CHRC: The Presumption of Reasonableness and the Rule of Law

Worries about the upcoming review of Dunsmuir

The Supreme Court of Canada released a number of decisions in the last few months on standard of review. Many of these decisions are probably noise rather than signal, in the language of Professor Daly. One, however, sheds some light on an important issue before the SCC’s revisit of Dunsmuir: CHRC v Canada (Attorney General), 2018 SCC 31 [CHRC]. What is the role of legislative context in rebutting the presumption of reasonableness?

CHRC says there is no role. This is inconsistent with the Court’s own cases, and doctrinally, it subverts the role of courts in seeking legislative intent to determine the standard of review. This is another milestone in the Court’s tortured administrative law jurisprudence, and it brings no hope for the upcoming review of Dunsmuir.

***

CHRC involved two human rights complaints before the Canadian Human Rights Tribunal [CHRT]. These complaints centred around the Department of Indian and Northern Affairs’ previous practice of “enfranchisement.” Under this practice, the government stripped individuals of their Indian Act status and denied the children of these people from registering as status Indians—for example, a child born to a status Indian mother who married a non-status man. In response to this discriminatory policy, Parliament enacted remedial provisions which enabled persons affected by the policy to re-register under the Indian Act.  Further reforms granted registration eligibility to children affected by the enfranchisement policy.

The two complaints were centred around the amended registration provisions in the Indian Act, which need not be exhaustively described—in essence, the claimants argued that the remedial provisions were insufficient because they permitted continued discrimination on the basis of enumerated grounds [1].  The claimants framed their challenge under s.5 of the Canadian Human Rights Act [CHRA], and alleged that the Department of Indian and Northern Affairs Canada engaged in a discriminatory practice in the provision of services.

Both complaints were dismissed on the basis that the claimants’ challenges were legislative challenges to the status registration requirements under the Indian Act. The CHRA confers remedial authority to the CHRT to render conflicting legislation inoperable, but a remedy could only be granted in circumstances where a discriminatory practice has first been established [56]. But the CHRT concluded that “legislation per se” was not a discriminatory practice in the provision of services, and for that reason, the complainants’ cases could not constitute a discriminatory practice.

***

The Supreme Court majority decision was written by Justice Gascon. To the majority, the CHRT was “called upon to characterize the complaints before it and ascertain whether a discriminatory practice had been made out under the CHRA” [30]. As a result, the Court reasoned that this was an issue of home statute interpretation inviting the presumptive standard of reasonableness.

The majority next considered whether the presumption was rebutted, concluding that the case did not fall into any of the categories for correctness review established in Dunsmuir. It then turned to the so-called “contextual approach” to determine whether it rebutted the presumption of reasonableness review. That “approach” was essentially a carry-over from the pragmatic and functional era, consisting of four factors which could indicate a different standard of review than the one indicated by the presumption: (1) the presence or absence of a privative clause; (2) the purpose of the tribunal as determined by interpretation of enabling legislation; (3) the nature of the question at issue; (4) the expertise of the tribunal.

The majority noted that a presumption of reasonableness is designed to “prevent litigants from undertaking a full standard of review analysis in every case” [45]. Context, then, should play a “subordinate role”, and should be “applied sparingly” [46]. Putting context in its place, to the majority, would forego the uncertainty and debate over the standard of review.

The majority emphatically disagreed with the opinion written in CHRC by Cote and Rowe JJ, which noted that correctness would apply wherever the “contextual factors listed in Dunsmuir point towards correctness as the appropriate standard” [73]. Instead, the majority noted that where the presumption of reasonableness applies, an adoption of a contextual approach would “undermine the certainty this Court has sought to establish in the past decade” [47]. The majority concluded that “…dissatisfaction with the current state of the law is no reason to ignore our precedents following Dunsmuir” [47]. On the facts, the majority nonetheless applied the contextual analysis and concluded that the presumption of reasonableness was not rebutted.

