COURT FILE NO.: CV-17-567946-00CP
DATE: 20210809
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
DAVID HELLER
Plaintiff
- and -
UBER TECHNOLOGIES INC., UBER CANADA INC., UBER B.V., RASIER OPERATIONS B.V. and UBER PORTIER B.V.
Defendants
Michael D. Wright, Lior Samfiru, Danielle E. Stampley and Samara Belitzky for the Plaintiff
Proceeding under the Class Proceedings Act, 1992
HEARD: In writing
PERELL, J.
REASONS FOR DECISION
[1] In a proposed class action, in which the motion for certification has been argued and is under reserve, David Heller and Felicia Garcia are the proposed Representative Plaintiffs. On behalf of putative Class Members comprised of Drivers and Delivery People that use an Uber software application, Mr. Heller and Ms. Garcia sue Uber Technologies Inc., Uber Canada Inc., Uber B.V., Rasier Operations B.V. and Uber Portier B.V. (collectively “Uber”).
[2] The Plaintiffs seek to be Representative Plaintiffs on behalf of a class of persons who have entered into Service Agreements with Uber to use software applications (“Uber Apps”) developed and operated by Uber to provide rider transportation and food delivery services. The Plaintiffs submit that Uber has breached its employment contracts with the putative Class Members and contravened Ontario’s Employment Standards Act, 2000.[^1] They also plead that Uber is liable for unjust enrichment and negligence.
[3] The putative class may be as large as 366,359 persons who have provided at least one ride or delivery using the Uber App.
[4] On this motion, the Plaintiffs request an Order, among other things:
a. approving the third-party funding agreement entered into by the Plaintiffs, Class Counsel, and Canada-based Augusta Pool 1 Canada Limited and its parent, Augusta Ventures Limited, based in the United Kingdom (collectively, “Augusta”).
b. providing that the Plaintiffs may post security for costs by Augusta providing an undertaking to Uber.
c. permitting the Plaintiffs and Class Counsel to disclose documents produced by Uber in this proceeding that would be subject to the deemed undertaking in subrule 30.1.01(3) as if it were a party to this proceeding; and
d. stipulating that all communication and documents passing between Augusta, the Plaintiff and Class Counsel and any additional plaintiffs in this proceeding shall be kept confidential and are not subject to disclosure to a third party.
[5] In December 2016, Mr. Heller, engaged Samfiru Tumarkin LLP pursuant to a Retainer and Fee Agreement. This agreement was revised in August 2020 when Wright Henry LLP became co-counsel. Ms. Garcia engaged Wright Henry LLP and Samfiru Tumarkin LLP (“Class Counsel”), to prosecute the action in December 2020, pursuant to the Retainer.
[6] Under the Retainer, the Plaintiffs agreed to a contingency fee of 30% of the total amount recovered, subject to Court approval, and that Class Counsel would indemnify the Plaintiffs for any adverse costs awards. The Retainer also contains provisions which address the conduct, control, and prosecution of the action, including: (a) the Plaintiffs have the right to instruct counsel and will assist, discuss, and instruct counsel as need be; and (b) Class Counsel is entitled to seek and secure an offer from a litigation funder, subject to court approval.
[7] On January 19, 2017, Mr. Heller commenced his proposed class action. In their Statement of Claim, the Plaintiffs advance four causes of action; namely: (a) breach of the Employment Standards Act; (b) breach of contract; (c) negligence; and (c) unjust enrichment.
[8] On January 22, 2018, Uber brought a motion to have the action stayed in favour of arbitration in the Netherlands. On January 30, 2018, I stayed the action.[^2]
[9] On January 2, 2019, the Ontario Court of Appeal reversed my decision and held that the arbitration clause was unconscionable and illegal because it contracted out of the Employment Standards Act, 2000.[^3]
[10] On May 23, 2019, the Supreme Court of Canada granted leave to appeal.[^4]
[11] On June 26, 2020, the Supreme Court of Canada dismissed the appeal and held that the arbitration agreement was unconscionable.[^5]
[12] On September 28, 2020, Mr. Heller delivered an Amended Fresh as Amended Statement of Claim.
[13] On November 27, 2020, Uber delivered its Statement of Defence.
[14] On December 18, 2020, Mr. Heller served his Motion Record for Certification.
[15] In March 2021, Uber delivered its Responding Motion Record.
