This article seeks to make a detailed analysis on the case of Uber Technologies Inc. v. Heller[i] which was decided in the supreme court of Canada on Friday 26 June, 2020.
The roots of this case lie in a class action claim, initiated by David Heller, who worked with UberEats, the food delivery service of Uber Technologies Inc. (Uber)[ii]. The lawsuit was brought against the company by a class of drivers working for Uber in Ontario to be recognized as employees rather than independent contractors.
The primary prayers that were sought by the Plaintiffs (hereinafter referred to as the defendants) were as follows:[iii]
- A declaration that the class of drivers are (sic: is) employees under Ontario’s Employment Standards Act, 2000, S.O. 2000, c. 41 (hereinafter referred to as “ESA”) and not independent contractors.
- Damages up to the amount of $400 million for unpaid minimum standards entitlements under the ESA.
However, was the first claim of the respondents that the drivers should be regarded as employees and not independent contractors a sustainable claim? I think so. Though the judgment of a foreign court is not binding in this particular court, it could add a persuasive weight to the argument. Below are some of the instances where courts ruled in favour of Uber drivers to be employees rather than independent contractors:
[T]he company has faced various legal proceedings across the world wherein authorities belonging to different legal fields have argued that the drivers should be qualified as employees[iv]. La Cour de Cassation[v] in France also upheld the characterization as an employee[vi]. The main justiﬁcation adopted by the French Court is based on the fact that an Uber driver cannot build his client base or ﬁx the prices which he/she thinks is fair[vii]. These characteristics make the driver an employee of the Company[viii].
Also, the AB5 bill[ix] of California helps a lot in addressing the question of who is an employee and who is an independent contractor. The bill was designed to determine if an individual should be qualiﬁed as an independent contractor or employee. To decide which qualiﬁcation is the correct one, an ABC test must be applied[x], that is: (A) Is the individual free from the control of the hiring company?; and (B) Is the individual providing a service that is not the hiring company’s core business?; and (C) Is the individual truly engaged in running his/her own business of the same nature of the service provided to the hiring company?[xi]. Consequently, in case of any of the questions are (sic: is) answer (sic: answered) negatively, an employment relationship is established.[xii]
[O]ne could argue that drivers are employees as (i) the company provides some rules regarding car maintenance and manners that must be followed by the drivers, (ii) the Company ﬁxes ride prices and handles the payment processing; (iii) Uber approves drivers’ applications and can cancel the use of the platform by them; (iv) the Company can also impose sanctions. These parameters indicate that there is some level of subordination and dependence[xiii].
As for the second prayer of the claim of up to $400 million for unpaid minimum standards entitlements under the ESA, though it wasn’t the only claim he sought under the ESA, he also seeks relief for four different claims in the proceeding: a claim for breach of the ESA, a claim for breach of contract based on either implied terms or the duty of good faith, a claim for negligence, and a claim for unjust enrichment[xiv]. All of these claims, however, depend on the ESA for their success.[xv] The essence of Mr Heller’s position is that he is an employee within the meaning of the ESA[xvi]
The amount Mr Heller seeks would hardly be an object of a surprise to most people since it is a class action though judge Cote J., in his dissenting judgment, renders the claim of such large amount and the uncertainty of Mr Heller’s claim as absurd.
Heller agreed with the company through a software application which is being facilitated by the company. Heller along with other drivers is to use their vehicles for commuting people around the city by which the passengers use their Uber Passenger App to call a Uber driver from which the company would calculate the appropriate fee and take its percentage and disburse the driver’s into his account that he registered with them.
The services agreement which Mr Heller Clicked and agreed to without any window for him to negotiate its terms, contains a mandatory arbitration that shall take place in Amsterdam, The Netherlands. It also contains a choice of law clauses which state:
Governing Law; Arbitration. Except as otherwise outlined in this Agreement, this Agreement shall be exclusively governed by and construed in accordance with the laws of The Netherlands, excluding its rules on conflict of laws….Any dispute conflict or controversy, however, arising out of or broadly in connection with or relating to this Agreement, including those relating to its validity, its construction or its enforceability, shall be first mandatorily submitted to mediation proceedings under the International Chamber of Commerce Mediation Rules (“ICC Mediation Rules”)….The place of arbitration shall be Amsterdam, The Netherlands….[xvii].
The judgment was given relying basically on two principles; the doctrine of unconscionability and the fact that the transaction was improvident.
H’s claim that the bargain was improvident rests on three propositions: (1) the place of arbitration clause requires him to travel to Amsterdam at his own expense, (2) the choice of law clause excludes the application of the ESA, and (3) the selection of the ICC Rules entails the payment of fees which he alleges are disproportionately high[xviii].
The up-front cost to begin arbitration at the ICC according to the ICC Rules amounts to about US$14,500[xix]. The fees do not include legal fees, lost wages and other costs of participation[xx]. But Mr Heller’s earns around $400-$600 per week and around $20,800-$31,200 per year. As indicated above, the arbitration fee represents most of Mr Heller’s annual income.
