Los Angeles city transportation commissioners Thursday placed San Fernando Checker Cab Co. on six months probation for illegally referring Valley customers to cab companies or car shuttle services operating without city licenses.
Checker Cab, owned by Burbank-based Babaeian Transportation Co., began serving the San Fernando Valley this year after winning a costly lobbying campaign to break an eight-year monopoly held by Valley Cab Co.
Despite the bitter business rivalry, representatives of both firms announced Thursday they had reached a tentative agreement to settle separate charges that Valley Cab placed misleading ads in several telephone books.
Each company had reported the violations by the other, resulting in city investigations.
The agreement was announced just before the Los Angeles Board of Transportation Commissioners was scheduled to hear evidence that Valley Cab had been running the ads since 1986 despite repeated orders not to do so.
Some ads contained the phone number for Valley Cab but advertised under the names Yellow Cab and Checker Cab. Other ads contained a phone number that was automatically referred to Valley Cab lines by a telephone answering service.
Under the agreement, Checker Cab will pay for the telephone book ads in the future and phone calls responding to the ads will be transferred to Checker Cab lines.
Gilbert M. Archuletta, an attorney for Checker Cab, said he was not sure how much it would cost to make the switch.
The board members said they would not punish Valley Cab for the offense if both firms sign a formal written document on the terms of the agreement. Valley Cab could have been suspended for running the misleading ads.
The board scheduled an Oct. 29 meeting to review the formal agreement between the two firms.
But board President David A. Leveton warned Valley Cab President Lloyd Conway that the board would not be as tolerant of future offenses. "I'm assuring you that we don't want to see something like this in the future," he said.
On the charges against Checker Cab, Archuletta admitted that the company referred two calls for service to unlicensed cabs. But he said the referrals were made because Checker Cab only has 22 cabs in service and was unable to provide cabs for every passenger requesting service.
He said no such referral would happen again because Checker Cab will put 22 additional cabs in service by Oct. 22 and will install a computer system that will automatically refer calls for service only to cabs licensed to serve the area.
For years, city transportation inspectors have tried to put a stop to the problem of unlicensed taxis, or "bandit cabs," because their fares are unregulated, they pay no city franchise fees and they are usually uninsured.
Commissioner Marion L. Fay said Checker Cab's referral to an unlicensed cab was "unpardonable."
"I for one am very unhappy about this," she said.
The violations were discovered when city transportation inspectors called Checker Cab on a routine test and the company referred the calls to a shuttle car service or taxi company that did not hold a Los Angeles license, officials said. Both drivers were arrested for violating the ordinance.
Under the terms of probation, Checker Cab must refer no more calls to unlicensed cabs, show proof that the new dispatching system has been installed, refer all future excess calls to Valley Cab and keep records of those referrals.
Fay said that if Checker Cab violates probation, she would recommend that the board suspend the firm's franchise agreements and that the company forfeit its $20,000 performance bond with the city.
Archuletta said he had no problem with the terms of probation. "All they're asking is that we follow city procedures, which is what we are doing," he said.