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ORDER

The hearing in Docket No. 96 MC 1, on motion by the Division of Public Utilities and Carriers, was reopened to take testimony pertaining to the implementation of non-consensual towing storage rates. The purpose of the hearing was to allow all interested parties an opportunity to submit testimony and evidence to formalize a reasonable rate structure for non-consensual storage charges.

Reference is made to 39-1, 39-2, 39-3, 39-4, 39-12, 39-12.1, 39-13, 39-14 and 42-35 of the General Laws of Rhode Island, as amended. Additional reference is made to 39-1-15, 39-1-18, 39-2-1, 42-35-9 and 42-35-10.

PROCEDURAL BACKGROUND

Under the rules of professional conduct, an attorney must be punctual in attending hearings. If an attorney expects to be late or cannot attend he or she must notify the court as early as possible (Rule No. 6 of Professional Conduct).

On three separate occasions, explained below, the Attorney for the Respondents', Mr. Albert DiFiore, showed contempt and acted in disregard of the Administrative Hearing Process in Docket No. 96 MC 1.


Occasion 1:

Mr. DiFiore failed to appear at a May 14, 1997 hearing

after being notified by the Hearing Officer (TR. 5/14/97, p. 4).

Occasion 2:

Mr. DiFiore was late for a hearing on May 23, 1997 and

appeared only after a reminder telephone call to his

office (TR. 5/14/97, p. 16; TR 5/23/97, p. 6).


Occasion 3:

Mr. DiFiore failed to respond to a data request order by

the Hearing Officer (TR. 5/23/97, p. 26).


Under the Division's Rules of Practice and Procedure attorneys are required to conform to the standards of ethical conduct required of practitioners before the courts of Rhode Island. (5. Appearances and Practices Before the Division (a) Appearances (3)). The rules also state that the Division may disqualify and deny, temporarily or permanently, the privilege of appearing or practicing before it an attorney who engages in unethical or improper professional conduct or engages in contumacious conduct at any hearing (5. Appearances and Practices Before the Division (a) Appearances (3) (b) Suspension (I) ii (2)).

An administrative hearing is a judicial process and behavior in violation of the Rules of Practice and Procedure on the part of any attorney representing a party in a proceeding before the Division cannot be tolerated.

ISSUES IDENTIFIED

The primary issue in the hearing was the establishment of just and reasonable storage rates for non-consensual tows. However, the Attorney for the Respondents introduced the issues of jurisdiction, bias of the hearing officer and recusal of a Division staff attorney from the proceeding. These issues will be discussed separately.

JURISDICTION

The question of jurisdiction was introduced in the proceeding by an objection by Respondents along with the introduction of an order signed by Superior Court Judge Richard Israel. The objection on jurisdictional grounds came after the Superior Court ruled that the hearing should proceed. The Superior Court order is confusing because on one hand it appears to delay a decision on the question of jurisdiction and on the other rules in favor of the Division holding a hearing on the establishment of storage rates for non-consensual tows which implies that the Division does indeed have jurisdiction. The Division is concerned by the Superior Court decision because it clearly put a roadblock in the way of the parties reaching a stipulated agreement on storage rates without going through the hearing process (TR. 5/14/97, p. 3). The objection to the proceeding certainly opened the door for the Division to rule on a finding of fact on this issue through documentary evidence and testimony at the hearing.


JURISDICTION FINDINGS

Mr. DiFiore, Attorney for the Respondents, based his objection on 39-12 of the General Laws. He contends that Division authority is limited to transportation between points in Rhode Island and not the storage of vehicles. The Advocacy Section, for the first time in the history of these proceedings, introduced into evidence the Rhode Island Towing Storage Act (39-12.1-1). The Towing Storage Act, by its name alone, indicates that the state legislature considered towing and storage as related activities. In the Act's Declaration of Purpose and Policy it states:


Whereas, the motoring public has a right when

delegating to law enforcement the selection

of an operator in the towing-storage business, to

expect that the charges for the services rendered

will be reasonable . . .

In Order No. 14980 issued on September 20, 1996

regarding this issue, the Hearing Officer stated:

"The Hearing Officer takes judicial notice of the

fact that abuse of storage rates has been persistent

and intractable . . . ."

