PUBLIC SERVICE COMMISSION OF WEST VIRGINIA CHARLESTON. Entered: April 4,20 17 RECOMMENDED DECISION

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1 PUBLIC SERVICE COMMISSION OF WEST VIRGINIA CHARLESTON Entered: April 4,20 17 CASE NO MC-C KIDDIE KRUISER, LLC, a limited liability company. Application for a certificate of convenience and necessity to operate as a coininon carrier by motor vehicle in the transportation of children in Monongalia County. RECOMMENDED DECISION This Order grants a certificate for specialized limousine service. On September 15, 2016, Kiddie Kruiser, LLC (Kiddie Kruiser) filed an application for a specialized limousine service transporting individuals under the age of eighteen in Monongalia County. On October 13, 2016, the Commission required Kiddie Kruiser to publish notice of the proposed limousine service and the proposed rates in Monongalia County. On October 13, 2016, Staff issued its Initial Joint Staff Memorandum. Staff indicated that Kiddie Kruiser was a limited liability company in good standing with the West Virginia Secretary of State s Office. Staff explained that Kiddie Kruiser would have to prove that it had the financial resources to operate the proposed business. Staff further explained that Kiddie Kruiser would bear the burden of proof that the existing transportation services were inefficient or inadequate. Staff pointed out that there were six companies certified to provide limousine service in Monongalia County. Staff indicated that none of these limousine services limited the transportation to children under eighteen. On October 25, 2016, the Commission referred the matter requiring a decision on or before April 13,2017. On October 28, 2016, Kiddie Kruiser filed an affidavit of publication indicating that it properly published notice of its application in Monongalia County. On November 10, 2016, Motown l axi, LLC (Motown) protested the application and petitioned to intervene. Motown argued that it had been providing adequate service in the area. It of West Vuginia

2 further argued that its business would be impacted by granting the additional certificate. Motown requested a hearing. On November 14, 2016, Motown s petition to intervene was granted On November 29, 2016, the matter was set for hearing on January 3 1,2017. On December 12,2016, Staff recommended that the matter proceed to hearing The hearing was held as scheduled. Jeffrey D. Taylor, Esquire, appeared on behalf of Kiddie Kruiser. Scott S. Radman, Esquire, appeared on behalf of Motown. John R. Auville, Esquire, appeared on behalf of Staff. EVIDENCE Meredith Talerico is thirty years old and resides in Fairmont. Ms. Talerico has a four-year old son. She is a member and principal owner of Kiddie Kruiser. The other owner is Andrea Audia, her sister. (Tr. 9, 10). Kiddie Kruiser plans to transport children. All of their passengers would be under eighteen. (Tr. 10). The transportation services would be Monday through Friday, with the possibility of also operating on Saturdays. (Tr. 11). Ms. Talerico believes the service would be beneficial for parents who both work. (Tr. 11, 12). Ms. Talerico believes it would be the first specialized limousine service focused only on transporting children in West Virginia. Ms. Talerico has talked to various daycare centers, friends, family, and has positive feedback to the idea. (Tr. 12). Ms. Talerico talked to at least two daycare providers who informed her they thought there was a need for such services. (Tr. 40,41). Kiddie Kruiser has an insurance quote from Erie Insurance. It has priced a Town and Country Chrysler minivan. It anticipates acquiring a loan to purchase the van. The van would be outfitted with various approved car seats. Car seats depend on the child s weight, height and age. (Tr. 14). Operations would start with one vehicle and Ms. Talerico and her sister would be drivers. Ms. Audia has already obtained her commercial driver s license and Ms. Talerico is in the final processes of obtaining her commercial driver s license. (Tr. 15). Kiddie Kruiser has approximately $12,800 in capital set aside. (Tr. 16). Kiddie Kruiser would have more than one child in the van at a time when it was appropriate based on where the children live and where they are going. (Tr. 39). Ms. Talerico is certified to administer CPR, including on infants. Kiddie Kruiser has had a logo designed and is prepared to launch advertising and marketing via social media. Kiddie Kruiser is waiting on final approval from the Commission before proceeding with expending funds. (Tr. 17). Ms. Talerico believes that the service Kiddie Kruiser would provide is different from the service provided by traditional taxicabs, She does not perceive any direct competition with the 2