In a concurring opinion, Rowe and Cote JJ disagreed with the majority’s obiter comments on the contextual approach. They reasoned that the approach to standard of review set out in Dunsmuir is “manifestly contextual in nature” [78]. To Rowe and Cote JJ, a contextual analysis must be undertaken where the categories inviting correctness review do not apply.  On the facts of the case, Rowe and Cote JJ would have found the presumption of reasonableness rebutted because of an absence of a privative clause and the potential for conflicting lines of authority because the CHRT does not interpret the CHRA in a discrete administrative regime [90]. Brown J concurred on similar grounds.

***

In my view, the two concurrences clearly had the better of the argument here. First, the majority’s approach continues a hard-line approach to the presumption of reasonableness that is inconsistent with Dunsmuir and post-Dunsmuir cases. Second, a presumption of reasonableness that is never rebutted is contrary to the concept of judicial review.

It is unusual—in the strongest sense of the term—that the majority rooted its endorsement of the presumption of reasonableness in terms of precedent. It noted, for example, that resort to the contextual approach would “undermine the certainty this Court has sought to establish in the past decade.” This is an unexpected remark. The Court has done much in the last decade on administrative law, but establishing certainty is not on the list. Putting aside all of the other issues—which are many—the problem of context provides a good example of the Court’s odd inability to apply its own precedents.

Legislative context is integral to determining the standard of review because legislatures, not courts, can set the standard of review. Dunsmuir recognized this when it held that “[T]he analysis must be contextual” [64].  This is about as clear as it gets for the Supreme Court in administrative law.  As Justice Bastarache, one of the authors of Dunsmuir said in the recent Dunsmuir Decade series, none of the categories inviting a particular standard of review—including the presumption of reasonableness—were meant to be set in stone. Dunsmuir only said that deference would “usually result” when a decision-maker interprets its home statute [54].

And this is how the Court applied the presumption of reasonableness in subsequent cases. There are a number of cases in which the Court looked to context to determine whether the presumption was rebutted; by my count, at least the following: Entertainment Software Association v SOCAN, 2012 SCC 34; Rogers v SOCAN, 2012 SCC 35; Marine Services International v Ryan Estate, 2013 SCC 44; McLean v British Columbia (Securities Commission), 2013 SCC 67; Tervita Corp v Canada (Commissioner of Competition), 2015 SCC 3; Mouvement Iaique Quebecois v Saguenay, 2015 SCC 16; CBC v SODRAC, 2015 SCC 57; Edmonton (City) v Edmonton East (Capilano) Shopping Centres, 2016 SCC 47 (though noting Justice Karakatsanis’ skeptical remarks regarding the contextual approach); Barreau de Quebec v Quebec (Attorney General), 2017 SCC 56; Williams Lake Indian Band v Canada (AANDC), 2018 SCC 4; Groia v Law Society of Upper Canada, 2018 SCC 27.

I repeat these cases for dramatic effect. It is an example of the Supreme Court saying one thing and doing another—something some judges of the court recognized was a risk in administrative law in Kanthasamy [112]. In CHRC, there is no explanation for why context should be abandoned, especially in light of all of these precedents and Dunsmuir’s clear, unequivocal statement.  Shouldn’t certainty be one of the underlying goals of doctrinal reform, particularly in this troubled area? Changing approaches year-to-year does not provide any guidance to courts and litigants.

Quite aside from the lack of consistency in the Court’s standard of review framework, a presumption-only approach also frustrates the search for legislative intent. “Legislative context” as Justice Brown noted in CHRC is really just a proxy for determining legislative intent. When one speaks of “legislative context,” one means statutory indicators that set the standard of review implicitly: statutory rights of appeal, signs of concurrent jurisdiction, privative clauses, statutory indications of purpose, and the like. Or, perhaps there is explicit legislative guidance on the standard of review. It was always understood that these signs of legislative intent should bind courts; this is just an implication of the hierarchy of laws, under which courts must respect law absent constitutional objection.

The presumption-only approach in CHRC raises profound challenges to the task of courts on judicial review to determine legislative intent. The challenge can be framed in the classic “rules vs standards” debate in law and economics terms. The “rules versus standards” debate probably impacts every area of law, because laws and doctrine can be framed as either hard-and-fast “rules” or flexible “standards.” Rules have certain benefits—cost savings are achieved because the rule applies to the mass of legal situations, and there is no need to conduct a case-by-case investigation. But rules can be overbroad—if they are not appropriately tailored, they can apply in situations where the underlying justifications for the rule do not exist.

