Alj/rim/vm2 proposed decision



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ALJ/RIM/vm2 PROPOSED DECISION Agenda ID #14378

Ratesetting

12/3/2015
Decision PROPOSED DECISION OF ALJ MASON (Mailed 10/19/2015)
BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA


In the Matter of the Application of Ridepal, Inc., a Delaware Corporation, for authority to operate as a passenger stage corporation and arrange transportation through a cloud-based delivery platform between the Counties of San Francisco, Contra Costa, Alameda, San Mateo, Los Angeles, and Santa Clara in the State of California, and the Cities of San Francisco, Oakland, Fremont, Newark, Hayward, Sunnyvale, Mountain View, Palo Alto, Menlo Park, Walnut Creek, Danville, Pleasanton, San Ramon, San Leandro, Campbell, San Jose, Saratoga, Cupertino, Walnut Creek and Glendale, as well as other future counties and cities in the State of California, and to qualify for exemptions thereunder as to schedules, points of service, maps, equipment, and fares (or in the alternative a Zone of Rate Freedom).


Application 13-12-014

(Filed December 23, 2013)





DECISION GRANTING RIDEPAL AUTHORITY TO OPERATE AS A PASSENGER STAGE CORPORATION, AND TO ESTABLISH A ZONE OF RATE FREEDOM; DENYING RIDEPAL’S REQUEST FOR EXEMPTIONS AS TO SCHEDULES, POINTS OF SERVICE, MAPS, EQUIPMENTS, AND FARES; AND IMPOSING A FINE FOR RIDEPAL’S OPERATION AS A PASSENGER STAGE CORPORATION WITHOUT FIRST OBTAINING
COMMISSION AUTHORITY


DECISION GRANTING RIDEPAL AUTHORITY TO OPERATE AS A PASSENGER STAGE CORPORATION, AND TO ESTABLISH A ZONE OF RATE FREEDOM; DENYING RIDEPAL’S REQUEST FOR EXEMPTIONS AS TO SCHEDULES, POINTS OF SERVICE, MAPS, EQUIPMENTS, AND FARES; AND IMPOSING A FINE FOR RIDEPAL’S OPERATION AS A PASSENGER STAGE CORPORATION WITHOUT FIRST OBTAINING COMMISSION AUTHORITY 1

DECISION GRANTING RIDEPAL AUTHORITY TO OPERATE AS A PASSENGER STAGE CORPORATION, AND TO ESTABLISH A ZONE OF RATE FREEDOM; DENYING RIDEPAL’S REQUEST FOR EXEMPTIONS AS TO SCHEDULES, POINTS OF SERVICE, MAPS, EQUIPMENTS, AND FARES; AND IMPOSING A FINE FOR RIDEPAL’S OPERATION AS A PASSENGER STAGE CORPORATION WITHOUT FIRST OBTAINING COMMISSION AUTHORITY 1

Summary 1

1.Background 1

1.1.Application 1

1.2.RidePal asserts that it provides commuting services for companies and individual riders by contracting with bus companies that are California Public Utilities Commission (Commission) licensed PSCs. RidePal states that it does not own or operate the busses or employ the drivers. Instead, it determines the routes, points of service and schedules based on service, demands, and then directs the contracting PSCs accordingly.While RidePal requests authority to operate as a PSC, it states that due to its unique service, it “does not fit within any of the Commission’s regulatory framework and is unable to meet many of the requirements of a PSC under the Commission’s Rules.” As such, RidePal requests that the Commission exempt RidePal from certain requirements that are set forth in Rules 3.3(a)(4)-(8) of the Commission’s Rules of Practice and Procedure (Rules), General Order (GO) 158‑A, and Title 13 of the California Code of Regulations. These requirements are identified and discussed in greater detail section 3.2 of this decision. Safety and Enforcement Division’s Motion to Accept Late-Filed Protest 1

1.3. Ramirez informed Branch that the Notice of Cease and Desist would be temporarily suspended while RidePal worked with SED to provide more information about RidePal’s operations.RidePal’s reply also attaches, as Exhibit E, a letter from Ramirez dated October 30, 2013, which makes three statements of note. First, because RidePal charges individual fares and receives payment from riders, it is required to obtain a PSC certificate to continue operating. Second, Ramirez cites to Commission Decision 96-08-034 and quotes the following passage: “There is no basis in state law or policy for declaring that a PSC must own any vehicles or employ any drivers.” Third, Ramirez concludes by instructing RidePal to either submit an application by November 20, 2013, or SED would pursue enforcement action. There is no reference in the Ramirez letter to the Notice of Cease and Desist being temporarily suspended, or that it was SED’s opinion that RidePal could operate without a Certificate of Public Convenience and Necessity (CPCN).Prehearing Conference 1

