Trial began this week in Tesoro Refining and Marketing Company LLC v. Pacific Gas and Electric Company, No. 14-cv-00930-JCS in the Northern District of California.  On January 14, Chief Magistrate Judge Joseph C. Spero decided numerous Daubert motions and motions in limine to exclude evidence filed by both parties.  While most of these motions were denied, one of PG&E’s motions which was granted is worth a closer look for its potential to significantly impact the trial and, in my view, increase the chances of a fair result.

By way of brief background, Tesoro alleges that PG&E is responsible for damage and loss caused by a power outage at Tesoro’s Golden Eagle Refinery in Martinez, California. The refinery primarily drew power from an adjacent cogeneration plant operated by two non-parties.  However, Tesoro had an agreement with PG&E whereby PG&E agreed to provide “standby” electricity service to the refinery.  In November 2010, PG&E was performing maintenance work on two transmission lines when an unexpected disruption occurred, causing a main power transmission line to fail and leaving the cogeneration plant as the sole remaining source of power for the refinery.  The cogeneration plant became overloaded and tripped offline, causing a loss of power at the refinery, which was not fully restored for a week.  The shutdown also allegedly caused a release of pollutants which affected nearby residents.  Tesoro asserts claims for negligence and breach of contract.

One of PG&E’s motions in limine sought to exclude “references to ‘acts of PG&E or ensuing regulatory, civil, or criminal proceedings that are not related to the November 10, 2010 Refinery outage,’ including an incident that occurred earlier in 2010 in which a PG&E natural gas pipeline exploded in San Bruno, California.” Opinion at 27 (quoting PG&E 3d MiL (dkt. 151) at ii, 1). Tesoro opposed this motion on the grounds that the San Bruno explosion “‘demonstrates that PG&E had a clear opportunity to review its history of deferring maintenance decisions’ and rebuts ‘PG&E’s anticipated evidence that it is a safety conscious company.'” Id. (quoting Opp’n to PG&E 3d MiL (dkt. 151-1) at 3).  Addressing Tesoro’s relevance argument, the court noted that it was inconsistent with the position Tesoro took in opposing another of PG&E’s motions in limine, wherein it acknowledged that the San Bruno explosion was completely unrelated to the instant case. Id. at 27-28.  The court also reasoned that the potential for unfair prejudice of this evidence substantially outweighed any probative value:

“It is common knowledge in this district that the San Bruno explosion resulted in multiple deaths and widespread property damage. Suggesting to the jury that the case at hand is in some way related to that incident – when Tesoro itself admits that San Bruno ‘has nothing to do with the instant case’ – needlessly introduces a risk that jurors would, consciously or unconsciously, seek to punish PG&E for the San Bruno explosion rather than resolve the case based on the evidence related to the Refinery outage.”  Id. at 28.

The court’s refusal to allow the jury to hear evidence regarding a highly publicized prior, unrelated incident involving a PG&E pipeline represents a practical and important application of Federal Rule of Evidence 403. As the opinion recognizes, a local jury in particular is likely to be aware of the San Bruno explosion, and, if allowed in evidence, it would almost certainly have a distracting and improper influence on the jury’s evaluation of the case.  It seems wishful at best to believe this risk would significantly dissipate if the evidence were offered along with a limiting instruction admonishing jurors that their determinations of liability and damages must be based only on PG&E’s conduct relating to the occurrence at issue.  It is unavoidable that some jurors might bring with them into deliberations negative associations and preconceptions about high profile defendants.  Nonetheless, in allowing trial courts to exclude relevant evidence if the risk of unfair prejudice substantially outweighs the probative value, FRE 403 can play an important role in preventing plaintiffs from exploiting what they perceive to be reputational vulnerabilities in this manner.  Here, it appears the court’s application of the rule has served exactly this function, though only time will tell how last week’s evidentiary rulings will impact this trial.