The Division finds that the preponderance of the evidence clearly shows that the Division has the authority to set just and reasonable storage rates for non-consensual tows and that the legislature reaffirmed the Division's authority in the Rhode Island Towing & Storage Act as the only way to protect the motoring public.


BIAS AND RECUSAL

Mr. DiFiore introduced a motion to have John Spirito, a staff attorney for the Division and the Public Utilities Commission, recused from having input in the hearing or the post hearing period prior to the decision. Mr. Spirito's only connection to the procedure was that his office was on the same floor as the hearing. The motion was dismissed as being frivolous and without merit (Tr. 5/23/97, p. 8-13).

Through cross-examination of the Advocacy Section's witness, (TR 5/23/97, p. 117-124) Mr. DiFiore attempted to establish bias on part of the Hearing Officer because he worked for the Agency. Mr. DiFiore had no evidence to support his charge of bias so it was dismissed. (United Steelworkers of America v. Marshall 647 F.2d 1189, 1208 F.C. ci. 1980) (United States v. Grinnel Corp., 384 U.S. 563 1966) (Parchman v. U.S. Dept of Agriculture 852 F. 2d 858 6th Cir. 1988).


BURDEN OF PROOF

Even though it is clear that the burden of proof is on the Advocacy Section, to produce prima facie evidence this burden shifts when the Advocacy Section's testimony is presumption and is rebuttable. In this hearing the burden of going forward/the burden of production shifted after the testimony of Mr. Maloney. Respondent's Attorney failed to pick up and carry the burden and presented no rebuttal evidence to refute any of the Advocacy Section's testimony (Rule 303, 304 RI Rules of Evidence). The Advocacy Section's testimony went to the heart of the main issue in this proceeding. If certificated towers were present, the Hearing Officer would have taken sworn testimony from them in an effort to fill the huge gap left by the Respondent's Attorney and to fulfill his responsibility to make the record as complete as possible.

TESTIMONY

William A. Maloney, Associate Administrator for Motor Carriers, testified as an expert witness on transportation issues and motor carrier rates. Mr. Maloney testified that Title 39 Chapter 12 and specifically Chapter 12.1, the Towing Storage Act, gives the Division authority to regulate towing-storage rates (TR. 5/23/97, p. 36). He said there are numerous incidental charges besides storage. He listed the other charges as preparation time, extra labor, waiting time and disconnecting linkage. He said they are covered in the towers' tariffs approved by the Division. Mr. Maloney testified that when a non-consensual tow is performed, the individual does not have the opportunity to discuss what the rates will be. "They are more or less held captive." (TR. 5/23/97, p. 39). The Associate Administrator said he had a survey conducted of twenty-five percent of the existing certificated towing companies which shows that the market is currently charging $17.00 a day for storage which is one dollar a day more than the storage rates set in 1994 (Advocacy Exhibit No. 16).

Katherine A. Smith, a Division staff investigator, testified that she conducted the survey at the request of Mr. Maloney. Ms. Smith testified that she randomly selected tow companies from the telephone book and called them to find out how much they charged for non-consensual tows and for storage. Ms. Smith said she called as a regular consumer to find out the information.

Mr. Maloney testified that audits were conducted by Division staff to support the survey showing that consensual or competitive tow storage charges were $17.00 a day (Advocacy Exhibit No. 18 and No. 19). He said the Advocacy Section recommends a storage rate of $17.00 a day with charges for the first day and last day set at one dollar an hour. He also testified that audits were conducted by Division staff members to substantiate the survey showing that consensual or competitive tow storage charges were $16.00 a day but the recommendation of $17.00 would cover the costs of inflation and the consumer price index. (Advocacy Exhibit No. 18 and 19). He said the recommendation is $17.00 a day storage with charges for the first day and last day would continue to be a dollar an hour.

Mr. Maloney testified that the purpose behind deregulation is to increase competition and therefore lower the cost to the consumer. Mr. Maloney said that Rhode Island was the leading state in urging that third-party tows should not be deregulated because people "are getting outrageously ripped off . . ." (TR. 5/23/97, p. 85).

