A Canadian Uber driver, Heller,
brought a class
action against Uber, actually several Uber entities, alleging violations of
Canada’s Employment Standards Act. According to the motion judge in the Ontario Superior Court
of Justice, Uber “[d]rivers in Ontario
do not enter into contracts with Uber Technologies Inc. [incorporated in
Delaware] or Uber Canada Inc. The Drivers rather create an internet account and
a contractual relationship with Uber B.V. and with Rasier Operations B.V. and,
or Uber Portier B.V.” Each of those Uber entities is incorporated under the
laws of the Netherlands. Uber’s form contract for drivers says it shall be governed
by the laws of the Netherlands, and that any dispute not resolved in mediation:
“shall
be exclusively and finally resolved by arbitration under the Rules of
Arbitration of the International Chamber of Commerce (“ICC Arbitration Rules”)
…. The Place of the arbitration shall be Amsterdam, The Netherlands.”
The motion judge granted Uber’s
motion to stay the class proceedings in favor of arbitration in the Netherlands,
relying on Canada’s International Commercial Arbitration Act, which implements the Convention on the
Recognition and Enforcement of Foreign Arbitral Awards (New York Convention).
The Court of Appeal of
Ontario set
aside the lower court’s order, and allowed Heller to litigate, rather than
arbitrate, the class action. The Court of Appeal emphasized that the ICC’s “up-front
administrative/filing-related costs for a driver to participate in the
mediation-arbitration process in the Netherlands prescribed in the Arbitration
Clause is US$14,500. As an UberEATS driver, the appellant earns about $20,800-$31,200
per year, before taxes and expenses.” The Court of Appeal held that the
arbitration agreement “constitutes a contracting out of the Employment Standards Act “ which permits a driver to make a complaint the Ministry of
Labour regarding the actions of Uber and their possible violation of the
requirements of the ESA.” The arbitration agreement “deprives [the driver] of
the right to have an ESO investigate his complaint.” The Court of Appeal noted
that the driver “has not, in fact, chosen to make a complaint under the ESA but
rather has commenced this proposed class action”, but held that this did not
under the court’s conclusion that the arbitration agreement impermissibly
contracted out of the ESA.
As an independent ground for denying
enforcement to the arbitration clause, the
Court of Appeal held the clause unconscionable.
The Supreme Court of Canada agreed with the Court of Appeal that the arbitration clause is unenforceable: “This is an arbitration
agreement that makes it impossible for one party to arbitrate. It is a classic
case of unconscionability.” The Supreme Court’s opinion contains a lengthy
discussion of the unconscionability doctrine, featuring some differences of opinion
among the justices.
Earlier Canadian cases include Dell
Computer Corp. v. Union des consommateurs, [2007] 2
S.C.R. 801, and Seidel
v. TELUS Communications Inc., [2011] 1 S.C.R. 531.