[16] In May 2021, Uber delivered its Supplementary Responding Motion Record.
[17] On June 9, 2021, Mr. Heller delivered his Supplementary Motion Record.
[18] On June 10, 2021, Mr. Heller delivered his Second Supplementary Motion Record.
[19] The certification motion was argued on July 13 to 15, 2021, and I reserved judgment.
[20] The costs exposure in this litigation has been and will be substantial. It has been hard-fought and well-fought on both sides for over four years. The disbursement costs required to advance this matter to final resolution have been and will continue to be significant. The total disbursements are estimated to be in the range of $250,000 to bring the litigation to conclusion.
[21] After discussions with various potential funders, Class Counsel determined that the proposal from Augusta offered the funding required to prosecute this action and would be in the Class Members’ best interests.
[22] Augusta is the largest litigation and dispute funding institution in the United Kingdom by the number of cases funded. As of July 29, 2021, Augusta had access to approximately CA$594 million of undrawn facilities.
[23] On July 28, 2021, the Plaintiffs and Class Counsel entered into a Litigation Funding Agreement with Augusta. The Agreement provides that:
a. Augusta will pay the disbursements incurred by Class Counsel up to a prescribed maximum amount after which amount Class Counsel will fund the disbursements.
b. Augusta will pay any adverse costs order on the Plaintiffs’ behalf up to a prescribed maximum amount after which amount Class Counsel will be responsible for costs.
c. Augusta will provide security for costs. Augusta has provided an undertaking with respect to an adverse costs award. Pursuant to the undertaking, Augusta agrees: (a) to comply with any adverse costs award made by the Court; (b) to attorn to the Court’s jurisdiction in relation to any order the Court makes directly against it; (c) to pay Uber the final, quantified amount of any adverse costs awards such that Uber may enforce payment as a debt due and owing by Augusta; and (d) not to revoke or withdraw the undertaking prior to meeting any accrued obligations to pay adverse costs awards in favour of Uber.[^6]
d. Augusta agrees to comply with the deemed undertaking rule and any protective orders made by the Court, and to maintain all documents and information received from the Plaintiff in the strictest confidence, and Augusta confirms that the provision to it of any documents or information relating to the action is not intended to waive any privilege.
e. Augusta agrees that only the Representative Plaintiffs are to instruct Class Counsel and Class Counsel owe their obligation to the Representative Plaintiffs. Nothing in the Agreement creates a solicitor-client relationship with Augusta, and Class Counsel’s professional obligations are owed exclusively and solely to the Class.
f. Augusta is entitled to receive copies of any documents or filings made or obtained and to be informed of all material developments with respect to the action.
g. Augusta will be reimbursed for all payments advanced and will receive 8-10% of the proceeds awarded to the Class, plus a funder administration fee.
h. Augusta can only terminate the Agreement with ten business days’ written notice to the Plaintiffs, and only in circumstances where: (a) the proposed representative plaintiffs breach any of their obligations or undertakings; or (b) Mr. Heller or Ms. Garcia unilaterally, without Augusta’s consent, appoint a different law firm to replace Class Counsel.
[24] On July 27, 2021, the Plaintiffs received independent legal advice from Anthony O’Brien, a partner at Siskinds LLP. Mr. O’Brien explained to the Plaintiffs, amongst other things: (a) the risks of class action litigation; (b) that litigation funding agreements can assist parties with indemnities against adverse costs awards and disbursement funding in exchange for a portion of a settlement or judgment; (c) that the Agreement must not interfere with the lawyer-client relationship or the proposed representative plaintiffs’ duty to act in the best interests of the Class; and (d) that Mr. Heller and Ms. Garcia will continue to instruct Class Counsel.
[25] After receiving advice from Mr. O’Brien, Mr. Heller and Ms. Garcia provided their instructions for Class Counsel to sign the Agreement on their behalf.
[26] With appropriate redactions, copies of the Retainer and of the litigation funding agreement were disclosed with Uber. Uber was given notice of this motion and takes no position with respect to the third-party funding approval.
