Susan Kootnekoff is the founder of Inspire Law, an Okanagan based-law practice. She has been practicing law since 1994, with brief stints away to begin raising children. Susan has experience in many areas of law, but is most drawn to areas in which she can make a positive difference in people’s lives, including employment law. She has been a member of the Law Society of Alberta since 1994 and a member of the Law Society of British Columbia since 2015. Susan grew up in Saskatchewan. Her parents were both entrepreneurs, and her father was also a union leader who worked tirelessly to improve the lives of workers. Before moving to B.C., Susan practiced law in both Calgary and Fort McMurray, AB. Living and practicing law in Fort McMurray made a lasting impression on Susan. It was in this isolated and unique community that her interest in employment law, and Canada’s oil sands industry, took hold. In 2013, Susan moved to the Okanagan with her family, where she currently resides. Photo: Contributed

Kootnekoff: Supreme Court of Canada rules clause in Uber’s contract is invalid

Susan Kootnekoff is the founder of Inspire Law, her diverse legal career spans over 20 years.

The Supreme Court of Canada recently released a decision that considered whether a clause in Uber’s contracts is legally valid.

Mr. David Heller, an Uber driver, challenged a provision in Uber’s contract.

To become an Uber driver, Mr. Heller had to accept, without negotiation, the terms of Uber’s standard form services agreement. Under that agreement, Mr. Heller was required to resolve any dispute with Uber through commercial arbitration in the Netherlands.

Mr. Heller and workers like him are low-paid, have no benefits plans or pensions, and do not have statutory entitlements like employment insurance. They cannot easily forgo work, are unlikely to know their rights and, under Uber’s arbitration clause, are unlikely to enforce them.

In 2017, Mr. Heller started a class proceeding against Uber to determine if he and others like him were employees entitled to protection of employment standards legislation.

Uber sought a stay of the proceeding. It contended that Mr. Heller could not proceed in court. It said he was compelled to arbitrate the dispute in the Netherlands.

Mr. Heller asserted that the arbitration clause in Uber’s services agreements is invalid, because it is “unconscionable.” In other words, the clause was unreasonably harsh or unreasonably one sided and therefore ought not to be enforced.

The arbitration process specified in Uber’s contract required up-front fees of US$14,500. Mr. Heller would also have to pay legal fees and other costs. Mr. Heller earns between $400-$600 a week. The fees represent most of his annual income.

The motion judge granted Uber’s request to stay the proceeding. The arbitration clause’s validity was to be referred to arbitration in the Netherlands.

The Court of Appeal allowed Mr. Heller’s appeal. It held that Mr. Heller’s objections to the arbitration clause could be dealt with by a Canadian court. It also found that the arbitration clause was unconscionable, based on the inequality of bargaining power between the parties and the improvident cost of arbitration.

In a 207-page decision, the Supreme Court of Canada dismissed Uber’s appeal.

In response to the argument that only the arbitrator could decide the clause’s validity, Justice Brown stated:

An arbitrator cannot reasonably be tasked with determining whether an arbitration

agreement, by its terms or effects, bars access to that very arbitrator. It therefore falls to courts to do so.

Justice Brown stated that the arbitration clause was unenforceable not because it was unconscionable but because it undermined the rule of law by denying access to justice. It effectively made it impossible for him to seek enforcement of his contractual rights. So, he said it was contrary to public policy.

The majority of the Court stated:

When arbitration is realistically unattainable, it amounts to no dispute resolution mechanism at all. … The arbitration clause is the only way Mr. Heller can vindicate his rights under the contract, but arbitration is out of reach for him and other drivers in his position. His contractual rights are, as a result, illusory.

Based on both the disadvantages faced by Mr. Heller in his ability to protect his bargaining interests and on the unfair terms that resulted, the arbitration clause is unconscionable and therefore invalid.

Interestingly, a number of United States cases revealed that Uber allows drivers there to opt out of the arbitration clause, does not require arbitration in Netherlands and pays the arbitration fees. Uber was waiving the clause elsewhere, but seeking to strongly enforce it within Canada.

This decision confirms that contractual provisions that effectively preclude access to justice are not enforceable. The decision may have further implications beyond the law of contract.

