An Ontario court has stayed a class action lawsuit against Lyft over the classification of their drivers as independent contractors.
Lyft is a San Francisco-based ride-sharing company that connects drivers with passengers who request rides through a mobile app. It operates in the United States and Canada, offering services that include car rides, scooters, and a bicycle-sharing system. It’s Canadian head office is located in Vancouver.
The proposed class action was led by A.W., a Lyft driver. He challenged the employment classification of drivers in Ontario, alleging that they should be recognized as employees under the Employment Standards Act, 2000, rather than as independent contractors.
Arbitration process should take precedence: Lyft
The crux of the legal battle centered on whether disputes such as A.W.’s should be resolved through arbitration — a condition stipulated in the Lyft driver agreement — or through court proceedings. Lyft argued that the arbitration process outlined in their terms of service was accessible, and therefore, should take precedence.
The court’s decision hinged on the interpretation of the Arbitration Act, 1991, which supports staying court proceedings when an arbitration agreement is in place. The judge noted, “The submission to arbitration of worker contracts (be they employment contracts or independent or dependent contractor contracts) has not been prohibited by legislative enactment. In the immediate case, the Arbitration Agreement is accessible… (and) is not a pretense to access to justice.”
A.W. had countered that the arbitration clause was unenforceable on several grounds, including contractual uncertainty and public policy. However, the court found no basis for these claims.
“Lyft’s Arbitration Agreement is not uncertain or indefinite. It is not unconscionable or contrary to public policy,” the judge said, affirming that the agreement does not unlawfully contract out of the Employment Standards Act, 2000.
‘Competence-competence’ principle
A key aspect of the ruling was the application of the ‘competence-competence’ principle, which allows an arbitral tribunal to rule on its own jurisdiction.
The court pointed to the Supreme Court of Canada ruling in Peace River Hydro Partners v. Petrowest Corp. The top court said: “It is well established in Canada that a challenge to an arbitrator’s jurisdiction should generally be decided at at first instance by the arbitrator.”
A.W. argued that Lyft’s arbitration provisions are “inaccessible” and the court should have no confidence that is if his claim is referred to an arbitrator that the arbitration will ever actually take place.
But the court said the arbitration agreement is accessible — “which is to say that (it) is not a pretense to access to justice.”
The court granted the stay of the proposed action sought by Lyft and awarded it costs of $40,000, as agreed, all inclusive.
For more information, see Wasylyk v. Lyft, 2024 ONSC 664 (CanLII).