CITATION: City of Toronto v. Uber Canada Inc., 2015 ONSC 1617
COURT FILE NO.: CV-14-516288
DATE: 20150318
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
CITY OF TORONTO
Applicant
– and –
UBER CANADA INC., UBER B.V. and
RAISER OPERATIONS B.V.
Respondents
Michele A. Wright and Matthew Cornett for the Applicant
John Keefe and Ryan Cookson for the Respondents
HEARD: March 10, 2015
REASONS FOR DECISION
diamond j.
[1] The Applicant the City of Toronto (the “City”) has commenced an application under section 380 of the City of Toronto Act, 2006, S.O. 2006, c. 11, Schedule A, as amended, against the Respondents, Uber Canada Inc., Uber B.V. and Raiser Operations B.V. (collectively “Uber”). The application seeks, inter alia, declaratory orders that Uber operates a taxi cab brokerage and limousine service contrary to the licensing provisions of the City of Toronto Municipal Code Chapter 545, (the “Code”) together with injunctive orders (including permanent injunctive relief) restraining Uber from operating those businesses within Toronto, Ontario.
[2] The City alleges that Uber is required and has failed to obtain a taxi cab brokerage licence and a limousine service company licence, and that various services offered by Uber to the residents of Toronto allegedly breach the provisions of the Code as the those services involve drivers using personal vehicles to provide taxi/limousine services within Toronto.
[3] Uber takes the responding position that as a technology company, the provisions of the Code do not apply to those services offered by Uber, and even if those services are found to be subject to the City’s licensing requirements, Uber asserts that such licensing requirements infringe upon, inter alia, its right to freedom of expression under section 2(b) of the Charter of Rights and Freedoms.
[4] In support of its application, the City alleges that Uber does not have adequate insurance coverage that would protect drivers and passengers who use Uber services – namely the requesting and accepting of requests for transportation services. In response to that specific allegation, Uber states that it does in fact maintain insurance coverage providing for $5,000,000.00 for all ride-sharing services requested through its Uber phone application (the “App”). It is Uber’s position that this insurance policy is “integral to its ability to make a full answer to the City’s allegations”.
[5] However, and as explained more fully below, Uber maintains that its insurance policy is highly confidential, contains commercially sensitive information, and thus disclosure of the insurance policy to the public would cause serious harm to its commercial interests and competitive position. Within the context of this application, Uber brings this motion seeking a sealing order pursuant to Section 137(2) of the Courts of Justice Act, and in particular an order sealing and keeping confidential the insurance policy and/or any document which contains or reveals information described in the policy.
[6] I note that a copy of the insurance policy was provided to the City and filed with this Court for the limited purpose of the within motion. Counsel for Uber expressly confirmed that the policy has not been served or filed in response to the City’s application, but that Uber reserves the right to subsequently do so in this proceeding.
[7] I also note that the City takes the position that while it would suffer no prejudice as a result of a sealing order being granted, it nevertheless opposes Uber’s motion due to the broader implications of the fundamental issues at stake.
Factual Background
[8] Uber operates a technology business involving the App which users can download and use on their mobile devices or smartphones. The App provides an additional platform enabling passengers to request transportation services from third party transportation providers, and to pay for those services automatically and without cash. Uber licenses the App to a particular class of drivers who provide peer-to-peer (“P2P”) ride-sharing services. Those drivers use their personal vehicles and can access the App to receive ride requests from Uber App users.
[9] In the supporting affidavit of Ian Black (“Black”, the General Manager of Uber Toronto), Uber states that since its App was introduced, several “competitor Apps have emerged in the P2P market”.
[10] Uber further states that the emergence of P2P driving services on a large scale is a recent phenomenon using current, innovative technology. In its submissions before this Court, Uber described its App as “a product of commercial innovation”.
[11] As stated above, the issue of whether insurance coverage secures P2P ride-sharing services requested through the Uber App is raised in the City’s application. Indeed, the City questions whether individuals (drivers or passengers) who are using P2P ride-sharing services through the Uber App would be adequately insured.
[12] As stated above, Uber has served and filed a copy of the insurance policy for the limited purposes of this motion. Uber has provided sworn evidence detailing both (what Uber claims to be) the extensive history of negotiations leading up to the securing of the policy, and the reasons why the contents of the policy are commercially sensitive and valuable. I note that the City chose not to cross-examine upon any of the affidavits tendered by Uber on this motion, taking the position that such evidence, on its own, does not meet the requisite test for a sealing order (to be described in greater detail below).