The presumption of home statute interpretation can be viewed as an overbroad rule, because on the happening of a certain event (home statute interpretation), the content of the law is defined (deference). It is rooted in the justifications of expertise and legislative intent.  But because the CHRC approach tells lower courts not to look to context, we simply never know if the legislature intended a standard of review other than the one indicated by the presumption. The presumption could apply in cases where the legislature did not intend reasonableness, even though the Dunsmuir factors (which could be understood as standards) implicitly set a different standard of review.

Not to put the point too strongly, but if this is the case, what is the point of a standard of review analysis? Couldn’t we create some sort of computer program in which cases are filed and the standard of review is selected by the computer? The point of the Dunsmuir factors is individual tailoring—they are designed to be applied by courts in cases where a statutory indication of legislative intent is evident. This requires some human appreciation of what an enabling statute implicitly sets the standard of review to be. But if judges simply say “reasonableness” all the time, the role of courts on judicial review is reduced to rote copying of a paragraph saying that deference applies, even where it should not.

This goes to the point of judicial review. The role of the courts on judicial review, as noted in Bibeault, is so important that it is given constitutional protection [126]. That role, rooted in the Rule of Law, is to authentically determine what the legislature intended the standard of review to be. When the Court binds itself to its own presumption–simply an evidentiary device–it subordinates its constitutional role to the police the boundaries of the administrative state.

The systemic costs of the CHRC approach are  exacted in the Rule of Law and against the constitutional role of the Court. As Leonid once wrote, judicial review can be understood as a cost-benefit analysis. While the costs saved through the presumption may be high, the potential costs of imposing the wrong standard of review could lead to more administrative decisions being upheld than what the legislature intended. The effect is case-by-case, an administrative state turned loose, increasingly unmoored by law. CHRC sanctions this unleashing of the administrative state.

This is not to say that the reasonableness review urged by CHRC is inconsistent with the Rule of Law (though I think there is a case to be made on that front). But expanding the class of cases in which reasonableness should and does apply, when that expansion is not mandated by law, presents a serious challenge to the Rule of Law and the role of courts in enforcing it.

CHRC worries me on this front. It demonstrates that the Court is not looking to the underlying constitutional precepts of judicial review. It does not seem to have seriously considered the costs to its approach. Nor is it even attempting to distinguish its own precedents in creating its new approach. Observers should worry about where the Court’s mind is going in advance of its planned review of Dunsmuir.

Not That Kind of Voting

What New Zealand’s Electoral Commission’s attempt to boost turnout gets wrong about voting, and what we can learn from it

There will be a general election in New Zealand this Saturday. As is customary in such circumstances, there is some hand-wringing going on about what turnout is going to be like ― it was almost 78% in 2014, which in Canada, never mind the United States, would be considered sky-high, but is regarded as worryingly low in New Zealand. And the Electoral Commission is doing its part in trying to encourage people to vote, among other things by publishing this sleek video that recently showed up in my Facebook feed (and by using other ads based on the same theme):

The trouble, as I see it ― though I will not claim to speak for Kiwi abstainers ― is that, if you think about it for a second, this video’s true message about voting is precisely the opposite of the one it is intended to convey.

We “vote every day”, we are told: for snoozing or getting up; for dirty or clean underwear (that one, I suppose, is of particular relevance to politics); for whether to be a nice person or a not-so-nice one; and for a whole lot of other things. And it follows, apparently, that we should also vote in the election (or those entitled to do so should, anyway ― I am not, since I’m not yet a permanent resident). In other words, according to Elections New Zealand, voting for a party and a candidate to represent you in Parliament is just like making one of those everyday decisions that you are used to making, well, every day. Except, of course, that it isn’t, and in a number of ways.

