Long awaited certification hearing into Toronto plate owners’ $1.7 billion legal action against City commences November 17
by Mike Beggs
Toronto taxi plate owners will finally learn the status of their proposed $1.7-billion-plus class action suit against the City of Toronto, at an Ontario Superior Court certification hearing on November 17, 18, and 19.
They’re seeking damages to offset the losses suffered from the alleged “negligent manner” in which the City enforced Chapter 545 against drivers of unlicensed Uber X vehicles, and for adopting Chapter 546 in 2016 which, “disregarded the interests of taxi plate holders.”
The group, All Taxi Owners and Operators Ltd. (ATOOL) was formed to mount this action, with the Statement of Claim filed on July 13, 2018 by co-plaintiffs Lawrence Eisenberg, Behrouz Khamseh, and Sukhvir Thethi on behalf of all industry members who held an owner’s license on September 1, 2014.
“That’s the day Uber X began its’ service. That’s when the real trouble started for the taxi industry, with a loss of business and a loss of value in plates and leasing rates,” their lawyer Michael Binetti said last fall at an ATOOL meeting. “The City was negligent in the way they sold out the taxi business, under the bylaw. The bylaw said the Uber driver was illegal, and the City did nothing about it.
“The City improperly preferred the interests of Private Transportation Companies (PTC’s) without due regard for the interests of Taxi Plate holders, contrary to the 2012 direction from City Council that they do so,” the Statement of Claim reads. “In fact, City staff’s preference was to destroy the traditional taxi industry in favour of Private Transportation Companies, and they undertook actions that would achieve that end.”
Cab interests around the world have been undermined by Uber and Lyft’s cut-rate rides (which heretofore have been heavily subsidized by the two companies).
And class actions have, similarly, been filed by taxi owner/operators in Ottawa, Mississauga, Saskatoon, and Quebec (where the Province recently increased its’ compensation to taxi permit holders to almost $800 million).
“We keep getting information on what’s going on in Quebec. They keep upping the ante. It’s encouraging,” Eisenberg says.
For the 55-year veteran, it’s some relief that the Toronto action is finally, “getting down to the nitty gritty”, given the peanuts he and his peers are now collecting off leases for their retirement.
“Three plates, and I’m getting $200 a month. Two of them are sitting on the shelf,” he relates. “How much have I lost over the last 1.5 years?”
He alleges that, from when Uber X first hit Toronto streets in 2014 through 2016, “There was no protection provided for the licensed taxi industry.”
“The whole system failed because the City turned its back on the industry they regulated,” he alleges. “The taxi industry itself is at fault, maybe we didn’t keep up with the times (in terms of app technology). But who knew the roof would fall down in one fell swoop? And, the City didn’t do anything about it.
“All it amounts to is, who is the City making the most money from?”
Of the City’s actions lowering service standards, long-time Toronto cab industry observer Rita Smith goes even further.
“I think it’s criminal negligence, and I think Cheryl Hawkes would agree with me. Her son died (in an Uber car, manned by an untrained driver on his second day on the job). And how many women have been sexually assaulted because of this criminal negligence?”
With open entry to the Toronto market, PTC’s have filled the streets with more than 90,000 cars, resulting in what taxi industry leaders have referred to as a “Wild West” scenario, with the shutdown of the City’s driver training school and vehicle inspection facility.
“Oh, they’ve raped the industry. That’s all it is,” says owner/operator John Dufort. “I wouldn’t advise anybody to get into this business.”
He cites the increased traffic and CO2 emissions caused by PTC’s, contrary to Mayor John Tory’s much-publicized measures for reducing gridlock in the downtown.
“He’s crazy on pedestrians, and bikes, saying that as far as congestion goes, ‘We’re all part of the solution,’” he continues. “Mr. Tory, please sit in the front seat of my car for a day, and I’ll show you all the idiotic things they do out there.”
Binetti maintains the new regulatory setup under Bylaw 546 (the Vehicle-For-Hire Bylaw) was destined to fail from the outset, with the licensed taxi industry placed at a big disadvantage in competing against Uber, Lyft, and other PTC’s.
He submits the City had a “social obligation” to look after cab operators’ financial interests, and didn’t live up to it.
Front and centre, ATOOL maintains the City has welched on its’ decades-old promise that the plate would represent the “taxi driver’s pension”. They claim by allowing Uber X to “run wild” outside the by-law for four years, and then granting PTC’s unlimited entry, taxi plate and lease values have been reduced to a pittance – leaving many of these aging owner/operators and their families out in the cold.
“The City has regulated taxi service for decades, and has consistently limited the number of taxi plates issued,” the Statement of Claim reads. “There has been an understanding that in exchange for significant regulations upon them, including upon pricing of services, taxi plate holders were permitted to earn a reasonable living.”
Further to the point, they claim, for decades, when a taxi plate was issued, City staff would congratulate the plate holder on being given their “pension” for retirement.
Dufort remembers that speech, from when his number came up.
“I figured I got a plate, and here I had something (of significant value),” he says.
Taxi plate owners claim this “contract” has existed for decades, and that a secondary market for plates has developed as a result.
“The City has been more than just a regulator of the taxi industry, but a willing participant in the leasing or transfer of plates, from which it profited,” the Statement of Claim reads. “The City created the conditions under which a taxi plate came to be treated as an investment, and a form of retirement savings for plate owners.”
The City refutes the notion that it was a “participant” in the taxi business, and that it has any obligation to protect the financial interests of cab owners. Furthermore, it has always taken the position that, “a taxicab owner’s license is not, and never has been, the property of any licensee.”
“If the prices for the sale of taxi-cabs, or the income earned by owners has decreased, the decrease is the result of market forces beyond the City’s control, for which it is not responsible, and are an expression of consumer preferences that taxicabs have failed to satisfy,” the Statement of Defence reads.
Relying on the Negligence Act, the City of Toronto Act, the Courts of Justice Act, and the Toronto Municipal Code, “the City pleads that the claim against it should be dismissed.”
Should they be granted certification, Toronto cab owners can expect to be in for a drawn-out battle.
Eisenberg alleges that Toronto Legal has already “dragged its feet” in addressing this legal challenge. But he believes this is the industry’s best shot ever for a victory in court.
“All of the points our lawyer has made have been good points,” he says. “He will do well, not only for Toronto, but for Mississauga as well.”
“I think certification is just about a slam dunk,” observes owner/operator Gerry Manley. “We’ve got a much stronger case than Ottawa (which is already certified).”
“(But) when Binetti says I need another $200,000 (or so), will the industry come up with the money?”
Of the dreadful situation owners have been left in, Manley says tersely, “I’m out there driving five or six days a week, and I’m 75 years of age.”
Their economic situation getting more dismal by the day, ATOOL is urging the industry’s 5,500 plate holders to make their $500 contribution and get behind the cause -- before it’s too late.
Eisenberg warns, “If you want your (investment) to be saved, we need your financial support.”
“There’s no in between here. This business has gone. There’s no money to be made, whether for the driver or the owner,” he continues.
“(But in 2011) our licenses were worth upwards of $380,000, and the City can prove it -- they kept the records of all this stuff.”
Former long-time driver Gary Walsh agrees they have a “winning case”.
“It was a social contract and the City said, ‘You do this, you will get this,’” he offers. “So, people rearranged their entire lives instead of getting on with something else.”
“I believe they will certify it. (But ATOOL is) going to have to raise more money, because the City has a series of standard actions to defend against a case (namely, delay tactics). They’re banking on the (hope) that the taxi industry won’t be able to pay.”