Teresa Scassa - Blog

Displaying items by tag: sharing economy

On January 24, 2017, Justice Peacock of the Quebec Superior Court certified a class action law suit against Uber Technologies and three of its related companies. The plaintiff, a Quebec taxi driver and permit holder, represents a class of plaintiffs consisting of individuals and companies who are holders of taxi permits and/or licences to drive taxis in designated regions of Quebec since October 28, 2013. That date marks the moment when UberX services became available in Quebec.

The law suit seeks compensation from Uber and its related companies for damages alleged to have been suffered by the plaintiffs as a result of Uber’s unlicensed and unauthorized operations in Quebec. The alleged damages include the loss of revenue suffered by drivers and permit owners, as well as the loss of value of taxi permits. Because the Quebec government authorized a pilot project in Quebec in the fall of 2016 which provides a framework for UberX to be legally deployed in the province, Justice Peacock restricted the period during which damages could be claimed to between October 28, 2013 and October 15, 2016 – the period of Uber’s alleged unauthorized operations in Quebec.

The certification of a class action law suit is far from a decision on the merits of the case. At this early stage, the court’s role is to filter out applications that are entirely without merit. The plaintiff need only show that he or she has an arguable case. Justice Peacock found that the representative plaintiff in this case had met that threshold. He framed the questions to be decided in the lawsuit as whether the defendants, through their activities in Quebec, had violated laws, including those relating to the taxi business. If so, it would be necessary to determine whether they had engaged in unfair competition. If they are found to be at fault, the court would have to determine the appropriate quantum of damages for both drivers and permit owners, both in terms of lost revenue and devaluation of permits.

Justice Peacock noted that, while not determinative of the issues in this case, a judge in another Quebec case had recently found that Uber drivers were acting outside the law by offering taxi services without the proper permits. Justice Peacock found that this earlier decision at least lent some credence to the view that the class plaintiff had an arguable case. He also found that there was sufficient evidence to support the argument that the class had suffered both lost revenues and lost value of their permits. Noting that the court could take judicial notice of the law of supply and demand, he observed that the value of a taxi permit in Quebec would necessarily be devalued if a considerable number of UberX drivers began offering services in competition with taxis.

Uber Technologies, the California-based company responsible for the development of the Uber app argued that it should not be joined as a defendant in the suit since its only connection to the province of Quebec was via the availability of its app in virtual app stores. It argued that this was too tenuous a connection to give rise to the court’s jurisdiction. Further, it argued that its actions in developing an app were not per se illegal. The court dismissed this argument noting that under Quebec law, courts may take jurisdiction over a matter where a fault is committed in Quebec or where harm is caused in that province. In this case, Justice Peacock noted, if the app developed by Uber Technologies was used to facilitate the commission of the delict (tort) of unfair competition in Quebec, then this in and of itself could be actionable.

Although the class action lawsuit by Quebec taxi drivers and permit holders has cleared an initial hurdle, it is a long way from being over. The case will be interesting to watch as municipalities across Canada struggle to address the challenges posed by the rise of ride-sharing services such as UberX and their disruption of incumbent taxi industries.

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