1.4.MR. CHAUVEL: 80 percent of the business is sold to corporate sponsors. They sponsor ridership of their employees. But the 20 percent is sold -- so what they’re doing is they've got a bus. Maybe 40 people on the bus. One company into it might take 25 spots, but then the other 15 spots they'll match up with possibly other companies or individual fares, the idea being to fill the bus.Request for Further Briefing 1

1.4.1. RidePal’s Position 1

In RidePal’s Opening Brief, it now claims that the Commission lacks jurisdiction over its services for three reasons. First, RidePal is not a TCP because it is not engaged in the transportation of persons by motor carrier. Rather, the authorized carriers RidePal contracts with (i.e. either TCPs or PSCs) provide the transportation service as RidePal does not own, lease or operate buses, or employ drivers. Additionally, rather than operate on a prearranged basis as required by Pub. Util. Code § 5360.5 for TCPs, RidePal aggregates the demand of multiple employers and then brokers the commute service required by corporate sponsors with authorized bus carriers. Although the majority of its bookings are made by companies, RidePal’s website also allows individual unsponsored riders which are the minority of its ridership to book commutes. RidePal considers itself a “transit brokerage service” that falls outside the Commission’s jurisdictional mandate.Second, RidePal claims it is not a PSC because it does not own, control, operate, or manage any passenger stage. Although RidePal sets service delivery standards and defines commute routes, RidePal has no direct control over the service delivery on a day-to-day basis. The vehicles and drivers are controlled by the authorized PSCs that provide the transportation service. Third, RidePal claims it fits within the ridesharing exemption. It bases this argument on Pub. Util. Code § 226( c), which it claims applies to vehicles having a seating capacity of 15 passengers or less if the driver files with the Commission evidence of liability insurance in the same amount as required of a PSC and the vehicle undergoes and passes an annual safety inspection by the CHP. 1.4.2. SED’s Position 1

SED further argues that a PSC need not own a vehicle in order to be regarded as a PSC, and cites to the Commission decision of In Prime Time Shuttle International, Inc. What matters is that RidePal exerts control over the schedules, routes, fares of the contractors by entering into agreements with companies to transport their employees, and by offering services on an individual fare basis to passengers through its cloud-based app.1.4.3. What is RidePal? 1

2.Commission Authority to Regulate PSCs 1

2.1.The Commission grants PSC certificates by a formal decision which finds that public convenience and necessity requires the proposed service. RidePal Admits it is Currently Operating as a PSC. 1

2.2.RidePal Admits it is Seeking Commission Authorization to Operate as a PSC 1

3.Moreover, contrary to RidePal’s suggestion, it would be procedurally improper to address, in the context of an application, if “a special class of [TCPs] could be created to avoid RidePal having to meet the unattainable requirements of Rule 3.3 and Pub. Util. Code §§ 1031 and 1032.” Changes in Commission rules, regulations, and guidelines are handled in rulemakings, wherein the Commission may, on its own, “adopt, repeal, or amend rules, regulations, and guidelines for a class of public utilities or of other regulated entities[.]” As such, the Commission will address the substance of and the relief requested by the application in this proceeding.Discussion 1

3.1.RidePal is in Violation of Pub. Util. Code § 1031(a) for Operating as a PSC Without First Obtaining a CPCN 1

3.1.1. Ridepal may not Rely on Estoppel as a Basis for not Complying with California’s Requirements for Operating as a PSC, or to Frustrate the Commission’s Decision-making Authority 1

3.1.2. Estoppel may not be used to Frustrate the Commission’s Duty to Protect Ratepayers 1

3.2.RidePal’s Claimed Unique Business Model is no Grounds for Excusing it, or its Subcontracting Partners, from Complying with the Requirements for Operating as a PSC 1

3.2.1. It is not necessary to either own the PSCvehicles or employ the drivers to be considered a PSC 1

3.2.2. The use of a cloud-based application platform does not take RidePal out of the definition of a PSC that would excuse it from compliance with PSC requirements 1