3 traditional taxi services. She believes that traditional taxi services are more catered towards adults. (Tr. 17, 18). Ms. Talerico is aware of similar child transportation services in other states and has researched some of those companies. (Tr. 18). Ms. Talerico was able to talk to five different children transportation companies around the country. Their experience was that most of the business was taking children to and from schools. (Tr. 38). The out-of-state children transportation companies usually had monthly packages and children would need transportation on a daily basis. (Tr. 38). Kiddie Kruiser would require preregistration of potential children. Ms. Talerico or Ms. Audia would have to meet a potential customer and they would have to file proper paperwork prior to any transportation of the children. Kiddie Kruiser would require a 24-hour notice before any transports. Kiddie Kruiser does not have any letters of intent or contracts with any individuals or organizations in the county to use the proposed service. (Tr. 21). Ms. Talerico believes that most parents would be uncomfortable in allowing their child to ride with any random taxi driver that would show up. (Tr. 22). Neither Ms. Talerico nor Ms. Audia have operated a business before. (Tr. 22, 23). Ms. Talerico has a bachelor s degree. Ms. Audia has an associate s degree. They are both mothers. They both work some in their parent s security business. (Tr. 23). Ms. Talerico indicated that additional capital would be available for Kiddie Kruiser, if needed. She indicated that Ms. Audia had additional money to invest in Kiddie Kruiser. (Tr. 23, 24). Ms. Talerico hopes that they will eventually need additional vehicles and believes they will have the financial resources to purchase those vehicles. (Tr. 26). Kiddie Kruiser will mostly advertise on social media. It also plans to use pamphlets and run advertisements on radio. It will have its own website. (Tr. 25). Kiddie Kruiser is exploring software programs that would allow customers to reserve services from the website. It is also exploring software programs to help with scheduling. (Tr. 37). Ms. Talerico views the proposed service as a super-niche service. The requirement for 24- hour reservation in advance would be subject to exceptions, such as if an existing client would have an immediate need, such as a child becoming sick at school. (Tr. 27). Ms. Talerico believes that they will have sufficient money to operate the business, including answering calls and maintaining the vehicle. (Tr. 27, 28). Kiddie Kruiser has not calculated a budget for maintenance and other issues. (Tr. 48). Ms. Talerico indicated that many of the area schools and daycares have various start times, which would assist in allowing Kiddie Kruiser to transport more children with a single vehicle. (Tr. 29). Ms. Talerico indicated that they would not have a reserve van unless they needed it. (Tr. 29, 30). The only two drivers will be Ms. Audia and Ms. Talerico. (Tr. 34). Ms. Talerico said you couldn t have just random people driving children around. Any drivers would have to be drug tested and background checked. If it comes to the point where Ms. Audia and Ms. Talerico are unable to meet the driving needs of Kiddie Kruiser, they would take all necessary steps to protect the children. (Tr. 35). The Department of Health and Human Resources (DHHR) informed Ms. Talerico that the operation would not need a license from DHHR. (Tr. 36).

