III. FACTUAL ALLEGATIONS
Staff began its investigation of Mr. Move in January 2003. Staff reported that the Better Business Bureau (BBB) website showed a history of approximately 137 intrastate moving complaints against Mr. Move dating back to 1992. Approximately 13 intrastate complaints were received in 2002, 30 were received in 2003, and as of October 2004, 12 were received in 2004. The Commission received approximately 53 intrastate moving complaints dating back to 2001, some of which were filed with the BBB. Staff reviewed consumer complaints and obtained 19 consumer declarations regarding their moving experience on moves conducted by Mr. Move in 2003 and 2004. Mr. Move was not cooperative in complying with Staff's request for its business records, but Staff was eventually able to obtain some business records, including a claim register and shipping documents. Staff's findings are described in its investigative reports.
A. Operations During Periods Of Suspension
A household goods carrier is required to have proof of cargo insurance on file with the Commission while its permit is in effect (§§ 5161 and 5164, and General Order (G.O.) 136-C.) After cancellation, suspension, or revocation of a household goods carrier's permit, it is unlawful for the carrier to conduct operations as a carrier (§ 5286.) It is unlawful for a household goods carrier to fail to comply with any order, decision, rule, regulation, direction, demand, or requirement of the Commission (§ 5139.) Every violation of the Household Goods Carriers' Act is a separate and distinct offense. In case of a continuing violation, each day's continuance is a separate and distinct offense (§ 5315.)
Staff has provided evidence that the Commission's License Section notified Mr. Move that its permit was suspended in two separate instances. The first time was when its cargo insurance was cancelled and thus its permit was suspended from December 24, 2002 through January 22, 2003. The second case occurred when staff discovered that Mr. Move failed to notify the Commission that its qualified MAX 4 examinee ceased to be connected with the company as required by § 51353, and thus its permit was suspended from June 24, 2003 through July 9, 2003.
Staff's report includes a Notice of Impending Suspension and Order of Suspension sent to Mr. Move notifying it of the suspension for failure to file evidence of cargo insurance, which include the following directive: "You are hereby directed not to operate unless and until your Commission operating authority is reinstated." On the subsequent suspension, Staff personally served Eli Galam the Order of Suspension, which directed Mr. Move to immediately cease all operations. Staff alleges that notwithstanding these directives, Mr. Move continued to conduct household goods operations4 during these periods when its permit was under suspension.
Furthermore, Staff has provided evidence that the Commission's License Section notified Mr. Move that its permit was again suspended from December 24, 2004 to February 16, 2005 for failure to file evidence of cargo insurance with the Commission. Staff reported that License Section sent Mr. Move notices similar to those previous suspensions with similar directives to cease and desist all operations. Staff alleges that Mr. Move continued to conduct household goods operations during these periods when its permit was under suspension, and Staff will present additional evidence through supplemental prepared testimony.
If these allegations are true, Mr. Move has unlawfully operated without the required insurance on file and failed to comply with the Commission's direction to cease operations, in violation of §§ 5161, 5164, 5286 and 5313. For operating without a valid permit, the Commission may impose a fine of up to $5,000 per day of violation (§§ 5313.5 and 5315.)
B. Operating Without Evidence of Insurance on File
A household goods carrier must procure and maintain inter alia evidence of adequate PL&PD and cargo insurance coverage in effect and on file with the Commission carrier while its permit is in effect. (Sections 5139, 5161 and 5164, and G.O.s 100-M and 136-C.)
In this case, Respondents failed to maintain on file with the Commission evidence of public liability and cargo insurance coverage for 103 days, while its permit was in effect (see table below).
Coverage |
Period in which evidence of insurance coverage was not filed with the Commission |
Total # of days |
PLPD |
January 10, 2004 through January 27, 2004 |
18 |
CARGO |
December 24, 2002 through January 22, 2003 December 24, 2004 through February 16, 2005 |
85 |
103 |
Section 5313 authorizes a $ 500 fine per violation, at 103 alleged violations, Respondents could be held jointly liable for total fine of $ 515,000.
C. Failure to Unload Shipments Upon Payment of the Not To Exceed Price
A carrier is required to unload a shipment at destination upon the consumer's payment of the Not To Exceed Price, plus all charges on a valid Change Order For Services, whether the carrier believes other charges are due or not. (MAX4, Item 104(1))
Staff's report and consumer declarations allege that Mr. Move held consumers goods "hostage" and threatened to auction them unless consumers paid significantly more than the "Not To Exceed Price" appearing on Mr. Move's shipping documents, or the amount of a verbal estimate given on the telephone. Consumers allege that they had to pay the higher price under duress because they feared the movers would leave without delivering their personal belongings. In at least five instances, intervention by CPSD enforcement staff and Los Angeles City Attorney investigators was required before Mr. Move would release the captive property. Staff alleges that the carrier remained defiant and continued to engage in the same practice of deliberately underestimating the actual costs of moves and later holding goods hostage in demand for higher payments.
