Uber to Pennsylvania Regulator: Rethink $11.4M?

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By Leslie A. Pappas

May 27 — Ride-sharing company Uber Technologies Inc. has asked the Pennsylvania Public Utility Commission (PUC) to reconsider a $11.4 million fine imposed on the company in April, saying the order is unreasonable and beyond the law ( BIE v. Uber, Pennsylvania Public Utility Commission, No C-2104-2422723, petition for rehearing and reconsideration 5/25/16 ).

In a petition for rehearing and reconsideration dated May 25, Uber argued that the commission “overreached” when it issued a penalty five times greater than any it had ever imposed, including for cases involving financial harm, property damage and fatalities. In the 102-page filing, the company offered new data about the number of rides during the five-month period in question, and argued the PUC should set the fine based on the number of days it operated rather than the number of trips that took place.

The petition underscores the difficulty public officials are having evaluating the scope and severity of the ride-sharing company's violations, and the balance between promoting innovation and protecting consumers. The commission imposed a much smaller fine than administrative law judges recommended, but much greater than its own enforcement arm initially sought.

“Our hope is that the new information presented in this filing will give the Commissioners ample reason to reconsider the unprecedented and wholly disproportionate fine,” Uber said May 27 in a written statement May 27. “As elected officials and several business organizations have pointed out, the disparate treatment of two competitors is patently unfair and paints Pennsylvania as an unwelcome and uncertain place for new investment and innovation.”

Commission spokeswoman Robin Tilley told Bloomberg BNA May 27 that regulators would carefully review Uber's petition before deciding on further action.

Down From $50M

The commission voted 3-2 on April 21 to fine the San Francisco-based company $11.4 million for operating in Pittsburgh from February 2014 through August 2014 without proper authority, and for ignoring discovery requests (21 ECLR 622, 4/27/16).

The fine was about a fifth of the $50 million penalty that two administrative law judges recommended in November 2015. The Commission's Bureau of Investigation and Enforcement (BIE) initially sought $95,000 in civil penalties (20 ECLR 1738, 12/16/15).

In the petition, Uber argued the $11.4 million penalty is unreasonably high, violates federal and state guarantees against “excessive fines,” and is 45 times more than the amount imposed on its competitor, Lyft, for the exact same service. The company said the new evidence shows the penalty is 110 times greater than net revenues that Uber subsidiary Rasier-PA LLC earned during the period between July 2, 2014 and Aug. 20, 2014, when a cease and desist order was in effect.

The company also noted that government leaders, state legislators and business groups have also called on the commission to reconsider the fine. In a May 3 joint letter to the PUC Commissioners, Pennsylvania Gov. Tom Wolf (D), Pittsburgh Mayor William Peduto and Allegheny County Executive Rich Fitzgerald said that “if state regulators continue displaying such hostility in the face of technological change, Uber and other companies may be forced to reconsider whether Pennsylvania is the right place to build the future.”

To contact the reporter on this story: Leslie A. Pappas in Philadelphia at lpappas@bna.com

To contact the editor responsible for this story: Joseph Wright at jwright@bna.com

For More Information

The petition for reconsideration is at http://src.bna.com/fpJ.

The case history can be found at http://src.bna.com/fpI.