II. COMPANY BACKGROUND
Starving Students is a licensed, statewide household goods carrier headquartered in Los Angeles, California, with 18 branch offices throughout the state. Starving Students also operates in Arizona, Colorado, Delaware, Maryland, Nevada, Texas, Virginia, Washington and Utah. Starving Students is incorporated in California, corporation # CO788718. According to documents obtained from Starving Students, Ethan Margalith owns 100% of the outstanding shares; Sanford Margalith (father), Elizabeth Margalith (mother), and Abigail Margalith (sister- married name, De Koster) each have 16 2/3% interest in Starving Students, subject to contractual terms. Mark Peers is its Chief Executive Officer.
The Commission granted operating authority to Starving Students in January of 1977, permit # Cal T-116,476. Starving Students of San Diego, Inc., permit # Cal T-147,142 was a licensee of Starving Students until October 2000. Since October 2000, the San Diego facility has operated as one of the branch offices of Starving Students.
On November 23rd, 1992, the Commission issued I.92-11-029 to investigate allegations of unlawful business practices by Starving Students, including failure to provide scheduled moving services, failure to provide competent and trained movers, and failure to respond to loss and damage claims. I.92-11-029 also alleged that Starving Students provided unlawful verbal estimates, misrepresented transportation and insurance charges, operated unsafe trucks, and unlawfully denied loss and damage claims because the customer did not note the damages at the time of delivery. On March 30th, 1993, Starving Students signed a settlement agreement with the Commission that mandated that Starving Students must do the following:
1. Be suspended 30 consecutive days to be completed no later than December 31, 1993.
2. Be placed on two-year probation.
3. Pay a $100,000 fine.
4. Complete the settlement of the pending loss and damage claims.
5. Not knowingly operate any unsafe vehicles and shall institute a new program of vehicle repair and maintenance.
6. Not knowingly allow an unlicensed driver to operate any company vehicle.
7. Immediately enroll in the Department of Motor Vehicle' Pull Notice Program and shall forward the verification of enrollment certification to the CPUC's Transportation Division.
8. Conduct the business operations throughout their probation period in accordance with the Operational Plan formulated by Starving Student's Inc. and reviewed by the Transportation Division. The Operational Plan addresses a) corporate structure (b) yellow page advertisement (c) sales practices (d) documentation discrepancies (e) claims processing (f) employee recruiting and training (g) vehicle and equipment maintenance and (h) distribution of monthly status report to the CPUC.
On July 8th, 1993, the Los Angeles City Attorney filed a complaint against Starving Students in Los Angeles County Superior Court, case number BC084603, alleging violations of California Business and Professions Code sections 17200 et seq. and 17500 et seq. Along with the complaint, the Los Angeles City Attorney and Starving Students filed a stipulation whereby Starving Students agreed to be enjoined from doing any of the following:
1. Misrepresenting the rates or scope of services offered to the public.
2. Providing verbal estimates over the telephone prior to visual inspection of the goods to be moved.
3. Failing to acknowledge or process loss and damage claims in a timely manner.
4. Charging a surcharge not authorized by the Public Utilities Code.
5. Making any statements with the intent to induce customers to engage defendants' moving services, which they know or, by the exercise of reasonable care, should know are untrue or misleading.
6. Operating as a common carrier of household goods without complying with the conditions set by the Superior Court regarding restitution to customers who were charged a "surcharge" between June 1990 and November 1992.
Starving Students was required to pay a total of $150,000; $50,000 to pay the investigative costs of the Commission; $20,000 to the Los Angeles City Attorney's Office in attorney's fees; and $80,000 to the City of Los Angeles and the State of California.
The Washington Utilities and Transportation Commission (WUTC) investigated violations of consumer protection, safety, and economic regulations in 1999 and 2000. WUTC staff found non-compliance with rules governing household goods carriers, including 600 separate violations ranging from rate and tariff problems to safety record keeping violations. WUTC stated that Starving Students has a history of noncompliance with regulation and a history of promising but failing to deliver compliance. On September 13, 2000 the WUTC adopted a Settlement Agreement, Docket TV-000695, which imposed penalties and conditions on Starving Student's activities1.
1 The agreement directed Starving Students, Inc. to take the following actions, among other things: correct its earnings and underpayment of its 1999 Annual Fees, and re-file its 1999 Report; pay $81,505.20 in penalties, and pay the costs of two future audits; restrict its expansion, with no new terminals or branches for 6 months without WUTC approval; conduct staff training on compliance with rules and regulations; ensure not to provide oral estimates, and to require accurate written estimates, customer information, and customer valuation choice; computerize its booking system, and make scheduling improvements to avoid booking moves when equipment or personnel are unavailable; provide valuation options, and ensure all customers are offered all valuation options provided for in the tariff; keep a record of complaints and claims and company responses; implement a written safety program.