3.3.Recently, the Commission has had occasion to address this issue in Rulemaking (R.) 12-12-011, where it adopted new rules and regulations for online-enabled transportation services (referred to as Transportation Network Companies or TNCs) such as UberX, and Lyft, Inc., who connect passengers to a vehicle via wireless service, smartphones, and on-line applications or platforms. In Decision (D.) 13-09-045, the Commission asserted its jurisdiction over this nascent industry on the ground that TNCs were functioning as charter party carriers and therefore subject to Commission jurisdiction pursuant to Article XII of the California Constitution and the Charter-party Carriers’ Act (Pub. Util. Code §§ 5351 et seq.). The Commission further observed that the regulated utility’s use of a technological innovation did not deprive the Commission of its duty to regulate this industry to ensure public safety:In recent years, the communications revolution in wireless service, smartphones, and on-line apps has further facilitated the development and adoption of passenger transportation for compensation to a point where passengers seeking rides can be readily connected with drivers willing to provide rides in private vehicles. This development in passenger transportation for compensation, referred to in this proceeding as TNCs and associated with companies including UberX, Lyft, and Sidecar, does not fit neatly into the conventional understandings of either taxis or limousines, but that does not mean that this Commission’s responsibility to public safety in the transportation industry should be ignored and/or left for individual companies or the market place to control.Like RidePal, the TNCs asserted that they were a new and innovative form of transportation, in that rides were facilitated by an on-line application, and that the TNCs did not own the transportation vehicles, and that the drivers were not their employees. Nevertheless, the Commission adopted specific rules and regulations that include the duty to: conduct a criminal background check on each driver; conduct vehicle inspections prior to allowing a vehicle to be driven as part of the TNC’s service; obtain commercial liability insurance; and perform driving record checks until the DMV Employer Pull Notice Program is available for use by TNCs.RidePal has not made a Sufficient Case for the Commission to Exercise its Discretion under GO 158-A Sections 1.07 and 9.01 to Excuse or Exempt RidePal from ensuring the PSCs it contracts with Comply Rules 3.3(a)4-8, the Pull Notice Program, and the Various Alcohol,Drug Testing, and Mandatory Controlled Substance Certification Programs 1

3.3.1. Geographical Scope and Points of Service 1

3.3.2. Maps of Points of Service 1

3.3.3. Proposed Fares/Zone of Rate Freedom 1

3.3.4. Frequency of Proposed Service 1

3.3.5. Proposed Equipment 1

3.3.6.Pull Notice Program, Alcohol and Drug Testing, Mandatory Controlled Substance and Alcohol Testing Certification Training Program, and Safety Requirements of the California Highway Patrol and Motor Carrier Safety Sections of Title 13 of the California Code of Regulations 1

3.4.RidePal’s Business Model Permits us to Approve its Application to Operate as a PSC that Subcontracts with TCPs, and PSCs Also Holding TCP Certificates of Authority 1

3.4.1. Control of the passenger registration 1

A passenger who wishes to avail itself of RidePal’s service must go to RidePal’s website, enter their contact and credit card information. A credit card is not needed if the passenger’s company sponsors one of the commuter busses.3.4.2. Services to be Performed 1

In the Agreement, under the working hours heading, “the [s]ervices required of Corinthian under this Agreement shall be performed during the days and hours specified by RidePal in RidePal’s sole and absolute discretion.”3.4.3. Minimum Service Requirements and Qualifications 1

The Agreement imposes various service requirements and qualifications on the subcontracting partner that include: (1) the duty to offer liability insurance for passengers; (2) hold a valid, commercial license for transporting passengers; (3) document that it complies with local, state, and federal laws; (4) perform services in compliance with safety regulations and work practice and with applicable federal, state, and local laws; (5) drivers have active commercial licenses; (6) confirm the acceptability of each driver’s DMV record; and (7) equip vehicles with GPS tracking and other tracking/scanning devices.3.4.4. Fares Charged 1

In Exhibit E to its Application, RidePal identifies the proposed fares for monthly rides, ten-pack rides, a daily ride, and a single ride. RidePal has also asked for a ZORF since it claims that it is not feasible for it to amend its rates with 10 days’ notice due to the nature of riders’ frequent changing demands and RidePal’s “almost instantaneous response to those changing demands.”3.4.5. Hold Harmless Agreement 1

3.4.6.RidePal requires that Corinthian must defend, indemnify, and hold RidePal harmless to the extent of any obligation imposed on RidePal arising from or in any way related to Corinthian’s breach of the terms of the working relationship, or any claims by any government agency against RidePal or any of the persons employed or retained by Corinthian to perform services for RidePal.RidePal’s Approval of Supervisory Personnel 1

3.4.7.Corinthian agrees to provide, during the performance of the services, supervisory personnel satisfactory to RidePal.Subcontractor Services 1

3.4.8.Conrinthian agrees not to engage any subcontractor for services without RidePal’s prior written approval.Employment of Personnel 1

3.4.9.RidePal requires that Corinthian employ only qualified and licensed personnel, with drivers possessing an active California Class C driver’s license, as well as a California Class B driver’s license with passenger endorsement or other license compliant with California regulations specific to shuttle bus service.Mandating Insurance Requirements 1

3.5.RidePal does not Establish that it Fits Within the Ridesharing Exemption 1

4.RidePal Should be Fined 1

5.Comments on Proposed Decision 1

6.Assignment of Proceeding 1

7.Categorization and Need for Hearings. 1

Findings of Fact 1

Conclusions of Law 1

O R D E R 1



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