PUC Hits Uber With Largest Fine – But Dodges the “Death Penalty.” Is Certificate Revocation Still a Possibility After Uber?
April 26, 2016
On April 21st, the Pennsylvania Public Utility Commission voted to hit Uber Technologies Inc. with a $11.4 million fine for providing motor carrier service to the public for compensation without proper Commission authority, a reduction of almost $23 million from the level recommended by the Administrative Law Judges.
The vote was 3-2, with Commissioner Powelson issuing a statement indicating that he would have set the fine much lower – $2.5 million. Commissioner Witmer also dissented, protesting the size of the fine. Both the joint motion/statement by Chairman Brown and Commissioner Coleman as well as the dissenting statements focused on many of the same factors in reaching their decision on the level of the fine, chiefly that the fact that Uber began operating in Pittsburgh without first obtaining any authorization from the PUC and that, even after ordered to cease and desist pending PUC action on its “experimental service” application, it continued to operate and, apparently, garnered considerable revenue from the operation (the actual amount of revenue was proprietary). Mentioned as “mitigating factors” leading the commissioners to reduce the ALJs recommended fine were the relatively complaint free operations of Uber since receiving its “experimental” certificate and the lack of any “harm” to anyone (other than the Commission itself in having its regulations and requirements so thoroughly ignored). All the statements mentioned that the service is apparently well liked by the riding public and apparently took this observation into account when reaching their decision on the level of penalty to be assessed. It is hard to judge the reasonableness of the level of fine arrived at because one of the key factors – the amount of profit Uber made as a result of the illegal activity – was not disclosed.
But the whole debate about the level of the fine misses the fact that Uber actually managed to dodge a much more lethal bullet: the “death penalty” – an order denying Uber a certificate to operate at all.
Prior PUC precedent makes clear that prior unlawful operations do not preclude the PUC from granting authority in a subsequent proceeding, so long as the “unlawful operations resulted from a good-faith misunderstanding of the law.” W.C. McQuaide, Inc. vs. Pennsylvania PUC, 137 Pa. Commw. 282, 585 A.2d 1151 (1991). While Uber’s initial foray into the Pennsylvania transportation market without PUC authority could possibly be deemed a “good faith misunderstanding,” it would not appear to be reasonably possible to suggest that its continued operation in the face of a PUC cease and desist order could fall into that category. While at first blush (especially considering how ubiquitous Uber has become around the Country) it is hard to imagine Uber being barred from operating in Pennsylvania, at least for some time, it is well established that a PUC certificate is not a property right, but a privilege. Considering this line of cases, Uber really achieved a major victory by apparently taking the “death penalty” off the table and having the Commission only debating how much of a fine to assess.
Does this mean that the “death penalty” is off the table for other PUC regulated entities that intentionally violate its regulations or the Public Utility Code? Since the result here is so fact driven, influenced by the popularity of the innovative ride service that provides high quality service, by all accounts, it would be unreasonable to come to that conclusion. But, expect the Uber experience to be cited back to the Commission the next time an argument is made that the certificate of a PUC-regulated entity should be revoked or suspended. If Uber, after its conduct, didn’t lose its certificate what kind of conduct would justify that outcome?
For more information contact Carl Shultz at cshultz@eckertseamans.com or Dan Clearfield at dclearfield@eckertseamans.com.
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