D. Failure to Acknowledge or Respond to Claims
A carrier receiving a claim for loss or damage to property shall acknowledge receipt of such claim in writing within 30 days. (MAX 4, Item 92, Paragraph 15.) The carrier, after receipt of such a claim, must either pay the claim, decline to pay, or make a firm compromise offer to the claimant within 60 days. (Ibid.)
Staff obtained Mr. Move's Claim Register, which identified 342 claims for the period of January 4, 2002 through January 14, 2003. The claims register did not indicate the amount of the claims and the date claims were acknowledged and settled. Staff's review of the complaints and the consumer declarations disclosed that Mr. Move failed to acknowledge consumers' claims or failed to process their claims in a timely manner. Consumers allege that Mr. Move failed to acknowledge their claim, and failed to pay, decline to pay, or make a settlement offer in a timely manner, in violation of Item 92. Consumers' declarations alleged that calls to the carrier regarding their claims were met with rudeness and a disconnection of the calls.
E. Unqualified, Unprofessional Help
G.O. 142 provides that no carrier shall permit any driver, helper, and/or packer to be used in the transportation of any household goods shipment unless such person is trained and experienced in the movement of used household goods. Also, carriers shall not knowingly permit drivers, helpers, and/or packers to go on duty who are under the influence of alcohol or drugs; employees are prohibited from drinking alcohol while on duty. G.O. 142 was promulgated by the Commission to protect consumers from excessive charges resulting from inexperienced, inefficient crews, and from excessive loss and damages which such crews could cause, and further to protect the crew itself from on-the-job injuries.
Consumers allege that Mr. Move's employees are untrained, inexperienced, and unqualified to move household goods, resulting in items being damaged by movers who mishandled their items. Consumers also allege that their belongings were missing while in the possession of Mr. Move and its employees. Of the 19 victims' declarations obtained by staff, six state that some of their personal belongings are still missing and have not been returned by Mr. Move.
Consumer declarations further allege that Mr. Move's movers exhibited unprofessional conduct by often appearing rude, untrained or intoxicated, and using profanities. Consumers also alleged that the movers were verbally abusive and physically threatening. In one case, consumer Wendelyn Jones stated in her declaration that the movers trashed her townhouse leaving human defecation on the carpet, vomit on the bathroom floor, impacted mud in every room, and food wrappers and empty wine cooler bottles strewn on the living room floor. In another case, consumer Leon Garcia stated in his declaration "I was shocked to see the movers were not dressed professionally or appropriately to move household goods. Two of the movers looked like gang members and thugs who just got out of prison." In yet another case, consumer Angela Lussier stated in her declaration that her belongings and furniture, which were shrink-wrapped, appeared to have some kind of liquid on them with an appearance of aging urine. Lastly, consumer Bruce Mohn in his written declaration stated that he "observed that the movers were not working as a team and were constantly bickering and using profanity, which my wife and I found extremely offensive."
If these allegations are true, Mr. Move's failure to supervise and manage its employees, by ensuring that its employees are professional, trained and experienced, and not under the influence of alcohol or drugs, constitutes a violation of G.O. 142.
F. Other MAX 4 Violations
1. Verbal Estimates and Charging in Excess of the Estimates - MAX 4, Item 108 requires that all estimates shall be in writing upon prescribed forms, and shall be based upon visual inspection of the goods to be moved. Item 108 also provides for a maximum allowable charge for estimated shipments. Consumers allege that they were assessed charges without any visual inspection of the goods to be moved and in excess of prices quoted and estimates given. Failure to observe Commission rules and regulations regarding estimates is unlawful, pursuant to section 5245. Mr. Move will be ordered to review the 19 consumer declarations and satisfy all those consumers' claims of overcharges arising from violation of Commission estimating rules, and the Commission will also consider other appropriate remedies.
2. Change Order - MAX 4, Item 120 requires the carrier to properly execute a Change Order containing all required information for additional services and increased charges, signed by both the shipper and carrier. Consumers allege that they were assessed additional charges not shown on the Estimate and without being presented with a Change Order.
