Goncharov v. Uber Technologies, Inc. ( 2018 )

Filed 1/29/18
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FIRST APPELLATE DISTRICT
DIVISION ONE
LEONID GONCHAROV et al.,
Plaintiffs and Appellants,
A149347
v.
UBER TECHNOLOGIES, INC., et al., (San Francisco City & County
Super. Ct. No. CGC-12-526017)
Defendants and Respondents.
Plaintiffs Leonid Goncharov, Mohammed Eddine, Alan Freberg, Trevor Johnson,
Peter Kirby, and Jeremy Watt filed a putative class action lawsuit against Uber
Technologies, Inc. (Uber) for providing unlicensed transportation services that
appropriated passengers and income from licensed taxicab drivers. In the second
amended complaint (SAC), plaintiffs alleged Uber failed to comply with the California
Public Utilities Commission (CPUC) licensing requirements for charter-party carriers.
Uber filed a demurrer, claiming the court lacked jurisdiction under Public Utilities Code1
section 1759 due to ongoing rulemaking by the CPUC and asserting the SAC failed to
state a claim as to all causes of action. Plaintiffs asserted the court had denied these
arguments in connection with Uber’s demurrer to the first amended complaint and lacked
jurisdiction to reconsider these issues without a proper motion under Code of Civil
Procedure section 1008. Plaintiffs also contested the substantive arguments raised by
Uber. The trial court took judicial notice of various documents associated with the
1
All statutory references are to the Public Utilities Code unless otherwise
indicated.
CPUC rulemaking and sustained the demurrer with leave to amend. Plaintiffs declined to
amend, and judgment was entered. We affirm the judgment.
I. BACKGROUND
A. Factual Background
Because this appeal challenges a trial court order sustaining a demurrer, we draw
the relevant facts from the complaint and matters subject to judicial notice.2 (Yvanova v.
New Century Mortgage Corp. (2016) 62 Cal.4th 919, 924.)
Uber provides transportation services to the public by connecting consumers to its
“ ‘partner drivers’ ” through the use of a GPS-enabled smartphone application. At the
time Uber began operating, it had not received any licenses, permits or approvals from
the CPUC to operate as a charter-party carrier.3
The CPUC issued a cease and desist letter and citation to Uber, asserting Uber was
violating various CPUC rules and regulations. The CPUC also initiated rulemaking
(Rulemaking) to determine “whether the CPUC should adopt changes to its regulations
pertaining to passenger transportation in light of the emergence of companies with
business models such as Uber, Lyft and SideCar.” In an effort to resolve the cease and
desist letter and citation, the CPUC and Uber entered into a settlement agreement in
which the CPUC agreed to not enforce the outstanding citation against Uber in exchange
2
On June 28, 2017, Uber filed an unopposed request for judicial notice of 13
documents. At the request of the court, Uber filed a renewed request for judicial notice
as to documents one through seven. This renewed request also was unopposed. These
documents encompass rulings, submissions, scoping memoranda, and proposed decisions
from the ongoing CPUC proceedings. The request also includes a permit issued by the
CPUC and the CPUC’s docket. We grant judicial notice as to all 13 documents as
administrative records of the CPUC. (Evid. Code, § 452, subd. (c); Davis v. So. Cal.
Edison Co. (2015) 236 Cal.App.4th 619, 632, fn. 11 (Davis).) We also consider those
materials properly noticed by the trial court in connection with Uber’s demurrer to the
SAC. (Evid. Code, § 459, subd. (a).)
3
The SAC also contains allegations regarding Uber’s failure to obtain appropriate
licenses, permits, and approvals from the San Francisco Municipal Transportation
Agency (SFMTA) to operate as a taxicab. However, plaintiffs’ claims are not based on
any violations of SFMTA rules or regulations, so we need not address them here.
2
for Uber’s compliance with certain consumer protection conditions. The parties agreed
the settlement would govern their interactions pending a final decision by the CPUC in
the Rulemaking.
The CPUC thereafter issued a decision, which established a new subset of charter-
party carriers known as transportation network companies (TNC’s). As part of that
decision, the CPUC found UberX4 qualified as a TNC and could not lawfully operate
without a CPUC license. The CPUC also “reject[ed] Uber’s assertion that TNC’s are
nothing more than an application on smart phones, rather than part of the transportation
industry. . . . Accordingly, Uber is not exempt from the [CPUC]’s jurisdiction over
charter-party carriers.” That said, the CPUC “left the issue of whether Uber is a [charter-
party carrier], despite the fact that it is not a TNC, to be determined in Phase II of this
proceeding.” Uber subsequently applied for a TNC permit for UberX, which the CPUC
issued on April 7, 2014.
