COURT FILE NO.: CV-21-00671950-00CP

DATE: 20240130

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

ADRIAN WASYLYK

Plaintiff

• and –

LYFT, INC. and LYFT CANADA INC.

Defendants

Proceeding under the Class Proceedings Act, 1992

Michael J. Peerless, Sabrina Lombardi, Jonathan Bradford, Paul Edwards, and Evan Edwards for the Plaintiff

Andrea Laing, Laura Dougan, and Sam Cotton for the Defendants

HEARD: December 5 and 6, 2023

PERELL, J.

REASONS FOR DECISION

Contents

A. Introduction. 2

B. Statutory Background. 3

C. Legal Background. 5

D. Evidentiary and Procedural Background to the Stay Motion. 8

E. Factual Background. 9

F. Analysis and Discussion. 15

1. The Class Action Waiver 15

2. Mr. Wasylyk’s Evidentiary Argument 16

3. The Significance of the Competence-Competence Principle to the Immediate Case. 17

4. Are the Arbitration Provisions Accessible?. 18

5. Are the Arbitration Provisions Unenforceable because of Contractual Uncertainty?. 19

6. Are the Arbitration Provisions Unenforceable because of Unconscionability?. 19

7. Are the Arbitration Provisions Unenforceable on Grounds of Public Policy?. 21

8. Are the Arbitration Provisions Unenforceable and Unlawful Contracting out of the Employment Standards Act, 2000. 22

9. Is the Mr. Wasylyk’s Action Appropriate for a Summary Judgment?. 24

G. Conclusion. 26

A. Introduction

1Pursuant to the Class Proceedings Act, 1992,¹ Adrian Wasylyk sues Lyft Inc. and Lyft Canada Inc. (collectively “Lyft”).

2Using Lyft’s app software and his own vehicle, Mr. Wasylyk drives passengers for hire. It is a neat question whether Mr. Wasylyk is a self-employed independent or dependent contractor or an employee of Lyft. In his proposed class action, Mr. Wasylyk alleges that he and other Lyft Drivers in Ontario are employees and that Lyft has breached Ontario’s Employment Standards Act, 2000.²

3On this motion, Lyft seeks an order pursuant to s. 7(1) of the Arbitration Act, 1991³ staying the proposed class action in favour of arbitration. Lyft submits that arbitration is “accessible” in the immediate case and that pursuant to the Act, the preconditions (the technical requirements) for arbitration have been satisfied. Lyft submits that the onus is on Mr. Wasylyk to demonstrate pursuant to s. 7 (2) of the Act that the court may refuse to stay his proposed class action because of one of the exceptions to a stay set out in the Act. Lyft submits that the case at bar is not one of the exceptional cases where the court should not stay its own proceedings and should rather defer its jurisdiction to the jurisdiction of the arbitrator.

4Mr. Wasylyk resists the stay of his proposed class action. He submits that Lyft’s motion should be dismissed because Lyft’s arbitration provisions are “inaccessible” and the Court should have no confidence that if his claim is referred to an arbitrator that the arbitration will ever actually take place. Further, Mr. Wasylyk submits that the arbitration provisions are unenforceable because of: (a) contractual uncertainty; (b) unconscionability; (c) being contrary to public policy; and (d) being an unlawful contracting out of the Employment Standards Act, 2000. Further still, he submits that there should be no deferral to arbitration because his proposed class action is appropriate for summary judgment.

5For the reasons that follow, I grant Lyft’s motion with costs fixed, as agreed, at $40,000 all inclusive.

6The 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, which is to say that the Arbitration Agreement is not a pretense to access to justice. Lyft’s Arbitration Agreement is not uncertain or indefinite. It is not unconscionable or contrary to public policy. The Arbitration Agreement does not contract out of the Employment Standards Act, 2000. In the context of the proposed class action, Mr. Wasylyk’s own case and the individual cases of the putative class members are not appropriate for summary judgments. Therefore, Lyft’s motion for a stay of the proposed class action should be granted.

B. Statutory Background

For present purposes, the relevant provisions of the Arbitration Act, 1991, are set out below:

Definitions

1 In this Act,

“arbitration agreement” means an agreement by which two or more persons agree to submit to arbitration a dispute that has arisen or may arise between them;

Stay

7 (1) If a party to an arbitration agreement commences a proceeding in respect of a matter to be submitted to arbitration under the agreement, the court in which the proceeding is commenced shall, on the motion of another party to the arbitration agreement, stay the proceeding.

Exceptions

(2) However, the court may refuse to stay the proceeding in any of the following cases:

1. A party entered into the arbitration agreement while under a legal incapacity.

2. The arbitration agreement is invalid.

3. The subject-matter of the dispute is not capable of being the subject of arbitration under Ontario law.

4. The motion was brought with undue delay.

5. The matter is a proper one for default or summary judgment.

Arbitral tribunal may rule on own jurisdiction

17 (1) An arbitral tribunal may rule on its own jurisdiction to conduct the arbitration and may in that connection rule on objections with respect to the existence or validity of the arbitration agreement.

7For present purposes, the relevant provisions of the Employment Standards Act, 2000 are set out below.

No contracting out

5 (1) Subject to subsection (2), no employer or agent of an employer and no employee or agent of an employee shall contract out of or waive an employment standard and any such contracting out or waiver is void.

Greater contractual or statutory right

(2) If one or more provisions in an employment contract or in another Act that directly relate to the same subject matter as an employment standard provide a greater benefit to an employee than the employment standard, the provision or provisions in the contract or Act apply and the employment standard does not apply.

No treating as if not employee

5.1 (1) An employer shall not treat, for the purposes of this Act, a person who is an employee of the employer as if the person were not an employee under this Act.

Reprisal prohibited

74 (1) No employer or person acting on behalf of an employer shall intimidate, dismiss or otherwise penalize an employee or threaten to do so,

(a) because the employee,

(i) asks the employer to comply with this Act and the regulations,

(ii) makes inquiries about his or her rights under this Act,

(iii) files a complaint with the Ministry under this Act,

(iv) exercises or attempts to exercise a right under this Act,

(v) gives information to an employment standards officer,

(v.1) makes inquiries about the rate paid to another employee for the purpose of determining or assisting another person in determining whether an employer is complying with Part XII (Equal Pay for Equal Work),

(v.2) discloses the employee’s rate of pay to another employee for the purpose of determining or assisting another person in determining whether an employer is complying with Part XII (Equal Pay for Equal Work),

(vi) testifies or is required to testify or otherwise participates or is going to participate in a proceeding under this Act,

(vii) participates in proceedings respecting a by-law or proposed by-law under section 4 of the Retail Business Holidays Act,

(viii) is or will become eligible to take a leave, intends to take a leave or takes a leave under Part XIV,

(ix) makes inquiries about whether a person holds a licence to operate as a temporary help agency or a licence to act as a recruiter as required under Part XVIII.1; or

(b) because the employer is or may be required, because of a court order or garnishment, to pay to a third party an amount owing by the employer to the employee.

Onus of proof

(2) Subject to subsection 122 (4), in any proceeding under this Act, the burden of proof that an employer did not contravene a provision set out in this section lies upon the employer.

General offence

132 A person who contravenes this Act or the regulations or fails to comply with an order, direction or other requirement under this Act or the regulations is guilty of an offence and on conviction is liable,

(a) if the person is an individual, to a fine of not more than $50,000 or to imprisonment for a term of not more than 12 months or to both;

(b) subject to clause (c), if the person is a corporation, to a fine of not more than $100,000; and

(c) if the person is a corporation that has previously been convicted of an offence under this Act or a predecessor to it,

(i) if the person has one previous conviction, to a fine of not more than $250,000, and

(ii) if the person has more than one previous conviction, to a fine of not more than $500,000.

Additional orders

133 (1) If an employer is convicted under section 132 of contravening section 74 […], the court shall, in addition to any fine or term of imprisonment that is imposed, order that the employer, […], take specific action or refrain from taking specific action to remedy the contravention.

Same

(2) Without restricting the generality of subsection (1), the order made by the court may require one or more of the following:

1. A person be paid any wages that are owing to him or her.

2. In the case of a conviction under section 132 of contravening section 74 […], a person be reinstated.

3. A person be compensated for any loss incurred by him or her as a result of the contravention.

C. Legal Background

8Pursuant to s.7 of the Arbitration Act, 1991, when a party brings a court action, his or her opponents may bring an application to have the action stayed on the ground that the parties have agreed that their dispute be arbitrated.

9In TELUS Communications Inc. v. Wellman,⁴ and Seidel v. TELUS Communications Inc.,⁵ the Supreme Court of Canada held that absent legislative language to the contrary, courts must enforce arbitration agreements.⁶ The court should only refuse a reference to arbitration if it is clear that the matter falls outside the arbitration agreement.⁷

10In TELUS Communications Inc. v. Wellman,⁸ Wellman brought a proposed class action on behalf of consumer and non-consumer purchasers of mobile phone service contracts with TELUS. The consumer purchasers were not subject to an arbitration agreement because it had been invalidated by the provisions of the Consumer Protection Act. The non-consumer, i.e., the business purchasers of TELUS’s services were, however, subject to an arbitration agreement. The Supreme Court held that under the Arbitration Act, 1991, a stay was mandatory for the non-consumer class members.