3. Important Information booklet - MAX 4, Item 88 requires the carrier to provide each prospective shipper at the time of first in person contact with a booklet entitled "Important Information For Persons Moving Household Goods". Consumers allege Mr. Move failed to provide them with this booklet.
4. Valuation Options - MAX 4, Items 128(2r), Note 3, and 136(3) require the carrier to offer three valuation options for lost or damaged goods: Basic Coverage at $.60 per pound per article (mandated by MAX 4, Item 136 and at no additional cost), Actual Cash Value of the total amount declared, which is the fair market value up to the total value declared (at additional expense to the consumer), and Full Cash Value, which is the replacement value of the item (also at additional expense). Consumers allege that they were not offered or allowed to select a higher valuation other than the basic coverage of $ .60 cents per pound per article.
5. Agreement For Services and Not To Exceed Price - MAX 4, Item 128 requires the carrier to properly and timely execute prescribed documents containing specified information so that the carrier and the consumer can sign each document prior to commencement of any service. These shipping documents are to contain such information as the scope of service to be provided, the rates and/or charges for those services, information regarding valuation, number and names of drivers and helpers, equipment to be provided, and rights and obligations of the carrier and the consumer. Under Item 128, this "Agreement For Service" is to be provided to the consumer, where possible, no less than three days prior to the date of the move. The Agreement For Service is also to contain a "Not To Exceed Price". All of these provisions are intended to be a further guarantee that the consumer has an opportunity to be fully informed before relinquishing to the carrier their most personal and valuable possessions. Consumers allege that they were not given the "Agreement for Service" three days prior to the date of the move or not at all, and that they were not given a "Not To Exceed Price" prior to the move.
6. Freight Bills and Not To Exceed Price - MAX 4, Item 132 requires the carrier to properly execute and provide to the consumer a freight bill on prescribed forms, and containing specified information about the shipment, points of origin and destination, units of measurement, date issued, preferred delivery date, form of payment, signature of carrier, all names both real and fictitious used by the carrier, and the "Not To Exceed Price". Also required, under this Item and Item 36 of the MAX 4, is a legible record of all starting and ending times for each phase of service (i.e. packing, loading, driving, and unloading), and a record of deductions in time, if any. Staff's report alleges finding numerous freight bills and other shipping documents that failed to meet these requirements.
7. Improper Charges - MAX 4, Item 340 provides that when the consumer pays the carrier for packing containers, no additional charges shall be made for other materials used in the packing and sealing of the container, such as dividers, paper, tape and labels. Consumers allege that they were charged for packing materials such as paper and tape. In addition, Item 36 provides that the time used for computing charges shall be the total of loading, unloading, and double the driving time from point of origin to the point of destination. A consumer alleges that the movers arrived 1.5 hours late without contacting her about the delay, and that while she contacted Eli Galam about the delay, the movers stopped unloading her belongings and charged her for the down time.
8. Application of Rates - MAX 4, Item 16 provides that distance rates which are charged to the shipment weight, apply for shipments transported in excess of 100 constructive miles. Also in conjunction with Item 16, Item 80 requires the carrier to obtain a weighmaster's certificate or ticket prior to delivery and unloading of a shipment transported under distance rates. Staff's report alleges Mr. Move assessed hourly rates in lieu of distance rates and failed to obtain a weighmaster's certificate.
9. Fictitious Business Names - MAX 4, Item 88 (Relationships with the Public) requires that the carrier shall, among other things, cross reference in classified telephone directories each name under which the carrier conducts business. Staff's report alleges that Mr. Move failed to cross reference each of its fictitious business names to all other names listed in its telephone directory advertisements.
10. Inspection of Records - The Commission, its authorized employees, representatives, and inspectors shall at all times have access to all lands, buildings, and equipment of household goods carriers used in connection with the operation of their business as such carriers in this state, and also all accounts, records, and memoranda, including all documents, books, papers, and correspondence kept or required to be kept by household goods carriers, and may photocopy or electrostatically or photostatically reproduce at the Commission's expense any of these accounts, records, memoranda, documents, books, papers, and correspondence at either the premises of the carrier or the offices of the Commission (§ 5225).
Staff alleges that carrier failed to allow inspection of records required to be maintained by household goods carriers upon request of an authorized representative of the Commission. Furthermore, staff alleges that carrier failed to provide documents requested in a timely manner. Staff reports that requests for documents pertaining to shippers' complaints would require at least 2-3 follow-up letters and took at least 3-5 months before the documents were turned over to staff. In some cases, staff was not permitted to view any other files, and Eli Galam would look over each document in the shipper/complainant's file and hand to staff only what he wanted staff to see.
