V. Discussion

A. Baeza's Ability to Retain his Permit

The Commission places great trust in household goods carriers when granting them operating authority, and customers place an equal trust in these carriers by tendering their most personal and treasured belongings to them. Baeza has shown disregard of very important California laws and tariffs governing household goods carriers.

Baeza does not dispute that he violated Pub. Util. Code § 5133 on over 18 occasions by conducting operations as a household goods carrier without a permit in force issued by the Commission, and similarly violated Pub. Util. Code § 5286 by conducting operations as a household goods carrier after the suspension and revocation of his permit. Baeza also does not dispute that he advertised as a household goods carrier without holding valid Commission authorization for his operations on at least seven occasions.³

We consider these violations to be serious. Our insurance requirements are the linchpin of our program to ensure that members of the public do not suffer harm at the hands of household goods movers, who assume custody of their customers' essential personal possessions when performing moving services. Baeza has shown a pattern of noncompliance with the law, because of his continued inability to keep his Commission permit valid, primarily due to his failure to maintain evidence of adequate insurance coverage on file with the Commission. He aggravates this problem by advertising his services while his license is suspended or revoked. Baeza also failed to respond to the ALJ's requirement that he assure the Commission that he was not operating while his license was suspended or revoked. This lack of response constitutes sufficient evidence to infer that not only has Baeza advertised his services while his permit has been suspended or revoked, but that he has also performed moving services in this situation.

Baeza also admits to poor business practices in not utilizing the proper paper work and promises to reform if permitted to retain his license. His refusal to respond promptly to customer complaints and adequately document his moves is decidedly not, as Baeza claims, an excusable, relaxed method of conducting his business, but rather, a serious violation of Commission statutes, general orders, and tariffs. CSD presented uncontroverted testimony that Baeza has violated Pub. Util. Code § 5139, General Orders 100-M and 136-C, and Maximum Rate Tariff 4 at least 65 times by, among other things, failing to (1) respond timely to claims despite repeated inquiries and to maintain a claims register; (2) give customers a Not to Exceed Price; (3) provide adequate equipment and capable help; (4) maintain adequate evidence of insurance coverage on file with the Commission; (5) record total hours charges, move dates, time computations, change order documents, and obtain customer signatures; (6) issue an Agreement for Moving Services for each move performed; and (7) provide shipper information booklets to customers.

We do not permanently revoke Baeza's permit in this decision, as requested by CSD, because we believe a less severe remedy will effectively deter violations by Baeza and others. Baeza is a small mover struggling to comply with the laws governing his industry. He offered letters from four of his satisfied customers testifying to professional moves conducted in a timely fashion. However, should he fail to comply with this decision's directives during the probationary period, we will initiate proceedings to revoke his permit with prejudice.

Baeza shall be on probation for three years following the effective date of this decision. In order to reinstate his revoked operating permit,⁴ no later than 30 days from the effective date of this decision, Baeza shall (1) provide to License Section of the Commission's Rail Safety and Carriers Division evidence of adequate insurance coverage, including but not limited to liability, cargo, and workers compensation insurance, and shall pay all past due quarterly fees; and (2) keep his evidence of proof of insurance current with the Commission throughout the three year probationary period. If Baeza does not comply with these two orders, the License Section of the Commission's Rail Safety and Carriers Division is directed to immediately suspend Baeza's permit for operating authority, with revocation to follow in 30 days. Reinstatement will be permitted only through the formal application process. In any such application, Baeza shall be required to pay appropriate licensing fees, show his operations and practices will conform to Commission rules and regulations, and include a verified statement that he has paid all outstanding fines and has resolved all outstanding consumer complaints.

In order to achieve restitution, we require that no later than 60 days from the effective date of this decision, Baeza pay in full the outstanding Small Claims Court judgment (including costs) in the Gilbert matter, and that he provide proof of this payment to the Commission in his quarterly reports. Additionally, Baeza is required to pay in full all final judgments against him for claims arising from his moving services no later than 60 days after the final judgments are rendered, unless the terms of the final judgments specify a different payment plan.

