Ottawa files closing statement in Metro Taxi vs Ottawa

The City of Ottawa has filed its closing statement in the case of Metro Taxi vs City of Ottawa.

The Executive Summary of the statement is published below; the the entire 421 page statement is available as a .pdf document at the bottom of this article.

“EXECUTIVE SUMMARY

1. The Defendant, the City of Ottawa (the “City”) is the municipal government of a large, diverse and growing city of a million people. The City exercises the authority delegated to it by the Province of Ontario to regulate, and act, in the public interest, for the benefit of its constituents. In doing so, the City must balance a complex milieu of competing viewpoints, clashing interests, diverse stakeholders, statutory constraints, and demands for scarce resources to act in a manner that best promotes the public good, while ensuring the safety and wellbeing of its citizens above all else. This is the approach that the City has always taken, with all the industries that it regulates, including the taxi industry. Faced with the arrival of a technology that was new, innovative, disruptive, and popular the City took the same approach.

2. For decades, the City and its predecessors have imposed regulations on the taxi industry, and enforced those regulations, in an effort to ensure that the taxi industry operated in a manner that was safe for the public and fair to consumers. The City’s regulatory approach was premised on two fundamental pillars: (1) controlling the number of taxis that could operate by restricting the number of taxi plates to ensure that vehicles and drivers met standards of safety and quality; and (2) regulating the fare that taxis could charge to ensure that consumers were not taken advantage of. At all times, the City and its predecessors retained ownership of taxi plates. Further, a time-limited, renewable license, such as a taxi plate, does not constitute property at common law.

3. The City permitted taxi plates to be transferred between licensees, to help foster its regulatory goals of public safety and consumer protection. Allowing the transfer of plates helped free up scarce enforcement resources that would otherwise have been occupied in attempting to prevent plate holders from circumventing a ban on transfers. The regulatory approach taken by the City, with limited and transferable plates and regulated fares, was broadly consistent with the approach taken by cities across North America. 2

4. Ensconced in its monopoly of vehicle for hire (“VFH”) services and without any competition, the taxi industry stagnated, and consumers became dissatisfied with the industry’s customer service. Taxi plates were treated as speculative assets, and were held in increasingly large concentrations by the taxi industry elite. By 2015, one percent of the taxi plate holders in the City held 25 percent of the plates, and three out of every four licensed taxi drivers had to pay rent simply for the privilege of operating a taxi. Many of the single plate holders that did manage to acquire rights to a taxi plate did so without undertaking basic due diligence.

5. At all times, two things remained true: (1) the City owned the taxi plates; and (2) the relationship between the plaintiffs and the City was the relationship between a regulator and a regulated industry. Nothing less, but certainly nothing more.

6. Into this context, in September of 2014, came a new and innovative ridesharing technology: Uber. Though it had spread rapidly throughout the United States and Europe, Ottawa was just its second Canadian city. The City immediately began to enforce its taxi by-law against Uber drivers on the basis that they were providing taxi service without a license. The City’s enforcement efforts against Uber drivers continued for two years, with the City deploying unprecedented resources to overcome unprecedented technological challenges. The City continually adapted its enforcement tactics and attempted to overcome the statutory constraints on its enforcement power. In the midst of these enforcement efforts, the City of Toronto brought and lost an application for an injunction against several of the corporate entities affiliated with Uber. As a result of this decision, it became clear to the City that it would likely be unable to take successful enforcement action against those entities, and so it made the reasonable decision to keep its enforcement focused on Uber drivers.

7. Uber’s technology was innovative and was an improvement over many of the aspects of taxi service that consumers found most frustrating. As of May 2015, it operated without any regulatory protections for the public. The City thus embarked on a lengthy and comprehensive regulatory review, guided by the principles of consumer protection, public safety, and accessibility, to determine how the 3 new technology should be addressed from a regulatory perspective. That review involved extensive research and study of the issues, including wide-ranging consultation with the general public and key stakeholders. Representatives of the taxi industry and members of the plaintiff class were extensively consulted and had direct access to decision-makers throughout the course of the review. Their suggestions and their concerns informed the review at every stage.

