In re PG&E Corporation

Background

PG&E Corporation and Pacific Gas and Electric Company, referred to together as “PG&E,” asked the District Court for permission to appeal three non-final orders issued by the Bankruptcy Court. Those orders largely rejected PG&E’s objections to securities claims asserted in the bankruptcy.

PG&E’s arguments

PG&E argued that the Bankruptcy Court made two errors. First, it said the Bankruptcy Court should have applied the heightened pleading standard under the Private Securities Litigation Reform Act, which requires more detailed allegations in certain securities cases. Second, PG&E argued that claims concerning a 2018 exchange offering should not have been allowed to proceed.

Legal standard

A district court may hear an appeal from a final Bankruptcy Court judgment, order, or decree. An appeal from a non-final order requires the district court to grant permission. The court explained that interlocutory appeals—appeals before the bankruptcy case reaches a final judgment—should be allowed sparingly and only in exceptional circumstances. The court applied standards comparable to those governing permission to appeal non-final district court orders, including whether the appeal would materially advance the litigation.

Ruling

The District Court found no basis for immediate review. It concluded that deciding whether the stricter pleading standard applied, and whether the 2018 exchange-offering claims should survive, would not materially advance the litigation and instead would materially delay it. The court also found PG&E’s argument that applying the stricter standard would likely eliminate several claims to be contested and speculative. Even under PG&E’s position, some securities claims would remain, and PG&E did not adequately explain how eliminating only some claims would significantly streamline the case.

Judge Haywood S. Gilliam, Jr. therefore declined to hear the appeal at that time and denied PG&E’s motion for leave to appeal. The court stated that it could address the applicable pleading standard and the viability of the claims in a later appeal from a final judgment.