Perhaps most obviously, if done with a modicum of seriousness, voting in a election is a good deal harder than deciding whether to hit the snooze button or to get up already. (I’ll call that sort of decision-making “voting”, as opposed to voting.) Voting requires one to acquire substantial amounts of information about the candidates and their platforms, about the world and the ways in which the candidates’ proposals fit or do not fit with what we know about it, and ideally also about how the electoral process itself works. (Another video from the Electoral Commission cheerfully showcases the voters’ utter ignorance about the latter point, as if equanimity were the appropriate response to it.) Relatively few people are well informed voters, and even some, perhaps quite a few, of those who are not at least realize that they have work to do in order to become at least somewhat knowledgeable ― though many will never do that work, for reasons to which I’ll presently return. And quite apart from informational difficulties, voting requires one to ponder incommensurable values (do vote, say, for the candidate with the better tax policy or the one more likely to respect the constitution?). By contrast, one doesn’t need to work very hard to “vote”. “Voters” typically have all the information they need from personal experience, and the values at stake are also less abstract and easier to sort out.

The second crucial difference between voting and “voting” is that the “voters” are the ones who live with the consequences of their decisions, whereas voters are not. If you keep on dirty underwear, you are the one who stinks. If you haven’t had occasion to learn that in the past, there’s a reasonable chance that you will learn now. By contrast, if you vote to keep a lousy politician in office, most (and perhaps  all) of the cost of that vote (however small a fraction of the total cost is attributable to an individual vote) is absorbed by others. You may even profit from your bad decision, either because the politician rewards his or her supporters at the expense of  the community as a whole, or simply because voting in that way gave you a satisfaction that is greater than the costs that vote imposes on you ―  though again the costs to the community as a whole are substantial. Moreover, it is often difficult to trace bad outcomes to bad votes, or good outcomes to good ones. The difficulty is sometimes subjective ― a voter who doesn’t understand a modicum of economics will not be able to tell that relative impoverishment resulted from the protectionist policies he or she supported. But it is often objective. Policy is complex, and it is difficult even for knowledgeable people to link causes with effects with much certainty. As a result, voters do not learn from the consequences of their decisions in the way “voters” do.

In short, voting and “voting” are rather different activities, and just because we do a lot of the latter, and do it reasonably well, it doesn’t follow that we should do the former, or that we can do it with any competence. We “vote” well enough because each “vote” is (usually) a relatively straightforward decision and, even when it is not, we have strong incentives to learn enough, and to be objective enough, to decide well, because we are the one living with the consequences of the decision. These reasons don’t apply to voting, which involves complex decisions and trade-offs, which are difficult enough to manage even for unbiased and well-informed decision-makers ― but we lack the incentives to be either of these two things because we do not in a meaningful way bear the consequences of our votes.

Of course, I have no idea whether the Electoral Commission will be successful at persuading people to go to the polls despite the faulty premises underlying its ad campaign. But if it does, this will, I am afraid, be an additional reason to distrust voters, who let themselves be fooled by what is really a well put-together effort at misdirection. Rather, the message we should take from the ad is the one that Ilya Somin delivers in his book Democracy and Political Ignorance: Why Smaller Government Is Smarter: the more decisions we can make by “voting” rather than voting, the better off we will be. Whoever wins this week’s election should really think about that, rather than fret about turnout rates. Don’t worry though: I won’t be holding my breath.

Ideas of the Marketplace II

What we can learn from thinking about the marketplace of ideas as a market

In a very interesting post over at EconLog, Bryan Caplan considers what he describes as the “dogmatic libertarian” claim that all markets work well, as it is applies ― or, rather, doesn’t apply ― to the marketplace of ideas. The marketplace seems to reject this claim, which suggests that it cannot be true. Prof. Caplan agrees that it is not, and makes two further observations. In reverse order, they are that “[t]ruth doesn’t largely win out in a well-functioning market for ideas, because consumers primarily seek not truth, but comfort and entertainment” (emphasis prof. Caplan’s), and that while “[m]ost markets work well … the market for ideas doesn’t … [b]ecause ideas have massive externalities. … The market for ideas … works poorly because strangers bear almost all the cost of your irrationality.” I think that’s largely right, but want to add a couple of additional points regarding prof. Caplan’s second observation.

