Discussion

The active parties have tendered an "uncontested settlement" as defined in Rule 51(f), i.e., a "...settlement that (1) is filed concurrently by all parties to the proceeding in which such... settlement is proposed for adoption by the Commission, or (2) is not contested by any party to the proceeding within the comment period after service of the ...settlement on all parties to the proceeding." Rule 51.1(e) requires that settlement agreements be reasonable in light of the whole record, consistent with law, and in the public interest. The Settlement represents a resolution of all issues among the active parties.

CSD represents the consumer interest in this proceeding, and it has done so in a thorough and careful way. Franklin, the applicant, adequately represents himself before the Commission. Thus, the Settlement commands the sponsorship of all active parties to this proceeding, and those parties are fairly reflective of the affected interests.

Evidence Indicates Rehabilitation

The central issue in this proceeding is Franklin's fitness to provide service. The Settlement would grant Franklin a conditional permit and subject him to a two-year period of drug testing and special scrutiny of his operations. This position is reasonable in light of the whole record.

Franklin's record shows strong evidence of rehabilitation. Franklin's record consists of a felony conviction for burglary of a Sears store on April 22, 1992, and an August 27, 1993 felony conviction for possession of a narcotic controlled substance. Prior to this period, Franklin committed several misdemeanor thefts and misdemeanors associated with drug possession and use. In sharp contrast to this prior record, we note that since 1993, Franklin's record shows no arrests or convictions for any violations of law. This pattern demonstrating reform supports the Settlement position that the Commission should offer Franklin a conditional permit as a household goods mover. In addition, since Franklin's prior criminal record shows a clear nexus with the use of controlled substances, the Settlement condition requiring testing for controlled substances every 90 days during the two-year period of temporary licensing is reasonable and in the public interest.

There is No Misrepresentation of Material Facts

Perhaps the most serious issue raised in CSD's initial protest is the charge that Franklin misrepresented material facts in his application. CSD rightly states that dishonesty is by itself grounds for denial of a permit.

Upon close scrutiny of the application and supporting materials, it is clear that CSD's charge arose from the applicant's checking a box indicating:

"I have not been convicted of committing any felony or crime involving moral turpitude."

CSP charged that this specific action constitutes a misrepresentation of material facts. CSD notes that the applicant placed an asterisk beside this statement and attached a statement that he was never "involved in any case involving moral turpitude" but that he "did have a problem with the law nearly ten years ago." Although CSD's protest dismisses the importance of this statement, the Settlement places greater weight on this note and drops discussion of the issue of material misrepresentation.

We find that the weight placed on the note in the Settlement is more consistent with the facts before us. By adding this note to his application, Franklin was clearly not attempting to hide his criminal record. Indeed, Franklin's note only brings attention to the fact that he has a criminal record.

In addition, the language of the note and Franklin's statements in the first PHC demonstrate that Franklin misinterpreted the question in the application as one narrowly focused on crimes of moral turpitude, not the larger issue of felony convictions.

Franklin's misinterpretation of the question concerning his criminal record is reasonable. The language of the statute grants the Commission the power to deny an application to an individual who has: "committed a felony, or crime involving moral turpitude." (§ 5135(e).) The application form asks whether the applicant has been "convicted of committing any felony or crime of moral turpitude." The comma that follows the word felony in the statute gives clarity that the application form, which does not have a comma, lacks. We conclude that we should amend the standard application form to make it clear that the Commission is interested in whether the applicant has committed any felony, whether or not it involves moral turpitude, as well as all crimes involving moral turpitude, whether felony or misdemeanor. In particular, the language on the permit application should be changed as follows:

"I have not been convicted of committing any felony, or any crime involving moral turpitude." (Changes are in bold and underlined.)

We further note that the term "moral turpitude" is itself ambiguous and subject to a range of interpretations. We therefore recommend the amendment of the standard application form for a household goods carrier permit to provide applicants with clear guidance.

In conclusion, given Franklin's attached statement acknowledging a criminal record and his clear but understandable misinterpretation of the application form, we find no material misrepresentation by Franklin. Therefore, the approach of the Settlement, which drops discussion of the issue of material misrepresentation and acknowledges the import of Franklin's note, is reasonable in light of the record in this proceeding, consistent with the law, and in the public interest.

Settlement Should be Amended to Permit Commission Action to Trigger Relinquishment of Permit During Two-Year Probationary Period

The Settlement demonstrates both CSD's vigilance in protecting consumer interests and Franklin's willingness both to work with the Commission's regulatory program and to demonstrate that he is fit to operate as a household goods carrier. In particular, we note that in the Settlement, Franklin agrees that should CSD initiate an enforcement action against Franklin during the two-year period in which he will hold a temporary permit, Franklin will relinquish the permit and desist from advertising or operating as a household goods carrier (Settlement, page. 4).

Although we appreciate Franklin's willingness to waive his procedural rights in the face of an enforcement action and CSD's concern that administrative procedure not delay the removal of an operator who fails to comply with rules and regulations, we believe that a slightly different approach better meets the consumer's needs and our statutory obligations. In particular, because the relinquishment of a permit would essentially put Franklin out of business, we believe that an action of the Commission - not simply the action of an enforcement division - should trigger the surrender of the operating permit. Thus, we will amend the Settlement as follows:

"In the event that CSD files the Commission institutes a formal enforcement action (e.g., requesting the Commission for issues an Order Instituting an Investigation against Franklin) and upon CSD's written request to Franklin agrees to perform the following:

2.5.1 Relinquish his Permit, pending the outcome of a hearing; and

2.5.2 As soon as practicable cease and desist from advertising or operating as a Household Goods Carrier in the State of California." (Settlement, page 4.)

This amendment shifts the locus of the decision that triggers the surrender of the license from CSD to the Commission. As a matter of governance, we believe that this important decision should reside with the full Commission acting in its quasi-judicial capacity. In addition, we note that since the Commission acts quickly once a formal investigation is requested, we believe that this amendment to the Settlement will result in consumer protection through timely action identical to those that the current Settlement would yield.

We note that the provisions of the Settlement are not severable, and the Settlement states that "if the Commission or any court of competent jurisdiction overrules or modifies any material provision of this Settlement as legally invalid, this Settlement shall be deemed rescinded." Although we are not overruling any terms as legally invalid, we believe that our proposed amendments better comport with the regulatory framework embodied in the Public Utilities Code. We seek the acceptance of the parties of these terms in comments on the proposed decision.

Summary

In summary, our discussion makes it clear that adopting this all-party Settlement and granting a two-year permit to Franklin is reasonable in light of the record, yields an outcome consistent with the law, and is in the public interest.