A California appeals court has reversed a lower court's ruling that a jury should be allowed to decide whether Pacific Gas and Electric Co. is liable for punitive damages in the 2015 Butte wildfire that killed two people and destroyed 549 homes.

The ruling limits, but does not eliminate, damages the PG&E Corp. subsidiary may still have to pay. The company said in its May 3 Form 10-Q for the first quarter that it believed it would probably incur a loss of at least $1.1 billion in connection with the Butte fire, but the assumptions did not include punitive damages.

The September 2015 Butte fire burned 70,868 acres in two Northern California counties. The California Department of Forestry and Fire Protection concluded that the wildfire was caused when a pine tree contacted a utility electric line. The California Public Utilities Commission in April 2017 issued an $8 million fine to PG&E for failing to maintain its 12-kV overhead conductors safely and properly.

More than 2,050 plaintiffs sued PG&E and its vegetation management contractors, alleging that the contractors should have removed the tree. Their cases were consolidated in a master complaint in Sacramento Superior Court.

PG&E asked the court to conclude that the parties that filed the complaint had insufficient evidence to seek punitive damages before a jury. The trial court denied the company's request, and PG&E appealed the ruling.

On July 2, the Court of Appeal of the State of California 3rd Appellate District in Sacramento, Calif., ordered the lower court to vacate its decision and grant summary judgment in favor of PG&E and its contractors. The appellate court said the parties who sued did not have sufficient evidence to prove PG&E and its contractors had consciously disregarded the rights or safety of others and deliberately failed to take steps to eliminate the risk of harm. That evidence was needed in order for the trial court to consider an award for punitive damages, the appellate court said.

Plaintiffs argued that PG&E's risk management and wildfire mitigation efforts were lacking because of shortcomings in its use of spatial imaging, sampling and other inspection techniques and that its contracted employees were not properly trained.

The appellate court said PG&E presented evidence the company devotes substantial resources to prevent wildfire. PG&E estimates that about 55 million trees have the potential to come into contact with its power lines. PG&E's vegetation management operations encompass a variety of programs and initiatives, including routine annual patrols.

In the Butte fire case, the contractors removed trees next to the tree in question in January 2015 and performed an additional inspection and other work near the tree in April and July 2015 before the fire.

The company continues to face billions of dollars in exposure to wildfire liability and is seeking help from the state Legislature to limit some of that exposure.