L/bjk BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA In the matter of the Order Instituting ) Investigation on the Commission's own ) F I L E D motion into the operations and ) PUBLIC UTILITIES COMMISSION practices of Harrington Brothers, ) MARCH 9, 1994 Inc., and its President, Jarlath T. ) SAN FRANCISCO OFFICE O'Connor, President, ) I.94-03-022 ) Respondents. ) _______________________________________) ORDER INSTITUTING INVESTIGATION AND ORDER TO SHOW CAUSE The California Public Utilities Commission [Commission] is the agency responsible for regulation of intrastate transportation of used household goods and personal effects, office, store, and institutional furniture pursuant to the California Constitution, (Article XII), the Household Goods Carriers Act (Public Utilities Code Sections 5101, et seq.), the Commission's Minimum Rate Tariff 4-C [MRT 4-C] (prior to November 1, 1992), Maximum Rate Tariff 4 [MAX 4] (after November 1, 1992), and Commission General Orders [G.O.'s] 100-L, 136-B, 139-A, 142, and others. These statutes and regulations require, among other things, that household goods carriers: operate only when a permit from the Commission is in force; procure, continue in effect, and maintain on file adequate proof of public liability/property damage, cargo, and workers' compensation insurance; and observe rules and regulations governing the acknowledgement and handling of claims for loss and damage, issuing of estimates, execution and issuance of documents, training and supervision of employees, maintenance of equipment and facilities, and rules pertaining to rates and charges. The California Public Utilities Commission to be the primary agency responsible for enforcement of these and other statutes and regulations governing household goods carriers. These other statutes and regulations include such general consumer protection and public safety provisions of other California Codes as: theft, fraud, bait-and-switch, unfair and unlawful business practices and unsafe or unlawful operation of vehicles. We have directed the Transportation Division (formally in D.92-05-028) to use all tools at its disposal to enforce the laws and regulations against illegal operations--both carriers operating without a permit and permitted carriers not in compliance with the law, and our rules and regulations--and bring cases to us and district attorneys for prosecution as appropriate. In response to our directives, Staff has brought such investigative proceedings before us such as Starving Students [I.92-11-029], Best Move [I.91-11-002], Nice Jewish Boy/Father and Son [I.90-12-010], Reginald Duncan [I.90-09-009], Dave's Quality Movers [I.91-10-011], and Ronald Zammito [I.91-01-011]. Transportation Division's Special Investigations Unit [SIU, staff, or investigators] advises us, through the declaration supporting the issuance of this investigatory proceeding, that it has initiated an investigation into the business practices of Harrington Brothers, Inc. [Harrington Brothers], T-149,921 who operates a moving service in the San Francisco Bay Area. SIU's investigation of Harrington Brothers found numerous alleged violations of the Household Goods Carriers Act, and Commission rules and regulations, and found corroborating testimony regarding complaints of threatening and abusive behavior on the part of Harrington Brothers' President, Jarlath O'Connor, and other Harrington Brothers' employees. On December 14, 1993, the SIU served upon James Byrne, attorney for respondent corporation, Citation Forfeiture [CFP] No. F-4745 against Harrington Brothers, Inc. The CFP lists over one hundred [100] separate alleged violations of the Household Goods Carriers Act, MAX 4, MRT 4-C, and General Order 142. These violations include: operating during periods of permit suspension, and without adequate proof of workers' compensation insurance on file; giving verbal estimates without inspection of the goods to be moved; failing to provide a "Not To Exceed Price"; failing to observe and obey rules pertaining to rates and charges, including the honoring of estimates and "Not To Exceed Prices", and rates and charges shown on "Confirmations" (MRT 4-C) and "Agreements for Service" (MAX 4); failing to provide the booklet "Important Information for Shippers of Household Goods" [booklet]; failing to acknowledge and handle claims for loss and damage, or to do so timely; failing to have properly trained, experienced, and supervised employees; failing to have properly maintained equipment and facilities to afford protection to goods tendered; failing to make a reasonable effort to determine the size of motor vehicle appropriate for the particular transportation; and other violations pertaining to the proper and timely execution and issuance of documents. On December 24, 1993, Transportation Division received a notice by Harrington Brothers