Supreme Court sides with Uber drivers
Canada’s top court ruling paves the way for $400M class action lawsuit
The Supreme Court of Canada has ruled that a controversial clause that forced Uber drivers to arbitrate workplace complaints in the Netherlands is invalid.
The decision means a proposed $400 million class action against Uber can move ahead in Ontario, a lawsuit that could shake the foundations of the gig economy.
Friday’s Supreme Court ruling stems from a 2017 case launched by Ubereats drivers David Heller arguing that he and other gig workers were employees of the ride-sharing giant, not self-employed entrepreneurs.
The class action stalled because Uber argued it couldn’t be sued in Ontario courts. According to a clause in its employment contract, drivers must take all workplace disputes to arbitration in the Netherlands — at a personal expense of more than $14,500.
After an Ontario court ruled that the arbitration clause was an “unfair bargain” for drivers, Uber appealed to the Supreme Court to uphold the requirement. On Friday, Uber lost that appeal.
Supreme Court Justices Abella and Rowe wrote in their decision that Uber’s arbitration clause was “unconscionable,” paving the way for Heller’s lawsuit against Uber to move through the Ontario court system.
Michael Wright, who acted as co-counsel for Heller said he was “relieved” at the decision. “We thought we had a good case, but it’s always very difficult to predict outcomes,” said Wright, a partner at Torontobased law firm Wrighthenry LLP.
“This was an arbitration provision that the court was essentially designed to prevent access to justice. There was no realistic way to actually assert and protect rights,” he added.
“So the message is, that is not permitted in Canada.”
In response to the ruling Friday, a spokesperson for Uber confirmed that the company plans “to amend our contracts to align with the court’s principles.”
“Going forward, dispute resolution will be more accessible to drivers, bringing Uber Canada closer in line with other jurisdictions,” the spokesperson said.
“We are proud to offer a flexible earning opportunity to tens of thousands of independent drivers throughout Ontario.”
Friday’s Supreme Court ruling found there was an “inequality of bargaining power” because the clause was part of a nonnegotiable employment contract and that Heller could not be reasonably expected to know the full financial and legal implications of the clause.
Lawyer Lior Samfiru, who started the class action against Uber in 2017, said allowing Uber’s arbitration clause to stand “would have effectively ended employee rights in this country.”
“After all, all the legal rights in the world are of no value if there is no way to enforce them. For a company to try to require employees to give up the laws of Canada is unconscionable and offends our sense of fairness and common sense,” he said.
The Supreme Court decision Friday did not weigh in on whether Uber’s arbitration clause represented an illegal “contracting out” of provincial employment legislation.
As a result, the Ontario Court of Appeal’s original ruling that the clause did unfairly circumvent that legislation remains “undisturbed,” said Wright.
The gig economy is currently facing a legal reckoning centred around its employment model that designates workers as independent contractors — a category of worker that is not protected under employment laws and cannot unionize.
That is what Heller’s lawsuit can now tackle. The first step is for the proposed class action to be certified as such by the courts.
Earlier this year, the Ontario labour relations board issued a groundbreaking decision ruling that couriers for food delivery app Foodora were not true independent contractors and had therefore had the right to join a union.
Drivers for Uber Black, the company’s luxury ride-sharing service, are also challenging their classification as independent contractors and have filed for union certification.
“I think the tide is turning,” said Wright, who is also representing Uber Black drivers in their union case.
“I think the population generally was very caught up with the convenience and accessibility of the various services that can be obtained through an app and didn’t really think about much more than that. I think Canada more generally has started to appreciate that there’s some gross unfairness.”