The man filed a proposed class action in federal court, alleging Uber Eats flouts the Competition Act
The Federal Court of Appeal dismissed a man’s bid to file a class action lawsuit against Uber this week, rejecting his arguments that he is not bound to Uber’s arbitration agreement with consumers due to provincial consumer protection legislation and other factors.
The plaintiff and Uber both agreed that Ontario law governed their contract. Under Ontario’s Consumer Protection Act, arbitration clauses in consumer contracts are invalid if they prevent a consumer from exercising their right to file an action in Ontario’s Superior Court of Justice. The legislation also empowers consumers to file class actions against companies or participate in a class action, even if a consumer agreement says it prevents them from doing so.
However, the FCA said those rules don’t apply to the plaintiff, Arthur Lin, because he filed his action against Uber in federal court.
Lin “could have avoided the arbitration clause in Uber’s contract by bringing his proposed class proceeding in the Ontario Superior Court of Justice under the Ontario Class Proceedings Act,” the appellate court said in its Oct. 7 decision.
“Having chosen not to do so, he must live with the consequences.”
The FCA also rejected the plaintiff’s claim that Uber’s arbitration clause is unconscionable, partly because there was an unequal bargaining power and a “gulf of sophistication” between the company and potential class members.
Lin “is essentially arguing that whenever a standard form contract is entered into between a consumer and a multinational corporation, it will inherently be the result of an inequality in bargaining power,” the FCA said. “This argument has, however, been repeatedly rejected by the courts.
“There is no evidence before the court that Mr. Lin was vulnerable or dependent in any way on Uber’s food delivery services as a source of nourishment, or that other class members were vulnerable or so dependent,” the court added.
According to Lin’s proposed class action, Uber Eats violates the Competition Act’s ban on “drip pricing,” which involves offering initial low fees to customers, only to later add mandatory fees that make the ultimate price unattainable.
A federal court paused Lin’s action so he could pursue arbitration instead, in accordance with an arbitration clause contained in the consumer contract that Lin automatically entered into when he opened his Uber Eats account. Lin appealed, arguing the federal court’s ruling contradicted provincial consumer protection laws, that the arbitration institute referenced in Uber’s arbitration clause does not handle class action proceedings, and that the clause was unconscionable.
However, the FCA sided with the lower court and said it made no errors. In addition to finding that Ontario’s Consumer Protection Act does not apply to federal court proceedings like Lin’s, the FCA said it recently ruled in another case that mandatory arbitration clauses will be enforced even if a plaintiff wants to pursue a class action instead.
In response to Lin’s argument that Uber’s arbitration clause is unconscionable, which is based on the premise that there was unequal bargaining power between Uber and its customers, the FCA found that Lin’s “real complaint appears to be that it was unreasonable for the federal court to assume that any user of Uber Eats’ food delivery services would ever read the terms and conditions in the Uber contract.”
However, the court said, “What matters for the unconscionability analysis is whether the contract was available and understandable, and not whether it was read.”
Counsel for the parties did not respond to requests for comment.