During the course of “Phase II,” the CPUC requested information and documents
from Uber regarding its operations. The CPUC also continued to evaluate issues
impacting the new TNC category. When the CPUC issued its decision on Phase II, it was
“still considering whether to require Uber, or any of its subsidiaries, to seek operating
authority as a TCP.”5 The CPUC concluded, “Uber’s status will be taken up as part of
Phase III of this proceeding.”
“Phase III” was divided into two subphases: III.A. and III.B. Phase III.A. focused
on issues impacting TNC’s. Phase III.B. addressed eight issues, including additional
TNC concerns, the question “Is Uber a TNC?,” and the “Regulatory status of Uber.”
Phase III.B. is currently ongoing and the CPUC has not issued a decision. Uber’s non-
UberX operations remain unlicensed.
4
UberX is one of several transportation options available through the Uber
smartphone application, in which drivers use personal rather than commercial vehicles.
5
TCP refers to transportation charter-party carriers of passengers, as defined by
section 5360.
3
B. Procedural Background
1. Uber’s First Demurrer
During the CPUC proceedings, plaintiffs filed a complaint against Uber, which
they unilaterally amended (FAC), alleging it operated and advertised itself as a public
transportation company without the requisite regulatory approvals from the SFMTA or
the CPUC. The FAC asserted causes of action for (1) violation of the Unfair Competition
Law (UCL; Bus. & Prof. Code, § 17200 et seq.); (2) intentional interference with
prospective economic relations; (3) negligent interference with prospective economic
relations; (4) accounting; and (5) declaratory relief.
Uber filed a demurrer to the FAC. The demurrer primarily focused on the doctrine
of judicial abstention. It argued the court should abstain from adjudicating the FAC
because it would require the court to “assume the functions” or “interfere with the
functions” of the CPUC. Specifically, Uber argued “the Legislature has entrusted the
power to regulate the vehicle for hire industry to the CPUC and SFMTA,” the claims
“depend on a determination that Uber is either a taxi company or a Black Car service. . . .
[which] lies with the agencies responsible for taxis and Black Cars,” and the CPUC is in
the process of evaluating these issues. In support of its argument, Uber referenced the
settlement agreement between the CPUC and Uber, which allowed Uber to continue its
operations “pending a final decision of the Rulemaking.” Uber claimed any
consideration of the FAC would “nullify the agency’s decision, supplant its regulatory
authority, and render its work superfluous.”
In opposition, plaintiffs argued the Legislature had already defined “taxis” and
“charter-party carriers,” and the FAC merely sought to determine whether Uber meets the
definition through standard statutory construction. In reply, Uber asserted the CPUC has
authority to determine the scope of the “charter-party carrier” definition and its related
regulations, and is in the process of doing so. Uber argued the court should defer to that
authority.
4
The trial court overruled Uber’s demurrer. The court declined to invoke the
doctrine of judicial abstention, holding, “[t]he gravamen of this instant case is statutory
interpretation with no regulatory or administrative implications.”
2. Uber’s Motion for Judgment on the Pleadings
Following the issuance of an opinion in a similar matter, Rosen v. Uber
Technologies, Inc. (N.D.Cal. 2016) 164 F.Supp.3d 1165 (Rosen), Uber filed a motion for
judgment on the pleadings. In that motion, Uber argued section 1759 divested the
superior court of jurisdiction “over suits that interfere with the authority and policies of
the [C]PUC.” Uber argued the complaint ran afoul of section 1759 because the CPUC
has authority to adopt regulations over passenger transport, has “actively exercised this
authority” by creating a new regulatory regime for TNC’s, and is continuing to exercise
that authority by its ongoing review of these issues and the regulatory status of Uber. It
asserted holding Uber liable for violating CPUC regulations that the CPUC “explicitly
determined Uber was not required to follow would upset the compromise that the
[C]PUC reached with Uber and would thus ‘obstruct or interfere with [C]PUC policy.’ ”
In opposing the motion, plaintiffs argued Uber “improperly [sought] to re-
adjudicate issues that have already been decided in this case.” Specifically, plaintiffs
asserted the court had already evaluated and ruled on the question of whether it should
defer to the CPUC’s authority. Plaintiffs emphasized, “[t]he [C]PUC did not undertake
any investigation into Uber’s past conduct.”
The trial court granted Uber’s motion for judgment on the pleadings. The court
noted Uber’s motion raised a new issue because “[n]either party argued and neither party
cited to California Public Utilities Code section 1759 in the initial demurrer.” The court
found “the gravamen of Plaintiffs’ [complaint] is that Uber is acting as an unlicensed
charter-party carrier in violation of [C]PUC regulations or as unlicensed taxicabs
violation of SFMTA rules and regulations, thereby damaging the class of taxicab drivers.
