Assignment of Proceeding
Geoffrey F. Brown is the Assigned Commissioner and Janice L. Grau is the assigned ALJ in this proceeding.
1. In I.92-11-029, the Commission investigated 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. The Commission also investigated whether 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.
2. CPSD obtained the declarations of 58 Starving Students customers after contacting 176 customers, primarily from Starving Students' claims register. Those declarations contain 234 allegations of violations of Commission rules and regulations concerning Starving Students' customer service.
3. CPSD summarized a review of 150 of Starving Students' shipping documents, including customer complaint records, for the years 2000 and 2001, which raise an additional 388 counts of alleged violations of our rules and regulations.
4. CPSD provided 19 complaints from CPSD's informal complaint files, which allege 64 violations of our rules and regulations.
5. CPSD provided 13 complaints received by the Better Business Bureau from October 2001 to June 2002, which allege 25 violations of our rules and regulations.
6. Starving Students on at least 208 occasions has failed to timely acknowledge and process consumers' claims for lost, stolen or damaged goods, to properly supervise and train its employees, to properly supervise and manage its employees and facilities resulting in items being lost while in the custody of Starving Students and/or its agents and employees, to provide the required "Not to Exceed Price" on shipping documents; and to issue the "Important Information for Persons Moving Household Goods," booklet; and has provided illegal verbal estimates; charged more than the provided estimate without the customer-initiated Change Order for Services, arrived hours late or failed to provide scheduled moving services at all, improperly denied consumers' claims for failure to note lost or damaged goods at the time of delivery, and solicited tips.
7. Gross operating revenues were lower on Starving Students' 1998, 1999, and 2000 quarterly reports filed with the Commission than on Starving Students' annual financial reports.
8. Starving Students included only three revenue accounts in its quarterly reports' computation of gross operating revenue-local moving, intrastate moving, and packing materials/box sales, and occasionally miscellaneous box sales.
9. Starving Students omitted revenue accounts such as intrastate moving-long haul, pick and hold intrastate revenue, and packing labor-intrastate.
10. CPSD used Starving Students' California income tax returns to compute an underpayment of license fees.
11. Interstate and exempt revenues are not subject to Commission license fees.
12. Pub. Util. Code § 5002 broadly defines gross operating revenue subject to payment of a license fee as including all revenue derived from the transportation of property having origin and destination within this state.
13. Starving Students was suspended for failure to maintain proof of liability insurance effective October 1, 1999 and reinstated on November 3, 1999, after it filed proof of insurance. On December 8, 1999, Starving Students was suspended for failure to maintain proof of liability insurance. Starving Students was reinstated effective December 10, 1999. On August 31, 2000, Starving Students was suspended for failure to maintain proof of workers' compensation insurance. Starving Students was reinstated effective September 13, 2000. Starving Students continued to operate during the three suspension periods.
14. Starving Students had business auto and workers' compensation policies in effect during the three suspension periods.
15. Starving Students expended considerable resources and capital in an attempt to resolve its customer service issues and complaints regarding Starving Students declined from 2000 to 2002 at the Commission and at the Better Business Bureau.
16. The Commission has investigated Starving Students twice for failing to provide scheduled moving services, failing to provide competent and trained movers, failing to respond to loss and damage claims, and unlawfully denying loss and damage claims because the customer did not note damages at the time of delivery.
1. Starving Students violated Pub. Util. Code §§ 5161, 5164, and General Order 100-M by operating as a household goods carrier without proof of property liability and property damage insurance, and cargo insurance in effect and on file with the Commission.
2. Starving Students violated Pub. Util. Code § 5135.5 by operating as a household goods carrier without evidence of adequate workers compensation insurance on file and in effect with the Commission.
3. Starving Students violated § 5286 by conducting operations as a household goods carrier after the suspension of its permit authorizing such operations.
4. Starving Students violated General Orders 139-B (timely claims processing), 142 (capable help), Pub. Util. Code § 5241 (denying claims solely because goods not noted at time of delivery) and Maximum Rate Tariff 4, items 88 (failing to provide booklet), 92 (timely claims processing), 100, 108 and 112 (improper estimate), 136 (failing to honor valuation options) and 128 (failing to provide agreement) at least 208 times as discussed herein.
5. Respondents' authority should not be revoked as a result of the violations committed while Starving Students lacked control over its operations.
6. It is reasonable to impose a 180-day suspension and stay that suspension subject to Starving Students' full compliance with this decision.
7. It is reasonable to place Starving Students on probation for three years following the effective date of this decision.
8. It is reasonable to fine Starving Students $104,000, the maximum of $500 per offense for a total of 208 consumer violations, as permitted under Pub. Util. Code § 5313.
9. It is reasonable to permit Starving Students to make restitution as set forth herein to the declarants and the complainants identified in this proceeding (the Starving Students, CPSD and BBB complainants) and as a result to stay all but 25% of the fine, thereby reducing the fine to $26,000.
10. It is reasonable to require Starving Students to pay the Commission $20,903 for 1998, 1999, and 2000 fees, taxes, and penalties.
11. It is reasonable to fine Starving Students $180,000, 4,000 per day for a total of 45 days, for operating without a valid permit, as permitted by § 5313.5.
12. For violations alleged and settled in 1992 and fined in this investigation, it is reasonable to establish performance guarantees, under the authority granted the Commission in Pub. Util. Code § 5196, in the form of a separate $100 credit, as established herein, to total shipment charges for each instance such a guarantee is violated.
13. It is reasonable to require Starving Students to meet General Order 142's requirement that Starving Students have capable help as set forth herein.
14. Starving Students should provide quarterly written compliance reports to CPSD as set forth herein.
15. If Starving Students fails to maintain proof of insurance during the probation period, Starving Students' suspension automatically should be lifted.
16. If Starving Students fails to properly report gross operating revenues during the probation period, Starving Students' suspension automatically should be lifted.
17. Starving Students should comply with all pertinent state statutes and Commission General Orders, tariffs, rules, and regulations governing household goods carriers.
18. Today's order should be made effective immediately to resolve the status of Respondents and to provide conduct guidance generally.
IT IS ORDERED that:
1. Starving Students, Inc. (Starving Students) shall pay $20,903 in additional license fees, taxes, and penalties for 1998, 1999, and 2000 payable to the California Public Utilities Commission and tendered to the Commission's Fiscal Office within 30 days of the effective date of this order.
2. Starving Students shall pay a fine of $284,000 for consumer violations and operating during periods of suspension, payable to the State of California General Fund and tendered to the Commission's Fiscal Office. Starving Students shall pay the fine in five installments, with the first installment of $56,800 due within 90 days of the effective date of this order and the remaining installments due every 90 days thereafter.
3. The fine ordered in Ordering Paragraph 2 shall be partially suspended and reduced to $206,000, or five installments of $41,200, if Starving Students makes restitution to its customers as set forth herein.
4. Starving Students' operating authority is suspended for 180 days and that suspension is stayed subject to the conditions set forth herein.
5. Starving Students is placed on probation for three years following the effective date of this decision.
6. 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.
7. Starving Students shall submit quarterly compliance reports to CPSD as set forth herein.
8. Starving Students shall comply with all pertinent state statutes and Commission General Orders, tariffs, rules, and regulations governing household goods carriers and the specific conditions established herein.
9. The stay of the 180-day operating authority suspension shall be lifted if Starving Students violates any law or regulation governing household goods carriers and any condition established herein.
10. Investigation 02-02-005 is closed.
This order is effective today.
Dated , at San Francisco, California.
