Ottawa’s response to Uber was “chaotic and unplanned”

The article below is derived from the factum filed by Conway Litigation on April 6, 2023, as its closing statement in the Metro Taxi vs. City of Ottawa case. For ease of reading, Taxi News has deleted the references and footnotes found in the complete original document, which is attached at the bottom as a PDF file. Otherwise, the text has not been edited.

Taxi News will be serializing sections of the Conway factum in the days ahead. The City of Ottawa is scheduled to file its response by June 3rd. July 4th and 5th, 2023 have been reserved for oral submissions.

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Although the City was aware that Uber would disrupt the system, the City had no plan and did not take any serious steps to enforce against Uber.

Uber flouts the law everywhere          

“Uber” refers to multiple affiliated corporations incorporated in different jurisdictions, including Uber B.V., Raiser Operations B.V., Uber Canada Inc. and/or Uber Technologies Inc. In affiliation with each other, these corporations carry on business with an electronic software application and license businesses in relation to facilitating private transportation services for compensation through telecommunications platforms and/or a digital network.

Uber began operating in Ottawa in or around September 2014. Around that time, Uber accelerated its activities by launching campaigns to attract drivers to join its operation. The operation of Uber and its drivers directly contravened the unlicensed driving and dispatching provisions of the 2012 By-law.

Uber and its drivers provided the same services as bandit cab operators and bandit cab drivers. Just like taxi brokers, Uber dispatched taxicabs to the individuals requesting a ride. Just like taxi drivers, Uber drivers picked up passengers from one location and dropped them offat another in exchange for compensation. This is the exact same service that taxicab driversand brokers provide and have provided since the former City of Eastview (now Vanier) began toregulate the taxi industry in 1933. Uber just cloaked these services in the guise of “ridesharing”and wrapped them up in a shiny app.

The City was unprepared for Uber’s arrival

In the fall of 2014, the City was aware that Uber had been operating in Ontario for at least two years. The City knew that Uber would disrupt the licensed taxicab industry. The City had ample opportunities to take reasonable care and prepare for Uber’s arrival in Ottawa. However, it failed to take any steps to prepare for Uber’s arrival.

The evidence led at trial revealed that the City did nothing until the last minute. After being made aware of Uber’s existence at an international conference in 2012, the City’s reaction was to merely “hope” that Uber would not come Ottawa.

The City’s reaction was chaotic and unplanned

As part of its chaotic and unplanned response, the City began to dedicate meager resources to enforce against Uber drivers. It began planning for the so-called enforcement effort only around the weekend before Uber came to Ottawa.

There was no plan. The City allowed Uber and its drivers to launch an uncontrolled invasion of Ottawa for over two years.

Historically, bandit taxicab businesses would operate through word of mouth and small Advertisements. Uber’s approach differed in that it was funded by venture capitalists with access to significant amounts of financing.120 For example, Uber would subsidize the trips upon entry into a City. Although customers would receive promotional discounts of up to 50-60% percent of the ride, drivers would still be paid the full amount of the ride.122 This predatory approach allowed Uber to gain traction quickly in markets like Ottawa where it operated outside the regulatory framework.

City staff believed that Uber operated illegally from the moment it intruded into Ottawa.To this end, Susan Jones, now Deputy city Manager, met with Uber representatives in September 2014. She provided Uber with a copy of its by-law and requested that it review the by-law and comply with it. The same day, she made public statements to the media to the effect that Uber required a broker’s license to operate in Ottawa.125 The message the City sent to Uber and the public that day was loud and clear: charges would be laid against Uber for noncompliance.

Despite these early alarm bells, the City focused its initial enforcement efforts only on drivers. As part of the City’s first undercover operation, Ms. Hartig opened up the Uber app for the first time on October 4, 2014 to take a ride with Uber. 127 Armed with a Bluetooth microphone, Ms. Hartig pressed a button, waited for a car, and took a seat during the nine minute ride.

A by-law officer waited at the destination to charge the driver as Ms. Hartig exited thevehicle towards her salon appointment.

The deed was done and the first charge was laid.

At the time, Ms. Hartig was of the view that Uber was an unlicensed broker.130 Her view on this point did not change over time. After that operation, which resulted in an immediate charge, Ms. Hartig was blocked from accessing the Uber app.132 Uber quickly adapted to thwart enforcement efforts against drivers.

Despite knowing that Uber thwarted enforcement efforts against drivers, the City never turned its enforcement efforts toward Uber

The ostensible goal of the City’s enforcement effort was deterrence.133 Yet Uber and its drivers continued to flout the law after the initial fall “blitz” and blocked accounts made by bylaw officers. Around January or February of 2015, Ms. Hartig heard anecdotally that Uber was paying the drivers’ fines.134 There is no evidence that City took any steps to actually investigate or act upon this information beyond ordering a court transcript.

Further, the City did not change its ineffective practice of charging drivers only; it simply carried on with the same approach. Indeed, the City had clear information from the outset to suggest that Uber was taking active measures to circumvent enforcement against drivers: by blocking enforcement officers from the app and by paying drivers’ fines. Yet the City did not modify its overall strategy at any time.

"The City never charged Uber. 
The City never prosecuted Uber. 
The City never sent a cease and desist letter against Uber."
--Conway Lititgation April 6 factum

In early 2015, the City persisted in its failure to deter Uber through charging its drivers. As such, Mr. Way continued to offer the City help with the enforcement after the City requested his assistance to investigate Uber at the Westin Hotel in the fall of 2014. Just as Mr. Way had done in the past in relation to bandit cab services, he retained the Triangle Investigation firm to take and document Uber rides as evidence for by-law enforcement in January 2015. The results of the investigation were provided to the City. However, the City did not accept the evidence from Mr. Way with open arms as it had done in the past.

Triangle Investigation encountered similar difficulties as the City in the investigation it was conducting because Uber would block its investigators’ accounts. Despite these hurdles, Triangle was able to take more rides and gather almost double the evidence than the City did during the same period.

The City further encouraged Uber’s illegal activity by taking zero steps to enforce the bylaw against Uber even though it believed and knew it was illegal.  At trial, Ms. Jones claimed that the City was “gathering evidence” and trying to understand “who and what” Uber was.

None of this alleged work or fact-finding was demonstrated at trial: no witness testified to any actual investigation or fact-finding about Uber itself.

It was plain and obvious what Uber was and what Uber did. By-law employee Mr. Tam testified that his understanding of how Uber works was easily obtained from its website — “Uber had everything on their website on how to use their application”.

Despite the fact that Uber’s illegality was open knowledge at the City, the City never charged Uber. The City never prosecuted Uber. The City never sent a cease and desist letter against Uber. The City of Ottawa never sought an injunction against Uber drivers. As demonstrated in paragraphs 121-125 below, the City did nothing vis-à-vis Uber besides throw out a welcome mat at City Hall.

Throughout the two-year conquest of Ottawa, the City believed Uber was illegal at all relevant times. In fact, the City added a statement regarding its likelihood of success to obtain an injunction against Uber into the draft report of the by-law review by KPMG. This report was published as part of a regulatory review which will be discussed in further detail below. The text added by the City is underlined :

Although a Court chose not to support an injunction in Toronto, City Officials indicated that Ottawa’s current by-laws are different than those in Toronto, and as such, would support an injunction if it was determined that the approach to be taken.

This is compelling and cogent evidence of the City’s view of Uber’s operations at the time. There is nothing in the written record to contradict it.