City & County of San Francisco v. PG & E Corp.

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

CITY & COUNTY OF SAN FRANCISCO, 

Plaintiff-Appellant, No. 03-16976 v.  D.C. No.

PG&E CORPORATION, CV-02-03668-VRW

Defendant-Appellee. 

PEOPLE OF THE STATE OF 

CALIFORNIA, ex rel. BILL LOCKYER, No. 03-17051 Attorney General State of D.C. Nos. California, Plaintiff-Appellant,  CV-02-04330-VRW

CV-02-03668-VRW

v. CV-02-04071-VRW

PG&E CORPORATION, OPINION

Defendant-Appellee.  Appeal from the United States District Court for the Northern District of California Vaughn R. Walker, District Judge, Presiding

Argued and Submitted February 18, 2005—San Francisco, California

Filed January 10, 2006

Before: Sidney R. Thomas, Richard A. Paez, and Consuelo M. Callahan, Circuit Judges.

Opinion by Judge Thomas; Partial Dissent by Judge Callahan

163 166 SAN FRANCISCO v. PG&E CORP.

COUNSEL

Bill Lockyer, Tom Greene, Ken Alex, Danette Valdez, and Anne Burr, San Francisco, California, for appellant Attorney General.

Dennis J.…

In this appeal, we consider whether a lawsuit filed by governmental entities seeking restitution to third parties pursuant to the California Unfair Practices Act constitutes a police and regulatory power action that cannot be removed to bankruptcy court. Under the circumstances presented here, we conclude that it does, and reverse the judgment of the district court.

I

The present controversy stems from the bankruptcy reorganization filed by Pacific Gas & Electric Company (“the Utility” or “the Debtor”). The Utility provides gas and electric services to more than four million customers in northern and central California, subject to the regulation of the California Public Utilities Commission (“CPUC”) and the Federal Energy Regulatory Commission (“FERC”). In general, the CPUC has jurisdiction to set the rates, terms and conditions of service for the Utility’s electricity distribution, natural gas distribution and natural gas transportation and storage services in California. The CPUC is also responsible for setting service levels and certain operating practices and for reviewing the Utility’s capital and operating costs. FERC has jurisdiction to set the rates, terms and conditions…

dissenting in part:

I join the holding on appellate jurisdiction in Part II of the opinion, but I cannot join my colleagues determination that appellants’ restitution claims do not have a pecuniary purpose and satisfy the “public policy” test.

We start at the same place but our reasoning diverges. The starting point, set forth by the majority in footnote nine, is former Representative Don Edwards’ statement that the exception is to be given a narrow construction and is “ ‘not to apply to actions by a governmental unit to protect a pecuniary interest in property of the debtor, or property of the estate.’ ” In re First Alliance Mortgage Co., 264 B.R. 634, 646 (C.D.Cal.2001) (quoting 124 Cong. Rec. H11,089 (1978), reprinted in 1978 U.S.C.C.A.N. 6436, 6444-45).

The majority appears to overlook this advice in concluding that the restitution claims pass the “pecuniary purpose” test. It restates the standard as “ ‘to prevent suits that would allow a governmental unit to obtain an advantage over creditors or potential creditors in the bankruptcy proceeding.’ ” (Quoting Lockyer v. Mirant, 398 F.3d 1098 , 1109 (9th Cir.2005)). The majority then reasons that because appellants “will…