Uber Technologies Inc. v. Heller, 2020 SCC 16 (CanLII)
Those who want to earn income as drivers for Uber’s food delivery services in Toronto Canada had to sign a service agreement that included a requirement that any of their disputes with Uber would be resolved through arbitration in the Netherlands. In order to file a claim, the drivers had to deposit an administrative and filing fee of US$14,000.00 as well as legal fees and other costs. Many drivers are lucky to make that much money annually from Uber.
A driver began a class action against Uber in the Ontario Courts alleging violations of the Ontario’s Employment Standards Act, 2000, S.O. 2000, c. 41 (“ESA”). Uber sought a stay of the proceeding, arguing that it should be resolved through arbitration in the Netherlands.
The Supreme Court of Canada, hearing an appeal from the Court of Appeal has allowed the class action to proceed in the Ontario courts, holding that the arbitration clause in the Uber drivers’ contracts is “unconscionable”. The finding of unconscionability was due to fact that the clause was part of an unnegotiated standard form contract, there was a significant gulf in sophistication between the parties, and a person in the driver’s position could not be expected to appreciate the financial and legal implications of the arbitration clause. Further, the arbitration clause was held to be “improvident” because the arbitration process required the US$14,500 in up-front administrative fees. These conclusions resulting in a finding that the arbitration clause is invalid and therefore unenforceable.
The Supreme Court recognized that an Uber driver would have no real prospect of pursuing a dispute against Uber under the standard form contract. The Court concluded:
Respect for arbitration is based on it being a cost-effective and efficient method of resolving disputes. When arbitration is realistically unattainable, it amounts to no dispute resolution mechanism at all. . . . [The Plaintiff driver] would experience undue hardship in attempting to advance a claim against Uber, regardless of the claim’s legal merit”. . . The arbitration clause is the only way [the Plaintiff] can vindicate his rights under the contract, but arbitration is out of reach for him and other drivers in his position. His contractual rights are, as a result, illusory.
As a result, the class action was allowed to proceed. The next legal issue that will have to be determined is whether the Uber drivers are “employees” within the meaning of the ESA. That question remains unanswered in both the courts and in pending cases before the Labour Boards in Canada.
The case is also interesting because the Court had to decide whether the Arbitration Act or the International Commercial Arbitration Act applied to the case. Concluding that although the agreement was “international”, the International Commercial Arbitration Act is not intended to govern labour and employment disputes. Therefore, the Arbitration Act would govern the litigation. However, it should be noted that in applications by unions to represent bargaining units composed of Uber drivers, provincial labour relations statutes would govern.