The San Juan Daily Star
LUMA removes lawsuits against it from local to federal court
By The Star Staff
LUMA Energy has removed from the local courts to the U.S. District Court two consolidated lawsuits that seek damages over the private operator’s performance as operator of the Puerto Rico Electric Power Authority’s (PREPA) transmission and distribution (T&D) system.
On April 13, plaintiffs filed the case captioned Ismael Herrero Domenech and the Class Composed of all Residential Electric Energy Consumers, Customers of LUMA Energy LLC of Puerto Rico; (“the Class”) v. LUMA Energy LLC; Underwriters A,B,C, Richard Doe and Jane Doe and Unknown Defendants.
On April 25, a group of plaintiffs filed the case captioned Wendco of Puerto Rico Inc.; MultiSystem Restaurant Inc.; Restaurant Operators Inc.; Apple Caribe Inc. all for themselves and on behalf of all Merchants doing business in the Commonwealth of Puerto Rico and subscribers of LUMA Energy LLC (Class A); Manuel Couvertié Barrera for himself and on behalf of all residential subscribers of LUMA Energy LLC referred to as (Class B) v. LUMA ENERGY LLC; Underwriters A, B, C; John Doe; Richard Doe.
At their bottom, the plaintiffs’ claims are premised upon LUMA’s performance of operation and maintenance services and its operation of the T&D system. Because the contract between LUMA Energy and the government expressly provides that PREPA shall indemnify LUMA for precisely these types of claims, the class action suit necessarily “could affect PREPA’s rights, liabilities or freedom of action, or otherwise conceivably have an effect on the adjustment of its debts or treatment of the debtor’s property in PREPA’s Title III case,” LUMA said in a court filing.
PREPA has been in bankruptcy since 2017 under Title III of the Puerto Rico Oversight, Management and Economic Stability Act, commonly known as PROMESA, to restructure some $9 billion in debt.
As recognized by the First Circuit, “although the proceeding need not necessarily be against the debtor or against the debtor’s property, if the outcome is one that “could alter the debtor’s rights, liabilities, options, or freedom of action (either positively or negatively)” and “impact . . . the handling and administration of the bankruptcy estate, then the proceeding is related to the bankruptcy,” LUMA Energy said.
“The claims in the putative class Action are incontrovertibly related to” PREPA’s Title III case because the allegations clearly involve the operation of PREPA’s electric power grid and the T&D system, the suit said. “Since June 1, 2021, LUMA has been in charge of operating PREPA’s electric power grid.”
The transfer to federal court would make it more difficult for the suit to be certified as a class action suit because the requisites are more stringent than in the local courts.