United States District Court, E.D. Pennsylvania
Z& R CAB, LLC and ZORO, INC.
PHILADELPHIA PARKING AUTHORITY
For Z& R CAB, LLC, ZORO, INC., Plaintiffs: EDWARD W. MILLSTEIN, LEAD ATTORNEY, SACKS WESTON PETRELLI DIAMOND & MILLSTEIN, PHILADELPHIA, PA; JOHN K. WESTON, LEAD ATTORNEY, SACKS & WESTON, PHILADELPHIA, PA.
For PHILADELPHIA PARKING AUTHORITY, Defendant: PATRICK J. DORAN, LEAD ATTORNEY, GARY D. FRY, ARCHER & GREINER PC, PHILADELPHIA, PA; DENNIS G. WELDON, THE PHILADELPHIA PARKING AUTHORITY, PHILADLEPHIA, PA.
We here must consider whether a decision of the Commonwealth Court of Pennsylvania applies retroactively to this 42 U.S.C. § 1983 case. As will be seen, this inquiry obliges us to analyze nuances of federalism.
Taxicab operators Z& R Cab, LLC and Zoro, Inc. (collectively, " Z& R Cab" ) bring this suit individually and on behalf of a class of others to recover fees paid to the Philadelphia Parking Authority (or the " PPA" ) under a state statute the Commonwealth Court held unconstitutional in February of 2013. The plaintiffs seek a declaration that all sums paid under that statute since 2004 were paid in violation of the United States Constitution and should be awarded to the plaintiffs and each class member, and they further seek to enjoin the PPA from assessing or collecting further payments under that law.
The Philadelphia Parking Authority seeks dismissal of the suit, contending that the Commonwealth Court's decision has
only prospective application and that plaintiffs lack standing to obtain the equitable relief they seek.
For the reasons detailed below we will deny defendant's motion to dismiss and hold that the Commonwealth Court's decision has retrospective application. But, as we lack subject-matter jurisdiction to grant the plaintiffs the financial remedies they seek, we must dismiss the matter to maintain the federal-state comity as the United States Supreme Court obliges us to do.
II. Factual Background
At the heart of this controversy is a Commonwealth Court decision last year that held the Parking Authority's regulatory fee schedule and budgeting process were unconstitutional. MCT Transportation Inc. v. Philadelphia Parking Authority, 60 A.3d 899, 901 (Pa. Cmwlth. 2013), aff'd 81 A.3d 813 (Pa. 2013).
The seeds of this suit were sown in 2004 when the Pennsylvania General Assembly transferred the regulatory responsibility for taxicabs and limousines operating in Philadelphia to the Philadelphia Parking Authority from the Pennsylvania Public Utility Commission (the " PUC" ) -- which historically had been solely responsible for all taxicab and limousine regulation in the Commonwealth. MCT Transportation, 60 A.3d at 901. Chapter 57 of the Parking Authority Law, 53 Pa.Cons.Stat.Ann. § § 5701-5745, set forth the new regulatory regime. Id. The regulations provided that Philadelphia taxis and limousines would pay a fee -- which varied annually -- into a fund to support the PPA's regulatory activities. Id. Under Section 5707(b) of the Parking Authority Law, the PPA's budget process required it to submit a budget and proposed fee schedule before March 15 of each year to the Appropriations Committees of the Commonwealth's Senate and House of Representatives. Id. The fee schedule became effective unless either the House or Senate disapproved that budget through a resolution by April 15 of the same year. Id. If either the House or Senate disapproved of the fee schedule and budget, the PPA could " submit a revised budget and fee schedule. . . within 15 days. . . [or] utilize the fee schedule and budget for the prior year." Id. at 902 (quoting 53 Pa.Cons.Stat.Ann. § 5707 (b)). Thereafter, unless either the House or Senate acted to disapprove the revised submission within ten legislative days, the PPA's revised budget and fee schedule became effective. Id.
On April 15, 2012, when the PPA's budget and fee schedule became effective through the just-described process, the taxicab companies refused to pay the invoiced fees. Id. The PPA responded by threatening them with citations and fines, impoundment of their vehicles, penalties, fees, and the revocation or cancellation of their certificates of public convenience. Id. The taxicab companies sued, seeking, inter alia, a declaration that Section 5707(b) as then written was unconstitutional because the General Assembly improperly delegated its legislative power to the PPA by supplying no guidance, standards or restrictions on the PPA's authority to formulate a budget or fee schedule. Id. at 903. They also sought a declaration that the fee schedule represents a taking without due process of law because Section 5707(b) did not provide for a hearing in which the taxicab companies might challenge the fees.