denying the allegations and requesting a hearing into the matter. LICENSE HISTORY Harrington Brothers, Inc. is holder of a household goods carrier permit under T-149,921. The permit was issued to Harrington Brothers, Inc. on December 10, 1985, pursuant to an application made on December 4, 1985 to transfer authority from Iris N. O'Connor, an individual doing business as "Harrington Brothers Moving and Storage" and "Richmond Rapid Transfer" under permit number T-84,028. The transfer application shows the same address, 599 Valencia Street, San Francisco, California 94110, for both transferor and transferee. The officers of Harrington Brothers, Inc. named on this transfer application are: Jarlath T. O'Connor, President, and Iris M. O'Connor, Vice President, Secretary, and Treasurer, each owning fifty percent [50%] of the corporation. The permit names "J.T. O'Connor, President" as the person who has established his knowledge and ability to enable the permittee to engage in business as a household goods carrier. Official Transportation Division records show that from December of 1988 to the present, Harrington Brothers' operating authority has been suspended eight [8] times, including three [3] times for lack of effective insurance (workers' compensation or cargo) on file. Harrington Brothers' operating authority was also revoked early in 1993 for lack of workers' compensation insurance on file. The remaining suspensions are for delinquent or underpaid Transportation Rate Fund fees. Harrington Brothers' operating authority has been in force continuously since October of 1993. These suspensions, and the revocation, are detailed further in the declaration supporting the issuance of this investigatory proceeding. THE INVESTIGATION The Special Investigations Unit says that it opened its investigation into Harrington Brothers primarily in response to two customer complaints received by the Transportation Division. Both complaints alleged: loss or damage; no booklet given; a lack of responsiveness to their complaints on the part of Harrington Brothers; and rude or threatening behavior by Jarlath O'Connor or other Harrington Brothers employees. One complainant alleged that a verbal estimate was given from Harrington Brothers then not honored. This complainant further alleges that Jarlath O'Connor personally made obscene and violent threats to her. Another complainant alleged that she was overcharged on a shipment for which she had received a written estimate. This complainant also reported that the driver attempted to charge her extra to move certain items, and when she refused, he threatened to confiscate her television set. This customer was billed for the amount of the estimate, plus a ten percent [10%] allowance (provided for in MRT 4-C, under some circumstances) without any justification for the charge shown on the shipping documents or any indication of the amount of time spent on the move. Inspection of Documents: On April 1, 1993, in response to these allegations, staff investigators examined documents from over two-hundred [200] shipments, provided to them by Jarlath O'Connor and Iris O'Connor, in Harrington Brothers' facilities at 599 Valencia, San Francisco. These documents were provided to SIU pursuant to a prior, written request by the investigators which specified the types of documents and the time periods they would be examining. Of the more than two hundred shipments for which staff saw shipping documents, not one was accompanied by a "Confirmation of Shipping Instructions and Rate Quotation" (MRT 4-C) or an "Agreement for Service" (MAX 4) [collectively herein: "contract"]. Further, apparently not one of these shipments was accompanied by a receipt showing that the shipper received the booklet. If true, we find this especially distressing, as the booklet and contracts, properly and timely executed and issued, are the very documents which we intended for all shippers to receive, sign (or sign for), and rely on prior to any service commencing. As such, they are often the only guarantee that shippers have the opportunity to be informed of their rights and obligations, and those of the carrier, and of the rates and charges for transportation and other services, before the move begins and the carrier takes possession of the shipper's personal belongings. Staff also observed that not one of the hundreds of Shipping Orders and Freight Bills [Freight Bills] they examined showed an accurate measure of the time spent on loading, unloading, and driving, in violation of MRT 4-C and MAX 4. This is the only written record showing the basis for charges under the hourly rates contained in MRT 4-C and MAX 4. Staff's investigation indeed reveals that there were disputes stemming from some of these moves as to how much time the carrier actually spent performing services. Survey of Customers: Staff says that it randomly