First, while it is often true that we do not internalize the costs of our irrationality, this is less true in some contexts than in others. Most obviously ― this a point that Ilya Somin makes in his discussions of political ignorance ― we do internalize a much greater share of the costs of our bad decisions, and also of the rewards of the good ones, when deciding for ourselves, in our private lives, than when we vote or, more generally, act in the political sphere. Even in our private lives, we pass on some of the costs of our irrationality to family, friends, and sometimes the broader society as well, but we do absorb a much more substantial fraction of these costs. This is perhaps a trite point, and prof. Caplan might only have been referring to the marketplace for political ideas (political in a very broad sense), but I think it’s worth spelling it out.

More interestingly, I think, it is also the case that, even in politics, there is a way in which people can be a made to internalize at least a small fraction of the costs of their bad decisions in the marketplace of ideas: democracy. This, I think, is what H.L. Mencken’s famous quip that “[d]emocracy is the theory that the common people know what they want, and deserve to get it good and hard” means. The theory is only partly true, because as prof. Caplan says, in the political sphere “strangers bear almost all the cost of your irrationality,” but self-government ensures that you bear at least a little fraction of the cost of your opinions and decisions. When you vote for a lousy politician, or convince others to do so, you increase ― albeit usually by very little ― your odds having to reap the consequences of the lousy policies that that politician will implement. By contrast, in a dictatorship, the few who decide typically bear even less of the cost of their views than the voters in a democracy, because they are even better able to pass these costs on to others, while those who do not (which is to say, almost everyone) are even freer to know nothing and believe everything, since their ignorance, credulity, and irrationality have no impact whatever on anything. If you think that voters and politicians are bad in democratic countries, just compare them to the people and the rulers in authoritarian ones. Once again, Churchill was quite right to say that while democracy is a bad system of government, others are even worse.

The second point I wanted to make might be too obvious for an economist like prof. Caplan to discuss, but bears repetition by a lawyer writing for non-economists. That the marketplace of ideas may be malfunctioning as a result of massive externalities does not justify intervention by the state in order to make people internalize these externalities or prevent them from occurring. Market failure may be real, but so is government failure ― and there are situations in which government failure is more severe than the market failure government intervention purports to correct. Indeed, this point is, I think, more widely accepted (albeit not necessarily in these terms) with respect to the marketplace of ideas than for just about any other market. Distrust of, and opposition to, censorship, in the face of widespread evidence of malfunctions in the marketplace of ideas reflects, at least in part, an understanding that giving the state the power to rectify these malfunctions would be disastrous, both because the state is a bad judge of ideas and because this power would be abused in various self-interested ways be the people entrusted with wielding it. Unfortunately, people often fail to transpose this understanding to their analysis of other markets. Yet there is no reason why they should. The marketplace of ideas is just not that special.

Thinking of the marketplace of ideas in economic terms ― assuming, in other words, that it is a marketplace more or less like any other ― is, I think a useful exercise. (I attempted it here already.) It both allows both to sharpen our understanding of the marketplace of ideas itself (and of the related markets, such as the one for votes), and can serve as a reminder of some broader truths about markets and regulations that we intuitively sense when thinking about the marketplace of ideas, but forget in other contexts.

L’Uber et l’argent d’Uber

Une poursuite contre Uber carbure à l’ignorance économique

Certaines personnes qui ont eu recours aux service d’Uber la nuit du Nouvel an ont payé cher. Très cher même, dans certains cas. Car, contrairement aux taxis traditionnels dont les prix sont toujours les mêmes, Uber pratique ce que l’entreprise appelle le « prix dynamique » ― un prix qui fluctue, parfois très rapidement, en fonction de la demande pour ses voitures qui existe à un endroit et à un moment donné. Puisque la demande était très forte et très concentrée à la fin des festivités du réveillon, les prix ordinaires ont été multipliés par un facteur parfois très élevé ― facteur dont un client qui commandait une course était avisé, et qu’il devait même entrer, manuellement, dans l’application afin de pouvoir passer sa commande.

Or, on apprenait vendredi qu’une des clientes d’Uber, Catherine Papillon, qui a payé 8,9 fois le prix ordinaire pour sa course, veut intenter un recours collectif contre l’entreprise, à moins que celle-ci ne la rembourse. Représentée par Juripop, elle prétend avoir été lésée par le prix « anormalement élevé[…] » qu’elle a payé. Quant au consentement qu’elle a donné en commandant sa course, elle soutient que celui-ci ne peut lui être opposé vu la lésion qu’elle a subie. Elle affirme, du reste, ne pas avoir compris ce que le « 8,9 » qu’elle a entré en passant sa commande voulait dire.