The [C]PUC is in the rule-making stage regarding Uber’s status as a charter-party carrier
and has declared that Uber vehicles are not taxicabs. Any award of damages based upon
the [complaint] could only be premised upon a finding that Uber vehicles are illegally
5
operating either as charter-party carriers or as taxicabs—a finding which directly
contravenes those of the [C]PUC.” As a result, the court concluded “Plaintiffs’
allegations directly implicate the [C]PUC’s exclusive rulemaking authority,” and held it
lacked jurisdiction under section1759.
3. Uber’s Second Demurrer
Plaintiffs subsequently filed their SAC against Uber. In response, Uber filed a
demurrer to the SAC. The parties’ arguments in support of and in opposition to the
demurrer closely mirrored those raised in Uber’s motion for judgment on the pleadings.
The trial court granted Uber’s demurrer with leave to amend. The court again held
claims relating to UberX’s operations prior to April 7, 2014 and non-UberX operations
were “barred by section 1759.” However, the court “reject[ed] Uber’s argument that its
demurrer should be sustained on jurisdiction grounds” because the SAC alleged new
claims regarding UberX’s failure to comply with the terms of its CPUC permit “that are
not barred by section 1759.” The court also concluded plaintiffs failed to state a claim
under the UCL because “the relief sought . . . amounts to a request for damages, which is
not available under the UCL,” and failed to state a claim for interference with prospective
economic relationship because plaintiffs failed to allege an economic relationship,
causation, or a duty of care.6
Plaintiffs did not file an amended complaint and stipulated to entry of judgment.
The trial court subsequently entered judgment, and plaintiffs timely appealed.
II. DISCUSSION
A. Standard of Review
“We review an order sustaining a demurrer de novo to determine whether the
complaint states facts sufficient to constitute a cause of action. [Citations.] We construe
the complaint ‘liberally . . . with a view to substantial justice between the parties’
[citation] and treat it ‘ “ ‘as admitting all material facts properly pleaded, but not
6
The trial court also dismissed plaintiffs’ false advertising, accounting, and
declaratory relief claims. However, plaintiffs have not contested those aspects of the trial
court’s ruling.
6
contentions, deductions or conclusions of fact or law. [Citation.] We also consider
matters which may be judicially noticed.’ [Citation.] Further, we give the complaint a
reasonable interpretation, reading it as a whole and its parts in their context.” ’ ” (Rufini
v. CitiMortgage, Inc. (2014) 227 Cal.App.4th 299, 303–304.)
“ ‘[W]hen a plaintiff is given the opportunity to amend his complaint and elects
not to do so, strict construction of the complaint is required and it must be presumed that
the plaintiff has stated as strong a case as he can.’ ” (Reynolds v. Bement (2005)
36 Cal.4th 1075, 1091.)
B. Uber’s Demurrer to the SAC
Plaintiffs argue Uber’s demurrer to the SAC raised “many of the same arguments”
as were raised in its prior demurrer, which was overruled. Because of these similarities,
plaintiffs claim Uber was required to comply with the statutory requirements for
reconsideration motions. Plaintiffs assert the trial court erred in granting the demurrer
because Uber failed to meet these requirements.
Section 1008 of the Code of Civil Procedure states: “A party who originally made
an application for an order which was refused in whole or part . . . may make a
subsequent application for the same order upon new or different facts, circumstances, or
law.” (Id., subd. (b).)7 However, section 1008 does not apply when a party files a
demurrer to an amended cause of action. (Clausing v. San Francisco Unified School
Dist. (1990) 221 Cal.App.3d 1224, 1232–1233.) As the court in Clausing explained:
“[R]espondents were not obliged to comply with Code of Civil Procedure section 1008,
subdivision (b), in bringing their second demurrer. That statute, which provides that any
subsequent application for an order which was previously refused must be supported by
an affidavit setting forth particulars concerning the initial motion and stating the new or
7
While plaintiffs cite subdivision (a) of Code of Civil Procedure section 1008,
they do not suggest Uber requested the court modify or revoke Judge Goldsmith’s order
in its subsequent demurrer. Rather, plaintiffs argue Uber sought the same order (i.e.,
dismissal of certain causes of action) previously sought before Judge Goldsmith. Thus,
subdivision (b) of section 1008, not subdivision (a), applies.
7
different state of facts claimed to exist, is simply not relevant under the facts of this case.
