PU Code Section 1759 Shields Uber From Class Action By Taxi Owners

April 9, 2018

Goodin Macbride Administrative Law Blog

In January the Court of Appeal (First District, Division One) issued its decision in Goncharov v. Uber Technologies, Inc 19 Cal. App. 4th 1157,2018 Cal. App. LEXIS 72 (January 29, 2018). The Court affirmed the dismissal of a class action by several taxicab companies against Uber Technologies, Inc. (“Uber”). The plaintiffs claimed that Uber had unfairly competed with the them by operating unlawfully as a transportation provider without the requisite authority from the California Public Utilities Commission. The Court held that the class action was barred by Section 1759[1] because the court proceeding could interfere with R.12-12-011, the Commission’s ongoing Rulemaking regarding Transportation Network Companies (“TNC”s).

Goncharov v. Uber is significant because it examines the third prong of the California Supreme Court’s decision in Covalt,[2] as described in the court’s later decisions in Hartwell [3]and Orloff [4]. All agreed that the first two prongs of Covalt (Commission jurisdiction and the exercise of it) were met. The question in dispute, as is usually the case when a Section 1759 defense is asserted, was whether the third prong of Covalt was satisfied—i.e., would the action in Superior Court “ interfere with the CPUC’s prospective regulatory program,” in this case R.12-12-011, the TNC Rulemaking.

In Hartwell, the California Supreme Court held that the prospect of a court verdict inconsistent with a finding in a past Commission decision was not enough to satisfy the third prong of Covalt. The Court held that a party asserting a defense under Section 1759 had to show that the trial court proceeding would actually interfere with a prospective, ongoing regulatory program.[5] Accordingly, Hartwell held that (1) an action asserting that water meeting Commission and Department of Health and Safety standards was, nonetheless, unsafe, would interfere with a “prospective, ongoing regulatory program” but (2) an action that asserted that a particular company had not met Commission/DHS standards in the past would not interfere with an ongoing program, even though the Commission decision at issue in Hartwell found that large water utilities had met those standards for the last 25 years.

The Goncharov Court distinguished the water quality proceeding at issue in Hartwell from the TNC Rulemaking in part by relying on Orloff’s description of the Commission proceeding at issue in Hartwell as “a process designed to gather information, rather than as a rulemaking proceeding.” The Court noted that:

The CPUC’s evaluation of whether Uber is a charter party carrier and what regulations should apply is not merely informational. Rather, it is an express focus of the CPUC’s formal Rulemaking regarding Uber and TNC’s. Any determination regarding Uber’s status would strike at the heart of this process. And any finding by the CPUC on this issue would be directly related to its ongoing efforts to regulate Uber and TNC’s. A judicial ruling to the contrary could potentially undermine this process.

The key to a successful defense under section 1759 is to point to a “prospective, ongoing regulatory program” of the Commission’s that could be affected by the civil court action that you seek to end.

11759 provides as follows:

(a) No court of this state, except the Supreme Court and the court of appeal, to the extent specified in this article, shall have jurisdiction to review, reverse, correct, or annul any order or decision of the commission or to suspend or delay the execution or operation thereof, or to enjoin, restrain, or interfere with the commission in the performance of its official duties, as provided by law and the rules of court.

(b) The writ of mandamus shall lie from the Supreme Court and from the court of appeal to the commission in all proper cases as prescribed in Section 1085 of the Code of Civil Procedure

2 San Diego Gas & Electric Company v. Superior Court (Martin Covalt, Real Party In Interest), 13 Cal. 4th 893, 55 Cal. Rptr. 2d 724 (1996)

3 Hartwell Corporation v. Superior Court, 27 Cal. 4th 256, 115 Cal. Rptr. 2d 874 (2002)

4 People ex rel Orloff v. Pacific Bell, 31 Cal. 4th 1132; 7 Cal. Rptr. 3d 315; 2003 Cal. LEXIS 9459 (2003)

5 As recent decisions of the Court of Appeal affirm, any action that arguably relates to ongoing rates meets this test. See Lefebvre v. Southern California Edison, 244 Cal. App. 4th 143; 2016 Cal. App. LEXIS 46 (January 25, 2016); Guerrero v. PG&E, 230 Cal. App. 4th 567; (October 10, 2014) 2014 Cal. App. LEXIS 909.