4 Ms. Talerico believes that Kiddie Kruiser would have to have some sort of waiting time limit in case a child would be unprepared for the transportation, especially if there were other children waiting in the van. Kiddie Kruiser would have a cancellation policy. It would have policies on how to deal with multiple children in the car when only one child is being dropped off at school. Kiddie Kruiser might consider an extra fee for walking the child into school. They would unbuckle all the children and take one child into the school and then bring them back and buckle them in. (Tr. 43, 44). It would be normal for young children to have to be walked into daycares below a certain age. (Tr. 43,44). Ms. Talerico was not aware of the fact that if Kiddie Kruiser wanted to modify its rates, that it would have to get Commission approval. (Tr. 45). Given that most daycares and schools only allow parents to pick up children, Kiddie Kruiser would require all the permissions and preregistrations to be made well in advance. The parents would have to provide the necessary consent forms for the pickups. A traditional taxi service would not be able to fit this need. (Tr. 46). Katie Eileen Conaway lives in Morgantown and is a Senior Analyst for Mylan. Ms. Conaway has two boys, ages seven and two. They attend the Amplify Children s Academy and the oldest son also attends Cheat Lake Elementary. (Tr. 49, 50). Ms. Conaway is married and her nearest family members live in Fairmont, so it s difficult for them to help. (Tr. 50). Ms. Conaway has trouble sometimes transporting her children to and from events. Her sons go to a variety of appointments and activities, including occupational therapy, hockey and Pokemon Club. The Pokemon Club is particularly difficult because it starts at 4:45, which is before Ms. Conaway gets off work, so she has to modify her work hours to accommodate her son. (Tr. 50). Ms. Conaway thinks that the proposed transportation service for children is fantastic. Ms. Conaway would never put her child in a regular taxi cab service. She doubts that the regular taxi cab service could care for her child. She is not going to trust a random driver who is a stranger with her children. (Tr. 51). She definitely would not use Uber for her children. She needs someone that she is building a relationship with, such as the proposed business model for Kiddie Kruiser. She testified the idea of using other existing transportation services would be scary and terrifying. (Tr. 52). The attractive business model for Kiddie Kruiser is that Ms. Conaway will have a relationship with the operators and drivers. She will have the person s cell phone number. The driver will have her cell phone number. (Tr. 52). She also likes the fact that the service will be contractual and prescheduled. The drivers will know what her children look like and where they need to go. She indicated it would be a relationship-based service, not random. (Tr. 53). Unlike existing services, the drivers of Kiddie Kruiser would know if her child had any special needs or medical issues. (Tr. 53). Ms. Conaway has talked with some of her coworkers. She believes there are a lot of mothers in her situation, or even single mothers that could use help with transportation services in Morgantown. (Tr. 53). Ms. Conaway testified that the proposed rates would be affordable given the amount of money she pays for other childcare expenses. (Tr. 54, 55). Ms. Conaway believes she would use the service. (Tr. 55). 4

5 Tina Iquinto lives in Morgantown and works for US Cellular. She has two children ages ten and thirteen. Ms. Iquinto is divorced. Ms. Iquinto has talked about the possible service with her coworkers who think the service would be very helpful. (Tr. 58). Her children play in numerous sporting leagues and have different school schedules. At times her children have to be in two places at the same time. Her ex-husband is unable to help with transportation because he lives in Bridgeport. (Tr. 58, 59). Ms. Iquinto would be interested in the services. Sometimes she goes out of town for work and has to be out of town for two days. Her relatives in the area are either elderly or very busy with work. (Tr. 59, 60). Ms. Iquinto would not let someone she was not familiar with drive her child around. She does not believe that one can place a price tag on her child s safety. She particularly distrusts strangers since she has daughters. (Tr. 60). Ms. Iquinto is a first cousin to Ms. Talerico and Ms. Audia. (Tr. 63). Ms. Iquinto testified she would probably use the service about three days a week given her children s current schedules. (Tr. 64, 65). On a recent evening, one of Ms. Iquinto s daughters had a choir concert and another one had a game at the same time. (Tr. 65). Randy Talerico, also a first cousin of the applicants, owns the Talerico Insurance Agency. (Tr. 66, 67). Mr. Talerico is an independent agent. He investigated insurance policies for Kiddie Kruiser. In his investigation, Mr. Talerico talked to the operator of Kiddie Cabs in Connecticut. His investigation demonstrated that there were no specialized transportation services for children insured in the State. (Tr. 68). Average insurance costs per vehicle will be about $2,800 annually. That also includes $1 million limits. He believes other coverage would be recommended including sexual misconduct coverage, which is not easy to obtain. The annual premium for that coverage with a sublimit of $50,000 coverage for sexual abuse was $2,400. (Tr. 70). Mr. Talerico also recommends an umbrella policy to try to get limits up to about $5 million, which would require a premium of between $5,000 and $10,000 depending on the precise limit chosen. (Tr. 71). The insurance that was quoted would not allow Kiddie Kruiser to operate between 9:00 p.m. and 6:OO a.m. It would not allow a meter in the vehicle. (Tr. 75). Andrew Vecchio has successfully operated Motown Taxi for its first year of operations. (Tr. 77). Motown has already lost two vehicles due to accidents in December. (Tr ). Motown started with six taxis and purchased two additional taxis in October. It s in the process of purchasing a ninth vehicle. Motown has significant maintenance expenses on its fleet. (Tr. 78, 79, 80). Motown has spent $18,000 on marketing. (Tr. 82). Its drivers are private contractors, but it has spent $1 12,000 on labor for its dispatchers. For insurance, it has paid $45,000. (Tr. 83). At the end of July, Uber came into the Morgantown market and Motown lost the majority of its student market and lost 90% of its app-base customers. (Tr. 86). Motown does provide transportation to children if there is parental consent. Motown has a car seat available. There are not many requests. (Tr. 86, 87). Motown responded to Uber by changing its advertising strategy, including emphasizing its homegrown nature and that it is a mom and pop shop. Motown emphasized its distinctions from 5

