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Lawsuit Says PG&E Execs, Not Shareholders, Should Pay For San Bruno Explosion

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Year In Review: 2010 Top News Stories

Flames erupt from an exploded gas pipeline in San Bruno’s Crestmoor neighborhood, September 9, 2010. (Justin Sullivan/Getty Images)

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Doug began his career as a copy boy at the New York Times, and then...
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REDWOOD CITY (KCBS) – A PG&E shareholder filed a lawsuit on Monday against the utility company’s management stating that the executives, not the people who own the utility’s common stock, should bear the cost of the San Bruno pipeline disaster.

The lawsuit, filed in San Mateo County Superior Court by shareholder Hind Bou-Salman, argues that PG&E’s executives created a “profits over safety” corporate culture that led to tragedies like the 2010 pipeline explosion in San Bruno that killed eight people and destroyed 38 homes.

PG&E officials said earlier this month that the utility has settled nearly 500 confidential claims totaling more than $565 million related to the San Bruno explosion.

While the California Public Utilities Commission is also currently considering a financial penalty against PG&E that could exceed $2 billion, the utility company has repeatedly reassured the public by stating that ratepayers will not bear the cost and that shareholders will.

Attorney Mark Molumphy at Cotchett, Pitre & McCarthy LLP, who filed the suit on Bou-Salman and PG&E shareholders’ behalf, strongly disagrees with that solution.

“It said that the money was going to come from shareholders. Well, our client is a shareholder and she’s saying, ‘Wait a second, I wasn’t responsible for that. Why should I be taking the brunt? Why shouldn’t management, who are responsible for that, pay their fair share?’” he said.

The suit wants PG&E management to give up their bonuses, claiming money earmarked for safety was diverted to executive compensation. PG&E responded by stating that they are reviewing the allegations in the complaint that they remain committed to improve the safety of the gas system and its customers.

(Copyright 2013 by CBS San Francisco. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)

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