selected and copied forty-eight [48] Freight Bills from among those they had examined on April 1, 1993. They then attempted to contact each of the customers on those Freight Bills, and were successful in contacting twenty-three [23] customers. Only three [3] of the 23 customers whom SIU contacted remembered receiving the booklet. Five [5] of the 23 could not positively recall whether they had received it, while the remaining fifteen [15] were positive they did not receive it. Of these 23 customers, two [2] had complaints which they regarded as serious. These customers complained about one or both of the following: loss and damage; verbal estimate; charges exceeding the estimate; no booklet given; refusal to release shipment to valuation requested by shipper; rude treatment by Harrington Brothers' employees; failure to bring a truck large enough to transport the goods; and refusal to move certain goods, forcing the shipper to move them herself. Better Business Bureau: Staff investigators found five complaints on file in the San Francisco office of the Better Business Bureau [BBB], including one, alluded to above, which had been sent to the Transportation Division. The remaining four complaints included the following allegations: verbal estimate; no booklet given; no contract; failing to bring a truck large enough to transport the goods; unclean equipment and facilities; untrained, inexperienced employees; charging in excess of the estimate; charging for time during which Harrington Brothers' employees were unaccounted for; rude and abusive behavior by Jarlath O'Connor, Iris O'Connor, and other Harrington Brothers' employees, including threats and vulgarities; loss and damage; failure to respond to loss and damage or other complaints; and an alleged claim by a Harrington Brothers employee, in response to a request to speak to Jarlath O'Connor, that he, O'Connor, was no longer with the company. Additional Complaints: During the course of SIU's initial investigation, five more Harrington Brothers customers contacted the Staff to complain about Harrington Brothers. These complaints included allegations of verbal estimates; improper estimates; no booklet given, or given before the move; contract not executed, or not executed timely; providing misleading information regarding valuation (insurance); slow, untrained, or inexperienced employees; overcharging on an estimated shipment (written and verbal); charging for services not rendered, or not agreed to in writing beforehand; refusal to give a copy of the Freight Bill to a shipper; loss and damage to goods and to property; attempts to conceal damage; and lack of response to claims and complaints. These and other allegations are detailed further in the declaration in support of issuance of this investigatory proceeding. Staff also noted other alleged violations evidenced by the shipping documents from these moves. Apparently, two of the moves took place at times when the operating authority of Harrington Brothers was suspended for lack of workers' compensation insurance on file with the Commission. Freight Bills failed to record the time spent performing each phase of service. The "Not to Exceed Price" was left blank on the Agreement for Service form. DISCUSSION The very beginning and foundation of our regulatory program for household goods carriers is that they must obtain, and keep in force so long as they are operating, authority to operate from the Commission (Public Utilities Code Section 5133). Keeping a household goods carrier permit in force requires the carrier to, among other things, procure and continue in effect adequate protection against liability for the payment of damages for personal injuries and property damage, and for loss or damage to cargo, and workers' compensation insurance. The law further requires that, beyond procuring these protections and continuing them in effect, the carrier must maintain them on deposit with the Commission at all times. These provisions were enacted by the legislature for the protection of the shipping and general public, and that of the carriers' employees. After the issuance of operating authority, the Commission exercises continuing oversight of the carrier's fitness. Public Utilities Code Section 5285 authorizes the Commission, upon complaint or on the Commission's own initiative, after notice and opportunity to be heard, to suspend, change, or revoke a permit for failure of the carrier to comply with any of the provisions of the "Household Goods Carriers Act" or with any order, rule, or regulation of the Commission or with any term, condition, or limitation of the permit. Section 5139 gives the Commission power to establish rules for the performance of any service of the character furnished or supplied by household goods carriers. The Commission requires carriers, in both MRT 4-C and MAX 4 (Item 88), to furnish