Philadelphia Group Wins Class Action Suit Against Parking Authority

PHILADELPHIA — In a pivotal victory for the limousine industry, the Philadelphia Regional Limousine Association (PRLA) won a declaratory judgment action against the Philadelphia Parking Authority (PPA) in the Pennsylvania Commonwealth Court on Feb. 14.

The ruling renders the PPA’s fee schedule unconstitutional because the statute that establishes the PPA’s budget process gives the PPA too much power to establish spending levels and to allocate regulatory expenses, and because it fails to give parties aggrieved by the fee schedule the ability to challenge the fees.

“We challenged the Parking Authority’s budget process for the Taxi and Limousine Division which is described in Section 5707B of the Parking Authority Law,” said the PRLA’s attorney, Michael S. Henry. “That process requires the Philadelphia Parking Authority to submit a budget with a proposed fee schedule to the appropriations committee in both the Senate and House. If neither the House nor the Senate takes any action, it becomes effective.”

Henry listed several supporting reasons for the challenge:

• The law does not impose any limitation on the amount that the Parking Authority can spend on taxi and limousine regulation.
• It provides no guidelines on how the regulatory expenses are allocated among the different carriers.
• The Pennsylvania constitution requires the legislature to make policy decisions.  This statute basically lets all of the policy decisions to be made by Philadelphia Parking Authority — things like how much they are going to spend and how they are going to assess the individual carriers to pay for the regulatory expenses.  
• The law did not provide any way to object to the assessment either through the administrative process or the courts. It violated due process as there was no way to appeal the assessment decision.

Although the PRLA did win in essence, they did not win on all points. Henry explained that the PRLA also asked the court to strike down the entire law because, without the funding decision, he did not believe that the legislature would have enacted the law. The court did not agree on that point but it did strike down the law as unconstitutional because of the unlawful delegation and due process argument.

Henry explained that the court entered an injunction against the PPA to prevent it from enforcing the fee schedule against any of the parties in the suit. The members of PRLA are not required to pay regulatory fees that have been adopted under this process. Any other carrier who wasn’t a party could raise the objection as well.

The PRLA’s case was heard by an en banc panel of all of the active judges of the court. En banc panels are held four times a year. They select the cases they will hear. They are typically cases that court believes are significant.  

However, the PPA has appealed the decision to the State Supreme Court. The Pennsylvania Supreme Court will set a briefing schedule and a date to hear arguments on whether they should uphold the Commonwealth decision. The appeal process could take over a year from start to finish. Additionally, the Pennsylvania legislature could decide to amend the statute to fix the constitutional defects in the law.  

Perhaps the most interesting part of the Commonwealth Court’s decision was its discussion of the budget process that all Commonwealth agencies must follow.  The Administrative Code of 1929 requires all Commonwealth agencies to follow a process which includes submitting the budget to the Governor and Department of Budget. The Governor then submits a budget request to the legislature and it gets put in an appropriations bill which both branches would then have a chance to review and modify. The PPA is required to follow this budget process regardless of anything else that the PPA’s law says about the budget.  The most interesting unanswered question is whether that applies to the entire PPA budget, not just the Taxi and Limousine Division budget.

“The PPA has not followed that process in the last 10 years since the legislation transformed it into a Commonwealth agency,” Henry said. The PPA’s budget is over $200 million. The Taxi and Limousine Division is only $6 million.  

The PPA refers to itself as a “quasi-state agency.” Henry laughed at this term, equating it to being almost pregnant.  

Why was the case brought?
Limousine operators in Philadelphia object to the manner in which the PPA assesses their businesses primarily because the PPA adopted a per vehicle assessment, which results in an inequitable allocation of regulatory expenses.  Essentially, operators feel that the number of vehicles in an operator’s fleet does not directly correspond to the company’s profitability. Limousine operators are different from medallion cab operators but are being treated the same way they are. Limousine operators are not taxis and there is no direct relationship between the number of vehicles being operated and profitability and revenues.  An example is an operator who has one vehicle and decides to expand to five vehicles. The PPA has no reasonable basis for concluding that the limousine carrier will be five times more profitable, thereby justifying an assessment five times bigger. Additionally, there are many different diverse models that limousine operators use to run their businesses, such as retail, proms, corporate, groups, etc. The PPA arbitrarily adopted the assessment methodology without any evidence to back it up.  

PUC v. PPA
The court noted in the decision that the statute that governs the Pennsylvania Public Utility Commission (PUC), which regulated Philadelphia operators before the PPA law and continues to regulate the remainder of the state, caps the amount that can be spent for regulatory expenses and ties it to a small percentage of the revenues of all of the utilities in the state. The PUC is prohibited from spending any more than that percentage. The PUC statute requires that the PUC group utilities according to the type of services they provide and assess them on a pro rata basis based on revenue.  

Limousine operators believe the PUC’s allocation was a more equitable method, which is still being imposed in the rest of the state. Legislation would be needed to fix the budget issue. If the legislature adopted a statute similar to the PUC statue, it would be preferable. That is what the PRLA has been lobbying for with their bills in Harrisburg for a number of years.

The PPA has some powerful allies supporting their efforts. Matt Daus, the former commissioner of the New York City Taxi and Limousine Association and the president of the International Association of Transportation Regulators, wrote a letter of testimony on behalf of the PPA when they testified before the House Consumers Affairs Committee in 2010. Although the PRLA has had many supporters to their bills, they were not able to get them out of Committee as the committees chairs have been controlled by PPA supporters.

“We are very excited about the win,” says PRLA President Jim Salinger of Unique Limousine.  “We continue to chip away at regulations that only serve to hurt our industry.”

— Linda Jagiela, LCT contributing writer