Toronto Taxi Drivers Denied Class Action Over Uber Licensing

Toronto likely has the most educated taxi drivers in the world.

Long dismissed as an urban myth, a 2012 study by Citizenship and Immigration Canada confirmed that over 80% of taxi drivers in Toronto are immigrants, the highest in any city in Canada, and many of them are highly educated,

Overeducation occurs both among Canadian-born and immigrant taxi drivers, but is at a higher rate among immigrants, especially among recent and very recent immigrants.

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The distribution pattern of field of study for postsecondary-educated taxi drivers is quite different between the Canadian born and immigrants. For the Canadian born, nearly one third have a degree in architecture and related technologies, 14.5% studied in business, management, marketing and related support services, and 13.5% studied in personal, protective and transportation services. Among immigrants, however, the top postsecondary field is business, management, marketing and related support services, accounting for 15.9%; while architecture and related technologies and engineering rank second and third, accounting for 13.7% and 13.4% respectively. The percentage of taxi drivers with engineering degrees is much higher among immigrants (13.4%) than among the Canadian born (2.2%).

Some blame Canada’s point-based immigration system, which attracts the best talent around the world, but then fail to utilize these skills properly in our economy. This isn’t necessarily new, as unemployed Torontonians turned to driving taxis during the Great Depression, even though it was highly competitive over the scarce fares of the day.

Perhaps it’s no surprise that a bunch of highly educated cab drivers with backgrounds in business would seek to be self-employed themselves. Many sought to purchase their own taxi license over the years, especially as taxi leases in Toronto increased in price.

Toronto launched the Standard Taxicab Owner Licences system in 1963. Regulations were amended in 1974 to allow drivers to operate a taxi they don’t own, through a lease. More recently, regulation of taxis can be found under s. 94 of the City of Toronto Act, 2006, with additional provisions under ss. 6, 8, 10, 86 more generally for the regulation of businesses. Taxi regulations can generally be found under Chapter 545 of the Toronto Municipal Code, until By-Law 1517-2019 amended this regulation and created a new regulation specifically for the licensing of vehicles for hire under Chapter 546.

In January 1995, the average monthly cost of a taxi lease in Toronto was $750, which rose to $1,244 in 2011. The value of the Standard Taxicabs also rose, from $80,900 in 1998, to $210,100 in 2011.

For many of these immigrant taxi drivers in Toronto, saving up to purchase their own cab was very much their Canadian dream, and plan for financial independence. To encourage this, the city released an “Ambassador” licence in 1998, prohibiting leasing of these licenses, and requiring the owner to personally own and operate the taxi for a minimum number of hours each month.

Unfortunately for them, disruption was on its way. Ride sharing programs entered the scene and ravaged the taxi industry. Uber launched a dispatch service to taxis in Toronto in 2012, and then expended their operations to non-licensed drivers in 2014. Although initially attempting to resist these initiatives, the city’s changes in Chapter 546 allowed Uber to operate legally in Toronto under a private transportation company (PTC) license.

Many of these immigrants who had put their life savings into purchasing a taxi license saw its value diminish. As expected, they protested. But then they sued.

The Ontario Superior Court of Justice recently released a decision in Eisenberg v. Toronto (City), denying a certification motion for a class action against the City of Toronto for failures to enforce provisions of the Toronto Municipal Code relating to the regulation of taxis, as the plaintiffs failed to present a legally tenable cause of action.

The plaintiffs claimed that the city was negligent in their enforcement of Chapter 545, failing to meet a standard of care to the licensed plate owners. By adopting Chapter 546, the taxi owners claimed a pure economic loss due to the actions of the city. The damages sought in the class action were over $1.7 billion, related to the sale, transfer or lease of taxi plates, and loss of income.

Although matters of law that are not fully settled should not be disposed of as not disclosing a reasonable cause of action, the circumstances for claiming a pure economic loss for negligence are limited in law. The five categories for economic loss recognized by the Supreme Court of Canada in Canadian National Railway Co. v. Norsk Pacific Steamship Co. are:

1. negligent misrepresentation;
2. negligence of public authorities;
3. negligent performance of a service;
4. supply of shoddy goods or structures; and,
5. relational economic losses.

