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Class Action, Employment & Labour

Ride-sharing class action back on track despite province bailing

The provincial government's decision to not take part in an appeal concerning a proposed $400-million class action against a leading ride-sharing service was an "abdication," says Toronto lawyer Michael Wright, who successfully argued the matter on behalf of a plaintiff driver. Read Law Times Lawyer's Daily Wall Street Journal CBC

In a recent ruling, Ontario’s Court of Appeal reversed a motion judge’s decision to stay the class action on behalf of Ontario drivers with the service, due to a clause in their agreements that provided for disputes to be settled via arbitration in the Netherlands.

The province’s top court ruled the decision could not stand because the arbitration was "unconscionable" and violated Ontario’s Employment Standards Act (ESA).

But the achievement came without the help of the province, which withdrew a planned intervention at the appeal following the election of the new government last summer, Wright, managing partner with Cavalluzzo LLP, tells AdvocateDaily.com.

“I found it both disappointing and inexplicable for them to withdraw,” Wright says.

The plaintiff in the case delivers food from restaurants to customers using one of the company’s apps and alleges he and other drivers were wrongly classified as independent contractors under the ESA, rather than employees, according to the appeal court decision.

The former Liberal government launched its intervention in support of the appeal, focusing on the narrow issue of where Ontario workers should have their workplace disputes heard, Wright says. However, Premier Doug Ford’s new Progressive Conservative administration withdrew its support ahead of arguments at the province’s top court in November.

“If we’ve got a government that says Ontario is open for business, then why would they want decisions being made about how that business is conducted by Dutch arbitrators applying Dutch law? It makes no sense," he says.

“Law should be interpreted in this province by Ontario decision-makers, and I thought it was ridiculous for them to withdraw those arguments.”

Writing for a unanimous three-judge panel, Appeal Court Justice Ian Nordheimer found the ESA prohibits the ride-sharing company from enforcing the arbitration clause because it would result in drivers waiving their rights under the Act.

In addition, the appeal court ruled the arbitration clause, which required the plaintiffs to pay up to US$14,500 (almost $19,000 CDN) in filing and administrative fees, as well as travel and legal costs associated with mediation and arbitration, was “unconscionable” because it would, in effect, stop the drivers from advancing their case in a neutral venue.

"It can be safely concluded that [the ride-sharing company] chose this arbitration clause in order to favour itself and thus take advantage of its drivers, who are clearly vulnerable to [its] market strength," Nordheimer wrote. "It is a reasonable inference that [it] did so knowingly and intentionally."

“This is a very strong statement that forcing people to contract out of the ESA will result in a provision like this being declared invalid,” Wright says. “The lesson for drafters of arbitration provisions with unequal bargaining power is that they have to pass the fairness test.

"If you draft something that’s too one-sided, you will probably live to regret it.” 

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