[13] Uber claims that the insurance policy is unusual, in that it is not a typical “off the shelf” product which can be easily purchased, and that the policy is a new insurance product, the development of which resulted from the “investment of considerable time and expense”. I pause to note that there was no evidence filed on behalf of Uber’s insurer on this motion, confirming the emergence of this “new market”, the lack of current insurance products able to provide the necessary coverage, or the extensive negotiations leading to this “new product”.
[14] In any event, Uber states that the insurance policy was specifically designed to address the new, emerging P2P transportation request market. Uber states that it entered into extensive negotiations with its insurer over a period of 7 months to create entirely new, special terms which would affect the provision of insurance coverage. There is little doubt that the insurer’s policy does indeed confer value upon Uber’s business. Uber goes further by claiming that armed with the insurance policy, it now enjoys a significant competitive advantage over companies that may offer products similar to the Uber App, but do not presently have any such insurance coverage.
[15] Put another way, the advantages which Uber believes it currently has over those “known or unknown competitors” would be lost if the terms and details of its insurance policy were made available to the public, as those known or unknown competitors could proceed to copy and/or use the terms of its insurance policy, “thereby reaping the benefit of all the time and effort that Uber expended in negotiating and developing the policy”.
[16] Unfortunately, there is little to no actual evidence in the record filed before this Court of any known, or even unknown, competitors attempting to carry on business with a similar App (with or without insurance coverage) in the Greater Toronto area. In argument, counsel for Uber submitted that the proposed sealing order is primarily intended to keep the insurance policy from Uber’s known or unknown competitors, and not the public at large.
[17] According to the evidence of Henry Fuldner (“Fuldner”, Uber’s Director of Insurance), the insurance policy has to date been kept strictly confidential since development, and is only shared on a “tightly restricted, need-to-know basis”. To Fuldner’s knowledge, the insurance policy has only been reviewed or provided to Uber’s legal counsel, insurance broker and its third party claims administrator) who have all promised to safeguard the confidentiality of its terms.
[18] There is no evidence from Fuldner that Uber’s insurer has promised to safeguard the confidentiality of the insurance policy. As stated above, there is no evidence at all from Uber’s insurer on this motion.
[19] For its part, while the City chose not to cross-examine Black or Fuldner upon their respective affidavits, in opposing its motion it sought to introduce and rely upon acts and statements made to the public by Uber about the insurance policy, and additional insurance coverage which Uber has obtained in other jurisdictions.
[20] While refusing to disclose the insurance policy to the public for the reasons set out above, in his affidavit Fuldner described the policy as including coverage liability for third parties for bodily injury and property damage that occurs “while a P2P driver is on route to pick up a passenger who has requested a ride using the Uber App and while transporting such a passenger to his/her destination”.
[21] Fuldner also stated that the insurance policy provides coverage if either the P2P driver’s own personal automobile policy has been exhausted, or there is no other coverage available for the accident. As such, the City contends that Fuldner’s “general summary” of the salient terms of the insurance policy are inconsistent with Uber’s request for a sealing order.
[22] In addition, the City has produced several statements and documents made public by Uber on its website and/or website blog. To begin, Uber has made its insurance policy applicable in the State of California available on its website for members of the public to review and/or download by clicking on the hyperlink “sample policy wording: California”. Given Uber’s request for confidentiality, I was not asked to perform a clause by clause comparison of the California insurance policy to the subject insurance policy, and there is also no evidence before this Court as to the similarities or differences between that the insurance regimes in both jurisdictions. However, I do note that the terms of the California policy seem to also provide insurance coverage for liability while a P2P driver is on route to pick up a passenger who has requested a ride using the Uber App, and while transporting such a passenger to his/her destination.
[23] Fuldner states that the terms of the California policy are “materially different” from the terms of the insurance policy at issue, and the California policy was issued by a different insurer. Again, it was not the function of this Court to undertake an exhaustive analysis of the two policies. However, Fuldner also stated that the California policy was only made accessible to the public after approximately one year. According to Fuldner, keeping the California insurance policy confidential for that one year period allowed Uber to “maintain an early competitive advantage in the United States…which assisted Uber in recouping the money and time invested in procuring the policy”.
[24] Finally, the City also produced evidence of Uber having previously disclosed to the public copies of its certificates of insurance applicable in the various other U.S. states in which Uber carries on business.