Respondents’ second demurrer was an appropriate responsive pleading to a new
complaint.” (Id. at p. 1232, fn. omitted.) “[W]hen a plaintiff files an amended pleading
. . . , the amended cause of action is treated as a new pleading and a defendant is free to
respond to it by demurrer on any ground.” (Berg & Berg Enterprises, LLC v. Boyle
(2009) 178 Cal.App.4th 1020, 1035 (Berg & Berg).) Here, the trial court dismissed all
causes of action contained in the prior complaint. The SAC was then filed, and Uber
demurred to the SAC. Uber did not file a “renewed demurrer” to the prior complaint.
Instead, Uber’s demurrer was “an appropriate responsive pleading to a new complaint.”
(Clausing, at p. 1232.)
Plaintiffs cite two cases, Bennett v. Suncloud (1997) 56 Cal.App.4th 91 (Bennett),
and Le Francois v. Goel (2005) 35 Cal.4th 1094 (Le Francois), to argue otherwise.
Neither case is applicable. In Bennett, the trial court sustained the defendant’s demurrer
as to some causes of action but denied the demurrer as to the remaining claims. (Id. at
p. 96.) After the plaintiff filed an amended complaint, the defendant again demurred to
the entire complaint on the same grounds as in its prior demurrer. (Ibid.) The trial court
subsequently sustained the demurrer as to all causes of action. (Ibid.) On appeal, the
court concluded, “after the specified causes of action were amended, [the defendant] was
free to demur to those causes of action on any ground.” (Ibid.) However, the “decision
to render judgment on the entire complaint and not just the three amended causes of
action was improper.” (Id. at p. 97.)
In Le Francois, supra, 35 Cal.4th 1094, the defendants moved for summary
judgment, which was denied. (Id. at p. 1097.) Certain defendants subsequently filed a
new motion for summary judgment “based on the same grounds as the first motion,”
which was then granted. (Ibid.) The Court of Appeal affirmed, concluding while the
second motion violated Code of Civil Procedure sections 437c, subdivision (f)(2) and
1008, the trial court had inherent power to rule upon the second motion. (Le Francois, at
p. 1097.) The Supreme Court reversed, holding that the statutes “impos[e] a limitation on
8
the parties’ ability to file repetitive motions, but not on the court’s authority to reconsider
its prior interim rulings on its own motion.” (Id. at p. 1105.)
Read together, Bennett and Le Francois stand for the unremarkable proposition
that a party cannot seek to dismiss the same claim based on a previously rejected
argument without seeking reconsideration. In Bennett, specifically, the defendant
improperly sought to raise the same demurrer to causes of action that had not been
previously dismissed. (Bennett, supra, 56 Cal.App.4th at pp. 96–97.) Here, however, the
court dismissed all of plaintiffs’ causes of action when it granted Uber’s motion for
judgment on the pleadings.8 As a result, Uber’s subsequent demurrer was not a
“repetitive motion.” Instead, it was a new motion as to new causes of action, which did
not require compliance with Code of Civil Procedure section 1008. (Berg & Berg, supra,
178 Cal.App.4th at p. 1035.)
In any event, reviewing courts may consider de novo whether a challenged claim
states a cause of action. (Bennett, supra, 56 Cal.App.4th at p. 97.) An appellate court’s
role “entails review of the trial court’s ruling, not its rationale. Thus, even if the trial
court . . . were constrained by its prior rulings . . . , [an appellate court is] not so
constrained and [is] free to render an opinion based on the correct rule of law.” (Berg &
Berg, supra, 178 Cal.App.4th at p. 1036; see Edward Carey Const. Co. v. State
Compensation Ins. Fund (2011) 194 Cal.App.4th 657, 661 [“We also ‘ “are not bound by
the determination of the trial court, but are required to render our independent judgment
on whether a cause of action has been stated.” ’ ”].) As such, we are not bound by either
trial court order.
C. Superior Court Jurisdiction Under Sections 1759 and 2106
The trial court held section 1759 barred plaintiffs’ claims relating to the operation
of UberX vehicles prior to April 7, 2014 and the operation of non-UberX vehicles. The
8
Plaintiffs do not contest the appropriateness of the court’s order granting Uber’s
motion for judgment on the pleadings. We therefore conclude they have waived any such
argument. (Behr v. Redmond (2011) 193 Cal.App.4th 517, 538 [failure to brief issue
“constitutes a waiver or abandonment of the issue on appeal”].)
9
court concluded it “has no authority to make findings as to the legality of Uber’s
operation of non-UberX vehicles in light of Phase II of the [C]PUC proceedings, which
will consider ‘Uber’s status as a possible TCP.’ ” Likewise, the court found it lacked
authority to make findings regarding the period before the CPUC exercised its authority
on April 7, 2014, as such findings would interfere with the authority of the CPUC. In
response, plaintiffs argue the California Supreme Court has allowed parties to bring
lawsuits concerning past noncompliance with CPUC regulations. Plaintiffs also argue
section 1759 does not apply when a lawsuit seeks damages for past injuries or is not
contrary to any CPUC findings. We find these arguments unpersuasive, and address
them in part II.C.2., post.
