We have been watching the progress of the proposed class action proceeding between ‘gig economy’ drivers and Uber, an international ride share and food delivery service. To date, the litigation has primarily focused on whether the action could proceed in Canada, or if the drivers would be required to take the dispute to mandatory arbitration in the Netherlands, as set out in their contracts with the corporation. The arbitration process would have disadvantaged the drivers significantly, due to inconvenience and the exorbitant costs involved for travel, as well as a minimum arbitration fee of $14,500.
The matter made its way to the Supreme Court of Canada, which declared that the clause was unconscionable because the drivers, when signing their contracts, would likely not have been aware of the fallout from the clause. Further, many drivers would likely have felt that they couldn’t object to the clause, for fear that if they refused to accept the term, they would face unemployment. Lastly, the process set out in the contract was skewed completely in favour of Uber, since most drivers would not have the resources to exercise their right to arbitration under the terms. As a result, the clause was struck and drivers earned the right to bring their case against the rideshare company in Canada.
Most recently, the case made headlines after it went before the Ontario Superior Court for certification, in which a court determines whether a proposed class proceeding should move forward, based on a set of pre-determined criteria.
Drivers Argue Uber Misclassifies Employees Unfairly
The crux of the class proceeding is the driver’s argument that Uber misclassified their employment status as independent contractors rather than employees, making them ineligible for employment standards protections such as minimum wage and vacation pay. Should the action be successful, it could have a significant impact on similar ‘gig economy’ workers and their employers, across the country.
Certification of a Class Action: General Principles
When deciding whether to certify a class proceeding, courts must examine the matter to ensure it meets a set criteria, including:
- The plaintiff must disclose a ‘plain and obvious’ cause of action under s. 5(1) of the Class Proceedings Act.
- There must be an identifiable class which:
- identifies those who could have a potential claim against the defendant
- identifies those who would be bound by the results of the case
- describes those who would be entitled to notice about the class proceeding
- The identified potential class must share a common issue that is a substantial component of each class member’s claim
- A class proceeding must be the preferred method of resolution considering the scope of the issues and the size of the potential class
Applying the Certification Principles to the Uber Case
1. A “Plain and Obvious” Cause of Action
The plaintiffs put forward four causes of action, including:
- Breach of contract,
- Breach of the Employment Standards Act,
- Negligence, and
- Unjust enrichment
While the Court was not satisfied that the plaintiffs had established a valid cause of action for the second two items, it was determined that the plaintiffs had satisfied the cause of action criteria for breach of contract and breach of the employment legislation.
2. An Identifiable Class
The Court noted that to satisfy this element, the proposed class must not be overly broad and should only include those who should be bound by an eventual settlement. While the Court found that the proposed class definition was not specific enough in that it simply referred to those who ‘worked for’ Uber, it provided an amendment that narrowed the class to those who had entered into a Service Agreement with Uber or its subsidiaries.
3. Common Issues
The Court found that “there is a genuine dispute about whether the Uber App users are working only for themselves in a shared economy with Uber or are working for Uber as an employee or as an independent contractor.”
4. Preferred Method
The Court determined that “there are viable common issues and a class action in the immediate case is a meaningful route to access to justice for both the Class Members and for Uber. In so far as the preferable procedure criterion is concerned, the immediate class action would be manageable and the common issues trial would provide considerable momentum for individual issues trials if the common issues favoured the Class Members.”
Given the fact that the Court found the plaintiffs had satisfied the four elements, the class proceeding was certified, enabling it to move ahead. It remains to be seen what the outcome will be, but we will continue to follow key developments in the case as they occur.
Contact Milosevic Fiske in Toronto for Skilled Representation in Class Proceedings & Contract Disputes
If you are involved in civil litigation or a class action related to a contract dispute, the exceptionally skilled corporate litigation lawyers at Milosevic Fiske LLP in Toronto can help. Over the years, our team of lawyers has successfully fought for our clients’ rights and our impressive track record speaks for itself. Please contact us by calling 416-916-1387 or connect with us online for a consultation.