Unless the company wants to take advantage of its workers, it would not have inserted such clause that is hardly plausible especially to a class of workers whose annual income is just above the arbitration cost. It is a clear imbalance that most of the workers would have to give up whatever dispute they have because of its cost.
The first proposition that the bargain was improvident for requiring him to travel to Amsterdam at his own expense was debunked by judge Cote J. in his dissenting judgment where he said that “…the place of arbitration is a legal concept which denotes the parties’ selection of a particular jurisdiction whose arbitration law governs proceedings, and under whose law the arbitral award is made. There is no obligation to conduct the arbitration at the place of arbitration.” Nonetheless, it was contained in the services agreement that “The place of arbitration shall be Amsterdam, The Netherlands…” and if the clause is not literal in its meaning, the appellants would have brought it to the court’s attention.
As of the second proposition which relates to the choice of law, it is the basic argument of Mr Heller because the success of his entire claims depends on the adoption of Arbitration Act and not International Commercial Arbitration Act. And at the end, the majority of the judges believed that the Arbitration Act is the applicable arbitration statute.
And of course, as it was obvious, the arbitration fees are disproportionately high. There is a clear inequality of bargaining power which makes the weaker party vulnerable. The improvidence of the arbitration clause was also clear because these fees are close to H’s annual income and are disproportionate to the size of an arbitration award that could reasonably have been foreseen when the contract was entered into[xxi] . Whether the stronger party knows of the vulnerability or not, it is just not rational for a company to impose such fees on an arbitration process as judge Brown J. says “…but where a clause expressly provides for arbitration while simultaneously having the effect of precluding it, the considerations which promote curial respect for arbitration dissolve”.
But according to Judge Cote J., in his dissenting judgment, the appeal should be allowed and stay on the condition that the arbitration fees be paid by the company. He also opined that “… if the arbitration clause were unconscionable or contrary to public policy, the selection of the ICC Rules and the place of arbitration clause could be severed. The majority does not explain why they have chosen not to address severance in their reasons.
To subject a person to an arbitration mechanism that is so high as to cost the most of an employer’s yearly earnings would be absurd and completely not plausible to be construed as a true way of accessing justice. Unless the stronger party intentionally wishes to take advantage of the weaker party which amounts to inequality of bargaining power, there is no way such a clause would be inserted in a contract agreement as a way of dispute resolution.
As of the conflict of laws, which both parties are invoking to be the appropriate mediation statute applicable, the court finally sided with the respondents establishing that the point of contention was whether Heller was an employee under the ESA. Under the ICAA, employment is not a “commercial” issue.[xxii] Consequently, the Arbitration Act, 1991 was adopted by the court to be the applicable arbitration statute.
[i] Uber Technologies Inc. v. Heller, 2020 SCC 16
[ii] Nikita Singh, ‘Explained: Class Action Against Uber in Canada’, available at < https://lexlife.in/2020/08/31/explained-class-action-against-uber-in-canada/ >, accessed on 2020-09-24
[iv] Ariene Reis and Vikram Chand, ‘Uber Drivers: Employees or Independent Contractors?’, available at
< http://kluwertaxblog.com/2020/04/03/uber-drivers-employees-or-independent-contractors/ >, accessed on 2020 -09-24
[v] Cour de Cassation, Chambre Sociale, ECLI:FR:CCAS:2020: SO00374, Uber France, société par actions simpliﬁée
unipersonnelle et autre(s) v. M. A. X., Arrêt n°374 du 4 mars 2020 (19-13.316).
[vi] Ariene and Vikram, Op.cit.
[ix] AB5 is the short term for Assembly Bill n. 5, also known as “Gig Worker Bill” published in the Oﬃcial Journal on 19
September 2019. See < https://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=201920200AB5 >
[x] For about 30 years, California Labor Courts applied an 11 factor-test established during the trial of S.G. Borello & Sons, Inc. v.
Department of Industrial Relations to decide if an individual should be considered an employee. Such precedent was revisited in 2018 by California Supreme Court when Dynamex Operations West, Inc. v. The Superior Court of Los Angeles
County was analyzed. By that time, it was ruled that the ABC test should be applied to determine a worker qualiﬁcation.
[xi] Ariene and Vikram, Op.cit.
[xvii] Uber Technologies Inc. v. Heller, op.cit, page 81.
[xviii] Uber Technologies Inc. v. Heller, Op.cit, page 14.
[xix] Uber Technologies Inc. v. Heller, Op.cit, page 32
[xxi] Uber Technologies Inc. v. Heller, op.cit, page 8. Per Wagner C.J. and Abella, Moldaver, Karakatsanis, Rowe, Martin and Kasirer JJ.
[xxii] Nikita, Op.cit.