In Davis v. Amazon Canada Fulfillment Services, 2025 ONCA 421, the Court of Appeal for Ontario ("ONCA") upheld a motion judge's decision to stay and dismiss a proposed class proceeding against Amazon Canada Fulfillment Services, ULC, Amazon.com, Inc., and Amazon.com.ca ("Amazon").
The claimants sought to bring the class proceeding on behalf of approximately 73,000 individuals who deliver goods for Amazon, alleging that Amazon was liable for breach of employment contracts, which included breach of the Employment Standards Act, 2000, breach of duties of good faith, unjust enrichment, and negligence. They sought $200 million in general damages; $50 million in aggravated, exemplary and punitive damages; and a declaration that any agreement excluding the putative class members from employment law statutes is void and unenforceable.1
The ONCA's decision provides helpful guidance to employers on both the enforceability of arbitration clauses and the common employer doctrine.
Background
The plaintiff class encompassed two groups of individuals who deliver goods for Amazon. The first group, delivery partners ("DPs"), are directly employed by Amazon. The second group, driver associates ("DAs"), are employed by third-party delivery-service partner companies ("DSPs") that have delivery contracts with Amazon.2
DPs are recruited through the Amazon Flex Program, which contains an arbitration agreement in its terms of service.3 Many DAs are also subject to mutual arbitration agreements in their contracts.4 Accordingly, the motion judge stayed the proceeding for DPs and DAs who were subject to an arbitration agreement, pursuant to section 7(1) of the Arbitration Act, which states that:
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.5
In staying the claims of those plaintiffs subject to arbitration agreements, the motion judge considered the precedent of Uber v Heller, 2020 SCC 16 ("Uber"). He distinguished this dispute from Uber, holding that Amazon's arbitration agreements "do not have the features of time, place, cost and procedure that were unacceptable in the [Uber] case."6 In doing so, he reaffirmed the principle in TELUS Communications Inc. v. Wellman, 2019 SCC 19, and Seidel v. TELUS Communications Inc., 2011 SCC 15, that courts must enforce arbitration agreements absent unconscionability or legislation to the contrary.7
The motion judge then conducted a certification analysis as if he had not stayed the proceeding and held that he would have conditionally certified a class action on behalf of the DPs, if an appropriate representative plaintiff was appointed and the class definition was amended. However, he would not have certified a class action on behalf of the DAs.8
The Court of Appeal's Decision
1. The Arbitration Agreement
On appeal, the claimants argued that the arbitration agreements signed by DPs and some DAs were unconscionable because they precluded collective action.9 The ONCA relied on section 7(6) of the Arbitration Act, which provides that "[t]here is no appeal from the court's decision."10 Therefore, the trial judge's decision had the effect of permanently staying most claims.
However, the ONCA held that s. 7(6) of the Arbitration Act did not apply to any DAs who had not signed an arbitration agreement.11 Moreover, certain DAs had signed arbitration agreements with a section 7(6) waiver.12 Claims for these two categories of DAs could thus proceed to a certification analysis.13
2. The Common Employer Issue
The ONCA upheld the motion judge's common employer analysis, which was central to his conclusion that a certification motion for DAs could not proceed. The motion judge applied the test from O'Reilly v. ClearMRI Solutions Ltd., 2021 ONCA 345, which requires that there be a significant degree of interrelationship and/or common control between the alleged common employers, and that the employee held a reasonable expectation that each of the alleged common employers were parties to their employment arrangement at the relevant times.14
The DAs are employed by 126 distinct DSPs.15 All DAs are required to use the Amazon Flex App, but beyond this requirement Amazon's involvement in the DSPs' operations was otherwise limited, particularly with respect to the DSPs relationship with the DAs.16 Indeed, the DSPs and Amazon were not an integrated group of companies.17 Moreover, the employment contracts between the DAs and DSPs expressly excluded Amazon as the employer.18 Based on these facts, the motion judge held that Amazon did not meet the threshold of a common employer, and that the claim was not properly constituted because the claimant did not name the DSPs as defendants.19
Takeaways for Employers
The Court's decision in this case is favourable to employers. By not challenging the motion judge's approach to Uber, as well as the applicability of section 7(6) of the Arbitration Act, this decision strengthens the position of employers who wish to utilize arbitration agreements in their employment agreements.
Employers may recall that Uber cast serious doubt on the ability of employers to use arbitration agreements in their employment contracts. The Supreme Court of Canada in Uber set out a two-part test to determine unconscionability: (i) whether there is an inequality of bargaining power between the parties and, (ii), whether that inequality led to the weaker party accepting an "improvident bargain". As employers are almost always found to hold the balance of bargaining power, the first part of the test was easy to pass. Uber encouraged courts to look at the terms of the arbitration agreement and come to its own opinion about the "improvident bargain". In Uber, the Court found that plaintiffs would incur $14,500 just to initiate a claim and would be required to use arbitration seated overseas, making it an improvident bargain for individuals subject to the agreement.
In addition, the court's approach to the common employer standard in the Amazon decision reduces the risk of expansive class action claims for those employers who subcontract a significant portion of their operations. But it requires discipline on the part of employers to legitimately subcontract the work out and not be involved in the management of the subcontractors' employees or create significant controls over the terms and conditions of employment. By limiting their involvement to mandating the use of the Amazon Flex App, Amazon was able to defeat the common employer claim.
Footnotes
1 Davis v. Amazon Canada Fulfillment Services at para 1.
2 Ibid at para 6.
3 Ibid at para 9.
4 Ibid at paras 7-8.
5 Arbitration Act, 1991 at s. 7(1).
6 Davis v. Amazon at para 21.
7 Ibid.
8 Ibid at para 19.
9 Ibid at para 33.
10 Arbitration Act, 1991 at s. 7(6).
11 Davis v. Amazon at para 13.
12 Ibid at para 14.
13 Ibid at para 16.
14 Ibid at para 48.
15 Ibid at para 49.
16 Ibid at para 53.
17 Ibid at para 50.
18 Davis v. Amazon at para 51.
19 Ibid at para 56.
The foregoing provides only an overview and does not constitute legal advice. Readers are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained.
© McMillan LLP 2025