11In the context of deciding the stay application, the court will decide whether the arbitrator has or may have jurisdiction to decide the parties’ dispute including a dispute about the arbitrator’s jurisdiction. Pursuant to what is known as the competence-competence principle, which is recognized by s. 17 of the Arbitration Act, the court will let the arbitrator rule on his or her own jurisdiction to decide the dispute. In Peace River Hydro Partners v. Petrowest Corp.,⁹ the Supreme Court stated that: “it is well established in Canada that a challenge to an arbitrator’s jurisdiction should generally be decided at first instance by the arbitrator.”¹⁰

12The competence-competence principle requires that a party to a dispute that is arguably subject to an arbitration agreement must challenge the scope of that arbitration agreement or the arbitrator’s jurisdiction before the arbitrator and not before the court. There are, however, exceptions to the competence-competence principle, some of which are also recognized by the Arbitration Act, 1991.

13There is a two-step analytical process to determine whether court proceedings should be stayed in favour of arbitration. First, the party relying on an arbitration provision must establish the technical requirements for a mandatory stay of proceedings including the existence of an agreement to arbitrate. Second, the stay is mandatory unless the opposing party establishes one of the statutory exceptions to arbitration.¹¹

14The case law establishes that to decide whether to stay the action, the court must decide: (a) whether arbitration is “accessible” and (b) whether there is an arguable case that the dispute between the parties is covered by an existing arbitration agreement, in which case the court will not stay the action unless it is clear that the dispute before the court is outside the terms of the arbitration agreement or that the parties are not subject to the agreement.¹²

15Pursuant to s.7 (2) of the Arbitration Act, 1991, the exceptions to granting a stay are that the court may refuse to stay its own proceedings: (1) if a party entered into the arbitration agreement while under a legal incapacity; (2) if the arbitration agreement is invalid; (3) if the subject matter of the dispute is not capable of being the subject of arbitration under Ontario law; (4) if the motion was brought with undue delay; or (5) if the matter is a proper one for default or summary judgment. If, for example, the case is suitable for a summary judgment, practically speaking, the court will decide the dispute and the arbitrator’s jurisdiction, if any, is preempted.¹³

16The exceptions are situations where it would be either unfair or impractical to refer the matter to arbitration.¹⁴ A party may waive the right to have an action stayed and the matter referred to arbitration if it takes steps in the action and waive the right to have the issues determined by arbitration.¹⁵

17In Uber Technologies Inc. v. Heller,¹⁶ the Supreme Court recognized that the competence-competence principle does not apply when resort to arbitration is not viable for one of the contracting parties because arbitration is too costly or is otherwise inaccessible. In the Uber Technologies case, Justices Abella and Rowe (Wagner C.J. and Moldaver, Karakatsanis, Martin and Kasirer JJ. concurring) stated at paragraph 39:

39. One way (among others) in which the validity of an arbitration agreement may not be determined is when an arbitration is fundamentally too costly or otherwise inaccessible. This could occur because the fees to begin arbitration are significant relative to the plaintiff’s claim or because the plaintiff cannot reasonably reach the physical location of the arbitration. Another example might be a foreign choice of law clause that circumvents mandatory local policy, such as a clause that would prevent an arbitrator from giving effect to the protections in Ontario employment law. In such situations, staying the action in favour of arbitration would be tantamount to denying relief for the claim. The arbitration agreement would, in effect, be insulated from meaningful challenge. […]

18In Haas v. Gunasekaram,¹⁷ the Court of Appeal set out a five-part analytical framework for determining whether an action should be stayed for arbitration: (1) Is there an arbitration agreement? (2) What is the subject matter of the dispute? (3) What is the scope of the arbitration agreement? (4) Does the dispute arguably fall within the scope of the arbitration agreement? (5) Are there grounds on which the court should refuse to stay the action?

19The technical requirements for a stay (the first analytical step) are: (1) an arbitration agreement exists; (2) a party to the arbitration agreement has commenced litigation; (3) the court proceedings are within the scope of the arbitration agreement; and (4) the party applying for a stay of the court proceedings has not taken a step in the court proceedings.¹⁸

20In the immediate case, Mr. Wasylyk concedes that if an arbitration agreement exists, the second, third, and fourth technical requirements are satisfied. He disputes, however, that arbitration is accessible, and relying on the exceptions of s. 7 (2) of the Arbitrations Act, 1991, he submits that the arbitration agreement is unenforceable on a variety of grounds.

D. Evidentiary and Procedural Background to the Stay Motion

21On November 12, 2021, Mr. Wasylyk commenced this action by Statement of Claim.

22On September 19, 2022, Mr. Wasylyk delivered an Amended Statement of Claim.

23On February 1, 2023, Mr. Wasylyk delivered his amended Motion Record for Certification, which included Mr. Wasylyk’s affidavit dated January 17, 2023 and the affidavit dated January 19, 2023 of Chelsea Smith and the affidavit dated January 20, 2023 of Errol Soriano.

24Ms. Smith is a lawyer with McKenzie Lake Lawyers LLP, co-counsel for Mr. Wasylyk. Mr. Soriano of KSV Soriano Inc. was retained as an expert witness to summarize a methodology to quantify the unpaid entitlements claimed by the class members based on the assumption that the Employment Standards Act, 2000 applied to their work contracts.

25For his proposed class action, Mr. Wasylyk proposed the following common issues:

a. Employment Misclassification - Do the predominate features of the Defendants' business model and relationship with Class Members lead to a finding, on the balance of probabilities, that the Class Members are the Defendants' employees for the purposes of the Employment Standards Act, 2000, SO 2000, c 41 ("ESA")?

b. Breach of Statute and Breach of Contract - If the answer to (a) is "yes," do the minimum requirements with respect to the Employment Standards Entitlements form express or implied terms of the Defendants' contracts with Class Members?

c. If the answer to (a) is "yes," do the Defendants owe contractual duties, including a duty of good faith, and/or statutory obligations pursuant to the ESA to:

i. ensure that the Class Members are properly classified as employees;

ii. ensure that the Class Members were compensated at a rate equal to or above the Minimum Wage;

iii. ensure that the Class Members were compensated for Overtime Pay;

iv. ensure that the Class Members were compensated for Vacation Pay;

v. ensure that the Class Members were compensated for Holiday Pay and Premium Pay; and,

vi. ensure that the Class Members were compensated for all Other Entitlements?

d. If the answer to (a) is "yes," did the Defendants fail to pay the Class Members Minimum Wage, Overtime Pay, Vacation Pay, Holiday Pay and Premium Pay, and/or Other Entitlements as required by the Defendants' contractual duties and/or statutory obligations pursuant to the ESA?

26It shall be pertinent to the analysis and discussion later in these Reasons for Decision to note that there is no common issue about aggregate damages and that the Class Members’ entitlements will require individual assessment.

27Pursuant to a notice of motion dated April 5, 2023 and an amended notice of motion dated May 5, 2023, Lyft moved for a stay of Mr. Wasylyk’s proposed class action. At the time of the service of the motion, they had not delivered a Statement of Defence or taken any steps in Mr. Wasylyk’s action.

28Lyft’s motion for a stay was supported by a Motion Record, an Amended Motion Record, and a Reply Motion record containing:

a. Mr. Wasylyk’s Amended Motion Record for Certification

b. Affidavit dated May 5, 2023 of Monica Singh. Ms. Singh is an assistant at Blake, Cassels & Graydon, Lyft’s lawyers.

c. Affidavit dated August 14, 2023 of Sam Cotton. Mr. Cotton is a lawyer at Blake, Cassels & Graydon.

29On July 10, 2023, Mr. Wasylyk delivered a Responding Motion Record. The record included his affidavit dated July 7, 2023.

30On September 25, 2023, Mr. Cotton was cross-examined.

E. Factual Background

31Lyft identifies itself as a technology company providing a service for a market where drivers can connect with individuals seeking a ride through Lyft’s mobile application. Lyft, Inc. is headquartered in San Francisco, California. Lyft Canada has its registered office in Vancouver, British Columbia. Lyft, Inc is a publicly traded company listed on the NASDAQ Stock Market and as of July 6, 2023 had a market capitalization of over $3.6 Billion USD.

32In order to become a driver using the Lyft app, the driver must create a user account and enter into a Terms of Service Agreement with Lyft.

33Mr. Wasylyk lives in Toronto, Ontario. He has a high school equivalency pursuant to a General Educational Development (GED) Certificate. He has had a varied work experience, having been a security guard, a train service attendant, and a rideshare driver.

34On October 24, 2017, Mr. Wasylyk contractually agreed to Lyft’s Terms of Service Agreement. The Terms of Service Agreement contains an Arbitration Agreement. Mr. Wasylyk has not provided any evidence that he opted out of the Arbitration Agreement.

35Mr. Wasylyk acknowledged that he agreed to Lyft’s Terms of Service that included the agreement to arbitrate. He deposed that he knew that the purpose of the Arbitration Agreement was to “prevent him from pursuing any form of dispute resolution other than the arbitration process set out in the Arbitration and Class Action Waiver Provisions.”

36The Terms of Service Agreement was updated on December 12, 2022 but the Arbitration Agreement remained largely unchanged. For present purposes, the relevant terms of the Lyft Terms of Service including the incorporated “Dispute Resolution and Arbitration Agreement” are set out below.

