In an 8 to 1 decision, the Supreme Court of Canada sided with an Uber driver finding the requirement of arbitrating labour disputes in the Netherlands to be unconscionable. This was the second Supreme Court of Canada decision in the transportation space over the last several months. It followed the decision in Wartsila v. Desgagnes Group rendered at the end of 2019.
Mr. Heller was an Uber driver, who commenced a class action lawsuit against Uber for alleged violations of employment standards legislation. Before commencing his relationship with Uber, Mr. Heller accepted the terms of Uber’s standard form services contract. Uber sought a stay of the class action proceeding on the basis of a jurisdiction clause in that agreement, which referred all disputes to mediation and arbitration in the Netherlands.
At first instance, the motions judge upheld the arbitration clause. That decision was reversed by the Ontario Court of Appeal which found the arbitration clause to be unconscionable in part due to the inequality of bargaining power between Uber and its drivers.
The Supreme Court upheld the Court of Appeal decision. The majority of the judges held that determining whether an arbitration clause was unconscionable required considering two elements: whether there was an inequality of bargaining power and whether there was a resulting improvident bargain. The court found that there was considerable inequality of bargaining power between Mr. Heller and Uber. The arbitration clause was found to be improvident because the arbitration process required US$14,500 in up-front administrative fees.
Standard form contracts and the corresponding unequal bargaining power of the parties are particularly vulnerable to findings of unconscionability.
This decision enables Mr. Heller’s class action lawsuit against Uber to proceed. If successful, it could lead to a finding that Canadian Uber drivers are employees within the meaning of Ontario’s Employment Standards Act.
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