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Taxilogoweb2014

February 2018

Judge gives Ottawa taxi industry approval to proceed with $210 million suit against city for damages sustained in wake of Uber

by Mike Beggs

Taxi interests have been given the go-ahead to proceed with a $210-million Class Action Suit against the City of Ottawa – the largest such suit in the capital’s history.

On January 16, Ontario Superior Court Justice R. Smith ruled in favour of a motion to certify a class action proceeding filed by Metro Taxi (Marc Andre Way, and Iskhak Mail) on behalf of the industry’s 768 plate holders, and four brokerages against the City. The suit was filed on August 16, 2016.

Way is chief operating officer of Coventry Connections, and president of the Canadian Taxicab Association, while Mail is a taxi plate owner.

They allege the City is responsible for damages they’ve suffered, (including a huge loss in plate values) due to the negligent manner in which it enforced the 2012 Taxi Bylaw against Uber drivers, and for unlawfully amending its Taxi Bylaw through the “Vehicle For Hire Bylaw” in September of 2016, to permit Uber to operate.

In addition, the plaintiffs claim this 2016 amendment had the effect of discriminating against taxicab license holders, of whom over 90 percent are members of minority groups, contrary to the Charter of Rights and Freedoms, and the Human Rights Code.

They also claim the fees charged to them by the City under the Taxi Bylaw constituted illegal taxes.

In his 33-page decision, Justice Smith observed that the City has regulated taxi services under a well-established scheme, “which strives to deliver safe and reliable service to the public, and reasonable revenues to the taxi industry,” before deciding to license Uber. He noted that for many years, the City required all taxi operators to hold a plate license, and all dispatch companies to obtain a broker’s license, and that the City consistently limited the number of plates issued.

Uber had begun operating in Ottawa in 2014, and the plaintiffs allege that Uber and its drivers fall within the relevant taxi industry definitions (“dispatch”, “taxicab”, “taxicab broker”), and that neither Uber nor Uber drivers obtained licenses or plates from the City to deliver these services. Nor did they pay any fees under the Taxi Bylaw.

And although taxi industry members asked the City to enforce the regulatory scheme against Uber, they allege the action taken by the City against Uber’s drivers was “vastly inadequate”, and with respect to Uber, “it was entirely lacking”.

The Justice ruled the plaintiffs have met the five criteria to certify a class action.

The City admitted that a class proceeding is the preferable procedure to resolve the common issue of whether it was negligent in enforcing the Taxi Bylaw.

But its solicitors noted that, in his affidavit Way said the plaintiffs sought damages, “caused by Uber’s operations in Ottawa since 2014”, and that this was an admission that the damages they have suffered were caused by Uber, and not by the City.

However, the Justice stated that, “Read in context, I am satisfied he is saying the damages suffered were caused by both Uber and the City.”

Furthermore, the City’s lawyers argued that while it is unfortunate that many taxi drivers have been unable to obtain employment in their field since they immigrated to Canada, “that is not the City’s fault”, and that the plaintiffs’ claims of discrimination under the Charter and the Code were not common to all class members, because six to seven percent of the license holders are not members of a minority group.

The list of reported plate values ranged up to $320,000. And the plaintiffs claim the City is aware of a secondary market where taxi plates are bought and sold, and of their stated value.

The suit also states that the new Bylaw provides a number of advantages to Uber and its drivers not available to class members, including unfettered access to the market, lower fees, and not having to install in-car cameras.

Commissioned to do a consultant’s review of Ottawa’s taxi and limo regulations in May of 2015, KPMG predicted taxi plate owners would look for damages from the city if Council created a new category for Uber X drivers. But the City responded that it, “would likely not be held liable for the economic losses suffered by taxicab plates and plate-holder licenses should the value of those plates decline as a consequence of City Council, and adopted through a bylaw which would affect the taxicab industry, by, amongst others, the vehicle-for-hire business in Ottawa.”

Ottawa Legal stated that the City is under no obligation to provide financial compensation to plate-holders.

From the time of Justice Smith’s decision, the plaintiffs could make submissions on costs within 15 days, and the City has 15 days to respond. From there, the plaintiffs will have 10 days to reply.

A $410-million class action suit against Uber on behalf of all licensed Ontario taxi and limo owners, drivers, and brokers by veteran Toronto owner/operator Dominik Konjevic is also outstanding in the courts. It marked the first class action filed against Uber in Canada, as represented by the firm of Sutts Strosberg.

The certification of the Ottawa taxi industry’s class action suit lends at least some level of encouragement to their Toronto counterparts pondering a similar course of action.

Owner/operator Gerry Manley observes that while the claim Toronto’s taxi industry would file against the City (and possibly the Province) would not 100 percent mirror the Ottawa industry’s case, “for the most part it would, and many of the comments made by Justice Smith certainly would apply to a Toronto case, as well.”

Mississauga plate-holder Peter Pellier suggests Sections 33 (b) and 49 of the Ottawa decision are of particular interest, because they recognize negligence on the part of the City of Ottawa.

“If their action is to succeed, the courts must be convinced the City acted negligently by not enforcing the previous Bylaw with respect to Uber, and also, in adopting amendments that accorded Uber and so-called ridesharing companies special treatment,” he says. “Herein, lies the crux of the matter.”

 

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