Lyft Terms of Service

These Lyft Terms of Service constitute a legally binding agreement (the "Agreement") between you and Lyft Canada Inc. (collectively, "Lyft," "we," "us" or "our") governing your use of the Lyft applications, websites, technology, facilities, and platform (collectively, the "Lyft Platform") in Canada. Lyft is entering into this Agreement for itself and for the benefit of its affiliates, subsidiaries, parents, successors, assigns, directors and officers (a "Lyft Affiliate" or "Lyft Affiliates").

PLEASE BE ADVISED: THIS AGREEMENT CONTAINS PROVISIONS THAT GOVERN HOW CLAIMS BETWEEN YOU AND LYFT CAN BE BROUGHT (SECTION 17 BELOW). THESE PROVISIONS MAY REQUIRE YOU TO SUBMIT CLAIMS YOU HAVE AGAINST LYFT TO BINDING AND FINAL ARBITRATION ON AN INDIVIDUAL BASIS, NOT AS A PLAINTIFF OR CLASS MEMBER IN ANY CLASS, GROUP OR REPRESENTATIVE ACTION OR PROCEEDING. AS A DRIVER OR DRIVER APPLICANT, YOU HAVE AN OPPORTUNITY TO OPT OUT OF ARBITRATION WITH RESPECT TO CERTAIN CLAIMS AS PROVIDED IN SECTION 17.

By entering into this Agreement, and/or by using or accessing the Lyft Platform, you expressly acknowledge that you understand this Agreement (including the dispute resolution and arbitration provisions in Section 17) and accept all of its terms. IF YOU DO NOT AGREE TO BE BOUND BY THE TERMS AND CONDITIONS OF THIS AGREEMENT, YOU MAY NOT USE OR ACCESS THE LYFT PLATFORM OR ANY OF THE SERVICES PROVIDED THROUGH THE LYFT PLATFORM. If you use the Lyft Platform in another country, you agree to be subject to Lyft's terms of service for that country […]

When using the Lyft Platform, you also agree to conduct yourself in accordance with our Community Guidelines which shall form part of this Agreement between you and Lyft.

17. DISPUTE RESOLUTION AND ARBITRATION AGREEMENT

THE LAWS OF CERTAIN JURISDICTIONS MAY NOT ALLOW FOR THE ENFORCEMENT OF AN AGREEMENT REQUIRING YOU TO SUBMIT TO BINDING ARBITRATION OR TO WAIVE ANY RIGHTS YOU MAY HAVE TO PURSUE A PROCEEDING ON A CLASS, COLLECTIVE OR REPRESENTATIVE BASIS IN RESPECT OF CERTAIN DISPUTES YOU MAY HAVE WITH LYFT IN WHICH CASE SOME OR ALL OF THE FOLLOWING REQUIREMENTS WITH RESPECT TO BINDING ARBITRATION AND WAIVER OF RIGHTS WITH RESPECT TO CLASS, COLLECTIVE OR REPRESENTATIVE ACTIONS MAY NOT APPLY TO YOU AND YOU MAY HAVE THE RIGHT TO INITIATE OR PARTICIPATE IN COURT PROCEEDINGS ON AN INDIVIDUAL, CLASS, COLLECTIVE OR REPRESENTATIVE BASIS.

(a) Agreement to Binding Arbitration Between You and Lyft.

YOU AND LYFT MUTUALLY AGREE TO WAIVE, TO THE FULLEST EXTENT PERMITTED UNDER APPLICABLE LAW, OUR RESPECTIVE RIGHTS TO RESOLUTION OF DISPUTES IN A COURT OF LAW BY A JUDGE OR JURY AND AGREE TO RESOLVE ANY DISPUTE BY ARBITRATION AS SET FORTH BELOW. This agreement to arbitrate ('Arbitration Agreement") survives after this Agreement terminates or your relationship with Lyft ends. TO THE FULLEST EXTENT PERMITTED UNDER APPLICABLE LAW, ANY ARBITRATION UNDER THIS ARBITRATION AGREEMENT WILL TAKE PLACE ON AN INDIVIDUAL BASIS AND CLASS ARBITRATIONS AND CLASS ACTIONS ARE NOT PERMITTED.

Except as expressly provided below and above, this Arbitration Agreement applies to all disputes between you and Lyft, including our affiliates, subsidiaries, parents, successors and assigns, and each of our respective officers, directors, employees, agents, or shareholders (each a "Claim" and collectively, "Claims") These Claims include, to the fullest extent permitted under applicable law, but are not limited to, any dispute, claim or controversy, whether based on past, present, or future events, arising out of or relating to: this Agreement and prior versions thereof (including the breach, termination, enforcement, interpretation or validity thereof), the Lyft Platform, the Services, any other goods or services made available through the Lyft Platform, your relationship with Lyft, the threatened or actual suspension, deactivation or termination of your User Account or this Agreement, payments made by you or any payments made or allegedly owed to you, any promotions or offers made by Lyft, and all other common law and statutory claims between you and Lyft or its affiliates and their respective employees, officers, directors and shareholders. To the fullest extent permissible under applicable law, disputes concerning the arbitrability of a Claim (including disputes about the scope, applicability, enforceability, revocability, or validity of the Arbitration Agreement) shall be decided by the arbitrator.

BY AGREEING TO ARBITRATION, YOU UNDERSTAND THAT YOU AND LYFT ARE WAIVING THE RIGHT TO SUE IN COURT OR HAVE A JURY TRIAL FOR ALL CLAIMS, EXCEPT AS EXPRESSLY OTHERWISE PROVIDED IN THIS AGREEMENTOR REQUIRED BY APPLICABLE LAW. THIS ARBITRATION AGREEMENT IS INTENDED TO REQUIRE ARBITRATION OF EVERY CLAIM OR DISPUTE THAT CAN LAWFULLY BE ARBITRATED.

(b) Prohibition of Class Actions and Non-Individualized Relief.

YOU UNDERSTAND AND AGREE THAT, TO THE FULLEST EXTENT PERMISSIBLE UNDER APPLICABLE LAW, THAT YOU AND LYFT MAY EACH BRING CLAIMS IN ARBITRATION AGAINST THE OTHER ONLY IN AN INDIVIDUAL CAPACITY AND NOT ON A CLASS, COLLECTIVE OR REPRESENTATIVE BASIS ("CLASS ACTION WAIVER"). YOU UNDERSTAND AND AGREE THAT YOU AND LYFT BOTH ARE WAIVING THE RIGHT TO PURSUE OR HAVE A DISPUTE RESOLVED AS A PLAINTIFF OR CLASS MEMBER IN ANY PURPORTED CLASS, COLLECTIVE OR REPRESENTATIVE PROCEEDING. AN ARBITRATOR APPOINTED PURSUANT TO THIS ARBITRATION AGREEMENT SHALL HAVE NO AUTHORITY TO CONSIDER OR RESOLVE ANY CLAIM OR ISSUE ANY RELIEF ON ANY BASIS OTHER THAN AN INDIVIDUAL BASIS. THE ARBITRATOR SHALL HAVE NO AUTHORITY TO CONSIDER OR RESOLVE ANY CLAIM OR ISSUE ANY RELIEF ON A CLASS, COLLECTIVE, OR REPRESENTATIVE BASIS.

Notwithstanding any other provision of this Agreement, the Arbitration Agreement or the AAA Rules, disputes regarding the scope, applicability, enforceability, revocability or validity of the Class Action Waiver may be resolved only by a civil court of competent jurisdiction and not by an arbitrator. In any case in which: (1) the dispute is filed as a class, collective, or representative action and (2) there is a final judicial determination that the Class Action Waiver is unenforceable as to any Claims, the class, collective, and/or representative action in respect of such Claims must be litigated in a civil court of competent jurisdiction, but the Class Action Waiver shall be enforced in arbitration on an individual basis as to all other Claims to the fullest extent possible.

(c) Rules Governing the Arbitration.

Any arbitration conducted pursuant to this Arbitration Agreement shall be administered by the American Arbitration Association ('AAA") and pursuant to the applicable AAA rules. You can learn more about the AAA and its rules and processes at www.adr.org. Notwithstanding the foregoing, if requested by you and if proper based on the facts and circumstances of the Claims presented, the arbitrator shall have the discretion to select a different set of arbitration rules, but in no event shall the arbitrator consolidate more than one person's Claims, or otherwise preside over any form of class, collective or representative proceeding.

As part of the arbitration, both you and Lyft will have the opportunity for reasonable discovery of non-privileged information that is relevant to the Claim. The arbitrator may award any individualized remedies that would be available in court. The arbitrator may award declaratory or injunctive relief only in favor of the individual party seeking relief and only to the extent necessary to provide relief warranted by that party's individual Claims. The arbitrator will provide a reasoned written statement of the arbitrator's decision which shall explain the award given and the findings and conclusions on which the decision is based.

The arbitrator will decide the substance of all Claims in accordance with applicable law, and will honor all claims of privilege recognized by law. The arbitrator shall not be bound by rulings in prior arbitrations involving different Riders or Drivers, but is bound by rulings in prior arbitrations involving the same Rider or Driver to the extent required by applicable law. The arbitrator's award shall be final and binding and judgment on the award rendered by the arbitrator may be entered in any court of competent jurisdiction, provided that such award may be challenged to the extent provided for under applicable law.