to each prospective shipper a copy of the information contained in Item 470 of each respective Tariff, the booklet entitled (in MAX 4) Important Information For Persons Moving Household Goods. We further require the carrier to provide this information at the time of first in-person contact between the carrier's personnel and the shipper or shipper's representative. To ensure that this is done, both Tariffs also require the carrier to obtain the shipper's signature that the shipper has received this booklet, and to retain these receipts in the carrier's records for three years. We are distressed to learn of Staff's apparent failure to locate even one receipt for the booklet among the hundreds of shipments for which they examined documents. When we promulgated MAX 4, we were so concerned that each and every prospective shipper obtain this vital informational booklet at the outset of their dealings with movers that we mandated that carriers pay one hundred dollars [$100.00] to the shipper upon completion of the move, for failing to comply with these requirements in their entirety. We note with concern that a number of the complaints documented in this investigation were not directed by the shippers to the Transportation Division, even where these complainants took the time and trouble to pursue their complaints elsewhere. The very least we expected to accomplish by ensuring that the booklet is provided to each customer is that they would know the name of the primary agency to which to complain. Both MRT 4-C and MAX 4 (Item 128) require the carrier to properly and timely execute prescribed documents containing specified information, and signed by carrier and shipper prior to commencement of any service. These documents, referred to collectively herein as "contracts", are to contain such information as the scope of service to be provided, the rates and/or charges for those services, information regarding insurance and valuation, number and names of drivers and helpers, equipment to be provided, and rights and obligations of carrier and shipper. Under MAX 4, this "Agreement For Service" is to be provided to the shipper, 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 shipper has an opportunity to be fully informed before relinquishing to the carrier their most personal and valuable possessions. Again, we are dismayed by Staff investigators' report that after a diligent effort they failed to find evidence of even one properly or timely executed contract among the hundreds of Harrington Brothers' documents examined. MRT 4-C and MAX 4 (Item 108) each also contain rules governing the issuance of estimates. Paramount among these requirements are that all estimates shall be in writing upon prescribed forms, and shall be based upon visual inspection of the goods to be moved. Both Tariffs provide for a maximum allowable charge for estimated shipments. These estimating rules were intended to protect both consumers and competing carriers from the illegitimate practice of deliberate underestimating by household goods carriers as a competitive practice. We note the apparent presence of disturbing patterns among the consumer complaints brought to our attention by Staff investigators, both with regard to the issuance of verbal estimates without visual inspection, and charging in excess of verbal and written estimates. Both MRT 4-C and MAX 4 (Item 132) require carriers to properly execute and provide to the shipper a Freight Bill upon prescribed forms, and containing specified information about the shipment, services provided and their rates and charges, units of measurement, helpers and packers, signatures of carrier, and the "Not To Exceed Price". Also required, under this Item and Item 36 of both Tariffs, is a legible record of all starting and ending times for each phase of service: packing, loading, driving, and unloading, and a record of deductions in time, if any. Again, we are distressed at Staff's apparent failure, after a careful search of the carrier's records, to find one Freight Bill or other document meeting this requirement, and we note that there are instances where the amount of time spent performing these services is in dispute. Commission General Order 142(2)(a) requires that household goods carriers have competent, trained, and supervised crews on all household goods moves, and we generally share staff's view that at the very least the mover's crew chief should be trained and experienced and provide adequate supervision of the other crew members. G.O. 142 was promulgated by the Commission to protect shippers 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. General Order 142(1)(a) also requires that equipment and facilities utilized by a household goods carrier for the transportation of used household goods be maintained in a manner which will afford adequate protection for the household goods