In its decision in MCT Transportation, the Commonwealth Court reviewed the process by which state agency budgets are prepared and enacted under the Pennsylvania Constitution -- which governs the process for executive and independent agencies. Id. at 906. Article VIII, Section 12 of the Pennsylvania Constitution provides that the Governor shall annually submit to the General Assembly " a balanced operating budget for the ensuing fiscal year" with proposed revenue and estimated expenditures; a capital budget; and a financial plan. Id. at 907 (quoting Pa. Const. Art. VIII, § 12). The Pennsylvania Constitution directs the General Assembly to respond and a general or specific appropriations act becomes law when the Governor signs it. Id. The Pennsylvania Supreme Court " established that this budget and appropriation process must be followed regardless of the source of the funds to be used by a state agency." Id. at 908-09 (citing Shapp v. Sloan, 480 Pa. 449, 391 A.2d 595 (Pa. 1978) (holding that legislative action is required before any funds can be used by a state agency)). " The General Assembly, alone, is charged with establishing spending priorities and allocating the available monies, thereby exercising control over all expenditures." Id. at 909 (internal citation, ellipses and emendations omitted).
The Commonwealth Court contrasted the PUC's budget process with the PPA's. As with the Parking Authority, the PUC is funded by fees from the utilities it regulates, which are held in trust solely to defray its administrative expenses. Id at 910. But the similarities end there. The PUC may assess utilities " up to three-tenths of one percent of gross intrastate revenue to cover the cost of regulation", id., and submits its annual budget request for the Governor's review and to both chambers of the General Assembly, which must approve the request before the Governor signs it and it becomes law. Id. at 910-911. " In short, the [PUC's] budget was established under the budgeting process that is mandated for all state agencies." Id. at 911.
By contrast, although it is also a state agency, the PPA's annual budget request at the time of the Pennsylvania suit was not submitted for the Governor's review. Indeed, the Governor did not approve it nor was the PPA's budget introduced in the General Assembly to be debated in each chamber before a vote. Id. Instead, its budget became law unless either the House or Senate vetoed it. As the Commonwealth Court stated,
This manner of establishing a state agency's budget is sui generis. Unlike any other state agency, the Parking Authority sets its annual budget, which changes from year to year, without the oversight of either the Governor or the General Assembly as a body.
The court also noted that, although the fees paid were placed in a special fund consisting of three accounts -- the Taxicab account, the Limousine account and " Other accounts as determined by the authority" -- the PPA retained the power to allocate expenses between accounts " in a fair and equitable manner. . .as determined by the authority." Id. at 911-912 (citing 53 Pa.Cons.Stat.Ann. § 5708(c)(2)). By contrast, the Court explained, continuing appropriations into other Commonwealth funds are subject to statutory limitations that do not leave those funds any discretion about cost allocation. Id. at 912 n. 15.
Turning to the fee schedule imposed on the taxicab and limousine companies, the Commonwealth Court noted that " [t]he aggregate amount of fees to be paid by the utilities that report to the Parking Authority is a matter committed totally to the
Parking Authority's discretion. How the fees are allocated among regulated taxicabs and limousines is likewise discretionary[.]" Id. at 913. By contrast, the PUC's allocation is determined by a legislative standard based on its regulated utilities' relative revenue and profitability.
Because nothing in Section 5707(b) limited the PPA's discretion in allocating costs --imposing neither a standard nor any limits -- and the House and Senate had only veto power rather than affirmative legislative power over the PPA's budget, the Court held that Section 5707(b) as then written was unconstitutional. Id. at 914-15.
The Commonwealth Court also agreed with the taxicab plaintiffs that Section 5707(b) " unconstitutionally deprives them of due process because it does not provide any procedure for challenging the Parking Authority's fee schedule, either before or after its adoption." Id. at 916. The Court cited well-established principles that " [t]he essential elements of due process are notice and opportunity to be heard and to defend in an orderly proceeding adapted to the nature of the case before a tribunal having jurisdiction of the cause." Id. (internal citation and modifications omitted). In short, the PPA's position -- that the taxicab companies could " lobby the Appropriations Committees between March 15 and April 15 of each year" if they objected to the fee schedule -- fell short of the Due Process requirement, particularly as the ...