(d) Arbitration Fees and Awards.

The payment of filing and arbitration fees will be governed by the relevant AAA Rules subject to the following modifications:

1. If you initiate arbitration under this Arbitration Agreement after participating in the optional negotiation process described in subsection (h) below and are otherwise required to pay a filing fee under the relevant AAA Rules, Lyft agrees that, unless your Claim is for CDN$5,000 or more, your share of the filing and arbitration fees is limited to CDN$50, and that, after you submit proof of payment of the filing fee to Lyft, Lyft will promptly reimburse you for all but CDN$50 of the filing fee. If, however, the arbitrator finds that either the substance of your Claim or the relief sought in the Claim is frivolous, vexatious or brought for an improper purpose, then the payment of all such fees will be governed by the applicable AAA Rules.

2. If Lyft initiates arbitration under this Arbitration Agreement, Lyft will pay all AAA filing and arbitration fees.

3. With respect to any Claims brought by Lyft against a Driver, or for Claims brought by a Driver against Lyft that: (A) are based on an alleged employment relationship between Lyft and a Driver; (B) arise out of, or relate to, Lyft’s actual deactivation of a Driver's User account or a threat by Lyft to deactivate a Driver's User account; (C) arise out of, or relate to, Lyft's actual termination of a Driver's Agreement with Lyft under the termination provisions of this Agreement, or a threat by Lyft to terminate a Driver's Agreement; or (D) arise out of, or relate to, Fares (as defined in this Agreement, including Lyft's commission on the Fares), tips, or average hourly guarantees owed by Lyft to Drivers for Services, other than disputes relating to referral bonuses, other Lyft promotions, or consumer type disputes (the subset of Claims in subsections (A) -(D) shall be collectively referred to as 'Driver Claims"), Lyft shall pay all costs unique to arbitration (as compared to the costs of adjudicating the same Claims before a court), including the regular and customary arbitration fees and expenses (to the extent not paid by Lyft pursuant to the fee provisions above). However, if you are the party initiating the Driver Claim, you shall be responsible for contributing up to an amount equal to the filing fee that would be paid to initiate the Claim in the court of general jurisdiction in the province in which you provide Services to Riders, unless a lower fee amount would be owed by you pursuant to the AAA Rules, applicable law, or subsection (d)(1) above. Any dispute as to whether a cost is unique to arbitration shall be resolved by the arbitrator.

4. Except as provided in any applicable rules of civil procedure, each party shall pay its own legal fees and pay any costs that are not unique to the arbitration (i.e., costs that each party would incur if the Claim(s) were litigated in a court such as costs to subpoena witnesses and/or documents, take depositions and purchase deposition transcripts, copy documents, etc.).

5. At the end of any arbitration, the arbitrator may award reasonable fees and costs or any portion thereof to you if you prevail, to the extent authorized by applicable law.

6. Although under some laws Lyft may have a right to an award of legal fees and non-filing fee expenses if it prevails in an arbitration, Lyft agrees that it will not seek such an award.

7. If the arbitrator issues you an award that is greater than the value of Lyft's last written settlement offer made after you participated in good faith in the optional negotiation process described in subsection (h) below, then Lyft will pay you the amount of the award or CDN$1,000, whichever is greater.

(e) Location and Manner of Arbitration.

Unless you and Lyft agree otherwise, any arbitration hearings between Lyft and a Rider will take place in the nearest municipality of your billing address, or, where appropriate arbitration facilities for the conduct of an AAA arbitration are not available in the municipality of your billing address, in the nearest municipality to your billing address in which such facilities are available, and any arbitration hearings between Lyft and a Driver will take place in the municipality in which the Driver provides Services or, where appropriate arbitration facilities for the conduct of an AAA arbitration are not available in the municipality in which the Driver provides Services, in the nearest municipality in which such facilities are available. If your Claim is for CDN$10,000 or less, Lyft agrees that you may choose whether the arbitration will be conducted solely on the basis of documents submitted to the arbitrator, through a telephonic hearing, or by an in -person hearing as determined by the applicable AAA Rules. If your Claim exceeds CDN$10,000, the right to a hearing will be determined by the applicable AAA Rules.

(f) Severability.

In the event that any portion of this Arbitration Agreement is deemed illegal or unenforceable, such provision shall be severed and the remainder of the Arbitration Agreement shall be given full force and effect.

(g) Opting Out of Arbitration.

You may opt out of the requirement to arbitrate pursuant to the terms of this subsection. If you do not wish to be subject to this Arbitration Agreement, you may opt out of arbitration by notifying Lyft in writing of your desire to opt out of arbitration, which writing must be dated, signed and delivered by: (1) electronic mail to CNarbitrationoptout©lyft.com, or (2) by certified mail, postage prepaid and return receipt requested, or by any nationally recognized delivery service that is addressed to:

Lyft Canada Inc., % General Counsel, 595 Burrard Street, P.O. Box 49314, Suite 2600, Three Bentall Centre, Vancouver BC V7X I L3, Canada

In order to be effective, (A) the writing must clearly indicate your intent to opt out of this Arbitration Agreement, (B) the writing must include the name, phone number, and email address associated with your User Account, and (C) the email or envelope containing the signed writing must be sent within 30 days of the date this Agreement is executed by you. Should you not opt out within the 30-day period, you and Lyft shall be bound by the terms of this Arbitration Agreement in full, to the extent allowable by law. You should assume that in the future there may be lawsuits against Lyft alleging class, collective, and/or representative Claims, in which the plaintiffs seek to act on your behalf, and which, if successful, could result in some monetary recovery to you. But if you do agree to arbitration with Lyft under this Arbitration Agreement, you are agreeing in advance that you will bring all such Claims, and seek all monetary and other relief, against Lyft in an individual arbitration provision. You are also agreeing in advance that you will not participate in, or seek to recover monetary or other relief for such Claims in any court action or class, collective, and/or representative action. You have the right to consult with counsel of your choice concerning this Arbitration Agreement and you will not be subject to retaliation if you exercise your right to assert claims or opt-out of this Arbitration Agreement.

(h) Optional Pre-Arbitration Negotiation Process.

Before initiating any arbitration or proceeding, you and Lyft may agree to first attempt to negotiate any dispute, claim or controversy between the parties informally for 30 days, unless this time period is mutually extended by you and Lyft. A party who intends to seek negotiation under this subsection must first send to the other a written notice of the dispute ("Notice"). The Notice must (1) describe the nature and basis of the claim or dispute; and (2) set forth the specific relief sought. All offers, promises, conduct and statements, whether oral or written, made in the course of the negotiation by any of the parties, their agents, employees, and lawyers are confidential, privileged and inadmissible for any purpose, including as evidence of liability or for impeachment, in arbitration or other proceeding involving the parties, provided that evidence that is otherwise admissible or discoverable shall not be rendered inadmissible or non-discoverable as a result of its use in the negotiation.

(i) Binding Effect; Third-Party Beneficiaries.

This Arbitration Agreement shall be binding upon, and shall include any Claims brought by or against any third parties, including but not limited to your spouses, heirs, third -party beneficiaries and permitted assigns, where their underlying claim(s) arise out of or relate to your use of the Lyft Platform, Lyft Services, or Rideshare Services. To the extent that any third-party beneficiary to this Agreement brings claims against a party, those claims shall also be subject to this Arbitration Agreement.

(j) Limited Recourse.

You agree that, to the extent that any Lyft Affiliate provides benefits or services under or in connection with this Agreement, your use of the Lyft Platform, Lyft Services or Rideshare Services, the Lyft Affiliate does so on behalf of Lyft. You agree to bring any Claims that may be brought in connection with this Agreement, your use of the Lyft Platform, Lyft Services or Rideshare Services exclusively against Lyft. Lyft will respond to Claims that could, but for this provision, have been brought against a Lyft Affiliate and will not take the position, in responding to such a Claim, that it should have been brought against a Lyft Affiliate instead.

21. GENERAL

Except as provided in Section 17, this Agreement shall be governed by the laws of Ontario. If any provision of this Agreement is or becomes invalid or non-binding, the parties shall remain bound by all other provisions of this Agreement. In that event, the parties shall replace the invalid or non-binding provision with provisions that are valid and binding and that have, to the greatest extent possible, a similar effect as the invalid or non-binding provision, given the contents and purpose of this Agreement. […] Any notices to you shall be provided to you through the Lyft Platform or given to you via the email address or physical address you provide to Lyft during the registration process. Headings are for reference purposes only and in no way define, limit, construe or describe the scope or extent of such section. The words "include", "includes" and "including" are deemed to be followed by the words "without limitation". A party's failure to act with respect to a breach by the other party does not constitute a waiver of the party's right to act with respect to subsequent or similar breaches, any such waiver shall be in writing. This Agreement sets forth the entire understanding and agreement between you and Lyft with respect to the subject matter hereof and supersedes all previous understandings and agreements between the parties, whether oral or written. The place of this Agreement is Toronto, Ontario.

In the event that any portion of this Agreement, including any portion of the Arbitration Agreement, is deemed illegal or unenforceable, such provision shall be severed and the remainder of the Agreement shall be given full force and effect.

