MLGW sues tree trimming contractor, alleges company misled utility and violated contract

Memphis Light, Gas & Water, the city-owned utility, is suing a tree-trimming company that it had contracted with in 2019, alleging that the company intentionally misled MLGW and that its failure to stay on pace with tree trimming efforts "increased rates of power outages."

The lawsuit, filed in federal court Friday, centers around the contract between MLGW and Asplundh Tree Expert, LLC., which was effective from Aug. 30, 2019, until MLGW ended it due to a breach in contract July 13, 2023. It was a $97 million contract.

Part of the contract between MLGW and Asplundh, the lawsuit said, required Asplundh to “trim MLGW’s entire electric distribution system on a three-year cycle.” It also required that the tree-trimming company maintain staffing levels to complete the project.

"The contract provided specific metrics for the cycle trimmi9ng obligation, in terms of mileage," the lawsuit read. "As set out in the contract, the entire distribution system totaled 4,119 miles. As such, to completely perform its obligation to trim the entire system on a three-year cycle, Asplundh had to trim 1,400 miles each year, or approximately one-third of MLGW’s electric distribution system annually. Over the five-year term of the contract, Asplundh was required to trim a total of 7,000 miles."

MLGW paid Asplundh based on how many miles it trimmed, and the company began tree-trimming in October 2019, the lawsuit said.

"Asplundh’s performance was deficient from the beginning of the contract term," the lawsuit alleged. "In fact, in 2020, Asplundh only cycle trimmed 610 of the 1,400 required miles, and the number of miles trimmed each year by Asplundh thereafter dropped."

The lawsuit alleged that Asplundh trimmed fewer miles in each subsequent year, with 552 trimmed in 2021, 190 trimmed in 2022 and 26 miles trimmed prior to the contract being ended in 2023.

In addition to not completing enough of the trimming, MLGW alleges that part of that was attributed to Asplundh not hiring, training and maintaining "a sufficient workforce to timely complete the cycle trimming." According to the lawsuit, Asplundh’s crews decreased over 2020 and 2023. The company also moved personnel from Memphis due to staffing shortages, MLGW alleged.

"At times, Asplundh pulled its crews from the MLGW service area and moved them to jobs in other states, where upon information and belief, Asplundh knew it was able to profit more than it would profit under the bid prices it submitted for the [Memphis] contract."

In 2020, MLGW alleged that Asplundh requested additional funding for new equipment to speed along the tree-trimming. In early 2021, MLGW alleged that Pennsylvania-based Asplundh requested a higher daily rate so that Asplundh could hire more workers.

The utility said it approved both requests.

"Those representations and promises were false, as Asplundh did not increase the mileage or hire enough employees to perform the cycle trimming in a timely manner,” the lawsuit read. “Nor did Asplundh intend to carry out the representations and promises at the time made, as it continues to make personnel decisions and crew management decisions that did not increase the workforce and instead contributed to its failure to provide a sufficient workforce and failure to complete the cycle trimming in a timely manner."

During a presentation to Memphis City Council last July, President of MLGW Doug McGowen said proper vegetation management would have prevented the majority of the outages that have happened in the area. McGowen also said the utility was three years behind on tree trimming efforts.

McGowen said MLGW's goal is to clear 1,374 right-of-way miles per year, but over the last 10 years, that goal has never been met. The presentation also came with Council approving a five-year contract using three vendors to address tree trimming. The total contract would be $227 million. Although the money would come from MLGW's budget, any contract over $250,000 needs approval from the council.

The contract, according to the lawsuit, stated that Asplundh is "liable for all expenses or financial losses incurred by MLGW for completing the work under the contract."

Part of the damages that MLGW alleged it faces due to Asplundh not completing its contract is the new, five-year contracts — that MLGW had to enter to finish the work — cost $130 million more than the Asplundh contract.

MLGW also alleged that the breaches in the contract, and the unfinished work, caused harm to the electric distribution system, which created reliability issues along with reputation issues. MLGW, in the lawsuit, places blame squarely on Asplundh for "increased rates of power outages."

McGowen gave another presentation in November, McGowen said that the tree trimming vendors were currently ahead of schedule.

Lucas Finton is a criminal justice reporter with The Commercial Appeal. He can be reached at [email protected], or (901)208-3922, and followed on X, formerly known as Twitter, @LucasFinton.

This article originally appeared on Memphis Commercial Appeal: MLGW sues tree trimming contractor, alleges company misled utility