The taxi industry has filed an uncertified class-action lawsuit for $215 million against the City of Ottawa over the new rules that will allow ride-hailing companies like Uber to operate next month.

The largest lawsuit ever filed against the city, the statement of claim alleges that the city did not take “reasonable steps to maintain the integrity” of the taxi regulations in a way that would not financially harm taxi-plate owners. The city ignored the market value of taxi plates, causing financial losses to plate owners, the statement alleges.

The suit also alleges that the city did not enforce the existing rules when Uber illegally began operating in the Ottawa market in the fall of 2014, stating that the city took “vastly inadequate steps to enforce the regulatory scheme against Uber drivers.”

Plate owners added that the city did not provide a long enough transition period between the previous, more onerous regulatory regime, and the looser rules under which Uber will be able to operate. Council approved the regulatory changes in April, which will come into effect on Sept. 30.

The suit was filed by the parent company of Capital Taxi and Marc Andre Way, whose family owns the largest number of taxi plates in the city. If the suit is successfully certified as a class action, it could cover about 1,000 individuals who were plate owners or taxi brokers on or after Sept. 1, 2014.

City doesn’t think it’s responsible for financial loss

The city says it will vigorously defend the claim.

In a memo to councillors on Friday afternoon, city solicitor Rick O’Connor wrote that the city “contemplated” a lawsuit like the one filed Friday when council was deliberating changes to the taxi rules earlier this year.

“Legal services remains confident in both the validity of the new taxi regulatory scheme, as well as in its position that the city was not, and is not, under a legal obligation to provide financial compensation for any loss in the notional or street value of a taxi licence as a result of the changes in the taxi regulatory scheme,” O’Connor wrote.

Taxi owners charge that other cities handled issue better

Plate holders have complained that taxis will have to operate under more restrictions than companies like Uber. For example, a taxi must be equipped with a camera; an Uber car does not. Taxis will also be subject to more stringent vehicle-inspection standards.

“Obviously, they would have preferred to have had the city listen more carefully to their concerns and to have addressed their concerns,” said Tom Conway, one of the lawyers representing Capital Taxi and Way.

At a meeting in April, taxi driver Tony Hajjar called Uber a “criminal organization” as Ottawa City Council voted to legalize the app-based ride-hailing service. (CBC)

“The vast majority of the class members are small business people who’ve worked very hard in this community. They contribute to their community. They pay their taxes. They obey the law, they obey the bylaws. In my view, they haven’t been treated in the manner the city should’ve treated a thousand small business people in Ottawa.”

Conway said before launching the lawsuit he looked at what other jurisdictions have done.

“Our clients have concluded that other jurisdictions have managed this issue much more effectively and much more fairly than the City of Ottawa has,” he said.

City solicitor O’Connor wrote in his email that neither he, nor anyone from the city, will be commenting on this case while it before the courts.

City and taxi industry in ‘relationship of proximity’

Ottawa began regulating the taxi industry in the 1960s, requiring a licence plate to operate a taxi, and a licence to dispatch taxis (known as a taxicab broker). Because the city allows a limited number of taxis on the streets, in part to guarantee that taxi drivers and owners can make a decent living, new taxi plates are hardly ever issued. For decades, the only way to enter into the city’s taxi business was to buy a plate from a current holder, a practice of which the city was aware and did nothing to stop.

Before Uber came along, these plates were worth $200,000 or even $300,000. Because there is no limit to the number of Uber drivers that will be allowed into the market, the taxi industry claims those plates are virtually worthless now. It’s these financial losses that are the bulk of the claim against the city.

“The city and the class members were in a relationship of proximity in which the City’s failure to take reasonable care would foreseeably cause loss or harm to Class members,” the suit alleges.