City files statement of defence in $215M taxi industry lawsuit
Had no obligation to protect taxi industry from financial losses, statement claims
The City of Ottawa has responded to a massive $215-million lawsuit filed by the taxi industry over the new rules that will allow ride-hailing companies like Uber to operate legally at the end of this month.
In its statement of defence against the suit filed in August by Capital Taxi and Marc Andre Way, whose family owns the largest number of taxi plates in the city, the city says it has no responsibility to protect the taxi industry from any financial losses that might arise from the regulatory changes.
Because the city allows a limited number of taxis on the streets, new taxi plates are hardly ever issued. For decades, the only way to enter into the city's taxi business was to buy a plate from a current holder — a practice which the city has been aware of and has done nothing to stop in its 50 years of regulating the industry.
Now that unlimited cars-for-hire can enter the market, however, those taxi plates have lost their value. And the suit filed in August — the largest in the history of Ottawa — alleges that the city and the taxi industry were in a "relationship of proximity in which the City's failure to take reasonable care would foreseeably cause loss or harm to Class members."
But the city says it has no such responsibility to taxi plate owners.
Buying and selling those taxi plates "created a speculative and artificial secondary market for time-limited taxicab service licenses" that the city had nothing to do with other than register the plate transfer, according to its statement of defence.
Taxi industry failed to 'innovate'
The statement said that since 2012, "transferees" of taxi plates have reported to the city that they've agreed to transfer plates for anywhere from one dollar to $320,000.
Also, there is "no requirement in law" for the city to provide any notice of changes in its regulations, although the city did do so, said the statement.
It added that the taxi industry failed to "innovate" to compete against Uber, even though it had "historical" advantages.
"Rider preferences showed generally that taxicab service providers were incapable of matching the transportation service experience provided to users of the Uber Apps," said the statement of defence.
If the taxi industry's suit is successfully certified as a class action, it could cover about 1,000 individuals who were plate owners or taxi brokers on or after Sept. 1, 2014.
Damages grossly exaggerated, city says
One of the allegations against the city is that it did not enforce the existing rules when Uber illegally began operating in the Ottawa market in the fall of 2014. The lawsuit claims the city took "vastly inadequate steps to enforce the regulatory scheme against Uber drivers."
The city rejected that claim in its defence, stating that they obtained more than 100 convictions against Uber drivers.
As well, the city stated it has discretion not to prosecute when it would have little chance of success. Other municipalities with regulatory rules similar to Ottawa tried to prosecute Uber as an unlawful taxi broker, and failed. Hence, the city decided that "prosecuting Uber would be an unwise expenditure of public monies," according to the statement.
While denying all allegations, the city did state that — should the court find that the city did cause damage to the taxi industry — the alleged damages of $215 million are grossly exaggerated and impossible to prove.
The statement also claimed that any damages found are the result of the taxi industry's "own inaction, complacency and contributory negligence."