II. Background

A. Issuance of Order Instituting/Order to Show Cause

On August 19, 2004, the Commission issued this Order Instituting Investigation/Order to Show Cause (OII/OSC) based on declarations from the Commission's Consumer Protection and Safety Division's (CPSD) investigative staff and former customers. These declarations, supported by filed documentation, allege respondents engaged in a pattern of continuing violations, over an extended period, of the statutes, rules, and regulations governing household goods movers operating on an intrastate basis in California. The most serious allegations are that respondents advertised and operated as a household goods mover without a permit from the Commission and overcharged consumers for moving services, including using "bait and switch" estimating practices and "holding goods hostage" tactics.

Pursuant to Article XII of the California Constitution and the Household Goods Carriers' Act (Chapter 7 of the Public Utilities Code, Sections 5101 - 5335), the Commission is the agency responsible for regulating the intrastate transportation of used household goods, personal effects and furniture.¹ To ensure household goods carriers operate only in a responsible manner in the public interest, we have also adopted specific rules and regulations to govern all aspects of their conduct, i.e., the Maximum Rate 4 Tariff (MAX 4) and General Orders (GOs) 100-M, 136-C, and 142.

As part of this OII/OSC, the Commission has afforded the respondents notice and an opportunity to be heard on why their November 7, 2003 permit application (November 7 application) should not be denied with prejudice. On March 19, 2004, the Director of CPSD sent a letter to respondents denying their November 7 application based on a staff determination that respondents are not fit to be licensed to serve the public as a household goods carrier and informing respondents of their option to contest this staff action by filing a formal application with the Commission. Respondents chose not to file a formal application, and it is only at the Commission's discretion that this matter is considered still pending.²

The staff declaration from Richard Molzner accompanying the OII/OSC also details the history of Isaac Nagar's previous household goods carrier permit under Globe Van Lines, Inc., permit T-189,207.

B. Procedural Schedule

On September 23, 2004, the assigned Administrative Law Judge (ALJ) issued a ruling setting a prehearing conference (PHC) for October 6, 2004. At the PHC, a schedule for testimony and hearings was set, and this schedule was memorialized in the October 20, 2004 Scoping Memo and Ruling of the Assigned Commissioner and ALJ.

Based on the schedule, CPSD served supplemental testimony on November 3, 2004, respondents served testimony on November 29, 2004, and CPSD served reply testimony on December 13, 2004.

Evidentiary hearings were held in San Francisco on December 20, 2004 and in Los Angeles on December 22, 2004. At the hearings, testimony was received from CPSD, respondents, and seven former customers. CPSD and respondents filed opening briefs on February 7, 2005 and reply briefs on February 28, 2005. The case was submitted on February 28, 2005.

C. Parties' Positions

CPSD presents evidence that between October 10, 2003 and the present, respondents have committed a total of 604 violations of the Public Utilities Code, including unlawfully performing intrastate household goods moves, advertising and operating without public liability or workers compensation insurance, overcharging customers, and "holding goods hostage." The specific violations alleged by CPSD are:

Violation	Number of Violations	Statutory Fine	Potential Fine
Operating without a permit ( § 5133(a)(1)	73	$5,000	$ 365,000
Advertising without a permit (§ 5139, 5313.5 and 5314.5)	2	$5,000	$ 10,000
Operating without workers' comp. insurance (§ 5135.5)	159	$ 500	$ 79,500
Operating without public liability insurance § 5161, and GO 100-M)	67	$ 500	$ 33,500
MAX 4 Items 108, 120, 128 "bait & switch"	86	$ 500	$ 43,000
MAX 4 Item 128 Failure to provide agreement to customers no less than three days before the move	10	$ 500	$ 5,000
MAX 4 Items 128 & 132 No "Not to Exceed" Price	53	$ 500	$ 26,500
MAX 4 Item 92 Failure to respond to customer claims	4	$ 500	$ 2,000
MAX 4 Items 108, 120 & 128 Failure to refund overcharges	86	$ 500	$ 43,000
MAX 4 Item 88 Failure to have Cal-T Number in ads	2	$ 500	$ 1,000
MAX 4 Items 16 & 44 Failure to observe units of measurement	6	$ 500	$ 3,000
MAX 4 Item 88 didn't provide Information Booklet	27	$ 500	$ 13,500
MAX 4 Item 340 Illegal extra costs	24	$ 500	$ 12,000
MAX 4 Item 80 Fail to weigh goods	5	$ 500	$ 2,500

CPSD recommends that respondents be ordered to pay (1) customer restitution of $61,590.52, (2) fines of $50,000, and (3) reimbursement to the Commission of $13,292.50 for the cost of CPSD's investigation. Further, CPSD recommends that respondents' November 2003 permit application (T-189,798) be denied with prejudice, respondents be permanently denied operating authority, and that respondent Isaac Nagar be ordered to remove his old Cal-T permit number (T-189, 207) from all advertisements and trucks.

Respondents state that they agree to nine claims of customers failing to receive the booklet "Important Information for Persons Moving Household Goods (within California)" in violation of MAX 4 Items 88(9) and 470 and that the penalty for these violations should total $900.00. They dispute all other charges. In testimony and briefs, their position is that:

· all the household goods moves that are the subject of this OII/OSC were lawfully conducted under the authority of permit T-189,207;




· respondents had adequate insurance at all pertinent times;




· respondents were not given an opportunity for hearing prior to having their November 7 application denied;




· based on Item 28 of MAX 4, there are no tariff violations concerning overcharges because respondents never charged in excess of 65% of the maximum rates permitted under MAX 4;




· respondent should not be sanctioned for violations of MAX 4 because this is an industry-wide problem;




· under the provisions of Public Utilities Code Section 5258, Isaac Nagar should be dismissed as a respondent in this OII/OSC because he was a witness in the hearings; and




· the terms of respondent Isaac Nagar's Florida divorce judgment are not admissible in this proceeding for the purpose of showing ownership of Globe Van Lines, Inc., holder of permit T-189,207.