2 Cab Firms Accused of Violating City Rules : Transportation: Panel will meet Thursday to hear evidence that one taxi company employed false advertising and another used unlicensed cars.

Los Angeles city officials will weigh accusations that the two taxi firms that serve the San Fernando Valley have resorted to false advertising or using unlicensed cabs in waging an increasingly bitter business battle.

The Los Angeles City Board of Transportation Commissioners is scheduled to meet Thursday to hear evidence against Valley Cab Co. and San Fernando Valley Checker Cab and determine any penalties needed for alleged violations of their franchise agreements.

Valley Cab, which held an exclusive eight-year franchise in the Valley until Checker Cab was given a franchise this year, is accused of advertising in several new telephone books under the names Yellow Cab and Checker Cab, a violation of city ordinances. Valley Cab has been warned by city transportation inspectors in the past about advertising under other names.

Checker Cab, which is owned by Babaiean Transportation Co. of Burbank, is accused of illegally referring Valley business to shuttle cars that do not have Los Angeles city taxi licenses.

Alan Willis, a senior transportation engineer in the city’s franchise regulation division, said a staff recommendation on penalties had not been completed Tuesday. The most severe penalty the commission could impose would be revocation of a company’s taxi franchise, he said.

The charges reflect intensification of the heated rivalry between the two firms, which city transportation officials predicted after Checker Cab won the franchise in March.

Babaiean waged a costly two-year campaign to break the Valley taxi monopoly held by Valley Cab, hiring powerful lobbyists and making large campaign contributions to key city officials. The issue eventually was fought out in the City Council, which voted unanimously to give Babaiean a franchise.

Several transportation commissioners had predicted at the time that competition might generate abuses because there is not enough taxi business in the Valley to sustain both firms.

“There is some element of nastiness here,” Willis said, with each company reporting its rival’s actions to city inspectors.

In interviews, representatives of both taxi firms minimized the charges against their own company, each accusing the other of committing a more serious violation.

Scott Schaffer, general manager of Babaiean Transportation, said the charge against his company resulted from a “just plain stupid” mistake. A city transportation inspector called Checker Cab on a routine test and Checker referred the call to a shuttle car service that does not have a license to operate taxis in the city of Los Angeles, he said.

Schaffer said the request had to be referred elsewhere because Checker Cab had only 10 vehicles in operation at the time and could not keep up with calls for service. He said that under the franchise agreement, Checker Cab is supposed to refer excess calls to Valley Cab, but Valley Cab had refused to take the calls.

“We were stuck between a rock and a hard place,” Schaffer said.

Checker Cab now has 20 vehicles in operation, he said, and eventually plans to field 85 cabs in the Valley.

Lloyd Conway, owner of Valley Cab, said that he knew nothing about the false advertising charges against his company but that such charges are not as serious as an accusation of dispatching an unlicensed vehicle.

Conway’s director of operations, George Piedra, acknowledged that Valley Cab ran an advertisement in the December, 1992, Pacific Bell Yellow Pages that gives the company’s phone number as that of both its rival, Checker Cab, and of Yellow Cab--a firm that does not provide service in the San Fernando Valley.

He said Valley Cab no longer runs that ad. But there is a full-page ad in the 1993 Pacific Bell Yellow Pages that advertises “Checker Cab” and “Yellow Cab” next to an ad for Valley Cab.

The phone number on the Checker Cab-Yellow Cab advertisement, however, does not connect the caller to the Babaiean-owned taxi company, which has the right to use the Checker name in the Valley. Instead, the caller reaches an operator who refers calls to the Valley Cab number.

Piedra said he knew nothing about the ad that sends Checker Cab calls to Valley Cab instead.

Nathan Chroman, head of the commission’s taxi subcommittee, said Tuesday that he had not seen the staff report on the alleged violations. But he added that the commission is “not going to put up with any nonsense.”

“When people go head-to-head in competition there is bound to be some sparks, but we would like to see them work in harmony,” he said.