California Public Utilities Commission Institutes a Formal Investigation of Uber and Certain Uber Black Sub-carriers (I.21-12-001)


By Andrew D. Kent

On December 10, 2021, the California Public Utilities Commission (CPUC) initiated investigation I.21-12-001 instituting a formal investigation of Uber and certain Uber Black Sub-carriers operating on the Uber Black Platform in violation of the Public Utilities Code, general orders, state laws, and other rules or requirements for the provision of charter-party carrier transportation services. The order instituting investigation (OII) also will consider whether Uber and its Uber Black Sub-carriers should be subject to monetary fines, penalties, and other remedies in association with providing transportation services without valid operating authority.

The investigative proceeding chiefly considers the CPUC’s Consumer Protection and Enforcement Division’s (CPED) Investigative Report which found Uber violated General Order (G.O.) 157-E and Public Utilities Code section 5413 by allowing carriers to operate without authority and finding Uber Black Sub-carriers violated numerous Public Utility Code sections, G.O. 157-E, G.O. 115-G, and other state laws by operating without a valid permit. The CPED Investigative Report alleges the Uber Black Sub-carriers provided over 200,000 trips generating revenues in excess of ten million dollars and contributed to Uber profiting millions of dollars in 2019.

Therefore, the OII will review and determine, inter alia, (1) whether Uber hired unlicensed sub-carriers and/or procured, aided and abetted violations by sub-carriers who operated without legal authority; and (2) whether Uber Black Sub-carriers operated without legal authority and in defiance of applicable charter-party carrier requirements.

The CPUC regulates Transportation Network Companies (TNC), a subset of Charter-party Carriers (TCPs) who provide transportation service to the public through global positioning system (GPS) applications. On September 19, 2013, the CPUC issued Decision D.13-09-045 adopting rules and regulations for TNCs to ensure that public safety was not compromised by the operation of the new transportation business model. On April 26, 2018, the CPUC adopted D.18-04-005 which reclassified Uber as both a TNC and TCP. [24:2 CRLR 207–208]

On January 6, 2022, Uber filed a response to the OII stating that in September 2019, Uber began implementing a two-step authentication process designed to ensure that Uber Black Sub-carriers (1) present current and valid TCP licenses and other documentation before gaining access to Uber’s platform and (2) ensuring the licenses and documents belong to the individual sub-carriers and affiliates submitting them. Also, Uber stated that they support the CPUC’s action against sub-carriers who violate the rules and regulations, but do not believe a penalty to Uber would facilitate the shared enforcement goals to curb sub-carrier fraud. Uber characterized the scope of the issues for the investigation as (1) whether Uber Black Sub-carriers defrauded Uber and operated unlicensed sub-carrier services by presenting false or forged certification materials in violation of the Commission’s General Orders, the California Public Utilities Code, and Commission Rule 1.1, (2) whether the Commission should penalize the sub-carriers for these violations, (3) whether Uber, despite having been a target of this conduct, nevertheless bears any responsibility for it, and (4) whether Uber should be penalized for failing to prevent its sub-carriers’ misconduct in order to promote compliance with Commission rules, even if the misconduct already damages Uber and naturally presents that incentive.

On February 1, 2022, a prehearing conference (PHC) was scheduled to consider issues of party status, proceeding schedule, scope, and other procedural matters.  The OII is adjudicatory in nature and the next steps will be for the ALJ to determine whether hearings are necessary, and the Assigned Commissioner will issue a memo setting forth the scope of the proceeding and establish a procedural schedule.


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