Analysis and the Law
[25] Pursuant to Section 137(2) of the Courts of Justice Act, the Court may order that any document filed in a civil proceeding be treated as confidential, sealed and not form part of the public record. Both the City and Uber are in agreement that the leading authority on the issue of the availability of sealing orders is Sierra Club of Canada v. Canada (Minister of Finance) 2002 SCC 41. Where the City and Uber part company is in their respective characterizations of the inherent principles to be applied in the application of the Sierra Club test.
[26] In Sierra Club, at paragraph 53 the Supreme Court of Canada set out a two part test for a confidentiality order. The Court should only grant a confidentiality order if:
(a) such an order is necessary to prevent a serious risk to an important interest, including a commercial interest, in the context of litigation because reasonably alternative measures will not prevent the risk; and
(b) the salutary effects of the confidentiality order, including the effects on the right of civil litigants to a fair trial, outweigh its deleterious effects, including the effects on the right to free expression, which includes the public interest in open and accessible court proceedings.
[27] The Court further held that the first part of the test has three subcomponents which must all be satisfied before consideration of the second part of the test. Those three elements are:
(a) that the risk posed by potential disclosure is real and substantial, in that it is well grounded in the evidence and proposes a serious threat to the commercial interest in question;
(b) that the “important commercial interest” sought to be protected is one which can be expressed in terms of a public interest in confidentiality; and
(c) no reasonable alternatives to the confidentiality order are available and the confidentiality order must be restricted as much as reasonably possible while preserving the commercial interest in question.
[28] Uber takes the position that a sealing order is necessary in order to prevent its potential loss of a significant advantage over its known or unknown competitors that do not presently have any insurance coverage. Uber asks this Court to find its potential loss of that competitive advantage as an “important commercial interest”.
[29] In Sierra Club, at paragraph 55 the Court discussed the nature of the “important commercial interest” necessary to satisfy the first element of the test:
In addition, the phrase “important commercial interest” is in need of some clarification. In order to qualify as an “important commercial interest” the interest in question cannot merely be specific to the party requesting the order; the interest must be one which can be expressed in terms of a public interest in confidentiality. For example, a private company could not argue simply that the existence of a particular contract should not be made public because to do so would cause the company to lose business, thus harming its commercial interests. However, if, as in this case, exposure of information would cause a breach of a confidentiality agreement, then the commercial interest affected can be characterized more broadly as the general commercial interest of preserving confidential information. Simply put, if there is no general principle at stake, there can be no “important commercial interest” for the purposes of this test. Or, in the words of Binnie J. in F.N.(Re), [2000] 1 S.C.R. 880, 2000 SCC 35, at para. 10, the open Court rule only yields “where the public interest in confidentiality outweighs the public interest in openness”.
[30] The Sierra Club test mandates this Court to “be alive to the fundamental importance of the open Court rule”. Uber argues that I need only be satisfied that the confidential information is commercially sensitive, and that a competitor could obtain an unfair advantage through its release.
[31] The City submits that Uber’s argument ignores or mischaracterizes the requirement in the Sierra Club test that a moving party must present cogent evidence of a general commercial interest in order to override the fundamental principle of open access to the justice system. The City argues that Uber cannot satisfy this Court that the “important commercial interest” in question transcends beyond Uber’s commercial interests, and there is no public interest in granting a sealing order on the record before this Court.
Decision
[32] For the reasons which follow, I agree with the City’s position.
[33] To begin, I am not satisfied that Uber has presented sufficient evidence to show that disclosure of the insurance policy would lead to a loss of any competitive advantage. While the evidence seems to confirm that the insurance policy was treated at all relevant times as confidential, the fact that Uber and its insurer may have negotiated the creation of previously unavailable insurance policy does not detract from the fact that the document sought to be sealed is nevertheless an insurance policy. New factual or legal developments will cause insurers to underwrite new risks as they unfold. The terms of insurance policies are amended, revised and updated all the time to keep pace with a changing commercial world. While the insurance policy in question may amount to a “new product”, contrary to Uber’s assertion it is not part and parcel of any “commercial innovation”.
[34] In addition, the absence of any evidence from Uber’s insurer undermines Uber’s position for two significant reasons. First, in order to truly characterize the insurance policy as “confidential” for the purpose of the Sierra Club test, one would have expected the insurer – a third party to this proceeding – to confirm that it also viewed the insurance policy as both a “commercial innovation” and worthy of being kept from the public record. As there is no evidence from the insurer on this motion, and the onus to satisfy the Sierra Club test falls squarely upon Uber, I am left with the resulting adverse inference that Uber’s insurer, at a minimum, does not oppose or takes no position on the public disclosure of the insurance policy in this proceeding.