37To summarize, Lyft’s Terms of Service contains an Arbitration Agreement. The parties agree to resolve any disputes by arbitration. The Arbitration Agreement prohibits any dispute resolution proceeding on a class, collective or representative basis.

38Significantly, a driver may opt-out of the Arbitration provisions by contacting Lyft’s lawyers in Vancouver within 30 days of executing the agreement. A driver, however, may not opt out of the class action waiver.

39The Arbitration Agreement stipulates that the arbitration is governed by Ontario law and will be procedurally governed by the American Arbitration Association (“AAA”). The AAA is a not-for-profit, private, public service organization that offers dispute resolution services, including arbitration. It is a private sector administrative agency that processes cases from filing to closing, and it provides services such as appointing an arbitrator, scheduling hearings, transmitting documents, and scheduling conference calls.

40The AAA offers rules and procedures for a variety of types of arbitration, and in several different languages. The AAA website provides resources and information related to its rules and procedures. Many of these resources are designed to assist self-represented claimants navigate an arbitration. In addition, the AAA also provides step-by-step guides for individual claimants. The arbitrator has the discretion to select a different set of arbitration rules, but in no event shall the arbitrator consolidate more than one person’s claims, or otherwise preside over any form of class collective or representative proceeding.

41The arbitration takes place in the municipality where the Lyft Driver provides services. Lyft agrees to pay any fees unique to arbitration except for the filing fee. The Driver is required to pay a portion of the filing fee up to the amount that would be required to file an action in the Ontario Superior Court.

42The arbitration provision provides the option for the claim to be heard in writing or on the telephone if the claim is for $10,000 or less.

F. Analysis and Discussion

1. The Class Action Waiver

43Before discussing whether this proposed class action should be stayed and the dispute about the classification and employment entitlements of the Lyft Drivers remitted to an arbitrator, it is necessary to discuss the provision in the Terms of Service that prohibits class, collective, or representative proceedings. The so-called “class action waiver” is an aspect of the Terms of the Service in any event of whether the dispute is resolved by action or by arbitration.

44For present purposes, I need not decide whether the class action waiver is enforceable. If the dispute is remitted to the arbitrator, the validity of the waiver will be a matter for the arbitrator to determine and it will be for him or her to determine whether the arbitrations can proceed collectively or by a representative proceeding. If the action is not stayed, then it will be for another day for the court to determine whether the class action waiver is enforceable.

45For present purposes, the issue to determine is whether to stay a court action of any type and remit the action to an arbitrator.

2. Mr. Wasylyk’s Evidentiary Argument

46Before discussing whether this proposed class action should be stayed and the dispute about the classification and employment entitlements of the Lyft Drivers remitted to an arbitrator, it is necessary to discuss Mr. Wasylyk’s evidentiary argument.

47Mr. Wasylyk advances an argument that Lyft waived any ability to rely on the competence-competence principle when it strategically chose to not cross-examine Mr. Wasylyk and to rely only on evidence from Lyft’s lawyers who claimed privilege about any of the interpretative issues. Lyft itself did not proffer its own direct evidence about the contested issues.

48Mr. Wasylyk submits that the consequences of Lyft’s strategic decision are that: (a) the Court must draw an adverse inference on all factual matters; and (b) Lyft is precluded from relying on the competence-competence principle.

49There is absolutely no merit in this evidentiary argument. While a court may draw an adverse inference because of the absence of a witness, a court is never obliged to draw an adverse inference because of the absence of a witness.¹⁹

50The “adverse inference” principle is rooted in ordinary logic and experience, and an adverse inference can only be drawn from the failure to call a witness if there is no plausible reason for non-attendance because it would be natural for the party to produce the evidence if the facts exposable by the witness had been favourable.²⁰ There are, however, plausible reasons why a party may not call a witness that are unrelated to the truth of the witness’ testimony including redundancy and the superiority or cogency of other evidence on the record, and the relative importance of the issue for which the evidence might have been proffered.

51A court does not make “at large” adverse inferences, as it appears Mr. Wasylyk proposes that the court should make in the immediate case because of the absence of witnesses from Lyft, and evidence instead from a legal assistant and a junior lawyer at Blake Cassels who on the advice of counsel refused to answer questions on the grounds of irrelevance or privilege.

52Mr. Wasylyk did not bring a refusals motion and while I need not decide the point, it appears to me that the refusals were well founded. Mr. Wasylyk’s counsel asked questions about the creation and the interpretation of the arbitration agreement and about the advice received from the lawyers. This line of question ignores the parol evidence rule that makes irrelevant the subjective views of the contracting parties and the interpretation of an agreement is an objective exercise in the factual nexus at the time of contract. Thus, there is considerable traction to the argument that the questions posed were properly refused and do not provide the basis for an adverse inference.

53There was ample evidence of the factual nexus in the immediate case, and what Mr. Cotton thought about what Lyft was thinking about the meaning of the words and what Lyft thought the words meant is irrelevant. In the immediate case, I have all the factual background I need to interpret the Arbitration Agreement and to determine whether the competence-competence principle applies or whether there are reasons for the court to stay Mr. Wasylyk’s action under the Class Proceedings Act, 1992.

54Further, while I would not disparage it as a tactical or strategic maneuver, I agree with Lyft’s submission that it was not necessary for it to call Lyft witnesses. Indeed, it was probably unnecessary to have Mr. Cotton testify at all. His affidavit was filed in reply to fill evidentiary gaps to Mr. Wasylyk’s second affidavit where he proffered evidence about materials from the AAA website. Mr. Cotton’s affidavit attached additional materials from the website and Mr. Cotton contradicts certain statements made by Mr. Wasylyk in his evidence about the AAA and its processes. There is no basis for the court to draw adverse inferences about each side’s hearsay evidence about the AAA’s practices.

55A court may take note that a witness’ evidence has not been challenged by cross-examination or by contradictory evidence, but the court is never obliged to accept a witness’ evidence as true simply because it has not been challenged. It always remains for the court to determine whether the witness’ evidence is material, relevant, credible, reliable, and probative (tending to prove the truth). It is categorically not correct to assert as Mr. Wasylyk does that “Lyft cannot disagree with the Plaintiff’s evidence without putting forward evidence of [its] own.” While Lyft cannot argue a counterfactual without evidence, it certainly can challenge Mr. Wasylyk’s evidence as not believable or not probative of a material fact.

56In short, I shall decide on its merits whether or not the competence-competence principle applies in the immediate case and more importantly, I shall decide whether or not the arbitration agreement in the immediate case is enforceable.

3. The Significance of the Competence-Competence Principle to the Immediate Case

57The fundamental idea of the competence-competence principle is that the arbitrator has the jurisdiction to decide whether as a matter of contract law he can decide the dispute between the parties. In other words, the arbitrator is allowed to decide two things before he can decide the actual dispute between the parties. First, the arbitrator must decide whether there is an arbitration agreement, and second the arbitrator must decide whether the dispute is within the scope of the submission to arbitration.

58In the immediate case, there is no dispute that Mr. Wasylyk’s dispute with Lyft is within the scope of the Arbitration Agreement. The dispute is whether or not that Arbitration Agreement is a valid and enforceable arbitration agreement. Ironically, although the competence-competence principle frames the arguments in the immediate case, in truth and in practical reality, neither party wants the question of the validity and the enforcement of the Arbitration Agreement to be decided by the arbitrator, which is what the application of the competence-competence principle would prescribe.

59Mr. Wasylyk’s argument is that the court should decide that there is no enforceable Arbitration Agreement. Lyft’s argument is that the court should decide that there is nothing wrong with the Arbitration Agreement and then refer the matter to the arbitrator who will not need to apply the competence-competence principle but will get on with deciding Mr. Wasylyk’s dispute with Lyft about his worker status.

60In other words, practically speaking, both parties wished the court to not duck the issues of whether Lyft’s arbitration agreement was accessible, uncertain, unconscionable, contrary to public, or illegal as a contracting out of the statutory enforcement regime provided by the Employment Standards Act, 1992.

4. Are the Arbitration Provisions Accessible?

61As noted above, in Uber Technologies Inc. v. Heller,²¹ the Supreme Court recognized that the competence-competence principle does not apply when resort to arbitration is not viable for one of the contracting parties because arbitration is too costly or is otherwise inaccessible. In the immediate case, Mr. Wasylyk argues that Lyft’s Arbitration Agreement is similarly inaccessible.

62This argument, however, does not withstand analysis. The Supreme Court of Canada found Uber’s arbitration agreement inaccessible because it did not provide a genuinely available route to justice which is to say, that Uber’s process or procedure for arbitration was a pretense to access to justice. The reality was that arbitration was not available to the Uber drivers who could not afford the expenses or bear the inconveniences of an arbitration venue in the Netherlands where foreign law would apply to resolve the dispute.

63In the immediate case, there are no comparable barriers in terms of expense or inconvenience for the Lyft Drivers and Canadian substantive law will apply to resolve the dispute. The Arbitration Agreement is subject to the law of Ontario. The fact that the Arbitration Agreement flexibly utilizes procedural rules from the AAA does not alter the applicability of Ontario law. As noted above, the arbitration takes place in the municipality where the Driver provides services. Lyft agrees to pay any fees unique to arbitration except for the filing fee. The Driver is required to pay a portion of the filing fee up to the amount that would be required to file an action in the Ontario Superior Court. The Arbitration Agreement provides the option for the claim to be heard in writing or on the telephone if the claim is for $10,000 or less. Moreover, as I will discuss further below, Lyft’s Arbitration Agreement is procedurally flexible and can accommodate the principles of proportionality that infuse modern approaches to civil procedure.