tendered to the carrier, and that the interior of vehicles used in such transportation be reasonably clean. This provision was also intended to protect shippers from excessive damage to goods tendered for transportation. General Order 142(1)(b) further requires that for shipments transported at hourly rates, the carrier shall make a reasonable effort to determine the size of motor vehicle appropriate to provide an adequate transportation service under the particular circumstances of the movement the carrier is requested to perform. This rule provides that if the carrier fails to make such a reasonable effort, or having made it, fails to provide such equipment, the shipper shall not be charged any driving time for excess motor vehicle equipment which is supplied. Both MRT 4-C and MAX 4 (Item 92) also prescribe rules governing the handling of claims for loss or damage. Claims must be filed in writing and must meet the minimum filing requirements contained in Item 92, paragraph 2. Upon receipt of such a claim, carriers are required to acknowledge receipt to the claimant, in writing, within thirty [30] days. Carriers are further required, where possible, to pay, decline to pay, or make a firm compromise settlement offer in writing within 120 (MRT 4-C) or 60 (MAX 4) days, or to advise the claimant, in writing, the status of the claim and reasons for the delay. Staff reports to us that only one of the claims of which it has knowledge meets the minimum filing requirements under Item 92(2), so that there is only one "technical" violation of the response provisions of this Item on the part of Harrington Brothers. We also note, however, the apparent existence of another disturbing pattern among the allegations contained in these consumer complaints: that Harrington Brothers appears to employ a variety of tactics to discourage anyone attempting to file or pursue such a claim. It does not escape our attention that the rules governing claims, including filing requirements and carriers' obligations, are spelled out clearly in the booklet which, it would appear, Harrington Brothers is so reluctant to provide to its customers. We place tremendous trust in household goods carriers in granting them operating authority, a trust equaled by that of our citizens who tender their most personal and treasured belongings to movers. This carrier's alleged pattern of violations and the mistreatment of consumers alarms us. Respondents should recognize that the Transportation Division's allegations described herein are grave, and if substantiated through hearing may well constitute grounds for suspension of the respondents' operating authority and other appropriate sanctions and remedies. We appreciate Staff's efforts to settle this matter informally, saving the expense of litigation. However, when we view this record and alleged pattern of conduct, it appears to us that this is a matter of such a serious nature that we believe an Order Instituting Investigation is the appropriate regulatory response. If the allegations accompanying this proceeding are substantiated, we feel that the facts of the case would most closely resemble those in the "Nice Jewish Boy" matter [D.92-03-089], the Starving Students matter [D.93-07-020], and the Best Move case [D.91-12-040]. It appears that the respondents may have: 1. Violated Section 5133 of the Public Utilities Code by operating as a household goods carrier during a period or periods when their permit was not in force; 2. Violated Section 5135.5 of the Public Utilities Code by failing to have valid workers' compensation insurance on file with the Commission at a time when they were operating as a household goods carrier; 3. Violated Section 5139 of the Public Utilities Code by failing to furnish to each prospective shipper a copy of the information specified in Item 470 of MRT 4-C or MAX 4, as applicable, in violation of Item 88 of MRT 4-C or MAX 4, as applicable; 4. Violated Section 5139 of the Public Utilities Code by, having failed to furnish to each prospective shipper a copy of the information specified in Item 470 of MRT 4-C or MAX 4, failing to then pay $100.00 to each such prospective shipper upon completion of the move; 5. Violated Section 5139 of the Public Utilities Code by giving estimates not in writing or not based upon visual inspection of the goods to be moved, in violation of Item 108 of MRT 4-C and MAX 4, as applicable; 6. Violated Section 5139 of the Public Utilities Code by issuing an estimate upon a form other than that prescribed, in violation of MAX 4 Item 108(1)(b); 7. Violated Section 5139 of the Public Utilities Code by giving an estimate as a range of prices rather than a single estimated price, in violation of MAX 4 Item 108; 8. Violated Section 5139 of the Public Utilities Code by charging in excess of the maximum allowable charge on estimated services; 9. Violated