Ottawa surrendered to Uber’s bullying, abandoned cabbies: judge

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A judge has ruled in favour of Ottawa taxi drivers in their $215-million class action lawsuit against the City of Ottawa over how the city “abandoned” them when ride-hailing company Uber arrived in 2014.

The decision by Ontario Superior Court Justice Marc Smith, released Monday after 31 days of testimony between January and November 2023, found the city negligent in failing to enforce its own bylaws to restrict “bandit” cabs from operation.

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The city “capitulated to Uber’s bullying tactics when it entered the Ottawa market,” Smith found.

“The City adopted a defeatist and acceptance approach to Uber’s entry into the Ottawa market,” Smith wrote in his 95-page decision. “A multinational giant was invading Ottawa, and because of the City’s unpreparedness and its lack of efforts to develop a plan to enforce the 2012 By-law, the City’s enforcement efforts against Uber drivers were ineffective.”

Smith said the city had ignored warnings from the taxi industry about what would happen when Uber began operations and, as a result, the city was caught flat-footed when the ride-sharing service appeared.

“Rather than continuing its partnership with the taxi industry to fight against this stronger illegal bandit taxicab company known as Uber, the City decided to abandon its partner,” Smith wrote. “The City then chose an ineffective enforcement strategy that it knew or should have known would fail.”

More than 90 per cent of the city’s taxi plate holders are members of minority groups, and the plaintiffs argued that the City’s conduct related to Uber was a violation of the Canadian Charter of Rights and Freedoms and the Ontario Human Rights Code. The drivers also alleged that the fees the city collected from plate holders and brokers under its taxi bylaw were actually illegal taxes. The drivers lost this argument, with Smith ruling no rights had been breached.

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The lawsuit’s lead plaintiffs are Metro Taxi Ltd, the company behind Capital Taxi, and plate holders Iskhak Mail and Marc André Way. According to the statement of claim, Mail was born in Afghanistan, immigrated to Canada as an adult and became a plate holder in 2013. Way is also the CEO of taxi company Coventry Connections and president of the Canadian Taxi Association.

“This is a great victory for the industry. It’s a great victory for the rule of law. It shows that big tech can’t just walk into a city and disrupt an industry to the point where it’s almost decimated,” Way said Monday.

When Uber hit the streets of Ottawa in the fall of 2014, there were four taxi plate brokers, or taxi dispatch companies, and approximately 768 plate holders, with 1,188 plates between them. The plaintiffs argued that the value of those plates plummeted after Uber arrived, dropping by as much as $137,000 to $150,000 per plate.

The judge agreed that those taxi plates were assets, that the city knew they were being traded on a secondary market and had “allowed this secondary market to thrive and prosper by not amending the regulation.” Because of that, the city should have known how the plates’ value would be affected by Uber.

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“Even if the City did not control the secondary market, nor was it involved in trading the assets, I believe that the City was nonetheless a willing participant in the secondary market,” Smith wrote. “In the circumstances of this case, and given the City’s conduct, I am of the view it would be unconscionable to negate the City’s duty of care.”

“We had a situation where there was an individual who bought a plate for a few hundred thousand dollars and overnight lost it all. He lost everything. That’s just not right,” Way said.

An Ottawa taxi plate is now worth about $10,000 he said. Plateholders, who used to be able to rent out their car to other drivers when they weren’t on the road themselves, saw their business evaporate as customers chose to use Uber, which subsidized the cost and undercut the taxi industry, Way said.

“That all evaporated when they (Uber) came in. The city said, ‘You, taxi driver, you have to follow all of these rules. And you, ride share, you can regulate yourself.’ That doesn’t make sense.”

It was not until August 2016, two years after Uber began operations, that the city adopted a new bylaw to deal with ride-sharing companies.

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Way said the taxi industry has adapted to the new rules. It had no other choice.

In his decision, the judge said he didn’t buy the city’s argument that it was powerless to stop Uber.

“The City takes the position that if the Plaintiffs suffered any damages, which it denies, those damages were inevitable from the moment that Uber decided to expand into Ottawa,” the judge wrote.

“I disagree. I am satisfied that the City caused the Plaintiffs’ damages.”

The taxi drivers had claimed $215 million in damages in their original statement. Smith has deferred a decision on the penalty to a later date.

The judge advised the city and the drivers to consider his judgment “and discuss them amongst themselves,” then decide if they want to return to court to argue the amount of damages to be awarded.

In an emailed statement attributed to city solicitor Stuart Huxley, the city said it “has received the Court’s decision in the Metro Taxi litigation. The City will be carefully reviewing the Court’s decision before determining next steps.”

CORRECTION: The class action case was heard before Ontario Superior Court Justice Marc Smith. An earlier version of this story misidentified the judge.

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