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Taxi trial: City accused of ‘weak’ response to Uber’s arrival

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Superior Court Justice Marc Smith was presented with two duelling narratives on Wednesday about the City of Ottawa’s response to the 2014 arrival of Uber on its streets, challenging the monopoly of the taxi industry that had been regulated and protected for years by the city.

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As portrayed in the opening statement by plaintiff counsel Thomas Conway, representing taxi plate holders and brokers in their $215-million class action lawsuit against the city, the municipal reaction to Uber’s arrival was “chaotic and unplanned” — despite the fact that they could anticipate the company would be coming to Ottawa — and enforcement efforts were “weak and ineffective,” even compared to other jurisdictions.

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It marked the beginning of a breach of a “social contract” between the city and those it had licensed to dispatch cabs and to hold a limited number of taxi plates, Conway contended, leaving them with devalued plates and challenged income from fares.

They were further harmed, according to their lawyer, when the city passed a new bylaw in 2016 allowing private transportation companies such as Uber to operate legally, following intense lobbying. It gave the company advantages over traditional cabs, while significantly impacting those now suing the city — the vast majority of whom are members of marginalized and disadvantaged groups, said Conway.

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 “Effectively the city for decades told racialized individuals: ‘Please, invest in this system. Pay into it by purchasing plates, even if that means you have to borrow money. We will enforce the bylaw to protect the system that we created.’

“But after plate owners invested in the system so that they and their families could have a better future, the city decided to change the regulatory regime, and the fundamental premise upon which it was based. The effect … has been devastating,’” said Conway, part of the plaintiffs’ Conway Baxter Wilson LLP legal team.

Among the issues that Smith, the trial judge, will consider over the next seven weeks are whether the city was negligent in its enforcement of the existing taxi bylaw when Uber came to town and whether the new bylaw regulating private transportation companies breached the rights of the taxi operators now suing the city, under the Charter or Ontario Human Rights Code.

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Defence counsel Todd Burke, one of the lawyers with Gowling WLG representing the city at trial, rejected both the allegations of negligence and discrimination.

The evidence will show the city acted responsibly in responding to Uber when it begin operating in Ottawa, he said, and that it was ultimately unable to prevent it from continuing doing so. Other cities experienced the same.

“In many respects, Uber was intent on operating no matter the regulatory resistance it faced.”

After widespread consultation that included the taxi industry — and lobbying by that industry as well as by Uber — Burke said the bylaw the city adopted through council in 2016 ultimately balanced “the interests of the taxi industry, with the progressive use of technology and the accompanying promise of cost-effective, safe transportation services for Ottawa’s citizens.”

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During the review that led up the the bylaw’s adoption, Burke said the city learned via consultation that Uber was, in general, “considerably more popular amongst consumers than taxis” and that “consumers in Ottawa wanted Uber on the basis that it was more convenient, offered better customer service, was less expensive, and many riders found it to be safer.”

He also noted that the entrance of private transportation companies into the vehicle-for-hire market likely offered a benefit to taxi drivers who don’t have their own plates, such as more power to negotiate leasing a plate at a lower rate and additional job options. These drivers share many of the demographic characteristics of those suing the city, Burke said, as do Uber drivers.

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He closed with a prediction that the judge would conclude, after hearing the evidence, that the case should be dismissed.

“The present challenge by plate owners is an effort to thwart the progress that (private transportation company) technology brings, and to protect their economic interests in preserving the historical monopoly that was enjoyed by the taxi industry for many years,” Burke argued.

Conway, meanwhile, said that what’s being disputed at the trial is whether the city, after creating and maintaining a regulatory system that it’s described as one of “supply management,” and permitting ⁠— if not encouraging ⁠— investment of capital by plate holders and brokers in the taxi industry, “the city can now absolve itself of any responsibility to those it regulated by simply and effectively writing itself out of the script.”

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Over the trial’s seven weeks, Conway said the court will hear from plate holders whose livelihoods were “decimated,” and expert witnesses speaking to the systemic disadvantages they face as well as the damages they’ve suffered, including an assessment of the loss of plate value.

According to an expert the plaintiffs plan to rely on ⁠— whose findings Burke said the defence will be challenging ⁠— the loss of value for the plaintiff class’s taxi plates after 2014 is in the range of roughly $137,000 to $150,000 per plate, while damages for plaintiffs who are brokers have been assessed at $4.78 million to $6.35 million apiece. When Uber hit the streets of Ottawa in the fall of 2014 there were four of these brokers, or taxi dispatch companies, and approximately 768 plate holders, with 1,188 plates between them.

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Burke noted that a number of witnesses from city hall will testify, including about the size, complexity and challenges involved in the city’s enforcement activities against Uber drivers, and why the city didn’t pursue an injunction against the company.

The city issued 273 charges under the Provincial Offences Act against individual Uber drivers between 2014 and 2016, resulting in 156 convictions, said Burke.

The first witness to take the stand was Marc André Way, one of the lawsuit’s lead plaintiffs and the CEO of taxi company Coventry Connections. His testimony began Wednesday afternoon, and was expected to last several days. 

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