SCC Paves Way for UberEATS Class Action to Continue

July 3, 2020
A person beginning an order with UberEATS on a laptop screen

written on behalf of Feigenbaum Law

Ridesharing apps such as Uber and Lyft have changed the transportation industry and have shown how industries long thought to be established and settled, such as the taxicab or food delivery industries, can be upended by technology and fresh thinking. From a user-perspective Uber might be an incredibly convenient way to get around or a better way to order food beyond standard home delivery options such as pizza. However, some Canadians working as drivers for the American tech company have a different point of view and have filed a class-action lawsuit against the company, seeking to enforce statutory protections reserved for employees, such as vacation pay and leave entitlements.

Where to Settle Disputes?

The latest development in the matter centres around a class-action lawsuit that has drivers seeking to be classified as employees rather than independent contractors. The CBC reported last week that the Supreme Court of Canada has ruled that the drivers behind the action have the right to have these issues resolved through the Canadian Court system, rather than mandatory arbitration, as stated in their contracts with Uber.

Uber had opposed having Ontario courts hear the issue, and have been seeking an end to the proposed class-action. They pointed to a clause in their contract with states that the only avenue available for drivers to settle disputes is through a costly arbitration process in the Netherlands. The story explains that the mediation process described in the contracts costs $14,500 US for drivers and that is before factoring in additional costs such as travel expenses. This amounts to nearly a year’s earnings for some drivers, and a considerable inconvenience. The drivers challenged this clause as being “unconscionable” and therefore unenforceable.

Looking to be Classified as Employees

The Canadian class-action lawsuit began when a driver for UberEATS, the food delivery arm of Uber, attempted to force Uber to classify its drivers as employees rather than independent contractors, which would entitle them to certain statutory employment rights. The class-action lawsuit has still not been certified, largely due to Uber’s challenging of whether it could be heard in Ontario.

At the initial hearing, the motions judge sided with Uber, holding that all disputes arising out of the contract were to be heard in accordance with the arbitration clause, including the matter of whether to proceed by arbitration. However, the Ontario Court of Appeal disagreed, siding with the drivers. At the appeal level, the Court found that the clause would prevent drivers from bringing matters before the Ministry of Labour, something the company was not permitted to contract out of.

The matter made its way to the Supreme Court of Canada who ruled recently that Ontario Courts can be used for labour issues between Uber and its drivers. This decision is in line with the Ontario Court of Appeal’s decision, described as finding that “Uber’s clause amounts to illegally outsourcing an employment standard.”

In its decision, the Supreme Court wrote:

“Respect for arbitration is based on its being a cost-effective and efficient method of resolving disputes. When arbitration is realistically unattainable, it amounts to no dispute resolution mechanism at all. In this case, the arbitration clause is the only way (the employee) is permitted to vindicate his rights under the contract, but arbitrations is out of reach for him and other drivers in his position. His contractual rights are, as a result, illusory.”

The court found the arbitration process in the contract to be unconscionable, opening the door for certification of the class-action lawsuit.

Doing business on both sides of the American/Canadian border can introduce a slew of challenges for both employees and employers. At Feigenbaum Law, our business and litigation services are available for corporate and commercial law, employment law, and litigation matters. Our cross-border knowledge and experience with US law put us in a position to uniquely serve our clients.  Businesses that have employees on both sides of the border need to be aware of the different laws in each country and how these relationships should be managed. We know US employment law and we work with our companies to keep them compliant.

Contact our lawyers for knowledgeable services and advice on a variety of issues. We offer employment litigation services to clients in the US, Canada and around the world. Contact us online, or call us at (905) 695-1269 or toll-free at (877) 275-4792 to learn more about how we can help.


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