1. Section 1759 and Covalt
The CPUC is a state agency of constitutional origin and possesses broad authority
to supervise and regulate every public utility in California. (Cal. Const., art. XII, §§ 1–6.)
It has the power to “do all things, whether specifically designated in [the Public Utilities
Act] or in addition thereto, which are necessary and convenient in the exercise of such
power and jurisdiction.” (§ 701.) Its powers include setting rates, establishing rules,
holding hearings, awarding reparation, and establishing its own procedures. (San Diego
Gas & Electric Co. v. Superior Court (1996) 13 Cal.4th 893, 915 (Covalt).) “ ‘The
commission’s authority has been liberally construed’ [citation], and includes not only
administrative but also legislative and judicial powers.” (Ibid.)
The Legislature has acted to limit judicial review of CPUC actions. Section 1759,
subdivision (a) provides: “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.”
However, this provision “is not intended to, and does not, immunize or insulate a public
utility from any and all civil actions brought in superior court.” (People ex rel. Orloff v.
Pacific Bell (2003) 31 Cal.4th 1132, 1144 (Orloff ).) The Legislature “ ‘provided for a
10
private right of action against utilities for unlawful activities and conduct’ ” by enacting
section 2106: “Any public utility which does, causes to be done, or permits any act,
matter, or thing prohibited or declared unlawful, or which omits to do any act, matter, or
thing required to be done, either by the Constitution, any law of this State, or any order or
decision of the commission, shall be liable to the persons or corporations affected thereby
for all loss, damages, or injury caused thereby or resulting therefrom. . . . An action to
recover for such loss, damage, or injury may be brought in any court of competent
jurisdiction by any corporation or person.” (Mata v. Pacific Gas & Electric Co. (2014)
224 Cal.App.4th 309, 315; § 2106.)
We are not the first court to address the interplay between sections 1759 and 2106:
“Section 2106 and section 1759 address different things. Section 1759 defines and limits
the power of courts to pass judgment on, or interfere with, what the commission does.
Section 2106, on the other hand, confirms the full power of the courts to pass judgment
on what utilities do.” (Cundiff v. GTE California Inc. (2002) 101 Cal.App.4th 1395,
1405.) “The similarity between the two statutes is that they both dictate which courts
have jurisdiction to engage in these activities. Only appellate courts can review decisions
and orders of the commission and interfere with its actions, whereas suits for relief
against utilities can be brought in the trial court.” (Ibid.) The California Supreme Court,
however, “has recognized that a plaintiff’s attempt to obtain relief under section 2106
may have the effect of interfering with the commission’s regulation of utilities.” (Ibid.)
In Waters v. Pacific Telephone Co. (1974) 12 Cal.3d 1, the Supreme Court stated
section 2106 “must be construed as limited to those situations in which an award of
damages would not hinder or frustrate the commission’s declared supervisory and
regulatory policies.” (Id. at p. 4.) The court expanded upon this concept in Covalt:
“Under the Waters rule, . . . an action for damages against a public utility pursuant to
section 2106 is barred by section 1759 not only when an award of damages would
directly contravene a specific order or decision of the commission, i.e., when it would
‘reverse, correct, or annul’ that order or decision, but also when an award of damages
would simply have the effect of undermining a general supervisory or regulatory policy
11
of the commission, i.e., when it would ‘hinder’ or ‘frustrate’ or ‘interfere with’ or
‘obstruct’ that policy.” (Covalt, supra, 13 Cal.4th at p. 918.) Nonetheless, “superior
courts are not precluded from acting in aid of, rather than in derogation of, the [C]PUC’s
jurisdiction.” (Hartwell Corp. v. Superior Court (2002) 27 Cal.4th 256, 275 (Hartwell).)
In general, damages actions challenging “a ruling of the commission on a single matter
such as its approval of a tariff or a merger . . . would not ‘hinder’ a ‘policy’ of the
[CPUC].” (Covalt, at pp. 918–919.) “But when the relief sought would have interfered
with a broad and continuing supervisory or regulatory program of the commission, the
courts have found such a hindrance and barred the action under section 1759.” (Id. at
p. 919.)
In Covalt, the Supreme Court set forth a three-part inquiry for evaluating whether
an action is precluded by section 1759: (1) whether the CPUC has authority to adopt
regulatory policy on the issue in question; (2) whether the CPUC has exercised that
regulatory authority; and (3) whether the superior court action would hinder or interfere
with the CPUC’s exercise of that regulatory authority. (Covalt, supra, 13 Cal.4th at
pp. 923, 926, 935.) Neither party disputes the first two prongs of the Covalt test are met.