Section 5139 of the Public Utilities Code by failing to execute and provide to each shipper prior to commencement of any service, a Confirmation of Shipping Instructions and Rate Quotation, or an Agreement for Service, in violation of Item 128 of MRT 4-C or MAX 4, respectively; 10. Violated Section 5139 of the Public Utilities Code by failing to execute and provide to each shipper an Agreement for Service no less than three days before the day of the move, in violation of MAX 4 Item 128(1); 11. Violated Section 5139 of the Public Utilities Code by failing to include upon the Agreement For Service a Not To Exceed Price, in violation of MAX 4 Item 128(2)(q); 12. Violated Section 5139 of the Public Utilities Code by failing to show on shipping documents information required by Items 36 and 132 of MRT 4-C or MAX 4, as applicable, including a legible record of all starting and ending times for each phase of service rendered, and deductions in time, if any, and reasons therefor; 13. Violated Section 5139 of the Public Utilities Code by charging for services not rendered, or not agreed to in writing beforehand, in violation of MAX 4 Item 132; 14. Violated Section 5139 of the Public Utilities Code by not providing to the shipper a copy of the Shipping Order And Freight Bill, in violation of MAX 4 Item 132(1); 15. Violated Section 5139 of the Public Utilities Code by failing to acknowledge and process loss and damage claims in a timely manner in violation of Item 92 of MRT 4-C; 16. Violated Section 5139 of the Public Utilities Code by permitting drivers, helpers, or packers to be used in the transportation of used household goods or in the performance of accessorial services, who are not trained and experienced in the movement of used household goods, or who is not adequately supervised, in violation of Commission General Order 142(2)(a); 17. Violated Section 5139 of the Public Utilities Code by failing to make a reasonable effort to determine the size of motor vehicle equipment appropriate for moving service requested, in violation of Commission General Order 142(1)(b); 18. Violated Section 5139 of the Public Utilities Code by--having failed to make a reasonable effort to determine the size of motor vehicle equipment appropriate for moving service requested, and having then failed to provide such equipment--subsequently charging the shipper any driving time for excess motor vehicle equipment which is supplied, in violation of Commission General Order 142(1)(b); and, 19. Violated Section 5139 of the Public Utilities Code by utilizing equipment for the transportation of used household goods not maintained in a manner which will afford adequate protection for the household goods tendered to the carrier. IT IS ORDERED that an investigation on the Commission's own motion is instituted into the operations and practices of the respondents, Harrington Brothers, Inc. and its President, Jarlath O'Connor. A public hearing on this matter shall be held expeditiously before an ALJ at a time and date to be set at the prehearing conference. At the hearing, respondents shall appear and show cause; (a) why their permits should not be suspended in view of the allegations made by SIU, assuming the allegations are proven at the hearing; (b) why, in addition to a period of suspension, the respondents should not be fined to the full extent allowed for the violations alleged, pursuant to Public Utilities Code Sections 5285(c) and 5315; (c) why respondents should not be required to refund excess charges collected resulting from verbal and written estimates and other excess charges collected in violation of CPUC rules and regulations; (d) and, why respondents should not be required to pay $100.00 to every shipper to whom a booklet was not given in accordance with Max 4; During the pendency of this investigation, it is ordered that Harrington Brothers shall cease and desist from any further violations of the Household Goods Carriers Act, including Maximum Rate Tariff 4 and General Order 142. The Transportation Division staff, if it elects to do so, may present additional evidence beyond that described in the attached declaration, either by testimony or through documentation, bearing on the operations of the respondents and their treatment of shippers. The Executive Director shall cause a copy of this order and the SIU declaration to be personally served upon respondents at 599 Valencia Street, San Francisco, California 94110. The Executive Director is also directed to cause a copy of this order to be served by mail on the respondents' counsel, James Byrne, at Byrne, Igleheart, and Byrne, 785 Market Street, #820, San Francisco, California 94103. This order is effective today. Dated March 9, 1994, at San Francisco, California. DANIEL Wm. FESSLER President PATRICIA M. ECKERT NORMAN D. SHUMWAY P. GREGORY CONLON JESSIE J. KNIGHT, JR. Commissioners