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Tuesday, Dec 5, 2023

Satisfaction a Key Reward for Sempra Plaintiff

The fa & #231;ade of the business at Fifth and Evans in Hillcrest doesn’t betray the slightest hint of controversy.

Potted plants sit beneath tinted windows. Peer inside and wet-haired women are sitting in swivel chairs, waiting for scissor-wielding hairstylists to give them a snip and some color.

This was a vital cog in the recently settled $8 billion lawsuit against Sempra Energy, the region’s largest energy provider?

Six years ago, Andy Berg, the 45-year-old owner of Wavelength Hair Productions, admittedly knew nothing about the energy industry or conservation. His courtroom experience was limited to jury duty during a weeklong sexual harassment suit.

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The energy crisis of 2000-01 would change all that.

Berg, who lives in Rancho Penasquitos, clearly remembers the conversation that drew him in. His wife, Andrea, was cutting a customer’s hair. Energy deregulation had just gone into effect and the crisis that lasted through 2001 had barely begun. Like many Californians, Berg was blissfully unaware of the trouble that was to come.

The customer had a stern warning: When you open your next bill, I’ll hear you scream, wherever I am in the state.

And when the monthly bill came, it was more than 300 percent higher than it had been 30 days earlier. A bill that averaged $300 to $350 had jumped to $1,100. Those astronomical bills continued arriving for months.

The customer was Michael Shames, the executive director of the San Diego-based Utility Consumers’ Action Network, a utility watchdog. He has been one of Sempra’s most vocal critics.

“It’s not like they were extremely representative of the most affected customers,” Shames said of Wavelength and the Bergs. “They were just a customer.”

Finding A Plaintiff

Shames piqued Berg’s interest. And when Berg happened to speak to Albro L. Lundy, an old college friend, the Hermosa Beach attorney mentioned the class-action lawsuit his firm, Baker, Burton & Lundy, was pursuing.

They just needed a plaintiff. Someone without skeletons in the closet. Someone sharp, educated, eloquent. Someone with whom jurors could empathize.

“Count me in,” Berg remembers telling Lundy.

And so Berg found himself at the forefront of a major suit filed in 2000 against Sempra, the parent company of Southern California Gas Co. and San Diego Gas & Electric Co., alleging the companies colluded to raise prices during the energy crisis.

“He knew what was going on,” Lundy said in a recent interview. “He figured out something was rotten in Denmark. I was really looking forward to putting him on the stand to be honest with you.”

That didn’t happen. The jury was sent home after attorneys settled the case Jan. 4. Sempra will pay $377 million and submit to several regulatory changes. Lundy estimates the long-term savings to consumers could reach as high as $2 billion to $3 billion.

Berg couldn’t say this while the trial was ongoing, because the threat of bankrupting Sempra was an important bargaining chip for the plaintiffs.

But Berg called Sempra a “good corporate citizen” and admitted: “We didn’t want to put them out of business. They’re amazingly important to the economy. I just think they momentarily lost their way.”

Too Big A Risk

Sempra Chairman Stephen L. Baum cited that risk as one of the reasons the publicly traded company, which brought in $9.4 billion in revenue last year, decided to settle.

“You don’t know what a jury’s going to do,” Baum said in a Jan. 4 conference call with investors. “An adverse jury verdict would’ve been fatal to the company, and we’re not in the business of betting the company.”

Under the settlement terms, Nevada receives $30 million; the city of Los Angeles $12 million; and the city of Long Beach $6 million.

Consumers will receive $328 million.

Once the settlement is approved , a process expected to take six months , consumers will be able to apply for a pro-rated share of the money, Lundy said.

“That’s the exciting thing about this,” Lundy said. “It’s not coupons. It’s real money into people’s pockets.”

Berg shares in none of the financial windfall. His role as a representative of two classes of affected consumers was voluntary , he neither risked nor gained financially.

He said he simply hopes regulatory changes will save him enough on his electricity bill to take his wife out to dinner.


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