The driverless car company Cruise LLC has appeared at a California Public Utilities Commission hearing and valiantly attempted to extricate itself from a mess of its own making.
As widely reported, on Oct. 2, 2023 at 9:29 p.m., a driverless Cruise vehicle with the name “Panini” was proceeding along near the intersection of Fifth and Market streets in San Francisco when a car operated by a human driver hit a pedestrian and flung the person directly into Panini’s path. The Cruise vehicle then hit the pedestrian and, with the victim under the car, executed a “pullover maneuver,” designed to get the vehicle to a safe location. In the process, Panini dragged the already-injured person 20 feet at a speed of 7.7 mph.
In the immediate aftermath, Cruise provided a briefing and showed — or offered to show — a video of the collision to a variety of audiences, including the California Department of Motor Vehicles, the CPUC and the National Highway Traffic Safety Administration, but allegedly did not show the pullover maneuver or the dragging. Cruise also did not affirmatively describe the severity of the collision to the regulators.
On Oct. 24, the DMV suspended Cruise’s permit to operate its driverless fleet in California and called out Cruise for failing to fully, candidly and immediately disclose all the facts surrounding the case.
On Dec. 1, the CPUC issued an “order to show cause” directing Cruise to appear in a public hearing to show “why Cruise should not be fined, penalized, and/or receive other regulatory sanctions for failing to provide complete information to the Commission regarding [the accident] and for making misleading public comments regarding its interactions with the Commission.”
Cruise’s unconventional offer
Things began to get odd when on Jan. 5, Cruise filed an “offer of settlement,” which proposed to resolve the issues by making three concessions: first, it offered to provide more data concerning collisions to the commission going forward; second, to give the commission simultaneous copies of what it gives the DMV with respect to permit reinstatement; and third, to pay $75,000 to California’s general fund.
Cruise then proposed that the commission put the “show cause” proceeding on hold and set up an “alternative dispute proceeding” to consider its offer of settlement.
On Jan. 12, Robert Mason, the administrative law judge assigned to the matter, issued an order flatly rejecting the idea of an ADR process.
Mason said that the process “is designed to help facilitate the resolution of disputes between multiple parties who disagree.”
However, because in this situation, Cruise “is the only party to the Order to Show Cause (OSC) portion of this proceeding, Cruise would, in effect, be negotiating against and with itself.”
The judge then ordered that the show cause hearing be put on hold, and, in its place, he scheduled a hearing on the proposed settlement.
Cruise vowed to do better and noted that it had already suffered a ‘reckoning’ that was ‘swift and extensive.’
On Tuesday, Cruise presented its case for approval of its one-party settlement.
The papers it filed beforehand expressed remorse for the collision (Cruise “regrets deeply the tragic accident”) and also for its failure to “affirmatively tell” the CPUC about the pullover maneuver and the pedestrian dragging.
Cruise vowed to do better and noted that it had already suffered a “reckoning” that was “swift and extensive.”
Cruise said it suspended all operations throughout the U.S. and noted that “many former senior leaders of Cruise, including the CEO, no longer are with the company.”
It also noted that hundreds of Cruise employees and contractors have been laid off.
Cruise then turned to the guts of its motion. It explained that it had hired the venerable California law firm Quinn Emanuel Urquhart & Sullivan LLP to investigate its interactions with its regulators after the collision. According to Cruise, it asked the law firm “to reach independent conclusions about Cruise’s actions and gave the investigators unfettered access to Cruise documents and employees.”
Steering through judgment, leadership woes
On Jan. 24, Quinn produced a 191-page report, which was provided to Cruise’s board of directors on the same day and thereafter to Cruise’s regulators and the public. The report concluded that Cruise made many mistakes and suffered from poor leadership and mistakes in judgment but, “the evidence reviewed to date does not establish that Cruise leadership or employees sought to intentionally mislead or hide from regulators the details of the October 2 Accident.”
The transmittal letter that covered the report referenced Cruise’s “commitment to transparency with its regulators, other governmental officials, and the public.”
To that end, the company said it agreed to waive attorney-client privilege for the report as well as communications of its in-house lawyers during the period Oct. 2 to Nov. 3.
The waiver did not extend to such communications after Nov. 3 or to Cruise’s communications with its outside law firms, including Quinn Emanuel.
Quinn Emanuel is among the firms that have represented General Motors Corporation, Cruise’s parent company, in other matters.
On Tuesday, the administrative law judge Mason commenced the hearing at the stroke of the scheduled time and spent the next hour asking questions that he said were intended to help him determine if the proposed settlement was reasonable, in accordance with law, and in service of the public interest.
While Mason’s questions were not combative, by the time he concluded, he touched on a number of key matters.
First, he confirmed that Cruise should have affirmatively disclosed the pullover maneuver and dragging to its regulators and that failing to do so implicated the ethics section of the commission’s rules of practice which state in part: “Any person who … transacts business with the Commission… agrees… never to mislead the Commission or its staff by an artifice or false statement of fact or law.”
Second, he drew from John Potter, a lawyer from Quinn Emanuel, that at the time of the collision there was an “us versus them” attitude at the company regarding its relationship with its regulators and government officials, and that the attitude “permeated” all ranks of the company.
Third, Mason compared Cruise’s interaction with the commission to Eddie Haskell, a fictional character on the old “Leave it to Beaver” TV show, a reference to Haskell’s habit of misleading people by telling half the truth while smiling widely.
Mason challenged Cruise’s suggestion that settlement was appropriate because it would avoid protracted and costly litigation. Mason said he didn’t think that any litigation over the order to show cause would be protracted.
Fourth, of the three concessions Cruise proposed to resolve the matter, two were vaporous — in both cases Cruise was only proposing to give the commission data that Cruise would have to give if asked. Cruise’s president Craig Glidden tried to give the concession more weight by saying the proposal was “proactive” in that it proposed to provide the data without making the commission ask for it first. Mason did not appear impressed.
And with respect to the third concession — the $75,000 fine — Mason said it was not clear to him why Cruise should pay less than $112,500, an amount based on maximum daily fine authorized. (Without missing a beat, Glidden offered to raise its offer to that number, “in order to put this matter behind us.”)
Finally, Mason challenged Cruise’s suggestion that settlement was appropriate because it would avoid protracted and costly litigation.
Mason said he didn’t think that any litigation over the order to show cause would be protracted. He said, “I think the facts are pretty much straightforward.”
Glidden responded by saying that one reason it was straightforward was because of all the work Cruise had done on its own. He said, “we wanted to make sure that we were transparent and totally candid with the commission.”
He then added, “We’d like to get credit for the work that we’ve done to make that possible.”
Mason closed the hearing without saying when he will make a ruling, though based on his questioning he seemed to lean toward rejecting Cruise’s offer to settle the matter, at least on the terms it has thus far proposed.