersey Utilities Association, a trade group that represents all the major utility companies in the state, said his organization wanted the BPU to have the last word because it sets customer rates and there is a direct link between service and revenue.

But he does not fear the court decision will expose utility companies to a flood of lawsuits.


-- (Dee360Degree@aol.com), June 15, 2000

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