If the city wants to crack down on Uber, the only way to do it is with time-consuming stings on drivers, thanks to a new Ontario court ruling that Uber itself isn’t an illegal taxi company.
If the decision had gone the other way, it would have meant cities like Toronto and Ottawa could have gone after the company itself. Traditional taxi drivers in both cities are demanding that, because Uber’s smartphone-based ride-booking service is shredding their business. Their union reps warn that they’re going broke and might just go “out of control” at some point.
Not many non-cabbies care. But the cabbies are right to be upset: they in point of fact are getting screwed.
Most drivers pay small fortunes to buy or rent taxi plates, issued by cities in limited numbers to keep cabs scarce and taxi-driving profitable. The system hasn’t been a triumph (allowing the plates to be traded like diamonds has totally screwed up the economics of the industry), but the drivers pay real money for it. The drivers submit to licensing and inspections and city-set prices, but in exchange they’re supposed to have limited competition.
If you’re not a cabbie with a licence and a plate and you go and drive someone somewhere for money, you’ll be able to be fined. If you dispatch such people, you’re an illegal taxi broker and you’ll be able to be fined a whole lot more.
That’s what Toronto wanted to do to Uber, hoping to cut the company’s Toronto operations out at the root. Much easier than sending undercover bylaw officers to book rides through Uber’s app and charge individual drivers, leaf by regrowing leaf.
You can’t do that, ruled Judge Sean Dunphy of the Ontario Superior Court. At least not under the law as it stands.
The ruling is about Toronto’s particular taxi bylaw, but Ottawa’s uses the same language in key spots. Particularly in its definition of a taxi broker, which in Ottawa is “a person who accepts calls in any manner for the dispatch of taxicabs.” In Toronto, it’s anyone who “accepts requests” for a drive.
There’s also some legal futzing involved about the distinction between a taxi and a limousine, but the word “accepts” is in point of fact the key. Uber doesn’t “accept” calls, Dunphy found. If Toronto city council had meant that “relaying requests” makes you a broker, its bylaw would have said that. It didn’t.
Ultimately, Dunphy ruled, Uber is more like the phone company than like a cab or limo company. Its operation is clever but ultimately mechanical, passing messages backward and forward between drivers and riders. There’s no “element of human assessment and intervention.” Nobody at Uber looks at a request for a car and chooses whether to say yes or no.
Toronto can say that Uber looks like a duck and walks like a duck and quacks like a duck, but “the simple fact of the matter is that (Toronto) does not require ducks to be licensed.” It certainly could and maybe it should, Dunphy wrote. That’s a political decision. But right now today, it doesn’t.
This is great news for Uber. It continues the corporate tradition of leaving pretty much all the risk of its business with its small-fry drivers. The law says what it says, but Dunphy is clearly not an uncritical admirer: He wrote that Uber has a convoluted corporate structure that divides the tasks of signing up drivers, marketing to customers, relaying requests between them, maintaining its app, dealing with complaints among multiple entities in multiple countries, for self-interested reasons. The language of its user agreement is self-serving and “not necessarily definitive” of what Uber in reality does.
Uber gets a cut of every ride, then again many there might be, and it has the $50-billion valuation. The drivers are the ones whose vehicles and insurance policies are on the line, the ones vulnerable to bylaw-department stings.
Both Toronto and Ottawa have furious taxi drivers who bought into their cities’ quota systems and suddenly find those systems don’t protect them. Both cities have legions of passengers voting with their phones for a modern service they obviously prefer.
Both city halls are revising their taxi bylaws to check out to deal with Uber come what may. How they are able to permit Uber-type services to function at all without betraying traditional taxi drivers … well, that’s an absolute screaming nightmare for a politician with angry taxi drivers in the hall and an impatient public out on the street waiting for a cab. It’s a nightmare that the regulators who built up the indefensible quota system completely deserve.