6 Uber and its business has been increasing again. Motown turned an $80,000 profit for the year. (Tr. 88). Motown has no contracts to transport children on a regular basis. (Tr. 89). Typically, if a customer calls Motown Taxi and has a child, the customer needs to provide its own car seat and hook its own child into the seat. (Tr. 90). Motown does have a single car seat for toddlers. (Tr. 91). Motown objects to the granting of the specialized limousine permit because it believes that it will infringe on its business. (Tr. 91, 92). Motown also fears that Kiddie Cruiser will start transporting adults. (Tr. 92). Upon cross-examination, Mr. Vecchio did testify that he did not think that the current business model of Kiddie Cruiser would compete with Motown. (Tr. 93). Mr. Vecchio does think that any transportation provider has some impact on the whole sector. (Tr. 94). The market in Monongalia for ridership is very competitive. (Tr. 95). Mr. Vecchio s family is close friends with Randy Talerico. (Tr. 95). DISCUSSION The first issue is whether Motown has standing to protest Kiddie Kruiser s application. Although Kiddie Kruiser seeks specialized limousine service and Motown has general taxicab authority, Motown should have standing to protest the service. Specialized limousine service is, in some regards, a subset of general taxicab authority. Depending on the structure of specialized limousine service, it could indeed significantly impact a holder of general taxicab authority. Kiddie Kruiser s proposed specialized limousine service for children would be the first of its kind in West Virginia. Apparently, similar services are offered in some other states and have operated successfully. The service is significantly different than general taxicab service given that all customers would be preregistered with Kiddie Kruiser. Paperwork, including permission slips to pick up or drop off children from schools, day cares and other areas, would be drafted. Parents would have the opportunity to meet and become comfortable with assigned drivers. Unlike taxicab services, Kiddie Kruiser would only operate on limited hours with insurance restrictions prohibiting transportation after 9:OO p.m. Kiddie Kruiser would provide appropriate car seats and its drivers would be thoroughly checked. At its launch, its drivers would be Ms. Talerico and Ms. Audia. Public witnesses testified that existing transportation services were inadequate in the sense that parents have discomfort with random drivers from taxicab services or even Uber picking up their minor children. None of the other six specialized limousine services in Monongalia County protested the matter. The only protest was from Motown, which holds general taxicab authority. Regarding fitness of Kiddie Kruiser to hold transportation authority from the Commission, both Ms. Talerico and Ms. Audia have certain experience working with their parent s business. Both have significant educational accomplishments. They appear to have a reasonable business plan and adequate capital to launch the proposed service. It is not the Commission s role to make any prediction as to whether there would be sufficient demand for this super-niche service in Monongalia County. It could well be that the business will quickly lold for lack of a sufficient number of paying 6

7 ~~ Motown admitted that it transports very few unaccompanied minors. It admitted that the proposed business model would not significantly compete with Motown. Motown's most significant concerns appear to be whether Kiddie Kruiser would infringe on its service territory by transporting adults. The proposed authority would not allow transportation of adults. Motown could certainly file a complaint against Kiddie Kruiser if Kiddie Kruiser begins violating its authority by transporting adults. Kiddie Kruiser presented a business model which would not be particularly conducive to the transportation of adults. Kiddie Kruiser should be granted its application for specialized limousine service transporting individuals under the age of eighteen in Monongalia County. FINDINGS OF FACT 1. On September 15, 2016, Kiddie Kruiser, LLC, filed an application for specialized limousine service transporting individuals under the age of eighteen in Monongalia County. (See application). 2. Kiddie Kruiser properly published notice of its proposed authority and its rates. (See affidavits filed October 28, 2016). 3. Motown protested the petition and intervened in the matter. Motown holds general taxicab authority in Monongalia County. (See filing of November 10, 2016). 4. Kiddie Kruiser will be the first specialized limousine service focused on the transportation of minor children in West Virginia. (Tr. 12,68). 5. There are existing transportation services specialized to the transportation of children in other states. (Tr. 18,38, 68). 6. Kiddie Kruiser would operate Monday through Friday no earlier than 6:OO a.m. and no later than 9:OO p.m. (Tr. 11, 75). 7. If possible or if needed, service might be expanded into Saturdays. (Tr. 11). 8. Kiddie Kruiser has an insurance quote, has priced a Town and County Chrysler minivan, has drivers with commercial driver's licenses, has started working on marketing strategies and has capital of $12,800 set aside. (Tr. 14, 15, 16, 17,25). 9. Kiddie Kruiser has engaged in certain market research and has investigated software programs to allow internet scheduling of services. (Tr. 12, 18, 38,40,41). customers. It could also be possible that the proposed business plan will work and even expand into other areas in West Virginia. 7