We agree, and find the CPUC has authority to adopt regulatory policies concerning
transportation companies and has exercised that authority. However, the parties dispute
the third prong, i.e., whether a finding of liability against Uber in this action would hinder
or interfere with the CPUC’s exercise of regulatory authority with respect to charter-party
carriers and TNC’s.
2. Application of Covalt to the SAC
Plaintiffs’ SAC focuses on two classes: UberX operations prior to April 7, 2014
and all non-UberX operations.9 The SAC alleges Uber operated “as an unpermitted and
9
The trial court ruled section 1759 did not deprive it of jurisdiction to the extent
plaintiffs’ claims were based on alleged violations of the April 2014 permit. We question
whether the trial court needed to reach this holding. While the SAC contains allegations
regarding UberX permit violations, the SAC does not assert class claims against UberX
for conduct after April 7, 2014 (the date CPUC issued UberX’s permit), and plaintiffs’
briefs repeatedly state the class claims exclude UberX operations after April 7, 2014.
12
unlawful charter-party carrier.” The SAC further alleges “Uber has continued to provide
multiple levels of unlicensed service such as ‘uberXL,’ ‘UberBLACK,’ ‘UberSUV,’
‘uberTAXI,” and ‘uberPOOL,’ ” even after UberX received “a limited permit to operate.”
In response, Uber asserts the superior court’s consideration of plaintiffs’ claims would
hinder or interfere with the CPUC’s development of the TNC regulatory scheme and the
newly launched Phase III of its Rulemaking. Uber argues this phase will “evaluate
whether Uber’s operations qualify it as a charter-party carrier” and “whether Uber should
be considered a TNC.”
The gist of plaintiffs’ complaint is that Uber was a charter-party carrier, even
before the CPUC established the TNC classification. And, as a charter-party carrier,
Uber was subject to the same rules and regulations applicable to traditional charter-party
carriers and failed to comply with those rules and regulations. In support of their
argument, plaintiffs rely heavily on Hartwell, supra, 27 Cal.4th 256. In Hartwell,
residents filed civil actions alleging “that certain water companies provided them unsafe
drinking water causing death, personal injury, and property damage.” (Id. at p. 260.)
Plaintiffs cite Hartwell for the proposition that “[a]lthough a [C]PUC factual finding of
past compliance or noncompliance may be part of a future remedial program, a lawsuit
for damages based on past violations of water quality standards would not interfere with
such a prospective regulatory program.”10 (Id. at p. 277.)
However, we need not address this issue. Any such error was harmless because the trial
court properly dismissed the entire complaint on other grounds. (Berg & Berg, supra,
178 Cal.App.4th at p. 1036 [appellate court’s role “entails review of the trial court’s
ruling, not its rationale”].)
10
Plaintiffs also rely on Orloff, supra, 31 Cal.4th 1132. However, that case is
distinguishable because it was brought by district attorneys rather than private
individuals. The Supreme Court noted “a number of statutory provisions expressly
authorize public law enforcement officials . . . to initiate civil enforcement actions against
public utilities in instances of alleged misconduct by such utilities.” (Id. at p. 1138.)
These statutes “significantly influence the inquiry whether a general regulatory policy of
the [C]PUC would be interfered with or undermined by the filing and maintenance of the
civil action.” (Id. at p. 1150.)
13
Plaintiffs argue this court should reach a similar conclusion—namely, that Uber’s
liability as a charter-party carrier for past damages would not interfere with the CPUC’s
prospective regulatory program for TNC’s. However, plaintiffs overlook key aspects of
Hartwell that undermine their analogy. The Supreme Court discussed Hartwell at length
in Orloff, supra, 31 Cal.4th at pages 1146–1148. There, the Supreme Court noted “our
decision [in Hartwell] relied upon the following circumstances: (1) the investigation by
the [C]PUC that led to the decision was characterized by the commission as a process
designed to gather information, rather than as a rulemaking proceeding; (2) . . . the
finding by the [C]PUC that the utilities had complied with water quality standards did not
constitute ‘part of a broad and continuing program to regulate . . . water quality’ and
thus the program ‘was not part of an identifiable “broad and continuing supervisory or
regulatory program of the commission” [citation] . . .’; and (3) the civil action sought
damages for injuries caused by water that had failed to meet water standards in prior
years, whereas any finding by the [C]PUC regarding past compliance would be relevant
only to a future remedial program . . . .” (Id. at pp. 1147–1148, italics added.) While
plaintiffs focus on this last factor, they ignore the prior two. Here, significantly, the first
two factors are directly relevant. 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 Second and Fourth Appellate Districts have addressed similar issues—i.e., an
interpretation of a statutory definition in connection with ongoing CPUC regulatory
activity. And both courts concluded section 1759 barred such actions. We concur with
our colleagues.
