The Supreme Court of Canada heard arguments last week in the much-anticipated case, Uber v. Heller. I finally got around to listening to most of the oral argument. I have some thoughts.
On appeal from a decision of the Ontario Court of Appeal issued earlier this year, the case involved the legality of a mandatory arbitration clause in Uber’s standard form contract with drivers that prevents the drivers from filing complaints with government agencies alleging violations of Ontario laws that are intended to protect employees, including the Employment Standards Act. The Uber clause, which drivers accept by clicking “agree” on their phone, requires that the drivers pay an upfront fee of about $19,000 to submit any complaints to an arbitrator in Amsterdam. The driver would then need to fly to the Netherlands to present their case, probably with the help of a lawyer. All of this for a complaint that might seek damages for unpaid wages amounting in the hundreds of dollars.
The obvious effect, if not the purpose, of this arbitration clause is to prevent drivers from ever complaining. No rational Canadian driver would pay thousands of dollars to pursue a claim in Europe for hundreds of dollars, and Uber knows this. The question put to the Supreme Court was whether Uber should be permitted to get away with this attempt to block employees from pursuing their statutory minimum entitlements through an Ontario class action. Other Canadian corporations are watching closely. If a company can block workers from pursuing complaints with government agencies or through class actions for enforcement of employment protection statutes simply by imposing a mandatory arbitration clause in their standard form employment contracts, then mandatory arbitration clauses are certain to proliferate in Canada, as they have south of the border.
U.S. employers have adopted mandatory arbitration clauses with zeal in order to block their employees from pursuing class actions against them in court. In a controversial 2018 decision called Epic Systems Corp. v. Lewis, the U.S. Supreme Court upheld this practice. President Trump appointee Justice Gorsuch wrote the majority decision, which can be summed up in this short passage: “The policy may be debatable but the law is clear: Congress has instructed that arbitration agreements like those before us must be enforced as written.” The “debatable” policy is permitting the more powerful party in the employment relationship to block access to one of the most important tools in the access-to-justice arsenal: the class action lawsuit.
Uber v. Heller, like Epic Systems, is a class action lawsuit, but the class action component of the Hellercase was surprisingly muted in legal arguments before the Court last week. Apart from submissions made by a few intervenors (including UFCW Canada), there was little emphasis in oral argument to the fact that the Uber mandatory arbitration clause does not just prevent an individual driver such as Mr. Heller from filing an employment standards complaint; it also effectively closes the door on any class action that might be brought by Uber workers.
This is a crucial point that needs to be emphasized. It was at the centre of the fight in the Epic Systems case. The reason why that decision is so devasting to U.S. workers is that it permits employers to block access to employee class action lawsuits to enforce fair labour standards. Class action lawsuits are the most important means by which groups of low-income, precarious workers can overcome systemic barriers to access to justice, including prohibitive costs associated with taking on large corporations and fears of reprisal for challenging employer prerogative.
Justice Ginsberg, in her scathing dissent in Epic Systems, called the majorities’ ruling “egregiously wrong” because it subordinated protective employee regulation to individualized private arbitration at an employer’s behest and in doing so ignored the inherent imbalance of power that characterizes the employment relationship and “the destructive consequences of diminishing the right of employees to band together in confronting the employer” through class actions.
The Ontario Court of Appeal similarly recognized the importance of preserving worker access to class actions in Fulawka v Bank of Nova Scotia, another recent class action lawsuit brought by bank employees. The Court wrote that “the goal of access to justice would be better advanced by a class proceeding” than by individual labour standards complaints:
The class proceeding relieves individual class members of the need to incur out-of-pocket expenses and the need to hire a lawyer or other advocate to represent them. Class actions also offer judicial oversight, which would deter any potential employer retaliation against employees taking part in the litigation.
That case was ultimately settled with the Bank of Nova Scotia agreeing to pay employees upwards of $90 million for unpaid overtime and wage claims. Class action lawsuits alleging violations of employment standards remain outstanding against several other large Canadian corporations, including the CIBC. I suspect that nothing would make giant corporations happier than if the Supreme Court rules that they can block these pesky class actions by simply adding a boiler-plate mandatory arbitration clause to all their contracts.
In oral argument last week, Justice Martin queried at one point whether in deciding if the Uber mandatory arbitration clause was unconscionable, the effects on the class should be considered, or whether the Court should look only at Mr. Heller. She asked:
“When we are measuring unconscionability, are we doing it just with respect to Mr. Heller himself, or do we take into account the larger ideas about what the class may be able to do?”
The exchange was brief, but the discussion appeared to leave off with the sentiment that the focus of the inquiry is exclusively on how the arbitration clause affects Mr. Heller and not also the entire class of Uber drivers.
Of course, one way the arbitration clause affects Mr. Heller – perhaps the most important way – is to block his ability to join with other drivers in bringing a class action lawsuit against Uber to enforce his employment standards claims, something expressly provided for under the ESA and Ontario class action legislation. Still, it is important that the Court make this point clearly; mandatory arbitration clauses that prevent workers from bringing class actions lawsuits to enforce minimum statutory labour standards are deeply problematic precisely because they close off access to justice through the most effective means by which vulnerable workers can enforce large scale violations of protective standards.
The Uber arbitration clause is also particularly abhorrent because it is obvious that it will block any individual driver from ever pursuing a claim for Canadian statutory minimum employment standards. The record showed that no Canadian Uber driver has ever pursued an arbitration claim for breach of the ESA. No surprise there. The arbitration clause effectively places Uber outside of the reach of Ontario’s statutory employment protection regime even though its drivers work in Toronto.
At several points during the SCC hearing, various judges asked whether the outcome should be different if the arbitration clause had no upfront filing fee and was heard locally (“in Toronto”). The answer is that, even then, the arbitration clause should be struck down, because it is found in a contract of adhesion characterized by vast inequality of bargaining power that purports to block access by vulnerable workers not only to their right to file an individual employment standards complaint with the government, but also their right to join together with like workers to pursue claims through class actions. The clause entirely favours Uber’s interests and ensures that its drivers are left in the cold when it comes to individually and collectively enforcing their statutory entitlements.
It would be a shame if the Court decides the case on the narrow basis that Uber’s clause is unconscionable because it requires Mr. Heller to pay nearly $20,000 to access arbitration in Amsterdam, though this seems a rather straightforward conclusion to me. The Court could provide a service to the employment relations community by finding more broadly that mandatory arbitration clauses that block access to statutory enforcement machinery in employment protection statutes, including the right to pursue class action lawsuits to enforce statutory claims, are unenforceable.
Of course, this case could have been avoided entirely had Canadian legislators seen the writing on the wall and proactively banned mandatory arbitration clauses that block workers from the administrative enforcement machinery provided in protective labour standards legislation. I have suggested before that Section 7(2) of the Ontario Consumer Protection Actcould provide the model. I will even draft the language as a public service (you’re welcome):
Any term or acknowledgment in an employment contract or a related agreement that requires or has the effect of requiring that disputes alleging a contravention of this Act be submitted to arbitration is invalid insofar as it prevents an employee from exercising a right to commence an action in court or file a complaint under this Act.
Hopefully our governments will get to this soon and we can quickly stomp out the virus of forced arbitration clauses blocking effective access through class actions to minimum labour standards enforcement that has infected our neighbours to the south.
Citation: David Doorey, “Heller v. Uber: Supreme Court Must Guard Access to Class Action Lawsuits” Canadian Law of Work Forum (November 18 2019):