Public Utilities Code Section 5354 and TNC Liability

Bottom line. Public Utilities Code § 5354 makes the driver's act, by force of statute, the act of the TNC. No employment finding. No agency analysis. No Borello multifactor weighing. On March 31, 2026, the arbitrator in Rutkovitz v. Uber applied § 5354 and entered a multi-million-dollar award (subject to attorney verification; arbitration award, not binding precedent) against Uber, holding that imputation "applies regardless of employment classification" and that "Proposition 22's independent contractor classification is irrelevant here."

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The text

"In construing and enforcing the provisions of this chapter relating to the prescribed privileges and obligations of the holder of a permit or certificate issued hereunder, the act, omission, or failure of any officer, agent, or employee, or person offering to afford the authorized service with the approval or consent of the permit or certificate holder, is the act, omission, or failure of the permit or certificate holder." (Pub. Util. Code, § 5354.)

The statute does not require any finding of employment, agency, or control. The Legislature wrote it to ensure public safety in regulated transportation, and it has never been amended, displaced, or limited by any published authority.

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The four elements (each routinely satisfied)

Element	What it requires	Why it is satisfied for Uber/Lyft
1. Permit holder	Defendant holds a CPUC permit	Uber holds TCP0038150-P. Lyft holds TCP 32513. Drivers do not hold permits.
2. Person offering authorized service	The actor is providing the authorized service	A "participating driver" is "any person who uses a vehicle in connection with a [TNC's] online-enabled application or platform to connect with passengers" (Pub. Util. Code § 5431). TNC drivers fit exactly.
3. Approval or consent	The permit holder approved or consented to the actor's service	The TNC's algorithm selects the driver and matches the driver to the passenger. The passenger has no ability to choose. Algorithmic matching is approval and consent.
4. No employment requirement	The statute reaches "any person offering to afford the authorized service"	No employment limitation in the text. The reach is defined by the permit relationship, not by classification.

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Why § 5354 is not duplicative of any other theory

Section 5354 operates by force of statute, not by common-law agency principles. The driver's act is, by statute, the permit holder's act. The Legislature wrote a rule that converts the conduct of the regulated worker into the conduct of the regulated entity. That is not derivative liability built on agency. It is freestanding statutory imputation.

This matters in three concrete ways:

1. No Borello multifactor analysis. Defense counsel will try to fight on the Borello "right to control the details" terrain. Section 5354 takes them off that field entirely.
2. No "agent" finding required. Even if Proposition 22 reclassified drivers for some purposes, § 5354's reach is defined by the permit relationship and the "approval or consent" trigger — not by an agency label.
3. No Terms of Service workaround. Private contractual disclaimers cannot displace a statutory rule that operates by virtue of the CPUC permit the TNC voluntarily holds.

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Sections 5433(f) and 2106 complete the statutory pathway

Section 5433(f) — the savings clause. "[T]he insurance requirements shall not limit the liability of a transportation network company arising out of an automobile accident involving a participating driver in any action for damages against a transportation network company for an amount above the required insurance coverage." The savings clause presupposes that TNC liability exists above the required insurance coverage. The Legislature would not have preserved liability that did not exist. The only obvious source of that liability is § 5354 imputation. (Coverage page →)

Section 2106 — the private right of action. Section 2106 makes any public utility "liable to the persons or corporations affected thereby for all loss, damages, or injury" caused by violation of state law or Commission orders, enforceable "in any court of competent jurisdiction." Charter party carriers are public utilities for § 2106 purposes. (City and County of San Francisco v. Uber Technologies, Inc. (2019) 36 Cal.App.5th 66, 76; San Diego Gas & Elec. Co. v. Superior Court (1996) 13 Cal.4th 893, 914.)

The chain: § 5354 makes the driver's negligent driving the act of the TNC. § 2106 provides the right of action.

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Proposition 22 did not amend, repeal, or reference § 5354

Proposition 22 did not touch the Public Utilities Code. Business and Professions Code § 7451 enumerates only the Labor Code, the Unemployment Insurance Code, and Department of Industrial Relations orders.

