Judge Says Uber Should Be Shut Down In California

from the another-day,-another-problem dept

Uber appears to be a company that just can't get out of the way of controversy. The week actually started out good for the company with New York announcing that Uber drivers were clearly contractors rather than employees (unlike a California labor commission ruling that went the other way). However, on Wednesday afternoon an administrative judge in California declared that the company's services should be suspended statewide for supposedly refusing to provide data that it's required to provide under a 2013 law that helped "legalize" the service (that was already widely in use at the time).

Uber, for its part, insists that it delivered the necessary info and promises to appeal the ruling (which also includes a $7.3 million fine, which is pocket change for the company right now). It also appears to hint that the information that the Public Utilities Commission is seeking would actually violate the company's privacy policies.

In a statement, an Uber spokeswoman called the decision "deeply disappointing."

"We will appeal the decision as Uber has already provided substantial amounts of data to the California Public Utilities Commission, information we have provided elsewhere with no complaints," spokeswoman Laura Zapata said. "Going further risks compromising the privacy of individual riders as well as driver-partners."

The details seem to involve what kinds of data Uber was supposed to turn over, including specifics about requests from users with service animals or wheelchairs. Uber apparently didn't have the ability to track that information in the past, though it does now. On the flip side, the California PUC argues that companies in the space were given a year to comply, and thus Uber had plenty of time to make sure it was compliant and failed to do so.

As part of the 2013 law that legalized ride-hailing in California, companies are required to prepare an annual report with data about rides provided through the app.

Uber's 2014 report did not include hard numbers on customers who requested cars to accommodate service animals or wheelchairs, nor how often those requests were fulfilled, the judge said. The company also didn't provide raw numbers on requests for rides tabulated by ZIP Code, and how many of those rides were fulfilled, instead providing “aggregates, averages and percentages,” and a heat map showing which ZIP Codes generally saw the most requests.

Uber also failed to submit complete information on drivers who have been suspended or committed a violation, the judge said. The company did not provide the “cause of the incident reported,” or the amount paid out by any insurance company other than Uber's.

It would appear that the company and its lawyers are going to remain rather busy for the foreseeable future. It is, frankly, somewhat surprising that Uber didn't do more to comply with these requests, even if it disagrees with need to hand over such information. Not fully complying was always going to end badly. There may be legitimate privacy arguments for Uber to make here, but it doesn't seem like playing games with the CPUC is the best way to make that point.

Filed Under: california, cpuc, data, privacy, puc
Companies: uber

California Continues To Be Anti-Innovation: Tells Ridesharing Services That Carpooling Is Illegal

from the oh-come-on dept

There has been plenty of discussion about ridesharing services lately, and whether they should be subject to the same sorts of regulations as taxis. As we've discussed, while taxi regulations have some historical basis in protecting riders from scammers, most of that was for a time when there was significant information asymmetry between drivers and riders, making it much easier for drivers to scam, rip off or endanger passengers. The wonderful thing that services like Uber, Lyft and Sidecar do is get rid of much of that information asymmetry and risk. The drivers are rated and monitored. The services handle the payment terms. The regulations that once served a purpose are less and less important. And, of course, then the reality starts to become clear. Where those regulations may have once had some benefit for the public, these days, they're much more about limiting competition, keeping prices artificially high and limiting new forms of innovation.

That's become especially clear in the last few days, where the California Public Utilities Commission (CPUC) has alerted Uber, Lyft and Sidecar that their new carpooling offerings are illegal. All three companies recently introduced a rather useful innovation that actually makes it much more accurate to call these services "ridesharing." By enabling "carpooling," the services find multiple people heading in the same general direction, and put them in the same car, allowing all of them to get a cheaper fare. It's the kind of useful innovation that seems like it's better for everyone. But, not the CPUC. In the world of the CPUC, you can't innovate if you haven't first groveled for permission:

Basically, the CPUC says that under California law it's illegal for these ride-sharing services to charge passengers an individual fare when carrying multiple people in one vehicle. If the companies would like to add a carpool feature, they first have to request an adjustment to their existing permits with the CPUC or petition the state legislature to modify the law.

Some people like to mock the idea that these companies like to innovate first and deal with the regulatory issues later -- and there may be something to that. But anyone who's ever worked in a setting where innovation is happening knows that having to ask for permission is a recipe for no innovation. California has a long history of enabling innovation. It would be quite a sad state of affairs for it to go the other way.

Filed Under: california, carpool, carpooling, cpuc, innovation, permission, ride sharing
Companies: lyft, sidecar, uber

Attorneys Openly Revolt Against General Counsel Over Failure To Punish PG&E For Pipeline Explosion

from the ethics-vs.-loyalty dept

A deadly explosion killed eight people and destroyed 38 homes in San Bruno, California on September 9, 2010. The cause of the destruction was a natural gas pipeline owned by Pacific Gas & Electric that ran underneath the homes.

The subsequent investigation turned up a litany of failings on PG&E’s part that contributed to the explosion. PG&E’s regulator, the California Public Utilities Commission, issued a recommendation that PG&E pay no fine, noting that the money the company was spending to modernize its pipelines to prevent future accidents was punishment enough.

This is when a number of CPUC attorneys took a stand against their boss, and their boss clumsily aired the office turmoil in public. And, yes, this all eventually involves the Taliban and a gun-toting enforcer...

