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Southern California Edison Co. settles business litigation

Back in 2007, parts of the Sequoia National Forest were burned in a wildfire that the United States government believes was the fault of Southern California Edison Co. According to business litigation filed by the government, the hardware on a power distribution line owned by the electric company was not properly maintained. The vegetation in the forest was dry and "molten material" from the line fell to the ground. The resulting fire burned nearly 1,350 acres both within and around the forest.

Southern California Edison Co. has agreed to settle the litigation by paying the government $1.8 million. As part of the settlement, the company is not admitting any liability or that it did anything wrong back in 2007. For its part, the government has implied that the settlement was not accepted because it could not adequately prove its case.

The federal government has settled 17 such cases involving wildfires. It has collected nearly $228.3 million from these settlements brokered over nearly four years. The money is earmarked to be used by the Forest Service to restore the public lands that were burned and to help pay back the taxpayers for the expenses incurred fighting the wildfires.

Southern California Edison Co. made the decision to settle this business litigation instead of going to court. One of the reasons that many companies settle lawsuits without admitting any liability is to preserve the reputation of the business. When a business is sold, there is a way to quantify the "good will" of a company, which includes how the public perceives that business. If a public trial would damage the good will of a company, settlement may be a good way to ensure its preservation.

Source: Los Angeles Times, Edison to pay U.S. $1.8 million to settle fire suit, Marc Lifsher, Sept. 16, 2013

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