8. In making any policy decision, the City must balance a multiplicity of competing viewpoints and priorities to achieve an outcome that most benefits its constituents as a whole. The City’s decision after carrying out its review was to enact By-law 2016-272 (the “2016 By-law”). The 2016 By-law is the fruit of City Council making hard policy choices after having heard from experts, taxi industry participants and the citizenry over a number of months. It regulates a business which had garnered substantial market demand and was not previously regulated, while eliminating some existing regulations for taxi services. It is consistent with the regulatory approach to ridesharing services taken by jurisdictions across Canada and the United States and was the approach that provided the most benefit and protection to the citizens of the City.

9. As is the case with policy choices, some constituents are pleased, some are indifferent, and some are upset. The essence of this claim is that the plaintiffs are upset with the City’s policy choices. They seek to use this Court to rewind the policy clock to a time when ridesharing did not exist, when they did not have to compete with innovative technology, and when taxis were the only option. They attempt to cloak this dissatisfaction with City policy in the language of negligence and discrimination.

10. The plaintiffs claim that the City owes them a duty of care to protect their potential for return on speculative investments. No such duty exists. The City is a government that acts and regulates in the public interest. It is not the guarantor of the financial returns of an industry. The plaintiffs claim, without evidence, that the City’s unprecedented enforcement efforts against Uber were unreasonable. They seek, without justification or authority, to hold the City to a standard of perfection. 4

11. In addition to their negligence claim, the plaintiffs have also framed their claim under section 15(1) of the Canadian Charter of Rights and Freedoms. This section guarantees equal benefit of the law without discrimination. Any law that discriminates on the basis of race, national or ethnic origin, colour, or other personal characteristics is unconstitutional, subject to the limits set out in section 1 of the Charter. The plaintiffs are claiming that the City’s regulation of the VFH industry, including the 2016 By-law, is discriminatory on the basis of race and national origin, and is therefore unconstitutional.

12. The plaintiffs’ discrimination claim defies logic and common sense, and lacks support in the evidentiary record. The plaintiffs point to the statistical analysis of Dr. Ornstein as evidence that the plate holder class members are vulnerable and disadvantaged members of society. The plaintiffs then claim that the City’s regulatory actions and the 2016 By-law have exacerbated that disadvantage.

The error in the plaintiffs’ position is twofold. First, the statistical data they rely on speaks only to broad demographic trends and not the impact of the City’s actions on the plaintiff class members. The statistical data advanced by the plaintiffs may be evidence of the systemic disadvantage felt by visible minority groups in Canadian society, but it says nothing about whether the City’s regulatory actions in this case are a manifestation of that systemic disadvantage.

Second, while the plate holder class members have co-opted the disadvantage felt broadly by visible minorities, the evidence in the record shows the class members themselves enjoy relative economic advantage. This is especially so when the plate holders are compared with the taxi drivers and Uber drivers who are not parties to this action. These drivers are also visible minorities and come from many of the same countries as the plate holders. However, these drivers have benefitted from the City’s regulatory action; Private Transportation Companies (“PTCs”) like Uber offer the opportunity for new, flexible work options and the introduction of competition into the VFH market has given taxi drivers a better bargaining position when negotiating the fees they pay to plate holders for access to the market.

13. As a result, the plaintiffs have failed to make out their Charter claim. The 2016 By-law is constitutional. 5

14. The plaintiffs have also framed their discrimination argument in the Ontario Human Rights Code, but this claim suffers from the same flaws as the Charter claim. Moreover, the Ontario Human Rights Tribunal has already considered this issue in the Addai v. Toronto case and rejected the claim that amendments to for hire regulations are discriminatory.

15. Finally, the City provided services to the plaintiffs in relation to By-law 2012-258 (the “2012 Bylaw”), which were related to the administration and enforcement of the regulatory regime. The City recouped the costs of those services by charging fees, pursuant to its authority under the Municipal Act, 2001 (the “Municipal Act”). In doing so, it consistently ensured that the quantum of the fees was roughly equivalent to the cost of providing those services. The plaintiffs suggest that the City is required to carry out a specific costing analysis to justify the fees charged under the 2012 By-law. There is no authority for this claim. The fees charged to the plaintiffs represent a small fraction of the City’s total by-law enforcement budget, a rounding error in the context of its overall budget, and are reasonably tied to the cost of the services that the City provides. They are lawful.”