A trial opens on April 2 in a class-action lawsuit accusing the Quebec government of wiping out hundreds of millions of dollars in the value of taxi permits by allowing ride-hailing company Uber to operate, and then by abolishing the permit system.
The government’s negligence led to the disguised expropriation of taxi licences—without proper compensation—in areas where Uber was offering its services, says the lawsuit by former permit holders.
Quebec allowed Uber to violate the laws and regulations governing the taxi industry when the company started operating in the province in 2013, “which led to a drop in demand for taxi owners’ permits and an inevitable decline in their value,” according to the statement of claim.
The lawsuit also alleges that the province’s actions—including the creation of a pilot project in 2016 that legalized Uber’s operations in Quebec—contributed to the further decline in the value of taxi owners’ permits before they were eliminated as part of a 2019 taxi industry reform.
“By permitting the massive entry of Uber vehicles under the cover of a pilot project, the government was negligent, acted in bad faith and deliberately caused the group members’ permits to lose value,” says the statement of claim.
The Quebec government used to strictly regulate the number of taxi permits in each city in the province; for instance, in 2015 Montreal was allowed to have 4,522. As a result the price of permits soared, reaching roughly $200,000 in Montreal in 2015, making the city’s market worth roughly $900 million. Permits used to be bought and sold, and many new taxi drivers took out loans to purchase their right to own a taxi in the city.
But when Uber entered the market, the value of those permits began to drop, as new entrants didn’t want to pay the high prices in an industry that was being disrupted.
Then in 2019, years after Uber started operating in Quebec, the government adopted a law abolishing the permit system and loosened other regulations. And while the government compensated permit holders, their lawyers allege many of them received around $150,000 less than the market value of the permits before Uber’s arrival in the province.
“In many cases, these permits represented the owners’ most important financial asset, in addition to being their retirement plan and the legacy they had planned to leave to their children,” law firm Trudel Johnston & Lespérance, which represents the former permit holders, said in a news release.
The class action, which was authorized in 2018, seeks compensation equivalent to the market value of a taxi owner’s permit before Uber’s 2013 arrival in Quebec and $1,000 in punitive damages for each member of the group.
The Quebec government had argued that it could not be sued for its political decisions, and claimed that the allegations in the lawsuit were not precise.
The office of Justice Minister Simon Jolin-Barrette declined to comment on April 1 because the case is before the courts.