[35] Second, Uber claims that it would lose its significant competitive advantage if its known or unknown competitors were granted access to the insurance policy. As there is no affidavit from Uber’s insurer, there is therefore no evidence upon which this Court could find the existence of any such risk. Absent the insurer’s agreement, there is nothing stopping the insurer from marketing or selling this “new product” to the public, including Uber’s known or unknown competitors. Simply put, unless the insurer has agreed not to sell its “new product” to the known or unknown competitors, Uber cannot claim to have any significant advantage over its competition.
[36] In explaining why its California insurance policy was only kept confidential and then made public after one year, Uber described that one-year period as allowing it to “maintain early competitive advantage” (my emphasis). In my view, in the absence of evidence to the contrary a document sought to be sealed is either confidential, or it is not. The fact that Uber unilaterally viewed the confidential nature of its California policy to have expired after it was able to “recoup the money and time invested in procuring the policy” is further evidence that the only “important commercial interest” at stake on this motion is that of Uber.
[37] While I accept that the insurance policy (inclusive of its terms and preceding negotiations) has been treated by Uber as confidential, in the ordinary course of business Uber would have no reason to disclose it to third parties or make it public. However, at stated by Strathy J. (as he then was) in Fairview Donut Inc. et al. v. The TDL Group Corp. et al. (2010), 2010 ONSC 789, 100 O.R. (3d) 510 (S.C.J.), “this is true in almost every business relationship, however, and in almost every such relationship it would be possible to characterize the ‘interest’ in terms of a broader public interest in the preservation of confidential information.”
[38] I also do not find the insurance policy amounts to a “trade secret”. An insurance policy is not the type of “technical” document which typically informs the Court’s assessment of potential trade secrets. In my view, the insurance policy falls within the category of commercial information which the Sierra Club test held does not constitute the type of “important commercial interest” justifying a sealing order.
[39] The case law submitted and relied upon by Uber does not assist its argument before this Court. As an example, in Andersen v. St. Jude Medical Inc. (2010), 2010 ONSC 5191, 104 O.R. (3d) 192 (S.C.J.) a sealing order was granted over documents which contained confidential or proprietary information belonging to a non-party. In support of the moving party’s request for a sealing order, affidavit evidence from the non-party was tendered, and that affidavit set out the prejudicial consequences resulting from the potential disclosure of the document sought to be sealed. In Andersen, Lax J. found that the moving party addressed the “commercial interest of third parties…unlike cases where the information sought to be protected was confidential to parties to the litigation, but not third parties.” Those latter cases fit the description of the situation in which Uber has placed itself on this motion.
[40] I therefore find that Uber has failed to meet the necessity test being the first part of the Sierra Club test. While I need not move to the second stage of that test, had I found that an “important commercial interest” was present and at risk on the record for this Court, I would not have found that the salutary effects of the proposed sealing order outweigh its deleterious effects. As stated above, on the record before this Court Uber is not precluded from disclosing the insurance policy in the absence of a sealing order, and thus such an order does not appear to be required to ensure that the parties, and in particular Uber, receive a fair hearing of the application.
[41] In addition, the City’s application in and of itself is, prima facie public interest litigation as it seeks to compel compliance with alleged breaches of its Code. The nature of Uber’s response to the application, including whether to disclose the insurance policy, is not the result of the City placing the issue of insurance coverage for the purpose of any unfair tactical advantage.
[42] For these reasons, Uber’s motion for a sealing order is dismissed. If the parties are unable to agree upon costs of this motion, written submissions may be delivered to me in accordance with the following timetable:
(a) the City’s Costs Submissions to be served and filed within 10 business days of the release of these Reasons, and
(b) Uber’s Responding Costs Submissions to be served and filed within 10 business days of the receipt of the City’s Costs Submissions.
[43] I wish to express my gratitude to counsel for their fulsome and able submissions on this motion.
Diamond J.
Released: March 18, 2015
CITATION: City of Toronto v. Uber Canada Inc., 2015 ONSC 1617
COURT FILE NO.: CV-14-516288
DATE: 20150318
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
CITY OF TORONTO
Applicant
– and –
UBER CANADA INC., UBER B.V. and
RAISER OPERATIONS B.V.
Respondents
REASONS FOR DECISION
Diamond J.
Released: March 18, 2015