Wildfires in California have continued to break records since early 2020 when the California Supreme Court unanimously granted a petition for review of the Second District Court of Appeal’s 2019 decision in Presbyterian Camp & Conference Centers, Inc. v. Superior Court (2019) 42 Cal.App.5th 148, summarized in our May 2020 Law360 article, “California Ruling Could Shift Fire Suppression Costs.”
According to statistics compiled by the California Department of Forestry and Fire Protection (CalFire), California saw over 2.5 million acres and 3,600 structures destroyed across nearly 9,000 fire incidents in 2021. The Dixie Fire, which investigators determined was ignited by power lines in July 2021, ultimately burned nearly 1 million acres across five counties in Northern California, taking second place for California’s largest wildfire on record behind 2020’s August Complex, which ignited only 11 months earlier. The 2021 wildfire season came on the heels of an historic and record-shattering 2020 wildfire season marked by nearly 10,000 fires that burned over 10,000 structures and 4.2 million acres—more than 4 percent of the state’s roughly 100 million acres of land. Of California’s seven largest wildfires, only one burned prior to 2020.
Capping off these two infamous wildfire years, on December 27, 2021, the California Supreme Court issued its decision in Presbyterian Camp and Conference Centers, Inc. v. Superior Court (Dec. 27, 2021) S259850, --- P.3d -- (2021 WL 6111380). The Supreme Court’s decision resolved a state appellate court circuit split on the question “Can a corporation be held liable under Health and Safety Code sections 13009 and 13009.1 for the costs of suppressing and investigating fires that its agents or employees negligently or illegally set, allowed to be set, or allowed to escape?”
To set the scene: Presbyterian Camp and Conference Centers, Inc. (Presbyterian) operated camps and conferences at Rancho La Scherpa, a rural property in Santa Barbara County. In 2016, a malfunctioning chimney in a cabin caused one of Presbyterian’s employees to transport a smoldering log from the cabin’s fireplace to an outdoor fire pit. Embers fell on dry vegetation during transit, igniting the Sherpa Fire, which burned 7,474 acres of vegetation and destroyed one structure. CalFire incurred $12.2 million in costs to suppress the Sherpa Fire.
The appellate court in Presbyterian Camp and Conference Centers considered who could be held liable for CalFire’s costs of responding to the Sherpa Fire. The appellate court’s analysis focused on Health and Safety Code sections 13009 and 13009.1, which establish liability for “any person” who “negligently, or in violation of the law, sets a fire, allows a fire to be set, or allows a fire kindled or attended by him or her to escape onto any public or private property . . . ” (Health & Safety Code §§ 13009(a); 13009.1(a).) That liability includes the cost of fire suppression, providing emergency medical services, investigating and filing reports on the fire, and accounting for and collecting funds. (Id.) The appellate court decided that a corporation like Presbyterian could be held vicariously liable for suppression and investigation costs for its employee’s negligent act because sections 13009 and 13009.1 must contemplate vicarious liability. In reaching this conclusion, the appellate court disagreed with Department of Forestry & Fire Protection v. Howell (2017) 18 Cal.App.5th 154 (Howell). The Supreme Court granted review to resolve the conflict between the appellate court and the Howell decision, which involved questions of liability resulting from the actions of an independent contractor.
The Supreme Court agreed with the Presbyterian appellate court, unanimously holding that Health and Safety Code sections 13009 and 13009.1 incorporate the common law theory of respondeat superior, under which an employer may be held vicariously liable for torts committed by an employee within the scope of employment. In reaching this conclusion, the court rejected Presbyterian’s argument that a 1971 amendment to section 13009, which eliminated a cross reference to sections 13007 and 13008, was intended to change the liability scheme. Citing respondeat superior’s 150-year common law history, the court concluded that “it would not be appropriate to read respondeat superior out of section 13009 unless the Legislature had expressed a clear intent to abrogate this common law doctrine” (S259850, p. 10). The court concluded that only “clear and unequivocal legislative intent” would be sufficient to conclude that the 1971 amendment eliminated respondeat superior, which the court found to be lacking (Id. at 14). The court, however, was careful to cabin its ruling to the theory of respondeat superior, as opposed to other common law theories of vicarious liability.
In support of its holding, the Supreme Court noted that a “central goal” of the statutes was to reimburse the government for the cost of firefighting and this goal would not be met where taxpayers were required to subsidize individual negligence by “footing the bill” for fires negligently started by corporate activity (S259850, p. 26). The court also reasoned that corporate activity has been a contributor to major fires in the state and that employers are more likely than their employees to have the funds or insurance to reimburse the state for fire suppression expenses (Id. at 27). Therefore, “applying respondeat superior liability equitably shifts losses from taxpayers to the enterprises that benefitted from creating the risks that gave rise to the wildfires” (Ibid.). Further, the court observed that the legislative goal of stimulating precautionary measures aimed at preventing fire starts would be served by the application of respondeat superior (Id. at 28).
As we move into 2022, the implications of the Supreme Court’s decision will begin to unfold. Looking ahead, we anticipate at least three potential impacts on bottom lines and the landscape.
First, the Supreme Court’s decision underscores the importance of corporate training and safety measures aimed at preventing the start and spread of fires. With the Supreme Court’s clarification of the liability regime, businesses may be well-advised to invest in training, safety and wildfire prevention planning efforts, and physical improvements geared toward preventing and responding to ignitions.
Second, California’s decision emphasizes the potential importance of adequate insurance for those engaged in land management and other activities that carry a risk of fire starts. The availability and affordability of such insurance, however, may remain in flux given California’s recent wildfire records.
Third, there is the potential for further state legislative action to address negative externalities related to the Supreme Court’s decision, such as the possibility that liability considerations will have a chilling effect on the desire of landowners and operators to participate in forest restoration activities—including thinning overstocked forests and the use of prescribed fire. There is growing consensus that such actions are important to improve forest health and prevent the risk of high-severity, catastrophic wildfire, and yet liability concerns may stymie proactive treatment. This is where we might see the California Legislature act in 2022 and beyond.
