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Uber Continues to Have a Real Bad Time In Canada

Canada's largest city has taken Uber to court.

by Kaleigh Rogers
Jun 1 2015, 10:25pm

Image: Brian Carson/Flickr

Uber rarely sets up shop in a new city without drawing questions, concerns, and occasionally ire from local government, but Canada's largest city has taken it to another level.

In Toronto, a court hearing began Monday over an injunction sought by the city that would declare Uber's operations illegal. The city's lawyers are arguing that the rideshare company has been running outside of the city's laws for years, including operating without a taxi brokerage license. The company finally caved and applied for a license last month after years of insisting it didn't need one because it was a tech company, not a brokerage. Still, the city wants the court to declare that Uber is subject to regulations.

"What's at stake here is a decision on the part of the judge as to whether Uber should be regulated," Toronto Mayor John Tory told me over the phone. "The bottom line is I don't think you're going to see the status quo prevail in any event, regardless of the court case. Things have changed too much."

Uber's lawyers are arguing that the company merely connects riders with drivers (unlike a taxi company, which actually employs the drivers) and that the local laws were never designed with our modern day app-centric world in mind. The judge hearing the case, Justice Sean Dunphy, sounds a bit puzzled as to why the case was brought before him at all, instead of hammered out in council chambers, according to reporters in the courtroom:

Out on the streets, taxi drivers and Uber drivers held two separate protests in an attempt to rally support for their respective sides, but mostly just succeeded in clogging up traffic.

Tory said he wants to see Uber regulated but in a way that makes sense for the new technology, which would mean crafting new legislation that address the unique place in the market that Uber has carved out.

It's true that Uber doesn't operate like a traditional cab company, but it's also more than just an app. In Toronto, there are concerns about whether or not Uber has proper insurance, and whether it has an unfair advantage over other transportation businesses in the city. And like everywhere else in the world, safety is a major concern as well. Just two weeks ago, an Uber driver in Toronto was charged with sexual assault after allegedly attacking a female passenger.

"Uber can't operate like we're in the wild west here where they just show up and run a paid transportation business without facing a regulatory regime that at least is fair relative to what is faced by the cab industry," Tory said.

But Uber says it wants to work with the city to develop regulations and doesn't see how getting a court injunction that would effectively (if temporarily) shut down its operations is helpful.

"We remain fully committed to working on a regulatory framework for ridesharing," Susie Heath, a spokesperson for Uber Toronto, said in a press statement sent out Monday. "Stopping Uber's operations in the city will not promote public safety or improve urban mobility for Torontonians."

Of course, Toronto is not the only city to keep the Silicon Valley-based Uber on its toes. In New Delhi, the service was banned by the local government and city councils from New York to Paris have grappled with how to manage the company, which tends to set up shop and ask permission later.

And Canada in particular has caused endless headaches for Uber since the app officially launched in the Great White North. Edmonton took the company to court in a similar move to Toronto (the judge denied the city's bid for an injunction). Ottawa has been fining Uber drivers for operating without a taxi license. The service was declared illegal in Quebec, and the province's revenue agency even raided Uber's Montreal offices under suspicion of violating tax laws.

But Toronto also has a bit of a history with red tape and bureaucracy in general. Until last month, heavy restrictions throttled the city's burgeoning food truck scene, and the new regulations are only a modest improvement. In the past, the city has created legal gridlocks to prevent new restaurants from obtaining liquor licenses and imposed heavy fees on free, acoustic music festivals in the parks.

"It's because we're quite timid by nature. I think a lot of our existing industries are afraid of change, and that's not limited to Toronto," Tory said. "The natural reaction of businesses when faced with a disruptive technology like Uber is to become defensive, because you're not ready for it. My argument has always been: let's get real. This technology, this kind of change, is here to stay, whether it's called Uber or something else."

The court case resumes Tuesday and is expected to take another day or so to shake out. Whether the judge provides the injunction or not, Uber doesn't have any plans to pack up its bags in Canada's largest city. But taking the whole thing to court may just make it a little more eager to find a resolution with the local government.