PUC upholds $11.4 million Uber penalty for 2014

Uber

HARRISBURG, Pa.–The Pennsylvania Public Utility Commission (PUC) on Thursday upheld a previously issued civil penalty against Uber Technologies Inc. for giving rides in Pennsylvania without state permission in 2014.

The Commission voted 4-1 to adopt an Opinion and Order denying Uber’s Petition for Rehearing and Reconsideration of the PUC’s May 2016 Order imposing $11,364,736 in civil penalties. The Commission also denied a Stay Petition filed by Uber and directed that the penalties, which are payable to the Commonwealth of Pennsylvania, be paid within 30 days.

The Commission emphasized that the significant total penalty assessed against Uber is entirely “due to the sheer number of violations which occurred.”  Further, the Commission noted, “the unprecedented number of unauthorized trips and violations of the Code and Commission directives, we found, distinguishes this case from those matters and necessitates the need for an unprecedented civil penalty.”

In upholding its previous ruling in this case, the Commission rejected Uber’s attempt to draw comparisons to civil penalties imposed in other PUC cases – emphasizing the already substantial reduction from the nearly $50 million fine that was recommended by PUC Administrative Law Judges (ALJs).

Regarding Uber’s request for a further reduction in penalties, the Commission determined that Uber made an “intentional and calculated business decision” to begin operations in Pennsylvania prior to receiving authority. Data disclosed by Uber shows that 122,998 trips were provided prior to receiving PUC authority, including more than 20,000 trips that occurred after a complaint was filed by the Bureau of Investigation & Enforcement (I&E) and nearly 42,000 trips after a cease and desist order had been issued.

In today’s Order, the Commission determined that Uber did not raise any new arguments or additional mitigating factors. Additionally, the Commission stressed that the authority to issue per-trip civil penalties is an important mechanism to effectively regulate entities who might otherwise justify continued unlawful operations as a “cost of doing business.”

In a joint statement, Chairman Gladys M. Brown and Vice Chairman Andrew G. Place stressed that public safety is the PUC’s number one priority with regard to motor carriers operating in Pennsylvania.  “We do not take lightly the fact that the civil penalty imposed in this case is the largest in this Commission’s history,” the Chairman and Vice Chairman said. “However, the reason the penalty is so large is because we were faced with an unprecedented number of violations committed by Uber.”

The joint statement also reiterated the Commission’s support for innovative transportation services, as demonstrated by the PUC’s temporary authorization for Uber and its competitors to operate in Pennsylvania – along with the Commission’s continued work with the General Assembly to draft legislation that would allow transportation network companies to operate under permanent certificates of public convenience.

In separate comments from the bench, Commissioner John F. Coleman also pointed to the unprecedented nature of the violations in this case, along with Uber’s calculated decisions to repeatedly skirt PUC regulations and continue operations – even after the filing of a formal complaint and the issuance of a cease and desist order.

Commissioner David W. Sweet, who joined the Commission after the initial decision in the Uber case, stated that his approach to earlier PUC actions may have varied, but added that “there has been no change in law, or any compelling new evidence unearthed that was unavailable during the proceedings.”

In his dissenting statement, Commissioner Robert F. Powelson repeated his concerns that the civil penalty being imposed on Uber is excessive; adding that, in his view, the fine is “inappropriate and inconsistent with Commission precedent” and “sends the wrong message about the business climate for innovation in this Commonwealth.”
Uber in PA: Timeline

Feb, 11, 2014 – Rasier LLC (Rasier) launched the Uber app in Allegheny, beginning its transportation network service without Commission authority.

April 14, 2014 – Rasier-PA LLC (Rasier-PA) filed an application for a Certificate of Public Convenience for two-year, experimental authority throughout the Commonwealth, excluding the City of Philadelphia, in which taxis and transportation network companies (TNCs) are regulated by the Philadelphia Parking Authority.

June 5, 2014 – I&E filed a formal complaint against Uber, Rasier, Gegen LLC and Rasier-PA (collectively referred to as Uber) alleging that the companies were operating as brokers of transportation – or transporting passengers by motor vehicle for compensation – in Pennsylvania without proper Commission authority. I&E amended its complaint on Jan. 9, 2015, proposing a civil penalty of $19 million and an additional $1,000 per day of unanswered discovery requests.

July 1, 2014 – PUC ALJs issued a cease-and-desist order against Uber, which became effective immediately. Uber continued to operate and applied for emergency temporary authority (ETA) in Allegheny County.

July 24, 2014 – The Commission entered an order affirming the granting of the cease-and-desist order issued on July 1, 2014

July 24, 2014 – The Commission granted Rasier-PA’s application for ETA, contingent upon its compliance with explicit conditions related to vehicle safety, driver integrity and insurance protections. Upon demonstrating compliance, the ETA effectively lifted the cease-and-desist order and allowed Rasier-PA to operate as a TNC in Allegheny County for 60 days, effective Aug. 21, 2014.

Oct. 17, 2014 – The Commission granted Rasier-PA an extension of its ETA until the Commission’s determination on Rasier-PA’s application for two-year, experimental authority.

Jan. 29, 2015 – The Commission approved an application granting Rasier-PA a two-year Certificate of Public Convenience for experimental service to operate throughout Pennsylvania.  Rasier-PA’s experimental authority is valid until Jan. 29, 2017.

Nov. 17, 2015 – PUC ALJs issued an Initial Decision imposing a civil penalty of $49.9 million.

April 21, 2016 – The Commission voted 3-2 to approve a civil penalty of $11,364,736. That Order became effective on May 10, 2016.

May 25, 2016 – Uber filed a Petition for Reconsideration of that Order, along with a petition to stay the order pending resolution of the Reconsideration Petition, any subsequent appellate proceedings, and any required Commission proceedings.

Sept. 1, 2016 – The Commission denied Uber’s Petition for Reconsideration and Stay Petition.