As someone relatively new to Philly, I am not at all surprised by the need for relocation towing. In the immediate Philadelphia metro area, but outside center city parking is extremely sparse. It's not uncommon for me to help squeeze neighbors into barely large enough parallel parking spots (by waving them in) at midnight. Some of these folks live more than 6 blocks away and purportedly were looking for parking after getting off work for an hour or longer.
Philadelphia is also the first place I have lived where parking in the center median of major thoroughfares is normal:
https://www.google.com/search?q=philadelphia+center+median+p...
Speaking of, I live a block off South Broad Street (most of the images in the link) and not too long ago there was a marathon that required clearing of that street of all parked cars for its entire length. It _was_ well communicated, well in advance but you can imagine that if parking is tight when the street side parking _and_ the center median is chalk full of cars, relocating is difficult. I don't know if any cars were relocation towed, but I know the night before the event I still saw some cars parked on Broad.
I still think there are communications issues, the city should have a way for owners to find their car. But I also think it's a bit more complex than your first take. Communication is hard and at the scale of Philadelphia I am not too surprised that there are cases where things can go awry between all the various bureaucracies you have to interact with in something like this. I also think it's pretty reasonable that the lawsuit is looking to force improvements, not do away with the system.