In Anchor Lighting v. Southern California Edison Co. (2006) 142 Cal.App.4th
541, the plaintiff argued it fell within the definition of a “small commercial customer”
14
under CPUC regulations and thus qualified for a rate reduction. (Id. at p. 546.) The trial
court sustained the defendant’s demurrer on the ground it lacked jurisdiction under
section 1759. (Id. at p. 547.) The Second Appellate District subsequently affirmed the
trial court’s order, holding the expanded definition of “small commercial customer”
sought by the plaintiff’s lawsuit would impact the CPUC-approved rate reductions and
related financing scheme. (Id. at p. 550.) As a result, “the interference with the CPUC’s
ratemaking function is clear.” (Ibid.; see Davis, supra, 236 Cal.App.4th at p. 643 [held
§ 1759 barred claims due to the “complexity” of interpreting concepts relating to tariff
application deadlines].) Likewise, in Schell v. Southern California Edison Company
(1988) 204 Cal.App.3d 1039, the Fourth Appellate District was asked to determine
whether a recreational vehicle park should be charged electricity rates applicable to
“mobilehomes.” (Id. at pp. 1042–1043.) The court held such a determination was
“within the exclusive purview of the [C]PUC as part of its continuing jurisdiction over
rate making and rate regulation.” (Id. at p. 1046.) These cases “stand for the general
principle that even where a plaintiff seeks only to enforce a CPUC rule, the action is
impermissible if its adjudication requires courts to determine how, or even whether, an
ambiguous CPUC rule applies, because this type of determination is policymaking that
would hinder or interfere with CPUC’s exercise of its jurisdiction.” (North Star Gas Co.
v. Pacific Gas and Electric Co. (N.D.Cal. Sept. 26, 2016, case No. 15-cv-02575-HSG)
2016 WL 5358590, p. *13 (North Star); see Davis, at p. 640 [“in cases where the courts
have found that the [C]PUC does not have exclusive jurisdiction, the lawsuits have
typically not required interpretation of [C]PUC-approved rules”].) “Conversely, if an
action seeks to enforce a rule that clearly sets out the nature of the obligation imposed,
. . . simply deciding whether a defendant’s actions did or did not violate that standard
does not hinder or interfere with the CPUC’s jurisdiction . . . .” (North Star, at p. *13.)
We also find Rosen, supra, 164 F.Supp.3d 1165, instructive. There, as here, “[t]he
crux of [the plaintiff’s] CPUC-based claims appears to be his allegation that, until Uber’s
subsidiary was issued a permit on April 7, 2014, Uber ‘was unregulated and operating
illegally in the State of California.’ ” (Id. at p. 1174.) The plaintiff’s complaint
15
acknowledged “the CPUC adopted rules and regulations affecting Uber . . . , that it issued
a permit to Uber’s subsidiary . . . on April 7, 2014, and ‘deferred any non-TNC related
issues, including Uber’s potential status as a charter-party carrier of passengers (“TCP”),
to a later date.’ ” (Id. at pp. 1174–1175.) In light of these allegations, the court
concluded “granting relief . . . would ‘interfere[] with a broad and continuing supervisory
or regulatory program’ of the CPUC.” (Id. at p. 1174.) Specifically, “the CPUC’s
ongoing process of determining which regulations Uber and other new TNCs must
follow.” (Id. at p. 1177.)
In the instant matter, plaintiffs ask this court to determine whether Uber qualifies
as a charter-party carrier and what regulations should apply to its operations. This
question is far from resolved, and does not seek to apply a “clearly set[] out” rule. (North
Star, supra, 2016 WL 5358590, at p. *13.) Rather, the CPUC has been attempting to
resolve these very questions for over four years.
First, the CPUC is actively addressing these questions as to Uber’s non-UberX
operations in Phase III.B., including: (1) “What is Uber for purposes of determining the
full extent of the Commission’s jurisdiction”; (2) “Should Uber be considered a Charter-
Party Carrier (TCP)”; and (3) “Should any other Uber subsidiary or Uber affiliated
business . . . be considered a TCP?” The CPUC also is evaluating whether it should
“reconsider its determination . . . that Uber is not a TNC.” As part of this reevaluation,
the CPUC is investigating how Uber selects and screens TNC drivers, manages
noncompliant drivers, investigates passenger complaints, and calculates fares. And, to
the extent plaintiffs challenge Uber’s ongoing activities, they ask us to countermand the
CPUC’s determination that Uber may continue to operate while it completes its
Rulemaking.