A number of attorneys for CPUC refused to agree to this recommendation and suddenly disappeared from the case. As Jaxon Van Derbeken of the San Francisco Chronicle reports:

The commission’s head of safety, Jack Hagan, and its general counsel, Frank Lindh, said last week that four members of the attorney team had asked to be reassigned, just days before the agency was to file its case for penalties against PG&E for the 2010 disaster that killed eight people.

If you’re still reading, it should come as no surprise that the “reassigned” lawyers disagreed with this interpretation. From the Chronicle again:

On Friday, Morris sent an e-mail to Lindh asking that he “cease immediately your defamatory representations that I and the other attorneys in the San Bruno (matter) voluntarily left the case.”

The Chronicle obtained a copy of the e-mail from a third party. Morris has declined to comment on the dispute.

In his e-mail, Morris said his team did not spend more than two years on the case, drafting hundreds of pages of briefs, so it could walk away from the case at the last minute.

“How could you or anyone else even question our commitment to ensure that such a tragedy should never happen again?” Morris said. “Your statements about us omit any mention of the fact that we refused to sign a reply brief, that we felt was unethical. Because you did nothing to resolve our ethical concerns, one attorney asked to be taken off the case, and you then claimed that all of us asked to be reassigned.”

Morris, who has worked for the commission for 31 years, added, “Anyone who knows me would question your statement that we voluntarily left.”

That’s the classic bar admission ethics query: what do you do when your boss asks you to do something unethical? This isn’t to say that Lindh was acting unethically. This is just to say that the general counsel of PG&E’s regulator used to work for PG&E and — over the objections of his staff — pushed for giving PG&E a no-penalty sweetheart deal. That’s all we’re saying.

The suggestion that the proper penalty for lapses that killed eight people is “bring your pipeline up to snuff” is troubling. It would seem as though building pipelines that don’t spontaneously combust should be par for the course and then there should be something out there to incentivize PG&E to not wait for the next explosion to look into the infrastructure they use to carry highly explosive material underneath houses. But maybe that’s just me.

After taking the weekend to mull over the charge that he was defaming his staff and committing ethical violations, Frank Lindh decided the appropriate response was to publicly air all of this in a keynote address to the National Conference of Regulatory Attorneys. From The Recorder:

Frank Lindh, the CPUC’s embattled general counsel, surprised the crowd — and his own staff — with a speech about a “hypothetical” state utility regulator whose staff attorneys needed to learn a lesson about loyalty and good judgment.

On hand were regulators from around the country who watched as Lindh’s own staffers heckled him for what they saw as a veiled attack on his legal team. The tense scene offered a glimpse of the firestorm within the CPUC’s legal department as it deliberates the financial penalty against Pacific Gas & Electric Co. for its role in the deadly 2010 San Bruno explosion.

Getting heckled by the staff for a petulant rant is not the recipe for a successful keynote. It is, however, the recipe for a speech I’d have loved to watch live. The speech is a comical read (transcript reproduced below), calling out the disloyalty of a hypothetical lawyer in his dealings with “Stella Artois.” I see what he did there.

This whole affair did not sit well with other CPUC’s lawyers:

“I feel compelled to say that your decision to give this speech, which was a thinly veiled critique of the actions of the San Bruno attorney team, demonstrated very poor judgment,” Assistant General Counsel Helen Mickiewicz wrote Monday afternoon in an email sent to Lindh and copied to many other CPUC attorneys. “What is NOT appropriate is for you to take your case public, arguing your position in the press, and then today, before a hundred attendees from all over the country at a regulatory conference.”

But maybe we should cut Lindh some slack. He’s had a rough decade or so. His son is John Walker Lindh, who you might remember as the “American Taliban.”

Is there any way this could get crazier? Insert allegations that Lindh had a gun-toting sidekick who threatened lawyers to get on board with the deal? Sure! The San Francisco Chronicle again:

The head of safety enforcement for the California Public Utilities Commission denied Tuesday that he had threatened state attorneys in a dispute over whether to fine Pacific Gas and Electric Co. for the San Bruno disaster and said he is entitled to carry a gun in the agency’s offices – though he said he hadn’t done so recently.

Jack Hagan acknowledged that the exchange with the attorneys had become heated. But he described himself simply as “an exasperated client” who was trying to get his attorneys to help him make a case that the money PG&E is spending to improve its natural-gas transmission system is sufficient penalty for the 2010 pipeline explosion that killed eight people.

Hagan also confirmed that he had packed a concealed gun in the commission’s San Francisco offices since becoming head of the safety division in 2012, but that he had stopped doing so several months ago after a staffer complained of feeling uncomfortable about it.

Several of the attorneys who had been working on the regulatory case against PG&E raised Hagan’s conduct as an issue in confidential e-mails to their boss, which The Chronicle obtained from a third party this week.

On Tuesday, several CPUC attorneys wrote a letter to Lindh that Above the Law has received from a third party (reproduced in full on the third page):

It also appears that you subscribe to the view, expressed by the Director of the Safety and Enforcement Division, that the client is the boss in Commission proceedings and the attorneys must simply obey, regardless of whether the actions involved are of questionable ethics and legality. We think that this view represents a lack of understanding of the Legal Division’s duty to the public, the Commission, and the State of California.

This brings us to the present. It sure sounds like a mess out there in California. But this whole affair highlights once again the dangers of a revolving door regulatory system. When an attorney who served as general counsel of a PG&E subsidiary becomes PG&E’s regulator, no one can be too surprised that the proper penalty for killing 8 people is, “carry on about your business.”

Filed Under: california, cpuc, frank lindh, pipeline explosion, san bruno