The plaintiffs denied their claim was based on negligent misrepresentation, but rather that of liability of public authorities. Because the defendant was a statutory actor, the duty of care may arise from the legislative scheme or common law. However, municipalities generally cannot be liable for legislative activities given the public policy considerations. The court stated,

[104] …it is plain and obvious that it cannot be liable for negligence for having enacted Chapter 546. The enactment of Chapter 546 was an activity of the City’s legislative authority that is not to be controlled by the threat of private damage suits. The City was not implementing its business powers, but in enacting Chapter 546, it was acting in its legislative capacity. Legislative activities inevitably affect individual citizens; for some the affect is positive, and for others the affect is negative, but the legislative activity has a public character and to quote Justice Laskin “the risk of loss from the exercise of legislative or adjudicative authority is a general public risk and not one for which compensation can be supported on the basis of a private duty of care”. The Plaintiffs and the Class Members were adversely affected by the enactment of Chapter 546 and suffered a pure economic loss, but it is plain and obvious that they do not have a cause of action for negligence.

The court also failed to find negligence in the alleged failures to enforce the municipal by-laws related to Uber and Uber drivers,

[112] …Neither the City of Toronto Act nor the Toronto Municipal Code require the City to protect the interests of taxicab owners. The statutory scheme does not create a positive duty to enforce Chapter 545 or Chapter 546 to achieve health and safety outcomes and there no obligation to protect the economic interests of those granted taxi licences.

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[138] In the case at bar, there is nothing in the statutory scheme that expressly imposes a duty of care to enforce the licensing bylaw and the spectre of indeterminate liability is a solid policy reason to not expand the circumstances for which a public authority should be liable for pure economic losses.

The court also noted there was insufficient proximity to establish a duty of care, in addition to the policy reasons that would negate a duty of care.

Although it is unfortunate that these underemployed plaintiffs would be denied relief, it does not mean that all taxi drivers would necessarily be denied these claims.

In 2018, the Ontario Superior Court of Justice certified a similar class action in Metro Taxi Ltd. v. City of (Ottawa), claiming that the city was negligent in now it enforced its taxi licensing bylaws in Ottawa. They also claimed discrimination under s. 15 of the Charter and s. 3 of the Human Rights Code, as over 90% of the members are minority groups.

What distinguishes the Ottawa case from this one in Toronto is that in the former the city did not dispute whether a duty of care existed, and the city agreed that a valid cause of action in negligence was plead.

Instead, the arguments focused on whether an admission in the pleadings that would suggest that Uber, and not the city, was liable for any damages.

Because the Toronto action did not claim discrimination, it did not form part of the analysis here. The Ottawa action employed the Withler test for a discriminatory measure, and concluded that it was not plain and obvious that these claims would not be successful, therefore meeting the s. 5(1)(a) criteria.

The effects of discrimination are likely more pronounced in Toronto than Ottawa, as examined by Abdulhamid Hathiyani’s Masters thesis, Underutilization and Discounting of Immigrant Skills: Professionals on the Road to Driving Taxis in Toronto. Exploring the complex factors involving the migration of professionals to Toronto, and the numerous barriers they encounter, he concludes,

Importantly, findings of this research expose that underutilization of professionally trained immigrant skills cannot be fully understood without taking its prejudicial and racial dimensions into consideration. The most prevalent barrier for not getting employment cited in the study was racism. Even when the barrier mentioned was the lack of the right English accent, lack of Canadian experience, or non recognition of qualifications from certain countries, there was almost a veiled sense of undertone of racism attached to it. Respondents in the study experienced both individual as well as institutional racism. While individual racism was experienced with comments from their clients while driving a taxi, it was the systemic racism that had a far reaching effect. Describing this type of institutional racism, Budhu explains that “systemic and structural racism – through major societal institutions, from educational, labour market, to justice and service delivery systems – create barriers, which prevent visible minority communities from fully developing their potential and participating equitably in Canadian society. These barriers also serve to rob the society of valuable human resources.” (Budhu, 2001).

The unanticipated consequences of technology and disruption will continue to give rise to litigation, especially where parties fail to adapt and change to economic and market forces. For the taxi drivers of Toronto, this might just mean that they take another underpaid job. They are certainly qualified to do so.

Brain scans of British cab drivers have found a larger hippocampus than general population, likely do to the cognitive demands of the job. Toronto cabbies are no different, being referred to as “road scholars.” There are purportedly more physicians driving cabs than anywhere else in the world. Lorne Foster describes them in The 21st Century Taxi Driver: An Examination of the Hidden Injuries of Race in Urban Canada as follows,

Their learnedness and educational acumen is recurrently acknowledged as feature of the immigrant experience, not merely a cognitive adjustment to a challenging service occupation. So, the perspicacity of urban Canada’s taxicab core is typically achieved before-the-job as opposed to on-the-job.

In a best case scenario, these growing tech sectors would draw on individuals with business and engineering skills as a source of skilled labour. Except nobody is standing around waiting for that ride to arrive.