Patrick Lagacé explique bien, dans une chronique parue dans La Presse, pour les personnes dans la situation de Mme Papillon ne méritent pas notre sympathie:

La nuit du Nouvel An, vous le savez sans doute, est la pire nuit où tenter de trouver un taxi. J’ai personnellement frôlé l’amputation du gros orteil droit, un 1er janvier de la fin du XXe siècle, en tentant de trouver un taxi au centre-ville de Montréal pour me ramener à bon port, au petit matin. Des centaines, peut-être des milliers d’autres cabochons dans la même situation que moi cherchaient eux aussi des taxis, introuvables…

Un détail révélateur du récit de Mme Papillon suggère qu’elle aussi se retrouvait dans une situation similaire : elle « a expliqué qu’elle s’est inscrite sur Uber “en cinq minutes”, peu avant de faire appel à la compagnie dans la nuit du 31 décembre au 1er janvier ». On ne sait pas encore pourquoi elle l’a fait, mais on peut deviner, n’est-ce pas? (Et les avocats d’Uber ne manqueront pas, j’en suis sûr, de lui poser la question pour confirmer la réponse dont on se doute.) Alors, écrit M. Lagacé, quand les gens acceptent de payer un prix, fût-il exorbitant, qui leur est clairement annoncé, pour s’épargner la recherche futile d’un taxi qui n’arrive jamais, eh bien, c’est un choix qu’ils font et dont ils devraient assumer la responsabilité.

Le droit voit-il les choses d’une manière différente? Je ne suis pas civiliste, encore moins spécialiste du droit de la consommation. Je ne prétendrai donc pas émettre de pronostic sur l’issue de la cause de Mme Papillon. Je crois, cependant, pouvoir émettre une opinion sur ce que le résultat de ce recours devrait être si les juges qui en disposeront s’en tiennent aux principes élémentaires qu’il met en cause.

Ces principes sont non seulement, et peut-être même pas tant, moraux qu’économiques. Les biens et les services n’ont pas de valeur intrinsèque qui pourrait servir à déterminer leur prix « juste ». Leur prix sur un marché libre dépend de l’offre et de la demande. Il s’agit, en fait, d’un signal. Si un service ― par exemple une course en taxi ― commande un prix élevé, les vendeurs ― par exemple, les chauffeurs ― savent qu’ils feront beaucoup d’argent en offrant le service en question. Plusieurs vendeurs s’amènent donc sur le marché ― par exemple, dans les rues du Vieux-Montréal ― pour offrir leurs services aux acheteurs. En même temps, le prix élevé signale aux acheteurs que s’ils le veulent acquérir le service, il leur en coûtera cher. Ceux qui tiennent à l’obtenir le feront, alors que d’autres trouveront des alternatives ou attendront. C’est ainsi que le nombre de vendeurs et d’acheteurs s’équilibre, et que ceux qui sont prêts à payer sont servis rapidement. Uber prétend que ceux qui ont voulu utiliser son service le matin du Jour de l’An n’ont attendu qu’un peu plus de quatre minutes, en moyenne, grâce au nombre record de chauffeurs qui étaient sur la route. Personne parmi eux, on peut parier, n’a « frôlé l’amputation du gros orteil droit », comme M. Lagacé jadis. 

Son histoire est, par ailleurs, un bon rappel de ce qui arrive si les prix ne peuvent pas augmenter en réponse à une forte demande ― par exemple parce qu’ils sont fixés par décret gouvernemental, comme le sont les prix du taxi traditionnel. Puisque les prix n’augmentent pas, les vendeurs n’ont aucune raison supplémentaire d’entrer sur le marché, et il n’y en a pas plus que d’habitude. Si, en plus, le nombre de vendeurs est limité ― par exemple, parce que le gouvernement fixe un nombre maximal de licenses de taxi ― il ne peut pas augmenter pour répondre à une demande exceptionnelle par définition. