Uber Appealing Pennsylvania’s $11.4 Million Fine

Ride-hailing company Uber has asked Pennsylvania’s Public Utility Commission to reconsider a whopping $11.4 million fine it assessed the company in April. Governor Tom Wolf and officials from the Pittsburgh area have added fuel to the fire by supporting a dollar reduction.

Uber’s Rise

Uber has helped redefine how people get from point A to point B, but its path hasn’t lacked some speed bumps. This corporate wunderkind got its start in 2009. Along the way, it encountered a number of public relations problems, regulatory issues, and problems with driver safety. By late 2015, Uber was seeking financing that would boost its value to $62.5 billion.

The $11.4 million fine slapped on the company on April 21, 2016 was a record for the utility regulators.

Uber’s Pennsylvania Problems

Officials based Uber’s fine on operating for six months without required approval by the Public Utility Commission in 2014. In November of 2015, two administrative law judges recommended a fine of $50 million. However, utility commission members voted 3:2 to lower that amount.

The judges frowned on Uber for continuing operations after a cease-and-desist order and for so-called obstructive actions during an active investigation. The findings of improper operation and the recommended penalty appeared to mirror other cases linked to concerns about auto accidents, personal injury, and unsafe business practices that might jeopardize public safety.

Commissioners who cast a “no” vote deemed the fine excessive based on what the Public Utility Commission had set in the past. Uber’s fine broke the prior record of $1.8 million levied due to the way an electric generation supplier handled a customer guaranteed savings program.

Public Utility Commission members who supported lowering the proposed fine to $11.4 million indicated that Uber had since changed its business practices and complied with Pennsylvania rules. In addition, the company’s operations hadn’t generated many complaints from consumers while it conducted business under so-called emergency and experimental authority.

Now here’s the kicker: The $11.4 million Pennsylvania fine wasn’t the only one levied on the ride-sharing concern. In January 2016, authorities fined Uber $7 million, stating that the company failed to provide California regulators with sufficient information.

Public Officials Support Appeal

After Uber officials expressed shock over the $11.4 million fine, they announced they would appeal. The passenger-carrying company, now international, cited two premises as the basis of its appeal. The first was that nobody was harmed. Add to that the fact that Pennsylvania eventually approved Uber’s operation.

Public officials on May 3, 2016 sent the Commission a letter objecting to fairness of the fine amount, citing the hundreds of millions of dollars Uber had already invested in Pennsylvania and the presumption that investments would continue. Signed by the state’s governor, the mayor of Pittsburgh, and an Allegheny County executive, it didn’t suggest an appropriate dollar amount.

Appeal supporters hold that refusing to budge from $11.4 million could discourage innovative concerns from investing in the state. They also cite Uber’s decision to use Pittsburgh as its international headquarters for testing self-driven vehicles and for advanced technology research.

The Public Utility Commission’s concerns centered on two ride-sharing issues:

• Lack of a uniform way to ensure safety of vehicles.
• Ambiguity over whose insurance would pay damages if an Uber car were in a crash or otherwise injured an individual.

Despite these concerns and no license, Uber continued operating.

So What’s the Bottom Line?

Although it didn’t offer a lower dollar figure, Uber seemed willing earlier to pony up $399,000. Meanwhile, the Commission has issued licenses to Uber and competitor Lyft for services in all areas except Philadelphia, outside its jurisdiction.