64Lyft’s Arbitration Agreement is of comparable accessibility to a class action ending with an individual issues trial. If this proposed class action were to reach the individual issues stage, the court would determine the procedure for the individual issues trials the court pursuant to s. 25 of the Class Proceedings Act, 1992. However, arbitrators under Lyft’s Arbitration Agreement have the flexibility to design the appropriate proportionate procedure for the individual issues arbitration. If this class action were to reach the individual issues stage, the normal costs rules would apply for the individual issues trials and the class member would have to make his or her own arrangements for legal representation, which typically will be Class Counsel but could be another lawyer. The situation is comparable under Lyft’s Arbitration Agreement.

65In the immediate case, the overall point to be make is that to arbitration under Lyft’s Arbitration Agreement is as accessible and indeed is likely more accessible than an individual issues trial in a class proceeding. An individual issues trial must await the outcome of the common issues trial and individual issues trials are unlikely to occur in the Drivers’ hometown but in Toronto where Mr. Wasylyk’s proposed class action is situated.

66In any event, although Mr. Wasylyk prefers a class proceeding, it cannot be said that the alternative of arbitration is inaccessible as was the case in Uber Technologies Inc. v. Heller.

5. Are the Arbitration Provisions Unenforceable because of Contractual Uncertainty?

67Pursuant to s. 7 (2), paragraph 2 of the Arbitration Act, 1991, the court may refuse to stay a proceeding if the arbitration agreement is invalid. In the immediate case, Mr. Wasylyk submits that the Arbitration Provisions in the Terms of Service are invalid because of contractual uncertainty.

68An agreement is unenforceable if essential provisions intended to govern the contractual relationship are uncertain and have not been settled or agreed upon by the parties. This uncertain is sometimes called indefiniteness. If the court is unable to conclude that the parties have reached a consensus ad item, an intention to contract, or if the court is unable to articulate the essential terms of the contract, then there is no agreement to enforce.²² Courts, however, strain to give meaning to the words of the contract and if the essential terms of the contract are complete the failure to agree on minor matters will not invalidate the contract.²³

69Mr. Wasylyk does not argue that there is any uncertainty about the scope of the arbitration agreement, which clearly applies to disputes about whether or not a driver is entitled to the benefits and protections provided by the Employment Standards Act, 2000. His fundamental allegation of uncertainty or indefiniteness is that there is uncertainty about the procedure for the arbitration.

70In the immediate case, however, the manner of arbitration is not an essential term and the flexibility provided by the arbitration agreement can be seen to be an incidental virtue not a vice of the agreement. Modern dispute resolution procedures including the Rules of Civil Procedure promote flexibility and the notion of proportionality. Ironically, were this action to proceed using a class action as the dispute resolution procedure, it would end with the flexibility of s. 25 of the Class Proceedings Act, 1992, where the court is empowered to define the appropriate procedure to resolve the individual claims.

71I, therefore, conclude that the uncertainty argument of Mr. Wasylyk fails.

6. Are the Arbitration Provisions Unenforceable because of Unconscionability?

72Pursuant to s. 7 (2), paragraph 2 of the Arbitration Act, 1991, the court may refuse to stay a proceeding if the arbitration agreement is invalid. In the immediate case, Mr. Wasylyk submits that the Arbitration Agreement in the Terms of Service is invalid because the arbitration provisions are unconscionable. Unconscionability is a doctrine that will vitiate a contract, i.e., make it invalid and unenforceable.

73Before the Supreme Court of Canada recast the law in Uber Technologies Inc. v. Heller,²⁴ the elements of a claim of unconscionability were (1) pronounced inequality of bargaining power; (2) substantially improvident or unfair bargain; and (3) the defendant knowingly taking advantage of the vulnerable plaintiff.²⁵ The Supreme Court has removed the third element and rearticulated the other elements.

74In the immediate, it is arguable that the Arbitration Agreement, which must be analyzed as a discrete contract, independent of the Terms of Service agreement, does not manifest an inequality of bargaining power because as highlighted in capitalized text “YOU [the driver] HAVE AN OPPORTUNITY TO OPT OUT OF ARBITRATION WITH RESPECT TO CERTAIN CLAIMS AS PROVIDED IN SECTION 17.”

75However, in the immediate case, I will assume that there was a pronounced inequality of bargaining power between each and every of the Lyft Drivers notwithstanding that all of them had the right to opt out of the Arbitration Agreement and still use the Lyft software and services.

76Mr. Wasylyk is free to opt-out of arbitration without losing the other benefits he bargained for by agreeing to the Lyft Terms of Service, including the ability to offer services as a Driver. This arbitration agreement is not a “my way or the highway” ultimatum provision.

77Nevertheless, I will assume that each and every Arbitration Agreement was negotiated with a pronounced inequality of bargaining power.

78Even with that assumption, I agree with Lyft’s argument that the other elements of an unconscionable contract are not present in the immediate case. Lyft has drafted an Arbitration Agreement that avoids the pitfalls or sinkholes that vitiated the agreement in Uber Technologies Inc. v. Heller.²⁶ Notwithstanding the pronounced inequality of bargaining power, the Arbitration Agreement in the immediate case is not a substantially improvident or unfair bargain. In the immediate case, arbitration is an accessible, feasible, and a fair dispute resolution system.

79The arbitration provision in the immediate case also did not give rise to an improvident bargain. A bargain is improvident if it unduly advantages the stronger party or disadvantages the more vulnerable.²⁷ Improvidence is assessed contextually and will depend on the facts of the specific case.²⁸

80In Uber Technologies Inc. v. Heller, the Supreme Court of Canada ruled that Uber’s arbitration agreement was improvident because of its mandatory requirements about: (a) the location of the arbitration; (b) the fees associated with the arbitration; (c) unfairness in the rules governing the arbitration; and (d) the application of foreign law. These elements of improvidence are not present in the immediate case.

81The Arbitration Agreement in the immediate case is not exceptional or abnormal and it does not have the features of time, place, cost, procedure, and law that were unacceptable in the Heller v. Uber Technologies Inc. case.

82In particular, there is nothing unconscionable about the mandatory nature of an arbitration provision or that an arbitration provision precludes access to the courts, including access to a class action, which is just a type of court proceeding. These aspects of an arbitration provision are inherent to all agreements to arbitrate. All types of court proceedings are to be stayed for arbitration subject to the exceptions found in the arbitration legislation.

83Evaluating the Arbitration Agreement of the immediate case contextually, it is useful, once again, to compare arbitration to the alternative of a class action. In this regard, it should be appreciated that in the immediate case, both are alternatives to proceeding under the regulatory regime of the Employment Standards Act, 2000.

84More significantly, it should be appreciated that both arbitration and a class proceeding will end with some sort of individual assessment of each Lyft driver’s claims. In this last regard, it should be appreciated that immediate access to arbitration and to an individual assessment of liability and claim for compensation does not depend upon the action being certified and a determination at a common issues trial, and if the class proceeding ends with individual assessments, the class members individually will be exposed to adverse costs consequences and if they have contingent fee arrangements for their own legal fees, they will have to share their compensation with their lawyers. In other words, arbitration provides a much quicker access to justice and is not more expensive on an individual basis than a class action that ends with individual assessments.

85This analysis is, of course, not to say that a class proceeding ending with an individual issues trial is an improvident transaction, rather it is to say that financially speaking, individual arbitrations are at least as provident and may be more provident than individual issues trials following a common issues trial.

86It also should be appreciated that if the action is certified, a possible outcome is that there may be no common answer to whether or not all of the Lyft drivers are employees. A possible outcome in the immediate case, is that some of the Lyft drivers are employees and some are independent contractors and some are dependent contractors. If that is the outcome, then with hindsight the Lyft drivers would have been better off proceeding immediately to arbitration rather than the long wait for certification and a common issues trial that will not be dispositive of the liability issues. The point to be made here is, once again, that it does not appear that submission to arbitration is an improvident bargain.

87I, therefore, conclude that Mr. Wasylyk’s argument about unconscionability fails.

7. Are the Arbitration Provisions Unenforceable on Grounds of Public Policy?

88Pursuant to s. 7 (2), paragraph 2 of the Arbitration Act, 1991, the court may refuse to stay a proceeding if the arbitration agreement is invalid. In the immediate case, Mr. Wasylyk submits that the Arbitration Agreement in the Terms of Service is invalid on grounds of public policy. This argument also fails.

89In TELUS Communications Inc. v. Wellman,²⁹ and Seidel v. TELUS Communications Inc.,³⁰ the Supreme Court of Canada held that absent legislative language to the contrary, courts must enforce arbitration agreements.³¹ In other words, the public policy actually favours arbitration agreements as an acceptable, preferable, and generally available alternative to court actions.

90The legislature could, if it was so minded, legislate and prohibit arbitration agreements in disputes about the enforcement of the Employment Standards Act, 2000, but that is not the current state of the law in Ontario.

91It is not against public policy to preclude access to class actions when arbitration is provided as an alternative dispute resolution mechanism. The rule of law is that absent legislative language to the contrary, courts must enforce arbitration agreements. Unlike the situation for consumers advancing consumer protection claims, there is no legislative bar to arbitration in employment law cases.

92Thus, Lyft’s Arbitration Agreement is not invalid as a matter of public policy.³²

8. Are the Arbitration Provisions Unenforceable and Unlawful Contracting out of the Employment Standards Act, 2000

93Pursuant to s. 7 (2), paragraph 2 of the Arbitration Act, 1991, the court may refuse to stay a proceeding if the arbitration agreement is invalid. In the immediate case, Mr. Wasylyk submits that the Arbitration Agreement in the Terms of Service are invalid because it is an unlawful contracting out of the Employment Standards Act, 2000. The alleged contracting out would make the arbitration agreement an illegal contract.

94Although the Supreme Court did not opine or rely on this argument in its decision, in Uber Technologies Inc. v. Heller,³³ this invalidity argument was successful for Mr. Heller in the Court of Appeal’s decision in Heller v. Uber Technologies Inc.,³⁴ which is binding on this court.

95The question then is whether the Arbitration Agreement in the immediate case contracts out of the Employment Standards Act, 2000. That issue is entirely a matter of interpretation of the particular arbitration agreement. In Heller v. Uber Technologies Inc., the Court of Appeal did not categorially decide that in the employment sector all referrals to arbitration are a contracting out of the Employment Standards Act, 2000.

96In Davis v. Amazon Canada Fulfillment Services ULC,³⁵as a matter of contractual interpretation, I concluded that there was no contracting out in that case. In that case, the interpretation of the arbitration agreement was straightforward because the agreement stated that the Amazon delivery drivers were expressly not precluded from pursuing remedies prescribed by statute in a forum prescribed by statute.

97In the immediate case, the interpretation of the Arbitration Agreement is more complicated and not as straightforward as in Davis v. Amazon Canada Fulfillment Services ULC, but as a matter of contractual interpretation, I conclude that Lyft’s Arbitration Agreement does not contract out of the Employment Standards Act, 2000.

98The interpretation of the Arbitration Agreement in the immediate case may begin by collecting the relevant provisions from the Lyft Terms of Service including the arbitration provisions in section 17 of the agreement. With my emphasis added to the particularly pertinent contractual language, the relevant provisions are set out below:

Lyft Terms of Service

PLEASE BE ADVISED: THIS AGREEMENT CONTAINS PROVISIONS THAT GOVERN HOW CLAIMS BETWEEN YOU AND LYFT CAN BE BROUGHT (SECTION 17 BELOW). THESE PROVISIONS MAY REQUIRE YOU TO SUBMIT CLAIMS YOU HAVE AGAINST LYFT TO BINDING AND FINAL ARBITRATION ON AN INDIVIDUAL BASIS, NOT AS A PLAINTIFF OR CLASS MEMBER IN ANY CLASS, GROUP OR REPRESENTATIVE ACTION OR PROCEEDING. AS A DRIVER OR DRIVER APPLICANT, YOU HAVE AN OPPORTUNITY TO OPT OUT OF ARBITRATION WITH RESPECT TO CERTAIN CLAIMS AS PROVIDED IN SECTION 17.

17. DISPUTE RESOLUTION AND ARBITRATION AGREEMENT

(a) Agreement to Binding Arbitration Between You and Lyft.

YOU AND LYFT MUTUALLY AGREE TO WAIVE, TO THE FULLEST EXTENT PERMITTED UNDER APPLICABLE LAW, OUR RESPECTIVE RIGHTS TO RESOLUTION OF DISPUTES IN A COURT OF LAW BY A JUDGE OR JURY AND AGREE TO RESOLVE ANY DISPUTE BY ARBITRATION AS SET FORTH BELOW. […]

Except as expressly provided below and above, this Arbitration Agreement applies to all disputes between you and Lyft, […]. These Claims include, to the fullest extent permitted under applicable law, but are not limited to, any dispute, claim or controversy, whether based on past, present, or future events, arising out of or relating to: […] your relationship with Lyft, the threatened or actual suspension, deactivation or termination of your User Account or this Agreement, payments made by you or any payments made or allegedly owed to you, any promotions or offers made by Lyft, and all other common law and statutory claims between you and Lyft or its affiliates and their respective employees, officers, directors and shareholders. To the fullest extent permissible under applicable law, disputes concerning the arbitrability of a Claim (including disputes about the scope, applicability, enforceability, revocability or validity of the Arbitration Agreement) shall be decided by the arbitrator.

BY AGREEING TO ARBITRATION, YOU UNDERSTAND THAT YOU AND LYFT ARE WAIVING THE RIGHT TO SUE IN COURT OR HAVE A JURY TRIAL FOR ALL CLAIMS, EXCEPT AS EXPRESSLY OTHERWISE PROVIDED IN THIS AGREEMENT OR REQUIRED BY APPLICABLE LAW. THIS ARBITRATION AGREEMENT IS INTENDED TO REQUIRE ARBITRATION OF EVERY CLAIM OR DISPUTE THAT CAN LAWFULLY BE ARBITRATED.

99As a matter of contractual interpretation, there is nothing in Lyft’s Terms of Service that expressly excludes resort to the statutory procedures and remedies available under the Employment Standards Act, 2000. The Arbitration Agreement expressly excludes resort to court proceedings but does not expressly exclude resort to statutory proceedings before an administrative or regulatory agency. It remains a matter of contractual interpretation whether resort to the Employment Standards Act, 2000 procedures is precluded.

100While it is not expressed in the straightforward manner as was the case in Davis v. Amazon Canada Fulfillment Services ULC, Lyft’s Terms of Service do not preclude and rather allow resort to the provisions of the Employment Standards Act, 2000.

101Although the Terms of Service repeatedly indicate that all disputes are to be arbitrated, in each instance, there is the qualification that the inclusion of every claim or dispute is only to the extent permitted by law. The qualification “of the extent permitted by law” means that resort to the enforcement provisions of the Employment Standards Act, 2000 is permitted because the Employment Standards Act, 2000 is a law permitting employees access to the services of an administrative agency to decide disputes.

102In other words, the Arbitration Agreement means “EXCEPT AS […] REQUIRED BY [THE EMPLOYMENT STANDARDS ACT, 2000] (i.e., the “APPLICABLE LAW”) THIS ARBITRATION AGREEMENT IS INTENDED TO REQUIRE ARBITRATION OF EVERY CLAIM OR DISPUTE THAT CAN LAWFULLY BE ARBITRATED.

103There is another explanation why as a matter of contract interpretation, the above provisions do not contract out of the Employment Standards Act, 2000. It is a canon of contract interpretation that where an agreement admits of two possible constructions, one of which makes the contract illegal and the other legal, the courts will give preference to the lawful interpretation.³⁶

104In the immediate case, although I do not find an ambiguity, if there was any ambiguity, then the Arbitration Agreement should be interpreted in the same way as the agreement was interpreted in Davis v. Amazon Canada Fulfillment Services ULC.

105Given that for the reasons expressed above, there is no illegality per se in referring disputes to arbitration in the employment context and given that for the reasons expressed above the Terms of Service in the immediate case can be interpreted lawfully to permit access to the statutory remedies, as was the situation in Davis v. Amazon Canada Fulfillment Services ULC, I conclude that there has been no unlawful contracting out in the immediate case.

106Finally, on the matter of the interpretation of Lyft’s Terms of Service, I note that in coming to my interpretation of the Arbitration Agreement in the Terms of Service, I have not relied on the decisions of other tribunals that have already decided that Lyft’s Terms of Service do not preclude claims and disputes being resolved by statutory regulators.³⁷

9. Is the Mr. Wasylyk’s Action Appropriate for a Summary Judgment?

107Pursuant to s. 7 (2) paragraph 5 of the Arbitration Act, 1991, the court may refuse to a stay a proceeding and not defer to the arbitration if the matter is a proper one for a summary judgment. Relying on this exception, Mr. Wasylyk submits that his case is an appropriate one for a summary judgment.

108The statutory exception under s. 7(2)(5) of the Act has been applied sparingly, and the exception should only be exercised in the simplest and clearest of cases where a summary judgment would demonstrably be the most just and expeditious way to resolve the dispute.³⁸ In 407 ETR Concession Co. v. Ontario (Minister of Transportation),³⁹ Justice Nordheimer stated: “The discretionary jurisdiction of the court to decide an issue that the parties have agreed to submit to arbitration is […] likely to be sparingly exercised and that conferred by section 7 (2) 5 may be most useful when the decision will finally resolve the dispute between the parties.” That said, employment law disputes, particularly wrongful dismissal cases, have frequently been resolved by summary judgment motions, and thus at first blush Mr. Wasylyk’s argument has some traction.

109The problem for Mr. Wasylyk, however, is that in the context of an employment law class action, there is no dispositive summary judgment. A summary judgment at the common issues trial would not be efficacious or just to the defendant or the class members who would still have to prove their individual claims.

110Assuming that Mr. Wasylyk’s case were to satisfy all of the other certification criteria, there could possibly be a summary judgment of the common issues, but then assuming that the common issues were decided favourably for the class members, then each and every one of them would have to proceed to an individual issues determination, some of which individual determinations might be amenable to summary judgment or simplified procedures.

