At a hearing in the Chapter 11 proceeding In Re: PG&E Corporation and Pacific Gas and Electric Company in the U.S. Bankruptcy Court, Northern District of California, San Francisco Division, Judge Dennis Montali granted a motion by Public Employees Retirement Association of New Mexico and certain other securities plaintiffs, all represented by Lowenstein Sandler as special bankruptcy counsel, to apply Bankruptcy Rule 7023 to the thousands of unresolved securities claims against PG&E, the first step toward certification of a class of holders of such claims.  The ruling represents a unique post-confirmation use of the class mechanism in a Chapter 11 context.  The Court has not yet certified the class on a final basis, saying it would allow discovery and briefing in the pre-certification stage ahead of a final certification hearing.

The securities plaintiffs seek to certify a class consisting of parties who purchased or acquired the publicly traded debt or equity securities of PG&E Corp., Pacific Gas and Electric Co., or both, from April 29, 2015 through November 15, 2018, inclusive, and who timely filed securities claims in PG&E’s Chapter 11 cases, which claims have not been resolved.  The reorganized debtors opposed the motion and class certification.  Oral argument was held on Aug. 23.

As reported by Reorg, Judge Montali preliminarily noted that “the four elements of numerosity, commonality, typicality, and adequacy of representation are satisfied pursuant to Rule 23 of the Federal Rules of Civil Procedure,” due to the thousands of members in the proposed class; and the common issue of liability amongst class members allegedly misled to acquire PG&E’s stock as a result of the company’s misleading statements and subsequent economic loss.  The judge also noted that the plaintiffs’ claims share the same questions of law and fact and that the representative parties would adequately represent the proposed class.

Michael S. Etkin, Andrew Behlmann, Scott Cargill, and Colleen M. Restel serve as Special Bankruptcy Counsel to the securities plaintiffs and the class.

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