On cross-examination Mr. Maloney stated, "I sent my investigators out to review current storage rates of approximately twenty-five percent of the existing certificated towers and find out from them what rate they are currently charging and I am willing to accept their calculations for their own rates that they set themselves." (TR. 5/23/97, p. 91).

The Respondents proffered one witness at the hearing, Ralph M. Ciunci, a certified public accountant. Mr. Ciunci testified that he has represented companies involved in the towing and storage business. He was allowed to testify as an expert on accounting methods.

Mr. Ciunci said he did a cost analysis for the storage operation of Coletta's Downtown Auto Service, Inc. for whom he has worked the past three or four years. He said as part of the analysis he reviewed the expenses that are incurred in the operation of their storage business. He said he was hired to perform a cost analysis of the expenses. He said his analysis did not consider any income information. The results of his cost analysis produced a thirty three dollar ($33.00) a day storage rate.

On cross-examination Mr. Ciunci testified that he had no expertise in rate making issues as it relates to utilities, utility rate regulation or rate design. He said he was not aware that under Title 39 of the General Law that tow companies are defined as public utilities.

FINDINGS

This is the first time in the history of rate proceedings that the utility affected by the rate decision failed to appear at a hearing to give testimony. The towers, in reality, boycotted the hearing process and gave up their right to protect their self-interest. A small group of towers were represented by counsel at the hearing who proffered only one witness, a certified public accountant, who offered a cost analysis from a tow company who employs him on a regular basis. The testimony of Mr. Ciunci was not supported by any documentary evidence. He said he was not familiar with the operation of a towing company and knew nothing about rate making or rate design.

The Advocacy Section, with a preponderance of evidence, met its burden of proof in recommending a $17 per day storage rate. The Advocacy Section successfully impeached the reliability and knowledge of Respondents' lone witness by revealing during cross-examination that the witness was not knowledgeable in the area of rate making and that a cost analysis of one towing company who employed him was insufficient to establish storage rates on a statewide basis.

The Advocacy Section presented prima facie evidence while the Respondents failed to produce one piece of substantial evidence to refute the testimony of the Advocacy witness or support their recommended storage rate of $33 per day.

Mr. Maloney's testimony, on the most part, was presumption and rebuttable, but no witness testified to refute his testimony. The Advocacy Section produced documentary evidence in exhibits 16, 17, 18 and 19 to support the testimony of Mr. Maloney that a $17 per day storage rate is reasonable and should be implemented as soon as possible to protect the motoring public.

Mr. Maloney's presumptions supported by documentary evidence requires the trier of fact to assume the existence of the presumed fact unless and until evidence is introduced which would support a finding of its nonexistence. Since no such evidence was introduced by the Respondents, the trier of fact in this instance has determined the existence of the presumed fact from the evidence.

The hearing officer has determined that Mr. Maloney arrived at a logical conclusion that the competitive marketplace has set a rate of $17.00 per day for storage of vehicles resulting from a non-consensual tow. Mr. Maloney presumed that the towers are making a profit using the $17.00 a day rate. There is no evidence to refute this presumption.

The Division wants to point out that any certificated tower has the opportunity to apply for an increase in tariffs and to appear at a hearing to show cause why the increase is warranted.

RECOMMENDATION

The Division strongly urges the Rhode Island Superior Court to lift its stay of non-consensual tow storage rate implementation such that the rates ordered by the Division take effect immediately. As stated in the Findings Section of this Order, the Advocacy Section has met its burden of proof with a preponderance of evidence in the establishment of towing storage rates along with documentation supporting the Division jurisdiction to regulate these rates.

Accordingly, it is

(15347) ORDERED: That the towing industry subject to Title 39-12 immediately implement a storage charge for non-consensual tows of seventeen dollars ($17.00) per day with charges for the first day and last day set at one dollar ($1.00) an hour.

DATED AND EFFECTIVE AT PROVIDENCE, RHODE ISLAND THIS TWENTY-FIRST DAY OF JULY, 1997.


BAS____________________________

Bruce A. Stevenson

Hearing Officer



APPROVED:___TFA____________________________________

Thomas F. Ahern

Administrator


RI Public Utilities Commission, 89 Jefferson Boulevard, Warwick, RI 02888
Voice: 401-941-4500 • Email: thomas.kogut@dpuc.ri.gov

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