Uber Technologies Inc., Uber Canada, Inc., Uber B.V. and Rasier Operations B.V. v. Daniel Heller

At a glance

Parties

Uber Technologies Inc., Uber Canada, Inc., Uber B.V. and Rasier Operations B.V. (appellants) v. David Heller (respondent), with 19 interveners

Case no.

Supreme Court of Canada, File No. 38534; 2020 SCC 16 (cited in the French text as 2020 CSC 16)

Forum and rules

Supreme Court of Canada, on appeal from the Court of Appeal for Ontario; the arbitration clause called for ICC mediation and ICC arbitration seated in Amsterdam

Instrument

Arbitration Act, 1991 (Ontario), s. 7(2); International Commercial Arbitration Act, 2017 (Ontario), which implements the UNCITRAL Model Law and the New York Convention

Court

Chief Justice Wagner and Justices Abella, Moldaver, Karakatsanis, Côté, Brown, Rowe, Martin and Kasirer

Sector

Ride-hailing and food delivery apps (gig economy); employment standards

Outcome

Appeal dismissed, Côté J dissenting. The arbitration clause is unconscionable and therefore invalid, so Heller's proposed class action was not stayed. Brown J reached the same result on public policy grounds.

Amount

ICC filing and administrative fees of about US$14,500 (about CA$19,000), against Heller's earnings of CA$20,800–31,200 a year. The proposed class action is valued at CA$400,000,000. Heller was awarded costs in all courts.

The dispute

David Heller delivers food in Toronto using Uber's apps. To become a driver he had to accept, by clicking "I agree", Uber's standard-form service agreement of about 14 pages with Dutch subsidiaries of Uber. The agreement chose Dutch law and required every dispute to go first to ICC mediation and then to ICC arbitration seated in Amsterdam. The up-front ICC fees of about US$14,500 were close to his whole annual income. In 2017 Heller started a proposed class action in Ontario, claiming that drivers are employees under the Employment Standards Act, 2000. Uber moved to stay the action in favour of arbitration. Heller argued that the arbitration clause was invalid because it was unconscionable and because it contracted out of the Act's mandatory protections. Uber argued that the International Commercial Arbitration Act applied and that, under the competence-competence principle, the validity of the clause was for the arbitrator to decide.

Key holdings

1. The Arbitration Act, 1991 applies, not the International Commercial Arbitration Act, 2017. Labour and employment disputes are not 'commercial' within the Model Law. The question is answered by looking at the nature of the dispute as pleaded, and whether Heller is an employee is the most basic employment dispute. ¶¶ 19–28
2. The Dell/Seidel framework applies to the Arbitration Act, 1991. Under it, challenges to an arbitrator's jurisdiction go to arbitration unless they raise only questions of law, or mixed questions needing only a superficial review of the record. The Court adds a further exception: a court should not refer a bona fide challenge to the arbitrator if there is a real prospect that, after a stay, the challenge would never be decided, for example because the costs of arbitration are prohibitive. The court asks (1) whether, assuming the facts pleaded are true, there is a genuine challenge to jurisdiction, and (2) whether the supporting evidence shows a real prospect that the challenge would never be resolved. This step must not become a mini-trial. ¶¶ 35–46
3. On these facts the exception applies. The US$14,500 fee is an insurmountable obstacle that must be paid before an arbitrator could rule on whether it is unconscionable. The court must therefore decide validity itself. ¶¶ 47–48
4. Unconscionability needs two things: inequality of bargaining power and a resulting improvident bargain. The Court rejected Uber's stricter four-part test. Independent legal advice is relevant only insofar as it reduces the inequality, and it is not necessary to prove that the stronger party knowingly took advantage of the weaker one. Standard-form contracts can create inequality of bargaining power, but they do not do so in themselves. ¶¶ 65–91
5. The arbitration clause is unconscionable and therefore invalid. There was clear inequality: the clause was in a non-negotiable standard form, there was a significant gap in knowledge between the parties, and the clause gave no information about the costs. The bargain was improvident: fees close to Heller's annual income, disproportionate to any award he could reasonably foresee, made his contractual rights illusory. The Court found it unnecessary to decide the Employment Standards Act argument. The appeal was dismissed with costs to Heller in all courts. ¶¶ 93–100
6. Brown J (concurring): the clause is void not as unconscionable but as contrary to public policy, because it effectively denies access to legally determined dispute resolution and so undermines the rule of law. Courts may decide such a challenge themselves, as a narrow exception to the competence-competence rule. Severing parts of the clause is not possible. ¶¶ 101–146, 176
7. Côté J (dissenting): the International Commercial Arbitration Act applies, because the relationship is commercial (a software licence). Heller's challenges need more than a superficial review of the documentary evidence and should go to the arbitrator. On the evidence before the Court, the clause was not unconscionable, contrary to the Employment Standards Act, or contrary to public policy. She would have allowed the appeal and granted a conditional stay, requiring Uber to advance the ICC filing fees. ¶¶ 199–203, 218, 324, 338

Procedural history

1. 7 June 2016Heller contracts with Rasier Operations B.V. to use the Uber driver app. On 15 December 2016 he contracts with Uber Portier B.V. to use UberEATS.
2. 2017Heller starts a proposed class action in Ontario alleging breaches of the Employment Standards Act, 2000. Uber moves to stay it in favour of arbitration.
3. 2018Ontario Superior Court (Perell J), 2018 ONSC 718: stay granted, on the basis that the validity of the clause is for an arbitrator in the Netherlands.
4. 2019Court of Appeal for Ontario (Feldman, Pardu and Nordheimer JJA), 2019 ONCA 1: appeal allowed and stay set aside. The clause is held invalid as unconscionable and as contracting out of the Employment Standards Act.
5. 6 November 2019Appeal heard by the Supreme Court of Canada.
6. 26 June 2020Supreme Court of Canada dismisses the appeal with costs, Côté J dissenting.

Tribunal, counsel and experts

For the claimant

Torys LLP

For the respondent

Wright Henry; Samfiru Tumarkin

For other participants

Procureur général de l'Ontario · Perley-Robertson, Hill & McDougall · Borden Ladner Gervais LLP · Monkhouse Law · Fédération canadienne de l'entreprise indépendante · Clinique d'intérêt public et de politique d'internet du Canada Samuelson-Glushko · Centre d'action pour la sécurité du revenu · Goldblatt Partners · Workers' Health and Safety Legal Clinic · Osler, Hoskin & Harcourt · Caza Saikaley · Blake, Cassels & Graydon · Davies Ward Phillips & Vineberg · Norton Rose Fulbright Canada LLP · Sotos · Allen/McMillan Litigation Counsel · Bennett Jones LLP

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Keywords

• Uber
• Uber v. Heller
• unconscionability
• arbitration clause
• stay of proceedings
• competence-competence
• Dell framework
• standard form contract
• inequality of bargaining power
• access to justice
• public policy
• ICC arbitration fees
• Arbitration Act 1991 Ontario
• International Commercial Arbitration Act 2017
• Employment Standards Act 2000
• gig economy
• New York Convention Article II(3)
• severability

Summary generated with AI from the published documents — refer to the award for the authoritative text.