Is a lawsuit challenging Pennsylvania’s new ride-sharing law in the works?

Is a lawsuit challenging Pennsylvania’s new ride-sharing law in the works?


Even though Gov. Tom Wolf has signed legislation that will create statewide regulations governing transportation network companies, at least one lawmaker says the new act has Pennsylvania traveling into risky territory – and he’s potentially looking at suing to stop it.

“I’m not going to let this go; I’m adamant about declaring the [retroactive penalty] provision inappropriate and strip it,” said Senate Minority Leader Jay Costa, D-Allegheny. “What mechanism we use, I don’t know, but that’s what I’m looking to do.”  Sen. Costa also said he wouldn’t rule out filing a lawsuit.

While Act 164 of 2016, previously Senate Bill 984, is billed as ensuring the operations of ride-sharing companies, like Uber and Lyft, are properly regulated in Pennsylvania, there’s a lot more to the new law, and that’s what Costa said worries him.

“The thing that I most object to is the provision in the bill which, in my view, is special legislation for one entity, that undermines the rulemaking and enforcement of a quasi-judicial agency, the PUC [Public Utility Commission],” said Costa.

The provision in question states: “A person or entity which, as determined by the commission, operated as a transportation network company prior to the effective date of this section without proper authority from the commission shall be subject to a penalty not to exceed $1,000 per day or a maximum penalty not to exceed $250,000, notwithstanding the number of violations that occurred during the period in which the person or entity operated without authority.”

In April, the PUC voted 3-2 to adopt a joint motion ordering Uber to pay over $11 million in civil penalties for “unlawful operations” in violation of the PUC Code by “providing regulated passenger transportation service without a certificate of public convenience” from the PUC.

The penalty is currently under appeal in Commonwealth Court, and when the fine was issued, some Republican and Democratic elected officials – including Gov. Wolf himself – questioned the severity of the fine.

Costa argues the Pennsylvania Supreme Court employs a test regarding special legislation which depends on whether treating a particular class differently under the legislation is founded on real distinctions and not artificial differences used to evade the constitution. The court has held that “classification is per se unconstitutional when the class consists of one member and it is impossible or highly unlikely that another can join the class,” said Costa.

Costa said the PUC did also penalize another riding-sharing company – Lyft – which reached a $250,000 settlement in July 2015 with the PUC for, like Uber, unauthorized operations. Uber’s April 2016 penalty was $11 million, and appears to be the only one that would be affected by the new act.

Therefore, argues Costa, the retroactive section of SB984 violates Article III, Section 32 of the Pennsylvania Constitution, which prohibits the General Assembly from passing “local or special law in any case which has been or can be provided for by general law,” and, within the section’s specifications, forbids “remitting fines, penalties and forfeitures, or refunding moneys legally paid into the treasury.”

Costa’s argument runs into a bit of difficulty, according to other readers of Act 164’s language.

“Based on numerous conversations with legislative leaders throughout the process, it is our understanding that the language regarding fines is intended to address future actions,” said PUC press secretary Nils Hagen-Frederiksen.

Costa has said during committee meetings and floor debate the legislation establishes some dangerous precedents.

Costa again expressed Friday that if the Legislature can undo a fine imposed by a regulatory agency like the PUC, there would appear to be little to prevent a future General Assembly and compliant governor from undoing a fine imposed by the state Department of Environmental Protection or another government agency.

With this new law “you’re saying it’s okay to change that [an imposed fine] for a specific company, retroactively,” which undermines the ability of any governmental agency to ensure compliance with its regulations, said Costa.

Senate Republican leaders have said there is no intent by the Legislature with this act to affect the PUC penalty assessed to Uber. They have also explained, as Hagen-Frederiksen stated, the language is written to address penalties that have yet be ordered by the commission, not ones that have already been finalized.

Senate GOP spokeswoman Jenn Kocher reiterated that position. “We feel this does not affect the Uber situation, as that has been finalized by the PUC, and there’s no other action that can be taken by the PUC unless ordered by the court,” said Kocher.

Kocher also said it’s possible there are other PUC actions about which we have not yet been made aware, and for which no fine has yet been imposed, so there could be more than one matter affected by the Act 164 provision.

“It doesn’t matter what the intent is if the plain language is clear,” Costa said, noting that intent is only of interest to the courts when judges can’t clearly discern what a law does. “This plain language is clear.”

“Now that the governor has signed this, Uber doesn’t have to make the payment, and I don’t know if anyone is going to come back and say they have to – I’m mean, who’s gonna make them pay it now, when you read it and it says they don’t have to pay it?” said Costa. “It’s crazy.”

Costa made it clear he’s only focused on the retroactive penalty language within the bill.

“I’m very supportive of the underlying bill – I voted for it in the past,” he said. “I think it’s a good step in the right direction, a good beginning.”

He did note there are a few items on which he and Sen. Wayne Fontana, D-Allegheny, are working for next session to address “provisions that should be applied statewide” but are currently only available to Philadelphia.

However, while Costa approves of much of the legislation, some have noted Act 164 doesn’t contain a severability clause – which allows the rest of a law to remain in effect even if a particular portion of it is found to be unconstitutional.

If Costa should sue, and he should be successful, that could likely force the General Assembly to pass new ride-sharing legislation.