8 li 10. Prospective customers would have to preregister and meet the drivers, sign the necessary permission slips and exchange information, including telephone numbers and any special needs of the child. Transports would require a 24-hour notice except for certain emergency situations, such as a child becoming sick at school. (Tr. 21,22, 27). 11. The proposed service is a super-niche service, which is significantly different than general taxicab service in that the drivers will be known by the parents and will not be just a random taxi or Uber driver. (Tr. 2 I, 22, 34, 35; See proposed tariff). 12. The principals in Kiddie Kruiser are Meredith Talerico and her sister, Andrea Audia. Both principals are young mothers with children. Both possess degrees beyond the high school level. Both will have commercial driver s licenses. Ms. Talerico is certified to administer CPR. They both have worked for their parent s security business. Kiddie Kruiser has approximately $12,800 in capital set aside and more capital available. (Tr. 9, 10, 14, 15, 16, 17, 23,24, 34,35). 13. Public witnesses testified that the service is needed. The public witnesses testified that existing transportation services were inadequate in that they were uncomfortable in allowing their young children to ride with drivers, which they have not met and with which they have no relationship. (Tr. 49, 50, 51, 52, 53, 58, 59,60). 14. No holder of specialized limousine service authority in Monongalia County protested the application. (See file generally). 15. The proposed service will not significantly compete with Motown. (Tr. 17, 18, 52, 60, 86, 87, 89, 93). 16. Motown has only one car seat and parents who want to have minor children transported generally have to provide a car seat and strap their children into the seat. Motown does not regularly transport minor children. (Tr. 89,90, 91). CONCLUSION OF LAW The proposed authority should be granted to Kiddie Kruiser, given that existing transportation services are inadequate to meet the special niche of transporting minor children in Monongalia County and that the Applicant is fit to hold the authority. ORDER IT IS, THEREFORE, ORDERED that Kiddie Kruiser, LLC be, and hereby is, granted P.S.C.M.C. Certificate No. 7583: 8

9 To provide limousine service for children under the age of eighteen (1 8) between points and places in Monongalia County, West Virginia to points and places in West Virginia. Rates: All rides must be prepaid (24 hours in advance) $25 registration fee Day Pass $30 (maximum 2 rides; any additional ride is $5.00 per ride for that day.) Week Pass $125 (maximum 2 rides per day; any additional ride $5.00 per ride for that day.) Single Ride $22 Siblings riding together - $15.00 per child per ride. IT IS FURTHER ORDERED that Kiddie Kruiser, LLC file with the Commission an original tariff and six copies containing the approved rates within thirty days of the date this becomes a final order. The Executive Secretary is ordered to serve this Order upon the Commission and its Staff by hand delivery, upon all parties of record who have filed an e-service agreement with the Commission by electronic service and upon all other parties by United States Certified Mail, return receipt requested. Leave is granted to the parties to file written exceptions supported by a brief with the Executive Secretary of the Commission within fifteen days of the date of this Order. If exceptions are filed, the parties filing exceptions shall certify that all parties of record have been served the exceptions. If no exceptions are filed, this Order shall become the Order of the Commission, without further action or order, five days following the expiration of the fifteen day time period, unless it is ordered stayed by the Commission. Any party may request waiver of the right to file exceptions by filing an appropriate petition in writing with the Executive Secretary. No such waiver, however, will be effective until approved by order of the Commission. C@& Keith A. George Chief Administrativeiaw Judge KAG : lc: kjs ab I 9