3. Discussion

As a preliminary matter, we take official notice that the Commission on August 8, 2002, issued Order Instituting Rulemaking (R.) 02-08-002 to consider revisions to G.O. 157-C, which governs charter-party carriers of passengers. The rulemaking responds in part to complaints from taxi operators and local taxicab regulators that a number of charter-party carriers are conducting taxi-like services under the guise of charter-party authority. We expect that a number of issues raised by City Cab in this complaint will be explored more fully in the rulemaking proceeding. Meanwhile, however, we will consider and set forth our resolution of the allegations raised by City Cab in this case based on the evidence adduced in two days of hearing and on the regulations as they now exist.

3.1 Management and Control

Much of complainant's case deals with management and control of East Valley and West Valley. When Titan lost its Valley Cab Company franchise, it reorganized as a charter-party carrier under permit number TCP-13964-P. Principals of Titan were Lloyd Conway, George Piedra, and Ivik Sarkisian.² In March 2001, Piedra and Sarkisian were active in organizing East Valley and West Valley as limited liability companies, drivers for which were designated as member/owners rather than employees. Titan then surrendered its TCP authority, and both East Valley and West Valley began operations under the fictitious business name of Valley Transportation. At hearing, Piedra testified that he owned another company, Zelda Enterprises, Inc. (Zelda), and that in October 2001, Zelda was asked to take over management and control of East Valley and West Valley. East Valley operated, converted, and repainted Chevrolet Caprice cabs formerly operated by Titan, while West Valley operated Lincoln Towncars, at least two of which were acquired from Zelda.

While it is not entirely clear, complainant appears to allege that Titan at all relevant times continued to control East Valley and West Valley, and that the charter authority of all three entities should be revoked for alleged violations discussed below. However, the evidence at hearing showed that Titan's TCP permit was voluntarily suspended on July 24, 2001, that the company went out of business at that time, and that its operating authority was revoked on May 31, 2002, for nonpayment of annual fees. The evidence also shows that East Valley and West Valley were duly formed as limited liability companies on March 28, 2001, and that they separately obtained charter-party authority from the Commission to operate under "P" permits.

While some of the same principals and many of the drivers have been involved with all of these organizations, there is nothing to show that the organizational structures themselves are in violation of the law or Commission regulations.³ The request that Titan's authority be revoked is moot, since the company ceased operations in mid-2001 and its operating authority was revoked in 2002.

3.2 Advertising in Yellow Pages

Complainant introduced evidence showing that Valley Transportation in 2001 advertised its charter-party service in the "taxicab" section of Pacific Bell Yellow Pages in San Fernando Valley. The advertisement in question, however, was in two parts, with one section devoted to an independent new taxicab service (Valley Cab) in Santa Monica, and the other section devoted to the services of East and West Valley Transportation. The charter-party portion of the advertisement stated in prominent type that the service was "Not a Taxi Cab Company" and that rates were "10% Less Than Taxi Cab Service." Defendants' witnesses testified that Valley Cab split the cost of the advertisement with Valley Transportation. They also testified that, based on the recommendation of their consultant, no such advertisements were placed in the taxicab section of the Yellow Pages in 2002.

Advertising under the heading of "taxicabs" in the Yellow Pages is not a violation of any Commission regulation. However, we have held in previous cases that such advertising supports an inference of taxi operations. (Babaeian Transportation Company v. Southern California Transit (1992) 45 CPUC2d 85.) The inference here is rebutted in part by the printed declaration that the Valley Transportation service is for car and limousine service, not for taxicab service. Without more, the limited advertising in this case does not support the allegation of unlawful taxi operation.

3.3 Prearranged Transportation

Two private investigators retained by complainant testified that they had called the Valley Transportation number to request a "taxi," and that cars were dispatched in response. In one instance, the first investigator riding in a charter car was greeted at her destination by the second investigator, who then engaged the car for another trip without prearrangement.

Section 3.03 of G.O. 157-C prohibits charter-party carriers from engaging in taxicab transportation service. Section 3.01 of G.O. 157-C requires that charter- party carriers "shall provide transportation only on a prearranged basis," and that the transportation be done pursuant to a waybill.

Tim Messer, a consultant retained by Zelda in 2001 to review regulatory compliance of East Valley and West Valley, testified that dispatchers are instructed to tell callers requesting a taxi that the Valley organizations are car and limousine services, not taxicabs. He also testified that drivers are required to sign a declaration prohibiting them from picking up passengers unless the transportation has been prearranged.

We note that the Commission's new rulemaking, R.02-08-002, focuses particularly on the definition of "prearranged transportation," citing complaints that the existing definition is not limited to a time period and does not specifically prohibit solicitation of passengers. Pub. Util. Code § 5360.5(b) defines "prearranged basis" as transportation "arranged with the carrier by the passenger, or a representative of the passenger, either by written contract or telephone."

The evidence before us shows one instance of transportation without prearrangement and three instances of responses to requests for a "taxi." One of the investigators testified that when she approached another East Valley vehicle for a ride, she was told that she would have to call a dispatcher and arrange the transportation. Our order today requires defendants to cease and desist from accepting orders for transportation without prearrangement, and requires disclosure in responses to "taxi" requests, but we find the evidence insufficient to warrant revocation.

