Philadelphia Department of Licenses and Inspections Hit with Class Action Over ‘Unconstitutional’ Daily Accruing Fines

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A proposed class action alleges the City of Philadelphia and its Department of Licenses and Inspections (DLI) have “entered a new chapter of exploitation” in the wake of a 2013 building collapse by continuing to assess unconstitutionally excessive, punitive and retributive fines on citizens and businesses as a way to extort vast amounts of money. 

The Philadelphia DLI, which is tasked with issuing construction permits, ensuring building safety and conducting inspections, has “long been infamous for its systemic corruption, incompetence and chronic underfunding,” the 30-page lawsuit alleges, claiming this dubious history is in part to blame for the deadly 2013 Salvation Army building collapse. The case claims the department “learned little” from the tragedy and has continued to put its own interests above the safety of Philadelphia residents by charging unconstitutional, hefty fines backed by only an “open-ended and vague” provision of the city code and geared only to generate additional revenues at the expense of alleged violators.

According to the lawsuit, Philadelphia is authorized by the Pennsylvania Legislature to impose a $300- to $2,000-per-day fee for each offense of the city code. Per the suit, each day an apparent violation continues counts as a separate offense, with no maximum cumulative fine in place despite the per-day cap. 

The plaintiff, a Florida-based developer whose lawsuit devotes a notable amount of real estate to the defendants’ reported history of systemic corruption and scandal, claims it was fined $7,200 per day and ordered to pay Philadelphia more than $2 million after it was cited by the defendants on December 20, 2017 for an apparent violation of Section A-601 of the Philadelphia Administrative Code.

Although the DLI’s stated focus is safety, the department, in practice, makes it so that financial obligations “must be satisfied before the unsafe condition giving rise to the violation can be remedied,” the plaintiff alleges. To that end, an alleged violator is unable to obtain necessary permits and licenses from the DLI to cure the issues that gave rise to a fine until after the fine is paid, the lawsuit says. 

Given the foregoing, the plaintiff alleges the fines issued by the Philadelphia DLI are a mechanism solely by which to make money, and not remediate safety or code violations. 

While the Salvation Army tragedy, during which six were killed and 13 injured after the wall of a building undergoing demolition next to the thrift store collapsed and trapped shoppers and staff inside, should have signaled a turning of the page for the Philadelphia DLI, the department has instead continued its pattern and practice of issuing exorbitant daily fines for less-than-clear reasons, according to the 30-page suit.

“That tragedy was supposed to usher in major changes, and many hoped that the once notoriously dysfunctional department would be subject to better oversight, properly managed and that the safety of the citizens of Philadelphia would be its primary concern,” the plaintiff claims. “That, however, never happened.” 

In the wake of the building collapse, a report compiled by a commission put together by Mayor Michael A. Nutter characterized the DLI as “a department fragmented by divergent mandates accumulated over decades of mission expansion, chronic underfunding and leadership with differing goals and methods,” citing a number of inadequacies with regard to coordinated action, safety regulations, proper training and stringent financial controls, the complaint says. Ultimately, the commission recommended 37 specific changes for the DLI that were never achieved, a failure the plaintiff alleges at length has bled into the present day.

Ultimately, the DLI’s “well-documented systemic incompetence, chronic underfunding, and corruption,” coupled with opportunity, has led the department to utilize a murky provision of the Philadelphia Code to extract excessive fines from citizens and businesses.

“In doing so, [the DLI] has created a lucrative scheme using the daily accruing fine provisions of the Philadelphia Code as a way to extort vast amounts of money,” the plaintiff alleges. “Upon information and belief, in just the last four (4) yeas alone, [the DLI] has generated at least tens of millions of dollars from this criminal enterprise.”

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