August 2018

Taxi industry takes first steps in mounting potentially huge class action suit against the City of Toronto

by Mike Beggs

Declaring their industry on its “last legs”, Toronto taxi interests have taken the first step towards mounting a class action suit against the City of Toronto.

On July 12, an application of intent was filed by a new organization, All Toronto Owners and Operators Ltd. (ATOOL), which has retained a Bay Street law firm to represent them in this potential $100 million class action.

This legal pushback comes with Toronto Municipal Licensing and Standards’ Review of the new Vehicle-For-Hire Bylaw more than a year overdue, and counting.

Taxi operators blame the City for failing to enforce against Uber, when it worked outside the Toronto bylaw from 2012-‘15, and for writing Uber and PTCs into the new Bylaw under favourable conditions – granting them unlimited entry to the market and virtual self-regulation.

Meanwhile, the cab industry continues to get pulverized by Uber, with plate values, lease rates, and driver revenues a bare fraction of what they were – and no less than 185 plates on the shelf, according to the City.

“This is going to be the industry’s last stand,” says Lucky 7 Taxi owner Lawrence Eisenberg, one of the plaintiffs. “If (owner/operators) sit and do nothing, they’d better sell their plates and go home.”

Four years after Mayor John Tory was first elected Mayor -- and almost immediately proclaimed, “Uber is here to stay” -- City Taxi owner Avtar Sekhon agrees the industry’s back is up against the wall.

“If we don’t do something before the (fall) election, we’re going to get the middle finger if Tory gets elected again,” he alleges. “People (in the taxi business) should be united and get together.”

The application of intent was filed shortly before the two-year statute of limitations ran out on challenging the Vehicle- For-Hire Bylaw, which took effect on July 15, 2016. ATOOL now has 30 days to fine-tune and add to the lawyer’s brief, before filing in Ontario Superior Court. There would then be a Show Cause hearing, where a Justice will decide if they have sufficient grounds to support a class action suit.

“If the Justice says they have enough cause to go forward, they have to decide if they want to go forward. These things can take years to play out,” observes owner/operator Gerry Manley, who is acting as a consultant for ATOOL on this action.

According to Peter’s Taxi owner Peter Mandronis, Uber has taken approximately half the money out of the cab business, with the City’s alleged blessing and assistance. And now Lyft, and other Private Transportation Companies (PTC’s) are also in the mix – all paying 30 cents per ride to the City!

“The City, they should (pay us back). That money the City collects from those other services, it’s the taxi industry’s money,” he alleges.“They should compensate the drivers and the owners. The City lines their pockets (but that revenue) belongs to every taxi driver, every taxi owner, every taxi operator.

“They should be ashamed, and give that money back to the taxi industry.”

With the Toronto cab operators paying among the highest regulatory fees in the world, Co-Op/Crown Taxi leasing manager Ernie Grzincic agrees it was the City’s responsibility to protect both public safety, and the ability of taxi interests to earn a reasonable living. He alleges the City has been negligent on both counts, and failed to warn cab operators that the licensing of PTC’s would impact them negatively.

He reminds it was the City itself that made Standard plates transferrable in 1963, thereby creating a street value for them. And, he notes many industry members built their livelihoods around those plates (proclaimed by the City itself to be the “taxi driver’s pension”), over the course of decades.

“If that’s the road they’re leading us down, I’m not really seeing any long-term viability for taxis. I don’t think that (financial compensation) would be unreasonable,” he asserts.

“The City is looking at a huge economic windfall from PTC’s at 30 cents per run -- with minimal expense to the City, because they’re basically self-regulating… I think here has to be recompense. If this is what they want to do, that’s fine. But there should be some accountability.”

In this month’s “Cab Stand” column in Taxi News, long-time owner Andy Reti relates that for the past 18 months numerous industry members were meeting on a regular basis to formulate a plan of action. And in March of this year, a Steering Committee was formed, with the mandate of initiating a legal challenge.

Reti alleges that, “several socialist councillors have been manipulating the taxi business for decades” – intent on destroying Standard plate vales, and now saddling it with the so-called level playing field between taxis and PTC’s, which he claims, turned out to be a “bold-faced lie”.

With two of his plates now sitting on the shelf and providing zero leasing income, it’s a “devastating result” in his retirement years – after serving the riding public for several decades.

“Integrity is a thing of the past,” he alleges. “I did not expect a thank you from anybody. All I’d expect is for the City to keep their word, and not to steal from me.”

Manley claims the City’s verbal promise that the plate would be the taxi driver’s pension is like a “tort”, or “promissory note”.

“You built up your expectations based on what they told you,” he says.

Over the past two years, he has been consistently advising government officials at all levels about the many “inequities and illegalities” within in the bylaw – but to deaf ears.

“Really, (taxi operators) had no other alternative,” he says of the application of intent. “If you don’t look to the courts for some sort of compensation, you’re not going to get it from the City.”

“It’s a matter of how they were profiting from our business, and how they controlled it through the bylaw,” he adds.

Manley stresses there were rules in place for the ridesharing company Hailo when it came to Toronto, stating that it could only use licensed taxis and drivers.

“Uber wasn’t doing that (when it subsequently arrived),” he asserts. “The procedures were in place already, why didn’t the City enforce against them?”

Given the grievous state of the taxi industry, Eisenberg says, “You have no choice, you’ve got to (take the City to court). Even the leasing has gotten to the point, they’re handing back plates.”

According to MLS reports, plate values now average around $46,000 (from a one-time high of $377,000). And Eisenberg notes that with Toronto’s 5,500 plate-holders each having lost some $300,000 in equity over the past few years, the class action suit could turn out to be for an awful lot more than the stated $100-million.

“At the garage’s, there’s no economic viability,” Grzinzic reports. “We put up money expecting some kind of return. There’s no return.”

“I know my drivers feel the burden of this. This is their retirement.”

In August of 2016, Ottawa taxi plate owners filed a $215-million class action suit against their City, in Ontario Superior Court, which is still awaiting trial.

The plaintiffs (including Metro Taxi Ltd., and Capital Taxi co-owner Marc Andre Way) claim it was the City that created the existing system in or about 1960, which required investment from plate-holders, and created and maintained the market value of the plates. The Statement of Claim alleges that, “the City breached the duty of care by taking vastly inadequate steps to enforce the regulatory scheme against Uber, and Uber X drivers.”

“The City’s refusal to enforce the regulatory scheme is not defensible, justifiable, or intelligible. The City’s refusal conferred an obvious advantage on Uber, and its drivers,” it reads.

What’s more, the plaintiffs contend that the City failed to provide plate owners and brokers with reasonable notice of the changes to the regulatory scheme in April of 2016, making the amendments in the updated taxi bylaw, “unlawful and unreasonable”. They’re seeking a court order to have the new bylaw declared, “ultra vires”.

Ottawa Legal responded that, “The City is under no obligation to provide financial compensation to taxi plate-holders.”

With the Ottawa plaintiffs approved for a class action, Manley suggests their Toronto counterparts would have, “a 50-50 chance of winning.”

Meanwhile, there is no word on the status of a $410-million class action suit filed against Uber in 2015 by veteran Toronto owner/operator Dominik Konjevic, on behalf of all licensed Ontario taxi and limo owners, drivers, and brokers. At the time, it marked the first class action filed against Uber in Canada, with representation by the firm of Sutts Strosberg.


© 2018 Taxi News



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