The presumption against implied repeal is "so strong that, to overcome the presumption the two acts must be irreconcilable, clearly repugnant, and so inconsistent that the two cannot have concurrent operation." (Stop Youth Addiction, Inc. v. Lucky Stores, Inc. (1998) 17 Cal.4th 553, 570.)

Section 7451 classifies drivers for employment purposes. Section 5354 imputes driver conduct to permit holders for public safety purposes. They operate in entirely different statutory universes. There is no inconsistency. There is no implied repeal. Full Prop 22 analysis →

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Section 1759 does not preempt passenger tort claims

The TNCs occasionally argue that Public Utilities Code § 1759 bars civil courts from determining TNC liability. The Supreme Court's three-part Covalt test asks whether (1) the CPUC has authority to adopt a regulatory policy on the issue; (2) the CPUC has exercised that authority; and (3) the court action would hinder or interfere with the CPUC's exercise of its regulatory authority. (San Diego Gas & Elec. Co. v. Superior Court (1996) 13 Cal.4th 893, 923-935.)

Section 1759 "does not . . . confer immunity from civil suits on a private company merely because the company is regulated under the PUC's authority." (City and County of San Francisco v. Uber Technologies, Inc., 36 Cal.App.5th at p. 77.) Applying CPUC Decision 13-09-045's holding that the TNC "should also be held responsible if the driver is negligent" enforces, rather than hinders, CPUC policy.

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Rutkovitz: the framework, applied

On March 31, 2026, the arbitrator in Rutkovitz v. Uber Technologies, Inc., AAA Case No. 01-24-0004-5195 (arbitration award; not binding precedent), entered a multi-million-dollar award against Uber (subject to attorney verification; arbitration award, not binding precedent). He did not need to reach the agency theories or the direct liability theories. He resolved liability on the cleanest doctrinal ground available: statutory imputation under § 5354. The findings are unequivocal:

Finding of Fact 6. Under Public Utilities Code Section 5354, the acts of a person offering authorized transportation services with the permit holder's approval are imputed to the permit holder. Finding of Fact 7. The imputation under Section 5354 applies regardless of employment classification. (Proposition 22's independent contractor classification is irrelevant here.) Award V(A)(2). Pursuant to Public Utilities Code Section 5354, the negligent acts of a person offering authorized transportation services with the permit holder's approval are imputed to the permit holder. Accordingly, UBER TECHNOLOGIES, INC. are liable for the negligent operation of the vehicle during the trip.

The award is not binding precedent, but it is on the record, it was issued by an experienced neutral after full evidentiary briefing, and it represents the pure § 5354 pathway distilled to its essence. Cite it in every brief. Cite the Prop 51 footnote in every settlement demand.

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Practitioner playbook

1. Plead § 5354 in the complaint. Treat it as the lead theory, not the fallback.
2. Authenticate the permit early. Use a request for admission, custodian declaration, or CPUC public-records request. Quote the standard permit conditions that incorporate Decisions 13-09-045, 14-04-022, and 14-11-043 by reference.
3. Establish the four elements through admissions and RFPs. The permit, the participating-driver classification, and the algorithmic matching are not seriously disputable. Lock them in.
4. Use the Rutkovitz corporate-rep admission. Uber's corporate representative in Rutkovitz confirmed under oath that without the TNC permit, the company "would not have been in business that day." That single line is a powerful piece of trial evidence.
5. Defeat the § 1759 preemption argument with City and County of San Francisco v. Uber. It directly forecloses the argument.
6. Pair § 5354 with § 5433(f) and the Prop 51 single-tortfeasor footnote. (Coverage page →)

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See also

• Hub: The Seven-Theory Framework
• The $1 Million Coverage Myth + Prop 51 Single Tortfeasor
• Proposition 22 Is a Labor Statute, Not a Tort Immunity
• TNC Discovery Roadmap — 24 Categories
• Press: April 30, 2026 Daily Journal Byline + Rutkovitz Award

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