Uber legacy: Class-action lawsuit by taxi drivers against Quebec begins

A trial commences Tuesday, marking the inception of a class-action lawsuit against the Quebec government. This legal battle accuses the government of causing significant financial harm to taxi permit holders by permitting ride-hailing giant Uber to operate and subsequently dismantling the permit system.

Former permit holders allege that the government's actions led to a de facto confiscation of taxi licenses without fair compensation, particularly in regions where Uber established its presence. The lawsuit contends that Quebec's decision to allow Uber to flout existing taxi industry regulations resulted in a substantial decrease in demand for taxi permits and a consequent depreciation in their value.

Furthermore, the lawsuit asserts that the government's implementation of a pilot project in 2016, which effectively legalized Uber's operations in Quebec, exacerbated the decline in permit values before ultimately scrapping the permit system altogether as part of a 2019 taxi industry reform.

Traditionally, Quebec strictly controlled the number of taxi permits in each city, leading to inflated permit prices. For instance, in 2015, Montreal's permit quota was capped at 4,522, driving permit prices to approximately $200,000 and valuing the city's market at nearly $900 million. Many aspiring taxi drivers took out loans to afford these permits, considering them a valuable investment.

However, with Uber's entry into the market, permit values began to plummet as the disruptive newcomer attracted drivers unwilling to pay exorbitant prices for permits. Subsequently, in 2019, the government abolished the permit system and relaxed industry regulations. Although the government provided compensation to permit holders, the lawsuit alleges that many received significantly less than the permits' market value before Uber's arrival.

The law firm representing former permit holders, Trudel Johnston & Lespérance, emphasized the importance of these permits as a crucial financial asset, retirement plan, and intended legacy for many owners and their families.

The class-action lawsuit, authorized in 2018, seeks compensation equivalent to the pre-Uber market value of taxi permits in Quebec, along with punitive damages of $1,000 for each affected member.

In response to the lawsuit, the Quebec government argued that it should not be held liable for political decisions and contested the specificity of the allegations. Justice Minister Simon Jolin-Barrette's office refrained from commenting on the case due to its ongoing judicial proceedings.

As the trial unfolds, it brings to light the complex interplay between technological disruption, government regulation, and the financial livelihoods of industry stakeholders. The outcome of this legal confrontation will likely have far-reaching implications for the future of Quebec's taxi industry and the relationship between traditional taxi services and emerging ride-hailing platforms.