Taxi drivers launch $215 million lawsuit against City of Ottawa weeks before Uber becomes legal

Cabbies worried about the dwindling value of their plates are suing the City of Ottawa for $215 million, weeks before Uber legal.

of Ottawa’s beleaguered taxi industry filed the class action lawsuit Friday, accusing the city of failing to properly enforce its own taxi bylaw after the ride-hailing company arrived here nearly two years ago.

The plaintiff is Metro Taxi Ltd., which carries on business as Capital Taxi, and holds a licence to operate and dispatch taxicabs. It is also a broker. Company co-owner Marc Andre Way is also named as a plaintiff. Way is the largest single in the city. As of 2015, he and his family owned 87 plates.

Thomas Conway, Way’s lawyer, said Friday the lawsuit was filed on behalf of about 755 plate owners, brokers or both.

Way himself could not be reached for comment. In an opinion piece published last March, Way wrote about the city’s obligation of “fairness to drivers.”

“The goal is to keep supply and demand (of licences) in balance so that drivers can afford to stay in business,” Way wrote.

In a press release sent Friday afternoon, Ottawa city clerk and solicitor Rick O’Connor said the lawsuit would be “vigorously defended.” He also said no other comments would be made as the matter is now before the courts.

The statement of claim, which has not been tested in court, says the city owed a duty of care to the taxi industry, which required the city to take “reasonable steps” to maintain the integrity of the regulatory scheme.

It claims the city created a scheme for taxi services that, in order to function effectively, required investment from plate holders.

Tony Caldwell / Postmedia
Tony Caldwell / PostmediaOttawa taxis appear at the airport in Ottawa Thursday March 31, 2016.

The scheme created and maintained the market value of the plates and, the statement of claim says, the city “actively and deliberately encouraged the growth in the market value” by permitting the sale of plates and capping the number issued.

The city directly benefitted from the market value of the plates, including through fees levied on the transfer of plates, the lawsuit says.

Yet when Uber came to town, “the City breached its standard of care by taking no steps to enforce the Uber and taking vastly inadequate steps to enforce the regulatory scheme ,” the statement of claim says.

It goes on to state that the failure of the city to enforce its own rules was an operational decision not based on economic, social or political factors, and did not result from a policy decision of “in good faith.”

“The City’s refusal to enforce the regulatory scheme is not defensible, justifiable, or intelligible. The City’s refusal conferred an obvious advantage on Uber and its drivers,” the statement of claim says.

Wayne Cuddington / Postmedia
Wayne Cuddington / PostmediaOttawa cabbies bolstered by others from Toronto, take their anti-Uber protest to Parliament Hill. Until now they have targeted most of their Uber-related protests at City Hall, since the municipality is the regulator for taxis.

The lawsuit says amendments contained in the city’s are unlawful and unreasonable because they didn’t plate owners with reasonable notice of the changes to the regulatory scheme, which the plaintiffs claim is inconsistent with previous changes to the rules.

The claim seeks a court order declaring that the city’s updated taxi bylaw, passed in April, is beyond its power and legal authority.

The bylaw created a new class of licence called private transportation company, which will essentially allow Uber to operate legally in Ottawa as of Sept. 30.

The plate holders are also seeking an order of restitution for fees collected under the taxi bylaw.

According to the statement of claim, Uber drivers operated taxis within the meaning of the city’s bylaw, while the company acted as broker, but neither obtained the necessary licences to do so.

The claim says class members asked the city to take “reasonable steps” to enforce its regulatory scheme, and notes the city prosecuted a “limited number of drivers.”

“The City did not take any steps to enforce the regulatory scheme against Uber,” the lawsuit says. “Uber continued to operate its services in the City of Ottawa. The City knew that Uber would continue operating its services unless the City took steps to enforce the regulatory scheme against Uber or took meaningful and reasonable steps to enforce the regulatory scheme against Uber’s drivers.”

The lawsuit also claims the city’s updated taxi bylaw provides a number of advantages to Uber and its drivers not available to class members, including lower fees, the purchase or lease of plate and the installation of in-vehicle cameras.

KPMG, which was hired to review the city’s taxi bylaw last year, predicted plate owners would seek damages from the city if council established a new category for alternative services, like Uber. That prompted the city to get an opinion from its own legal consultants, but the 30-page review is confidential.

However, the city made one excerpt from the legal opinion public.

In the lawyers’ opinion, “The city would likely not be held liable for the economic losses suffered by existing holders of regulated plates and plate holder licenses should the value of those plates decline as a consequence of regulatory changes approved by city council and adopted through a bylaw which would affect the industry by, among others, relaxing the controlled entry into the vehicle-for-hire business in Ottawa.”

The city’s legal department also concluded the city is under no obligation to provide financial compensation for any loss in plate value.

About Matthew Pearson and Jon Willing, Postmedia News