The Supreme Court of Canada’s decision clears the way for Mr. Heller’s sizeable class action to be heard by Canadian courts. If Uber drivers are held to be employees, and not contractors, then they are entitled to be treated as such. This includes entitlements to be paid the minimum wage, as well as overtime, vacation and holiday pay. They will also be entitled to termination pay and reasonable notice of dismissal.

The content of this article is intended to provide very general thoughts and general information, not to provide legal advice. Specialist advice from a qualified legal professional should be sought about your specific circumstances.

If you would like to reach us, we may be reached through our website, at www.inspirelaw.ca.

In case you missed it?

Kootnekoff: B.C. Violated French Education Rights

To report a typo, email:
newstips@kelownacapnews.com
.


@KelownaCapNews
newstips@kelownacapnews.com

Like us on Facebook and follow us on Twitter.

Columnist

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Myra Canyon SCARE park is located in Kelowna, British Columbia. (Photo - Twila Amato)
VIDEO: Myra Canyon SCARE park cranks up the horror

Open Oct. 29 to Oct. 31 from 5:30 p.m. to 10 p.m.

RCMP. (Phil McLachlan - Black Press Media)
Kelowna Mountie hit with 2nd lawsuit in 2 months for alleged assault

Const. Julius Prommer is accused of breaking a woman’s knee during while responding to a noise complaint

One Peak Creative has made a catapult which allows children to receive candy in a socially distanced fashion. (Onepeakcreative - Instagram)
Kelowna production company creates Halloween catapult

One Peak Creative promoted the product by making a reality TV style video

Image: Dave Ogilvie.
Man with leg injury rescued from West Kelowna trail

The incident happened in the Glenrosa area

Man experiencing homelessness lying on the bench. (File photo)
CMHA opens fourth supportive housing in Kelowna

Ellis Place will open on the first week of November

Burnaby RCMP responded to a dine-and-dash suspect who fell through a ceiling in March 2020. (RCMP handout)
VIDEO: Suspected dine-and-dasher falls through ceiling of Burnaby restaurant

A woman believed to be dashing on her restaurant bill fell through the kitchen ceiling

Vince Schnabl looks at the view this October from the Gorge, west of Revelstoke. (Photo by Jon Wichett)
There’s 3 times more snow near Revelstoke than usual

According to 54 years of data from Parks Canada for Glacier National Park

A deer was spotted in October 2020 in Prince Rupert, B.C., with a bright pink yoga ball stuck in its antlers. (Kayla Vickers/Chronicles Of Hammy The Deer Official Page)
Hammy 2.0? Prince Rupert deer spotted with bright pink yoga ball stuck in antlers

The BC Conservation Officer Service is aware of the deer roaming around the city

Bear sightings have been reported in a residential area in Summerland in late October. The Conservation Officer Service is urging people to take measures so bears are not drawn to the area (Black Press file photo)
Bear sightings reported from Summerland neighbourhood

Conservation Officer Service urges people not to leave garbage outside

Is it time to start thinking about greener ways to package cannabis?

Packaging suppliers are still figuring eco-friendly and affordable packaging options that fit the mandates of Cannabis Regulations

Hirdeypal Batth, 24, has been charged with sexual assault and forcible confinement in relation to an incident in August 2020. (VPD handout)
Man, 24, charged with sex assault after allegedly posing as Uber driver in Vancouver

Investigators believe there could be more victims outside of the Vancouver area

Join Black Press Media and Do Some Good

Pay it Forward program supports local businesses in their community giving

Melissa Leveque claims that on June 2, 2020 she spilled hot tea on her lap due to negligence on the part of staff at Penticton’s Riverside Starbucks drive-thru. (Google maps photo)
Woman sues Starbucks over hot tea spill at Penticton drive-thru

Melissa Leveque claims she suffered second degree burns, seeking $35,000

B.C. Premier John Horgan and Washington Gov. Jay Inslee arrive for annual Cascadia conference in Vancouver, Oct. 10, 2018. They have agreed to coordinate the permanent switch to daylight saving time. (B.C. government)
B.C. still awaiting U.S. approval to eliminate daylight saving time

Clocks going back one hour Nov. 1 in Washington too

Most Read