Second, plaintiffs argue the CPUC has already determined UberX is subject to
CPUC regulations and, consequently, should have been subject to those regulations
during its entire operations period. We disagree. The CPUC determined UberX’s
operations qualified as a TNC—a new category created during the initial stage of its
Rulemaking. But in making that determination and subsequently issuing a permit to
16
UberX, the CPUC is not “done with [UberX],” as plaintiffs’ counsel suggested at oral
argument. To the contrary, the CPUC continues to retain regulatory jurisdiction over
UberX’s operations. The 2014 permit issued to UberX, for example, expressly states,
“The requirements and status of your issued TNC permit may change pending
determinations the [CPUC] may make in Phase II of Rulemaking 12-12-011.” Likewise,
UberX’s 2017 permit also notes, “The requirements and status of your issued TNC permit
may change pending determinations the [CPUC] may make in Rulemaking 12-12-011 or
a successor proceeding.” These permits not only preserve the CPUC’s jurisdiction over
UberX, but expressly reserve the CPUC’s right to create and modify the scope of
regulations applicable to UberX’s operations. Any litigation regarding what regulations
should apply to UberX infringes upon the CPUC’s ongoing rulemaking in this area and
its reserved authority to modify those regulations.11
Plaintiffs also argue the superior court should have jurisdiction because the CPUC
cannot award damages and has not sought to review Uber’s past conduct. Plaintiffs claim
these factors suggest any relief would not “interfere with the [C]PUC’s regulatory
authority.” (See PegaStaff v. Pacific Gas & Electric Co. (2015) 239 Cal.App.4th 1303,
1318.) But a court cannot provide redress for a past regulatory violation without first
determining what, if any, CPUC regulations apply. While an award of damages may not
usually impact the CPUC’s authority, in this instance the issues a court must address to
reach such an award would do so.
As discussed above, allowing the SAC to proceed would require the trial court to
make factual findings regarding whether Uber falls within the charter-party carrier
definition and, if so, which regulations would apply to its operations. A judicial
11
We also note plaintiffs’ claims as to UberX for the period January 2013 to April
2014 run afoul of the settlement between Uber and the CPUC. That settlement set forth
various terms for Uber’s continued operations (also presumably applicable to those of
UberX). From the time the parties entered into the settlement until UberX received its
initial TNC permit, the CPUC exercised its jurisdiction to ensure Uber’s compliance with
the settlement terms. Any attempt to find UberX in violation of TCP regulations during
this period would clearly interfere with the CPUC’s regulatory authority.
17
determination on these issues would directly infringe upon the CPUC’s ongoing
rulemaking in this area. As such, the claims in the SAC are barred by section 1759.12
Because we find these claims barred by section 1759, we need not address whether the
SAC stated any viable claims for relief.
III. DISPOSITION
The judgment of the trial court is affirmed. Defendant Uber Technologies, Inc.
may recover its costs on appeal. (Cal. Rules of Court, rule 8.278(a)(1), (2).)
12
Plaintiffs also raise two other arguments, which we can summarily dismiss.
First, plaintiffs argue Uber cannot raise the jurisdictional bar of section 1759 because it
previously argued the CPUC lacked jurisdiction. However, the CPUC rejected this
argument and asserted jurisdiction. As such, Uber is not a “nonregulated defendant,” as
argued by plaintiffs. Second, plaintiffs argue the trial court reached its holding by relying
on allegations beyond the scope of their SAC—i.e., “the belief that a finding that Uber
was a taxicab under the SFMTA regulations would directly conflict with the [C]PUC’s
finding that Uber was not a taxicab.” But this concern is neither stated in the trial court’s
order on the second demurrer, nor in the referenced section of the order on Uber’s motion
for judgment on the pleadings. Instead, the trial court only stated the FAC was premised
on “violation[s] of the [C]PUC and the SFMTA” and “[t]his Court has no authority to
make findings contrary to the Commission as such findings would interfere with and
contravene the authority of the [C]PUC.”
18
_________________________
Margulies, J.
We concur:
_________________________
Humes, P.J.
_________________________
Banke, J.
A149347
Goncharov v. Uber Technologies, Inc.
19
Trial Court: San Francisco City and County Superior Court
Trial Judge: Hon. Mary E. Wiss
Counsel:
The Brandi Law Firm, Thomas J. Brandi, Brian J. Malloy and Jason B. Friedman for
Plaintiffs and Appellants.
Reed Smith, Raymond A. Cardozo and David J. de Jesus for Defendant and Respondent.
20