Word Document PDF Document

ALJ/JLG/MOD-POD/avs Mailed 11/17/2003

Decision 03-11-023 November 13, 2003

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Investigation on the Commission's own motion into the operations, practices and conduct of Starving Students, Inc. (Cal T-116,476), and Ethan Margalith,

Investigation 02-02-005

(Filed February 7, 2002)

      Edward W. O'Neill and Jeffrey P. Gray, Attorneys at Law, for Starving Students, Inc. and Ethan Margalith, respondents.

      Travis T. Foss, Attorney at Law, for Consumer Protection and Safety Division.

OPINION IMPOSING SANCTIONS FOR VIOLATIONS OF PUBLIC
UTILITIES CODE AND COMMISSION REGULATIONS

TABLE OF CONTENTS

TITLE Page

OPINION IMPOSING SANCTIONS FOR VIOLATIONS OF PUBLIC UTILITIES CODE AND COMMISSION REGULATIONS 22

I. Summary 22

II. Background 44

III. Consumer Violations (Phase II) 77

IV. Underpayment of License Fees (Phase I) 2121

V. Failure to Maintain Proof of Insurance (Phase II) 2828

VI. Remedies and Fines 3030

TITLE Page

VII. Appeals 4646

VIII. Assignment of Proceeding 4949

Findings of Fact 4949

Conclusions of Law 5252

OPINION IMPOSING SANCTIONS FOR VIOLATIONS OF PUBLIC
UTILITIES CODE AND COMMISSION REGULATIONS

I. Summary

We find that Starving Students, Inc. (Starving Students) violated our rules and regulations that apply to performing intrastate moves, in paying required regulatory fees, and in maintaining proof of insurance on file with the Commission. We fine Starving Students $20,903 in additional license fees, taxes, and penalties for 1998, 1999, and 2000, for underpaying required license fees. We fine Starving Students $282,000 for consumer violations and operating during periods of suspension, payable in five installments of $56,400. We reduce that fine to $199,500, or five installments of $39,900, if Starving Students makes restitution to all customers identified in the 58 declarations, the 150 shipping documents, the 19 Consumer Protection and Safety Division (CPSD)1 complaints, and the Better Business Bureau (BBB) complaints. We suspend Starving Students' operating authority for 180 days and stay that suspension subject to certain conditions. We place Starving Students on probation for three years.

Starving Students had customer service problems in 1999 and 2000 but has attempted to resolve those problems. Those customer service problems recurred after an earlier enforcement action and required our staff to devote scarce resources to a second investigation of Starving Students' operations and specific violations of our rules and regulations. Starving Students is reluctant to equate these customer service problems with regulatory noncompliance. Instead, Starving Students views these problems as failures to adhere to its own standards. Our finding that Starving Students violated our rules and regulations leads to the conclusion that Starving Students' customer service standards are lower than those mandated by our rules and regulations. Recidivism, in this instance, appears to stem from a company culture that tolerates a failure to comply with regulatory mandates. At the same time, Starving Students has grown from its California base to having operations in many states and is therefore providing a type of service that customers seek. Starving Students currently faces financial uncertainty, as its attempts to return to profitability after several years of losses have been elusive. A major objective in adopting a remedy for Starving Students' violation of our rules and regulations is to ensure that no investigation of Starving Students' operations is necessary in the future and that any failure to adhere to our rules and regulations will result in immediate relief for customers.

In order to prevent future recidivism and establish automatic relief, we adopt performance guarantees for activities alleged and settled in 1993 and fined in this investigation. Starving Students shall pay a $100 credit to total shipment charges as set forth herein for each instance of:

1. Misrepresenting to customers that a move can be scheduled on a day when there are insufficient trucks to complete those moves;

2. Sending personnel untrained and/or inexperienced in the movement of used household goods on a move;

3. Failing to acknowledge receipt of a claim for loss or damage in writing within 30 days;

4. Failing to either pay a loss and damage claim, decline to pay, or make a firm compromise offer to the claimant within 60 days; and

5. Denying loss and damage claims solely because the customer did not note the damages at the time of delivery.

1 CPSD was formerly the Consumer Services Division.

Top Of PageNext PageGo To First Page