[27] The issue to be determined on this motion is whether to approve the Litigation Funding Agreement. In this regard, third-party litigation funding is acceptable as promoting the important objectives of class proceedings, including promoting access to justice and behaviour modification, and may be justified in class proceedings as a matter of necessity.[^7] The general test for approval of a third-party funding agreement is that the agreement should not be champertous or illegal and it must be a fair and reasonable agreement that facilitates access to justice while protecting the interests of the defendants.[^8]
[28] Ontario Courts have developed a four-factor test to approve a third-party litigation funding agreement, which requires that the court be satisfied that: (a) the agreement must be necessary in order to provide access to justice; (b) the access to justice facilitated by the third-party funding agreement must be substantively meaningful; (c) the agreement must be a fair and reasonable agreement that facilitates access to justice while protecting the interests of the defendants; and (d) the third-party funder must not be overcompensated for assuming the risks of an adverse costs award because this would make the agreement unfair, overreaching, and champertous.[^9]
[29] Ontario Courts consider a variety of factors in determining whether to approve a third-party agreement including: (a) whether the procedural and evidentiary steps have been satisfied; (b) whether the agreement is necessary to provide access to justice; (c) whether access to justice would be substantively and meaningfully facilitated by the agreement; (d) whether the agreement is fair and reasonable, and does not overcompensate the funder; (e) whether the agreement protects the legitimate interests of the defendants, including the confidentiality of the parties’ information; and (f) whether the lawyer and client relationship between the plaintiff and his or her lawyer has been compromised.[^10]
[30] In the immediate case, I am satisfied that the Litigation Funding Agreement should be approved.
[31] Order to go as asked.
Perell, J.
Released: August 9, 2021
COURT FILE NO.: CV-17-567946-00CP
DATE: 20210809
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
DAVID HELLER
Plaintiff
- and -
UBER TECHNOLOGIES INC., UBER CANADA INC., UBER B.V., RASIER OPERATIONS B.V. and UBER PORTIER B.V.
Defendants
REASONS FOR DECISION
PERELL J.
Released: August 9, 2021
[^1]: S.O. 2000, c. 41.
[^2]: Heller v. Uber Technologies Inc., 2018 ONSC 718
[^3]: Heller v. Uber Technologies Inc., 2019 ONCA 1, which rev’d 2018 ONSC 718
[^4]: Uber Technologies Inc. v. Heller [2019] S.C.C.A. No. 58.
[^5]: Uber Technologies Inc. v. Heller, 2020 SCC 16, aff’g 2019 ONCA 1, which rev’d 2018 ONSC 718.
[^6]: An undertaking is sufficient to meet the legal standards applicable to third party litigation funding agreements: David v. Loblaw, 2018 ONSC 6469; Cosimo Borrelli, in his capacity as trustee of the SFC Litigation Trust v. Allen Tak Yuen Chan, 2017 ONSC 1815 (Div. Ct.); Printing Circles Inc. v. Compass Group Canada Ltd. (2007), 2007 CanLII 57095 (ON SC), 88 O.R. (3d) 685 (S.C.J.)
[^7]: Drynan v. Bausch Health Companies Inc., 2020 ONSC 4379; David v. Loblaw, 2018 ONSC 6469; Houle v. St. Jude Medical Inc., 2017 ONSC 5129,affd 2018 ONSC 6352 (Div. Ct.); Bayens v. Kinross Gold Corp., 2013 ONSC 4974; Dugal v. Manulife Financial Corp., 2011 ONSC 1785.
[^8]: Flying E Ranche Ltd. v. Canada (Attorney General), 2020 ONSC 8076;Drynan v. Bausch Health Companies Inc., 2020 ONSC 4379; JB & M Walker Ltd./1523428 Ontario Inc. v. TDL Group, 2019 ONSC 999; David v. Loblaw, 2018 ONSC 6469; Marriott v. General Motors of Canada Company, 2018 ONSC 2535; Houle v. St. Jude Medical Inc., 2017 ONSC 5129affd 2018 ONSC 6352 (Div. Ct.); Bayens v. Kinross Gold Corp., 2013 ONSC 4974; Dugal v. Manulife Financial Corp., 2011 ONSC 1785.
[^9]: Drynan v. Bausch Health Companies Inc., 2020 ONSC 4379; JB & M Walker Ltd./1523428 Ontario Inc. v. TDL Group, 2019 ONSC 999; Houle v. St. Jude Medical Inc., 2017 ONSC 5129affd 2018 ONSC 6352 (Div. Ct.).
[^10]: David v. Loblaw, 2018 ONSC 6469.