March 2019

What is just compensation for industry devastated by regulatory mayhem?

by Mike Beggs

As part of their $1.7-billion-plus class action suit initiative against the City, veteran Toronto plate owners Lawrence Eisenberg and Andy Reti are currently preparing affadavits culled from their respective 50-plus years of industry experience.

And as their group (All Taxi Owners and Operators Ltd., ATOOL) awaits a certification hearing October 15-17, its members can, similarly, examine past examples of financial compensation to taxi plate-holders in other jurisdictions around the world.

For instance, in January of 2018 an Ottawa judge certified the largest class action suit ever filed against the city ($214-million), alleging their Council’s actions allowing Uber and other Private Transportation Companies (PTC’s) to operate legally was “discriminatory”. (Lyft has also hit the streets there, since the bylaw was enacted in 2016.)

This class action was filed by the parent company of Capital Taxi, and Marc Andre Way, the city’s largest holder of taxi plates. The City of Ottawa responded that it has no obligation to protect the cab industry from financial losses, and that the $215-million figure was “grossly exaggerated”.

For Toronto owners who have seen their business reduced by 70 percent, and plate and leases gone to peanuts, the Ottawa certification represents a positive precedent. (Toronto owners are seeking damages, “to offset the heavy losses resulting from the negligent manner in which the City enforced the bylaw against drivers of unlicensed PTC companies such as Uber between 2011 and 2016, and from implementing the Vehicle-For-Hire Bylaw which placed them at a significant disadvantage in competing against Uber X and other PTC vehicles).

“Everybody is going at it from different angles,” Eisenberg observes. “It’s a step in the right direction, absolutely.”

City Taxi owner Avtar Sekhon agrees, “I think that’s going to help us, and I hope they’re going to certify us, as well. I’m encouraged. In Canada, it’s happening.”

On the other hand, in May of 2018 an Ottawa judge dismissed a class action suit filed by a union representing Ottawa taxi drivers and alleging the City acted in bad faith by legalizing ridesharing. Justice Maria Linares de Souza ruled that their claims were unfounded.

The union’s legal team argued cab drivers had been promised a “level playing field” when the city opened the door to PTC’s, but were instead hung out to dry -- with a “double standard” providing a competitive advantage to PTC’s.

But Oakville owner/operator Al Prior contends, Judge de Souza’s decision was in error, by deferring to municipal discretion.

“This is a global problem, not a local one,” he observes. “Rulings such as this affect an individual’s charter of rights by discouraging stakeholders in other jurisdictions from making similar challenges.”

But, Toronto owner/operator Gerry Manley feels, “one Judge’s decision does not set in stone what every other judge might rule”. And he’s, “not overly concerned” this particular judge’s ruling will affect the Toronto class action.

Meanwhile, Quebec was the first province to commit to compensating taxi plate owners – up to $46,700 per owner. However the owners have, reportedly, refused that sum of money.

“Isn’t that interesting” Eisenberg says. “They’re right, it isn’t enough. With the evolution of time, and everything that’s happened, it’s more than that.”

Similarly in Toronto, ATOOL sees the class action escalating above $1.7 billion over time. Eisenberg notes owners have now lost about 95 percent of the monthly income on their plates, with leases having fallen from $1,800-$2,000, to $200-$400 per month.

In an article, dating back to August 24, 2016, The Conversation (an online independent non-profit media outlet authored by academics, and headquartered out of Melbourne, Australia) observed that, “taxi driver compensation for Uber is unfair and poorly implemented.”

While Australian states were among the world’s first jurisdictions to provide compensation packages to taxi plate owners, The Conversation stated, “the amounts pale in comparison to the investment value that has been lost (with plate values peaking at around $500,000 in 2011), and, that Uber users may not be happy about the additional levies to fund compensation to the taxi industry.”

The article further alleged that, “the owners’ significant investment value has been destroyed, not by competition, but by a company that (subverted) the law, by consumers who readily supported cheaper prices, and by government that restructured the market by implementing populist policies.

“Uber has won, and there will be much rejoicing by consumers. But the way the transition has occurred verged on the unethical, and licensed owners are footing the bill,” it alleged. “This is inherently unfair. In a regulated monopoly, the regulated players have had little impact on the rules.”

Closer to home, Mississauga licensing staff will now examine the merits of an industry request for compensation of $50,000 per taxi plate owner.

Eisenberg suggests, given the magnitude of their losses and the shell-shocked state of the business, that $50,000 figure, “isn’t enough”.

“But they’re not going to give them anything (anyway). Why should they,” he says, sarcastically. “If they’re smart (the Mississauga owners) will file for a class action suit, now. There’s a two-year limit from when any new bylaw takes effect, and I would take the initiative just in case – because they can always back out.”

Veteran Mississauga owner Peter Pellier asserts that if the City was willing to direct a portion of revenues received from Uber and Lyft towards a compensation package, and amortized payouts over a five-year period, the total maximum cost of $33,400 ($50,000 for each of the 668 plates in circulation as of July 1, 2017) it would have a minimal impact on the City’s tax base.

And, “given that the City of Mississauga does not want to admit fault under any circumstances”, he suggests compensation be approached via a buy-back arrangement, where in return for an acceptable payout each plate would revert to the City.

Eisenberg claims one of the Toronto cab industry’s biggest problems is a steadily increasing shortage of drivers, “because there’s no profit to be made anymore in this business.”

At his brokerage, Sekhon has lost, “lots and lots of cars”.

“I took 23 cars off the road. I gave the plates back to the owners to do what they want,” he relates. “And 11 cars are sitting with only one driver on them. I can’t find drivers for the second shift, because they can’t even cover their insurance.

“Do you think John Tory cares? He never cared for us.”

And, Sekhon suggests the City will offer industry “a lollipop” at best in the VFH Bylaw Review.

And that leaves his drivers hanging on by the barest thread.
“They don’t say anything, but we see all their faces when they come in to pay us. Business is totally gone,” he adds. “Maybe they will give the TTC to Uber, too.”

He warns that, “All of the guys are going to go on welfare. And is Uber going to pay welfare? No. And it’s not John Tory. It’s the taxpayers.”

While he says business remains good at his brokerage, Able Atlantic/Maple Leaf/Imperial Taxi owner Rashid Thattha likewise cites a shortage of drivers.

He stands behind the owners’ class action, stating, “They should be compensated for so many things, and I think it’s a good idea -- if they can get anywhere.”

He also believes nothing will change as a result of the Bylaw Review.

So going forward, he says, “I think everybody has to get technology sooner than later, so we can compete. We are building our own app in the next few weeks. I think competition is healthy.

“We are Canadian. We are local. We pay our taxes here. The sad thing is, the government doesn’t care about that.”

In his regular online correspondence, Pellier has advised his fellow aging plate owners to admit defeat in the war against PTC’s, and consider their health first rather than continuing to bang their heads against the wall at city hall.

“Everybody’s older,” Eisenberg concurs. “What about the people in their 80’s and 90’s, who rely on their taxi licenses for income? Some of them only have their old age pension. You think they’re scared, sure they’re scared.”

He urges them to contribute $500 to join the class action suit.

“They’re living in the past. This is the future. They have to move forward, get their compensation, and get the hell out of the business,” he adds.


© 2019 Taxi News



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