Nicholas Malfitano Apr. 28, 2016, 2:55pm


HARRISBURG – Pennsylvania’s Public Utility Commission has fined public transportation ride-sharing service Uber $11 million for operating in the state for a period of six months in 2014 allegedly without the necessary approval.

Per a statement from the PUC, the body voted 3-2 to adopt a joint motion by Chairman Gladys M. Brown and Commissioner John F. Coleman Jr. which levied a civil penalty of $11,364,736 on Uber.

It is the largest fine ever issued in the PUC’s history.

The formerly-largest fine totaled $1.8 million and was levied upon Hiko Energy, an electric company which defrauded its customers.

On Nov. 17, PUC administrative law judges recommended a fine of $50 million directed to Uber, for conducting business operations from February to August 2014 without PUC approval.

Brown and Coleman explained in the joint motion why the recommended fine amount of $50 million was passed over in favor a reduced penalty.

“We find that the recommended fine should be reduced to $11,364,736 for two reasons,” Coleman said. “One, Uber has modified its internal practices to comply with the Commission-imposed conditions on its current authority. Two, Uber and its affiliates have not demonstrated any significant compliance problems since the grant of emergency temporary and later experimental authority.”

Despite those positive remarks, Coleman reiterated the need for the issued fine.

“We find that a civil penalty of this size is necessary to deter Uber and other members of this industry from future violations of the Public Utility Code and the laws of this Commonwealth,” Coleman added.

Two members of the PUC, Commissioners Robert F. Powelson and Pamela A. Witmer, dissented from the majority and issued their own statements regarding the decision and fine decided on by the body.

“Uber’s operations as a motor carrier without a license constitute a serious violation of the Public Utility Code that warrants a substantial civil penalty,” Powelson said. “However, when determining the penalty amount, the Commission cannot overlook the existence of several mitigating factors in this case, such as the minimal actual harm that resulted from Uber’s operations, as well as Uber’s current compliance with PUC orders and continuing willingness to meet Commission directives.”

Witmer added compared to other cases handled by the PUC, she believed the penalty directed towards Uber was “egregious.”

“Several Commission cases wherein we assessed substantial civil penalties involved incidents of serious bodily injury, fatalities, significant property damage and/or patterns of unsafe businesses practices that jeopardized public safety. I think these prior cases should instruct the civil penalty assessed in the instant case and guide us to a more measured and reasonable outcome,” Witmer said.

Uber spokesperson Craig Ewer said the company was “disappointed” by the PUC’s decision.

“We are disappointed by today’s decision and shocked by the amount of the civil penalty, which is 45 times higher than the penalty paid by Uber’s competitor for the same activity,” Ewer said. “As two Commissioners confirmed, there was no actual harm to Pennsylvanians, and the Commission subsequently approved the same operations.”

Lyft, a ride-sharing company and prominent competitor of Uber’s, settled a case with the PUC for similar compliance issues for an amount of $250,000.

Ewer added Uber looked forward to appealing its case to the Commonwealth Court of Pennsylvania, but in the meantime, would continue to “work in good faith with the [Public Utility] Commission.”

In a separate action, the Philadelphia Taxi Association filed an antitrust lawsuit against Uber on March 15, claiming the ride-sharing company violated both the Sherman Antitrust Act and the Clayton Antitrust Act through operating a monopoly for public service transportation in Philadelphia, and intentional interference with contractual relationships and unfair competition.

That case remains pending.

From the Pennsylvania Record: Reach Courts Reporter Nicholas Malfitano at nickpennrecord@gmail.com

More News