3.4 Workers' Compensation Insurance

Pub. Util. Code § 5378.1 requires, among other things, that every charter-party carrier file with the Commission a certificate of workers' compensation coverage for its employees issued by an admitted insurer. Zelda has filed such a certificate for the "administrative employees" who serve Valley Transportation. Neither East Valley nor West Valley has filed such a certificate for its drivers on grounds that, as limited liability companies, drivers are "member/owners" who contract with Zelda for the services of administrative employees. (Corp. Code § 17003.) According to testimony of three of the drivers, they pay a monthly fee to one of the Valley companies and this entitles them to drive the charter-party cars, collect fares, and share in profits. The unrebutted testimony of an accountant called by defendants was that the organizations have been correctly established as limited liability companies. Complainant on brief challenges the designation of drivers as anything other than employees, but it presents no evidence to establish an employee/employer relationship. While we agree that the limited liability structure appears strained here, we have no evidence that would permit us to find non-compliance with Pub. Util. Code § 5378.1.

3.5 Length of Trips, Waybills, Taxicab Vouchers

Witness Debbie Waters, operations manager for San Gabriel, testified that she examined some 2,250 trip records on waybills of East Valley and West Valley filed at the Commission's offices. She testified that about 85% of the trips appeared to be relatively short one-way trips involving one person only, indicating taxi-like operation. She introduced copies of waybill trips that showed payment on six trips by senior citizen vouchers redeemable by franchised taxicabs in Los Angeles. Two trips showed the notation "fetal diagnostics delivery," a medical pickup and delivery service not authorized for charter-party carriage.⁴ The taxicab administrator for the City of Los Angeles confirmed that the senior citizen vouchers are redeemable only by franchised taxicab companies and bus companies.

Defendants' consultant Messer acknowledged that East Valley and West Valley drivers have accepted the senior vouchers. He stated that when hospitals with client accounts call for service, they sometimes do not make it clear that the passenger will use a restricted senior voucher. Messer said that he has called clients to tell them that charter-party carriers cannot accept the vouchers. When such vouchers are picked up by drivers, Messer said that they are stamped "void" and returned to the issuing city agency. Messer did not testify as to the fetal diagnostics deliveries.

Defendants do not deny that a high percentage of their calls are relatively short, one-way trips, but they argue that no law or regulation sets distance limitations for charter-party carriers. Contending that a "P" permit is virtually identical (except for transfer privileges) to a "Class B" charter-party designation, they argue that there are no distance restrictions in the Code.⁵ Complainant contends that short-distance trips give rise to an inference of taxi-like operations when combined with other persuasive evidence. (Babaeian Transportation, supra, 43 CPUC2d at 89.)

Our order today requires defendants to cease and desist from accepting prohibited voucher coupons or prohibited medical shipments for transportation. We find that complainants have failed to show a violation based solely on the predominantly short, one-way trips operated by defendants.

3.6 Valley Cab Phone Listing

Scott Schaffer, vice president of City Cab, demonstrated on the stand during hearing that when he dialed 411 on the telephone, asked for Van Nuys information, and asked for the number of "Valley Cab," the recorded response was an 818 number for Valley Transportation. Schaffer testified that the fact that the information listing is still available after revocation of the Valley Cab franchise on December 31, 2000, is evidence that East Valley and West Valley still operate like taxi services.

Defendants' consultant testified that he has been trying for months to have Pacific Bell delete the 411 listing for Valley Cab, but he has been told that other companies maintain the database for such numbers, and he has been unsuccessful in having the listing removed.

Our order today requires defendants to have the Valley Cab listing removed from the 411 service and, until it is removed, to arrange to answer calls that ask for Valley Cab by announcing that Valley Cab service is no longer available and offering to give the caller the telephone number of a local taxicab company.

3.7 Trips Within a Single City

Waters' examination of Valley Transportation trip records shows a majority of trips within a single city, a practice that complainant maintains is not authorized by Pub. Util. Code § 5353(a), which provides that charter-party regulations do not apply to "[t]ransportation service rendered wholly within the corporate limits of a single city or city and county and licensed or regulated by ordinance." Unlike taxicab services, however, Valley Transportation is not licensed or regulated by local ordinances, and its operations appear to be permissible under Pub. Util. Code § 5353.5, which permits in-city transportation service by "limousine[s] for hire."

Valley Transportation's consultant, Messer, testified that he conferred with the Commission's staff on whether his clients could transport passengers within a city's limits. He noted that class B charter-party carriers are authorized by § 5371.2 to provide transportation within a radius of 125 miles from a home terminal. On brief, defendants argue that there are no within-city restrictions in the statutes or general order governing charter-party carriers operating with a "P" permit. Complainant agrees that no "P" permit distance restrictions apply. We conclude that complainant has failed to show that Valley Transportation's in-city service is a violation of charter-party requirements.

3.8 Other Allegations, Summary

Complainant alleges a number of other violations, including lack of livery plates prior to September 2001, use of taxi terminology like "no show" on trip sheets, and unauthorized transfer of assets by Zelda. The drivers' use of terms common in taxi service is not surprising, since most of the drivers are former taxi drivers. The evidence shows that the absence of livery plates on some vehicles was corrected, and that the transfer of assets was made with appropriate filings to the Commission and other state agencies.

In summary, complainant's evidence taken as a whole shows that East Valley and West Valley are engaged in transportation services that in some respects resemble that of taxicabs. What complainant has not shown by a preponderance of the evidence is that East Valley and West Valley have violated charter-party regulations to an extent that requires revocation of their permits. Unlike other carriers with which we have dealt, the defendants here have shown that they retained a consultant, revised their waybills, instructed their drivers and dispatchers, conferred frequently with Commission staff, and made other efforts to comply with the letter of the charter-party carrier rules. To the extent those rules need modification to better distinguish charter-party service from taxicab service, complainant and other parties have the opportunity to make their views known in the rulemaking proceeding (R.02-08-002) that is now in progress.