Keeping Tabs February 2019

CASE COMMENT
One Heller of an
Arbitration Agreement
David Campbell,
The Law Office of David Campbell
Arbitration is becoming ever-more important for those who practise civil litigation,
since an ever-increasing number of contracts contain arbitration agreements.
For those interested in arbitration, the Ontario Court of Appeal started 2019 with a
bang. Heller v. Uber Technologies Inc. is one of those rare cases where the arbitration
agreement was held to be unconscionable. The case also held that the arbitration
agreement was invalid because it violates s. 5(1) of the Employment Standards Act,
2000 (ESA). The Court’s unconscionability findings should bolster public confidence in
arbitration by refusing to enforce an ADR clause that would effectively prevent the
dispute from being decided independently and beyond judicial overview.
Heller is a 35-year-old, high-school-educated UberEATS driver who earns $400–$600
a week—or $20,800–$31,200 a year—working
40–50 hours a week. This income is before
taxes and expenses, like his vehicle.
He commenced a proposed class action on
behalf of all Uber drivers seeking a declaration
that they are employees under the ESA,
and $400 million in damages.
Uber’s contracts with their drivers have
arbitration agreements. Uber moved under
s. 7(1) of the Arbitration Act, 1991 and
Article 8(1) of the International Arbitration
Act, 2017 (ICAA) to stay Heller’s action.
Both provisions mandate a stay, absent
certain exceptions. The Court of Appeal’s
analysis focuses on s. 7(2)(2.): “The arbitration
agreement is invalid.”
At the heart of this case is Uber’s ADR
system. If a driver has dispute with Uber,
then there are several steps:
• The driver starts by calling an Uber
CSR in the Philippines;
• The dispute may then be referred to
an Uber CSR in Chicago;
• Uber’s legal team may then take over
the dispute from the Chicago CSR;
• The driver may also go to an Uber
Greenlight Hub in Ontario to ask Uber
staff for help;
• If still dissatisfied, the driver may commence
a mediation with the International
Chamber of Commerce (ICC) in
the Netherlands under Dutch law; and
• If the mediation fails, the driver may then
commence an ICC arbitration, again in
the Netherlands under Dutch law.
Aside from travel and counsel fees, the
driver would have to pay $14,500 (USD) in
ICC filing fees to reach arbitration, along
with his or her share of the mediator’s
and arbitrator’s fees.
The Court found that this arbitration
agreement was unconscionable, because
“it operates to defeat the very claims it purports
to resolve.” The Court held that the
facts were sufficient to meet both the twopart
test for unconscionability and the fourpart
test. A driver with a claim of a few hundred
dollars must fly to the Netherlands to
have his or her claim decided independently,
rather than by Uber employees.
In a separate holding, the Court also held
that the arbitration agreement violates s.
5(1) of the ESA and is thus unenforceable.
Section 5(1) of the ESA voids provisions that
force an employee to contract out or waive
an employment standard. Not only does
Uber’s arbitration agreement extinguish
an employee’s right under s. 96 to report a
dispute to the Ministry of Labour and have
an Employment Services Office investigate,
but it also eliminates an employee’s s. 98
right to commence a civil action. According
to the Court, arbitration does not fall within
the definition of a civil action.
However, the ESA analysis has a tricky
component. It presumes that Heller’s allegation
that he is an employee is capable
of proof. This presumption is based
on the Supreme Court of Canada’s decision
in Seidel v. TELUS Communications Inc.
Although Seidel certainly makes the same
presumption, this is the first case following
Seidel that uses the presumption in
the context of a stay motion. It does seem
to leave open the possibility that future
plaintiffs could make questionable allegations
to defeat s. 7(1).
Generally, arbitration agreements
must be enforced, even in contracts of
adhesion, unless one of the exceptions
in s. 7(2) or Article 8(1) is met, the dispute
is outside the scope of the arbitration
agreement, or there is a legislative
override to the arbitration. In promoting
arbitration as an alternative, we must
not allow ourselves to enforce unconscionable
arbitration agreements that
may undermine public confidence in arbitration
as a fair and legitimate form of
dispute resolution.
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