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Uber Fights Back Against Pennsylvania PUC Fine

To fight the new fine, Uber has cited the newly established state limit on how much ride-hailing services can be penalized.

by Daniel Moore, Pittsburgh Post-Gazette / January 24, 2016
Photo Courtesy of Shutterstock

(TNS) -- Uber is fighting back against an “unprecedented and unwarranted” $11.4 million fine issued by the Pennsylvania Public Utility Commission last year, arguing in a new court filing that the penalty should be reduced to no more than $190,000.

To bolster that argument, the San Francisco-based ride-hailing company is citing a newly established limit on how much the state commission can penalize ride-hailing services.

The penalty cap came as a controversial provision inserted by lawmakers last fall into the first-ever statewide law governing transportation network companies such as Uber, Lyft and zTrip, a unit of Yellow Cab of Pittsburgh.

In a brief filed in Commonwealth Court last week, lawyers for Uber contend the state’s law, signed by Gov. Tom Wolf in November, “clearly and unequivocally” caps civil penalties on such companies at $250,000. “The $11.4 million fine here violates that unambiguous legislative command,” company lawyers wrote.

The argument from Uber represents exactly what opponents of the legislation had predicted would happen.

While it’s not unusual for a state legislature to limit a state utility commission’s civil penalties, some lawmakers had warned such a strict cap would hamstring the Public Utility Commission’s ability to regulate a fast-growing industry that has already flouted state law.

“What we’re talking about here is a very dangerous precedent,” said Sen. Jay Costa, D-Forest Hills, in October, urging his colleagues to scrap the limit on fines. It had been added and approved days before by House Republicans.

“We’re overriding an independent agency,” he said. “We’re cutting their legs out from under them.”

Uber and Lyft first launched in Pennsylvania in early 2014, giving thousands of rides without any regulatory oversight. While both companies later that year obtained temporary experimental licenses from the Public Utility Commission, the months-long dispute touched off two lengthy cases before the commission. (YellowCab’s zTrip obtained a temporary license before giving any rides.)

The $250,000 cap in the legislation was a clear nod to Uber’s argument to the commission that it should receive the same fine as rival Lyft, which had settled for that amount with the commission in 2015.

Uber never settled. Last April, the commission voted 3-2 to fine Uber, calling the magnitude of the company’s violations as groundbreaking as its technology. The $11.4 million fine was affirmed by the commission in September, and Uber appealed in Commonwealth Court shortly thereafter.

During discussions over the proposed fine caps in October, Mr. Costa and others predicted Uber would try to use the law to vacate the commission’s fine.

Proponents of the ride-hailing bill assured Mr. Costa and others that the law would apply only to future penalties issued by the commission — not the multimillion-dollar fine already imposed.

“This legislation has never been about the PUC’s fine on Uber,” said Sen. Camera Bartolotta, R-Washington, who sponsored the ride-hailing legislation. Ms. Bartolotta could not be reached for comment on Monday.

Uber appears willing to test that in court.

In a written statement last week, the company said, “Our hope is that the Commonwealth Court will join with the governor and the state legislature in denouncing this outrageous penalty.”

In an interview Monday, after learning of Uber’s legal maneuver, Mr. Costa said the company is wrongly interpreting the intent behind the law. Mr. Costa said he plans to get involved in Uber’s case to argue that the law should not apply retroactively, either by filing a brief of his own or becoming a party to the case.

“My intention is to keep working to pursue the appropriate legal strategy,” he said. “That has been my position, and that has not changed.”

He may be going at it alone.

Mr. Costa was the lone vote against the ride-hailing law when it passed by a 47-1 vote in the Senate. Now, the state Public Utility Commission is in the process of rolling out the regulations provided for under the law and doling out the first permanent licenses to Uber, Lyft and zTrip.

Uber also has plenty of public support from politicians. In May, Gov. Tom Wolf, Allegheny County Executive Rich Fitzgerald and Pittsburgh Mayor Bill Peduto signed a letter denouncing the commission’s fine, saying it “constitutes a civil penalty on innovation, threatening the company’s ability to harness new technologies and create the jobs of tomorrow.”

©2017 the Pittsburgh Post-Gazette Distributed by Tribune Content Agency, LLC.