NYLJ Article on LIPA's & Con Ed's Liability Concerning Hurricane Sandy

On Friday Novemebr 16, 2012 Marc Miner's article on the Liability of Public Utlitities as a result of failing to provide power in the wake of Hurricane Sandy, was published in the New York Law Journal.  The article can be found  HERE, and is reproduced  below.  

Liability of Public Utilities in the Wake of Hurricane Sandy

Marc Miner New York Law Journal 11-16-2012 Hurricane Sandy has blown through causing many people and businesses to lose power. As a result of the loss of power there have been many injuries and damages. People may trip and fall in darkened staircases, food in homes and grocery stores have gone bad without refrigeration, and car accidents may have occurred due to lack of traffic lights. Can the power companies be held liable for loss of power during a storm? Usually, the electric companies, such as Consolidated Edison, Long Island Power Authority, etc. cannot be held accountable for loss of power during a storm except under special circumstances.

Negligence and Contracts

The New York State Court of Appeals has held that the liability of a public utility must be limited to damages arising from the utility's willful misconduct or gross negligence. Such is because under the terms of the rate schedule, the utility cannot be held liable for interruption of service due to the ordinary negligence of its agents and employees. The public utility does, however, remain liable for gross negligence. Such is based on the fact that most suppliers of electricity in New York, under the tariff or rate schedule filed with the Public Service Commission, have a provision which states that they: [W]ill endeavor at all times to provide a regular and uninterrupted supply of service, but in case the supply of service shall be interrupted or irregular or defective or fail from causes beyond its control or through ordinary negligence of employees, servants or agents, the Company will not be liable therefore. See Food Pageant v. Consolidated Edison, 54 N.Y.2d 167 (1981); Lee v. Consolidated Edison of New York, 98 Misc.2d 304 (App. Term, 1st Dept. 1978). Current New York law on the issue was clarified following the 1977 New York city-wide blackout caused by two lightning strikes hitting Con Ed equipment. At a trial in the case of Food Pageant v. Consolidated Edison, supra, the plaintiff, a grocery store chain, sued Con Ed for compensation for the loss of food. It was argued that Con Ed was grossly negligent in maintaining its facilities and reacting to the storm and lightning strikes. A jury agreed and the appellate courts upheld the verdict. Thus, any person who had a contract for power with Con Ed, and who was damaged due to a loss of that power in the 1977 blackout, was entitled to recover for their damages. Under the theory of collateral estoppel Con Ed could not dispute that it was grossly negligent. However, the utility did not owe any duty to those persons who lacked a direct contractual arrangement. Specifically the New York State Court of Appeals held in Strauss v. Belle Realty, 65 N.Y.2d 399 (1985): [T]hat in the case of a blackout of a metropolis of several million residents and visitors, each in some manner necessarily affected by a 25-hour power failure, liability for injuries in a building's common areas should, as a matter of public policy, be limited by the contractual relationship. In Strauss a tenant of an apartment building tripped and fell on a darkened stairway during the 1977 blackout. He sued his landlord, and Con Ed, but the case against Con Ed was dismissed on public policy grounds because only the landlord, and not the tenant, had a contract with the power company to supply services. The Court of Appeals later held in Milliken & Co. v. Consolidated Edison of New York, 84 N.Y.2d 469 (1994), that commercial tenants of skyscrapers would also be unable to sue Con Ed when they had no direct contractual relationship with the power company: Our precedents thus warrant the view and conclusion that tenants of a building, as such, are not a sufficiently "narrowly defined class" and should not be relieved of the usual juridical relationship prong in order to garner a potential liability against the utility.

Lack of Responsibility

The issue has since been revisited by lower courts following other events leading to loss of power. In the case of Dunlay v. Niagara Mohawk Power, 137 Misc.2d 1048, (City Court of Albany, 1988) the court held that: The storm of Oct. 3-4, 1987, was an unprecedented "act of God." Nature caused the outage, not any negligence on the part of the defendant. But, what of the restoration? Can any gross negligence be imputed to defendant regarding the restoration efforts? On the record before it, the Court thinks not. Similarly, following another blackout it was held in the case of Schlesinger v. Con Edison of New York, 1 Misc.3d 903(A), 2003 WL 22964883 (N.Y.City Civ.Ct.), 2003 N.Y. Slip Op. 51493(U) that: This Court finds that the evidence gathered to date indicates that the August 14, 2003 blackout resulted from events outside of Con Edison's service area and was not caused by a failure of Con Edison's local distribution system. No evidence has been presented proving that Con Edison was either negligent or grossly negligent in causing the August 14, 2003 blackout. Con Edison restored service as soon as practical. Under the circumstances in the instant case, there is no liability by defendant for claimant's food spoilage and therefore for any damages proximately caused by the August 14-15, 2003 interruption of electric service to claimant's premises. So, will the power companies be held liable for damages caused by blackouts in October and November of 2012? Only if it can be shown that the damages were caused by the gross or willful negligence of the power company, and that the damages were incurred by a customer of the power company due to loss of power to be supplied under an agreement. All parties with an interest will thus be following closely any government investigations into the actions of the local power companies leading up to Hurricane Sandy, and their responses to the outages. Marc Miner is a member of Zalman Schnurman & Miner, handling personal injury actions. He can be reached at marcminer@1800lawline.com.

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