Baeza shall also provide quarterly written reports with the Commission commencing on September 15, 2002, as more specifically set forth in the Ordering Paragraphs. Furthermore, Baeza is directed to comply with all pertinent state statutes, Commission General Orders, tariffs, rules and regulations governing household goods carriers, including but not limited to the Household Goods Carrier's Act, Pub. Util. Code §§ 5101 et seq., General Orders 100-M and 136-C, and the Commission's Maximum Rate Tariff 4.

One of Baeza's problems is his inability to process or handle the paperwork that is necessary to properly and lawfully conduct his operations. No later than 90 days from the effective date of this decision, we require Baeza to obtain job counseling, at his expense, in order that he might properly comply with the laws governing household goods carriers, particularly Maximum Rate Tariff 4.

B. The Fine

CSD also requests that we fine Baeza $94,000. Pub. Util. Code § 5313 subjects household goods carriers to a penalty of not more than $500 for each violation of the Household Goods Carriers Act or Commission rules and regulations. Pub. Util. Code § 5313.5 subjects carriers to a penalty of not more than $5,000 when operating as a household goods carrier without a valid permit or holding itself out as such a carrier without a valid permit.

We fine Baeza a total of $19,000 as follows. We fine Baeza $500 for each of 25 violations of Pub. Util. Code § 5313.5, consisting of 18 violations of operating without a valid permit and seven violations for holding himself out as a carrier without a valid permit. We also fine Baeza $100 for each of 65 violations of Pub. Util. Code § 5139, General Orders 100-M and 136-C, and Maximum Rate Tariff 4.

To provide guidance in setting fines, the Commission recently distilled the principles that it has historically relied upon in assessing fines and restated them such that they may form the basis for future decisions assessing fines. (See D.98-12-075, Appendix B.) In determining whether to impose a fine and at what level, the Commission will consider (a) the severity of the offense; (b) the utility's conduct; (c) the financial resources of the utility; (d) the totality of the circumstances in furtherance of the public interest; and (e) the role of precedent.

In considering the severity of the offense, Baeza has shown a pattern of noncompliance with the law and Commission directives, particularly in operating without a valid permit, in keeping his insurance coverage current, and in providing written documentation for the moves. Compliance is essential to the proper functioning of the regulatory process and adequate insurance is essential in order that customers can receive restitution for lost or damaged goods, even if the loss or damage is accidental. In light of Baeza's continued disregard of the law and Commission directives, we find the violations severe.

The next factor is the utility's efforts to prevent, detect, and rectify the violation. In this case, Baeza attempted to reinstate his various forms of insurance coverage, but did not do so in a timely fashion, even while the OII was pending. He failed to promptly respond to customers who complained regarding his services and failed to properly document the moves. However, Baeza has indicated a willingness to rectify these problems, although he has not actually done so.

The next factor is the financial resources of the utility. Baeza appears to be a modest operation with minimal financial resources.

In addressing the role of precedent, CSD cites several cases, three of which we find to be the most relevant because of their similar facts and because they do not involve a settlement. In these three cases, the Commission revoked the permit and fined the carrier. However, in all three of these cases, the misconduct of the respondent was much more severe than that of Baeza. Therefore, we do not permanently revoke the permit here but nonetheless impose a substantial fine.⁵

The final factor is the totality of the circumstances in furtherance of the public interest. As a mitigating factor, we consider the letters from customers who were very satisfied with Baeza's services. However, as noted above, we place tremendous trust in household goods carriers in granting them the authority to operate. Where that trust is violated, as the record here demonstrates, we must take action that strongly conveys the message that such conduct will not be tolerated.

In sum, we fine Baeza a total of $19,000 for the violations enumerated above. Prompt and complete payment of the outstanding small claims court judgment and compliance with the other conditions in this decision will be a significant mitigating factor. We therefore suspend all but $ 5,000 of the fine in order to encourage Baeza's compliance with the other conditions in this decision. Baeza shall pay the $5,000 fine in five $1,000 installments during the probationary period, with the first installment due no later than the first of the month following the effective date of this decision, and the subsequent installments due every 60 days thereafter until paid in full.⁶ Should Baeza fail to comply with these conditions, the remaining fine, including the suspended portion, shall become due and payable immediately.