111In Omarali v. Just Energy,⁴⁰ Justice Belobaba rejected a motion for summary judgment in a class proceeding on the issue of employment mischaracterization and concluded that mini-trials were required. Mr. Wasylyk submits, however, that Omarali is distinguishable because there was conflicting evidence on the specifics and level of control the company had over the drivers. I disagree; an employment relationship involves more than the words on a contract and the description of the organizational structure of the defendant. In the immediate case there will be conflicting evidence on the level of control over the Lyft Drivers all of whom have individual stories to tell. This is not to pre-judge the commonality of any common issues, it is rather to note that in the immediate case, Lyft’s liability cannot be determined on a class wide basis by a summary judgment motion. And it is noted that the procedure proposed by Mr. Wasylyk is neither efficacious nor fair.

112I, therefore, disagree with Mr. Wasylyk’s argument that there should be no deferral to arbitration because his proposed class action is appropriate for summary judgment.

113I would not apply this exception found in s. 7 (2) of the Arbitration Act, 1991 in the immediate case.

G. Conclusion

114For the above reasons, Lyft’s motion for a stay is granted with costs as agreed.

Perell, J.

Footnotes

1. 1S.O. 1992, c.6.
2. 2S.O. 2000, c. 41.
3. 3S.O. 1991, c. 17.
4. 4TELUS Communications Inc. v. Wellman, 2019 SCC 19.
5. 5Seidel v. TELUS Communications Inc., 2011 SCC 15.
6. 6Peace River Hydro Partners v. Petrowest Corp., 2022 SCC 41; Trade Finance Solutions Inc. v. Equinox Global Ltd., 2018 ONCA 12; Haas v. Gunasekaram, 2016 ONCA 744; Rogers Wireless Inc. v. Muroff, 2007 SCC 35; Dell Computer Corp. v. Union des consommateurs, 2007 SCC 34; Éditions Chouette (1987) inc. v. Desputeaux, 2003 SCC 17.
7. 7Patel v. Kanbay International Inc., 2008 ONCA 867; Dalimpex Ltd. v. Janicki (2003), 2003 CanLII 34234 (ON CA), 64 O.R. (3d) 737 (C.A.).
8. 8TELUS Communications Inc. v. Wellman, 2019 SCC 19.
9. 92022 SCC 41.
10. 10See also: Haas v. Gunasekaram, 2016 ONCA 744; Dancap Productions Inc. v. Key Brand Entertainment Inc., 2009 ONCA 135.
11. 11Goberdhan v. Knights of Columbus, 2023 ONCA 327; Peace River Hydro Partners v. Petrowest Corp., 2022 SCC 41.
12. 12Peace River Hydro Partners v. Petrowest Corp., 2022 SCC 41; Kore Meals LLC v. Freshii Development LLC, 2021 ONSC 2896; Uber Technologies Inc. v. Heller, 2020 SCC 16; Trade Finance Solutions Inc. v. Equinox Global Ltd., 2018 ONCA 12; Haas v. Gunasekaram, 2016 ONCA 744, rev’g 2015 ONSC 5083; Ontario Medical Assn. v. Willis Canada Inc., 2013 ONCA 745; Seidel v. TELUS Communications Inc., 2011 SCC 15; Ontario v. Imperial Tobacco Canada Ltd., 2011 ONCA 525; Dalimpex Ltd. v. Janicki (2003), 2003 CanLII 34234 (ON CA), 64 O.R. (3d) 737 (C.A.).
13. 13Peace River Hydro Partners v. Petrowest Corp., 2022 SCC 41; Kore Meals LLC v. Freshii Development LLC, 2021 ONSC 2896; Uber Technologies Inc. v. Heller, 2020 SCC 16; Haas v. Gunasekaram, 2016 ONCA 744; Ontario Medical Assn. v. Willis Canada Inc., 2013 ONCA 745; Dell Computer Corp. v. Union des consommateurs, 2007 SCC 34.
14. 14TELUS Communications Inc. v. Wellman, 2019 SCC 19 at para. 65; MDG Kingston Inc. v. MDG Computers Canada Inc., 2008 ONCA 656 at para. 36, leave to appeal refused, [2010] S.C.C.A. No. 94.
15. 15Paulpillai Estate v. Yusuf, 2020 ONSC 851; Lansens v. Onbelay Automotive Coatings Corp., 2006 CanLII 51177 (ON SC), [2006] O.J. No. 5470 (S.C.J.).
16. 162020 SCC 16.
17. 172016 ONCA 744 at para. 17.
18. 18Peace River Hydro Partners v. Petrowest Corp., 2022 SCC 41.
19. 19Parris v Laidley, 2012 ONCA 755.
20. 20R. v. Ellis, 2013 ONCA 9; R. v. Lapensee, 2009 ONCA 646; R. v. Jolivet, 2000 SCC 29, [2000] 1 S.C.R. 751; Blatch v. Archer (1774), 1 Cowp. 63 (K.B.), at p. 65: “It is certainly a maxim that all evidence is to be weighed according to the proof which it was in the power of one side to have produced, and in the power of the other to have contradicted.”
21. 212020 SCC 16.
22. 22UBS Securities Canada Inc v Sands Brothers Canada Ltd, 2009 ONCA 328; Bawitko Investments Ltd. v. Kernels Popcorn Ltd., 1991 CanLII 2734 (ON CA), [1991] O.J. No. 495 (C.A.); Marquest Industries Ltd. v. Willows Poultry Farms Ltd. (1968), 1968 CanLII 581 (BC CA), 1 D.L.R. (3d) 513 (B.C.C.A.); G. Scammell & Nephew Ltd. v. Ouston, [1941] A.C. 251 (H.L.); Hillas & Co. v. Arcos Ltd. (1932), 147 L.T. 503 (H.L.); R.A. Samek, “The Requirements of Certainty of Terms in the Formation of Contract” (1970), 48 Can. Bar. Rev. 203.
23. 23Canada Square Corp. v. Versafood Services Ltd. (1981), 1981 CanLII 1893 (ON CA), 34 O.R. (2d) 250 (C.A.); Hillas & Co. v. Arcos Ltd. (1932), 147 L.T. 503 (H.L.).
24. 242020 SCC 16.
25. 25Birch v. Union of Taxation Employees, Local 70030 (2008), 2008 ONCA 809, 93 O.R. (3d) 1 (C.A.); Titus v. William F. Cooke Enterprises Ltd. (2007), 2007 ONCA 573, 284 D.L.R. (4th) 734 (Ont. C.A.); Black v. Wilcox (1976), 1976 CanLII 555 (ON CA), 12 O.R. (2d) 759 (C.A.); Mundinger v. Mundinger, 1968 CanLII 250 (ON CA), [1969] 1 O.R. 606 (C.A.), affd. [1970] S.C.R. vi; Vanzant v. Coates (1917), 1917 CanLII 573 (ON CA), 40 O.L.R. 556 (C.A.); Waters v. Donnelly (1884), 9 O.R. 391 (Ch. Div.).
26. 262020 SCC 16.
27. 27Uber Technologies Inc. v. Heller, 2020 SCC 16 at para. 74.
28. 28Uber Technologies Inc. v. Heller, 2020 SCC 16 at para. 75.
29. 29TELUS Communications Inc. v. Wellman, 2019 SCC 19.
30. 30Seidel v. TELUS Communications Inc., 2011 SCC 15.
31. 31Peace River Hydro Partners v. Petrowest Corp., 2022 SCC 41; Trade Finance Solutions Inc. v. Equinox Global Ltd., 2018 ONCA 12; Haas v. Gunasekaram, 2016 ONCA 744; Rogers Wireless Inc. v. Muroff, 2007 SCC 35; Dell Computer Corp. v. Union des consommateurs, 2007 SCC 34; Éditions Chouette (1987) inc. v. Desputeaux, 2003 SCC 17.
32. 32See Davis v. Amazon Canada Fulfillment Services ULC, 2023 ONSC 3665.
33. 332020 SCC 16.
34. 342019 ONCA 1
35. 352023 ONSC 3665.
36. 36Unique Broadband Systems Inc. (Re), 2014 ONCA 538 at para. 87; Ventas, Inc. v. Sunrise Senior Living Real Estate Investment Trust (2007), 2007 ONCA 205, 85 O.R. (3d) 254 at para. 57 (C.A.).
37. 37Lyft Canada Inc and Uber Canada Inc. v United Food and Commercial Workers International Union, Local 1518, 2020 BCLRB 35 (B.C. Lab. Rel. Bd.).
38. 38Alpina Holdings Inc. v. Data & Audio-Visual Enterprises Wireless Inc, 2013 ONSC 3087; Apotex Inc. v. Virco Pharmaceuticals (Canada) Co., [2007] O.J. No. 4817(S.C.J.); Dewshaf Investments Inc. v. Buckingham Hospitality, [2005] O.J. No. 6190 (S.C.J.); 407 ETR Concession Co. v. Ontario (Minister of Transportation), [2005] O.J. No. 4516 (S.C.J.).
39. 39407 ETR Concession Co. v. Ontario (Minister of Transportation), [2005] O.J. No. 4516 (S.C.J.).
40. 402019 ONSC 3734.