SAN FRANCISCO --- The California Public Utilities Commission (CPUC) on April 26 ruled Uber Technologies, Inc., is both a transportation network company (TNC) and a charter party carrier (TCP).
That means Uber is now required to pay fees for the past three years for operating as a TCP, and to pay any remaining back fees for the past three years for any TNC permit holders separate from Rasier-CA that provided TNC service through the Uber platform. Uber has 30 days to register as both a TNC and a TCP.
The CPUC found Uber controls the operations of its subsidiary Rasier-CA, LLC (which is the legal entity through which the UberX service operates) to such an extent that Rasier-CA is a mere instrumentality of Uber. Further, the CPUC found Uber controls TCP companies Uber USA, LLC, and UATC, LLC (the legal entities that provide the Uber app to independent charter party carriers) to such an extent they are instrumentalities of Uber as well.
Only the smaller subsidiaries (Rasier-CA and UATC) are assessed CPUC fees. Those fees are based on total revenue earned from all passenger operations for the reporting period. Today’s finding means Uber is the correct entity that must hold both a TNC and TCP permit to ensure the company is properly identifying TNC and TCP operations of present and future subsidiaries to the CPUC, and paying the appropriate amount of fees.
"This is huge a big deal and a world of trouble for them," said Scott Solobmrino, the co-chair of the National Limousine Association's Legislative Committee and the CEO of the Dav El / BostonCoach Chauffeured Transportation Network. "I just don’t know how they don’t connect all the dots. It’s always what we said it was. We are a lot better off today as an industry sector than we were yesterday."
Solombrino told LCT today's decision is the first step in a series of anticipated actions that will conclude Uber is no different than any other chauffeured transportation operation in the U.S.
"That includes Uber drivers truly are employees and vehicles have to be properly licensed, tagged, insured, and inspected just like any other operation in California and throughout the U.S. We hope the case sets a precedent that state, local, and federal governments finally recognize. A level playing field should have long ago been established so people are able to compete in an open market."
NLA President Gary Buffo added, “This is a great example of how national and state associations working together can help to protect our industry.”
In an e-communication to its members, the NLA said, "Uber can no longer hide behind its smaller subsidiaries and is now in the eyes of California a transportation charter provider. They can no longer hide from California regulations on the pretense they are a mere network."
Greater California Livery Association President Mo Garkani said the decision is a win for the state group and the industry, but cautioned Uber will likely appeal it. The GCLA wants to fully assess the decision before issuing a full reaction, he said.
Solombrino predicted the CPUC approval could reverberate among the myriad of pending legal cases and actions pending against Uber nationwide that include labor and driver issues, liability disputes, and lawsuits related to criminal and safety incidents.
Most notable is a pending case before Northern California U.S. District Judge Edward Chen on whether Uber drivers should be classified as employees or independent contractors. "Judge Chen has known this was coiming, and logic would tell you why he’s been delaying was he didn’t want to get in front of the state of California," Solombrino said.
California state and labor laws make it near impossible for a TCP-licensed chauffeured transportation service to operate using independent contractor drivers.
The proposal voted on is available at: http://docs.cpuc.ca.gov/PublishedDocs/Published/G000/M213/K517/213517214.PDF.
The CPUC regulates services and utilities, safeguards the environment, and assures Californians’ access to safe and reliable utility infrastructure and services.
Sources: CPUC press release; Martin Romjue, LCT editor
Related LCT article: CA Operators Get Behind Rules Shakeup Of Uber
Related Topics: California operators, California Public Utilities Commission, Gary Buffo, Greater California Livery Association, illegal operators, legal issues, Mo Garkani, National Limousine Association, regulatory enforcement, Scott Solombrino, state regulations, TNCs, Uber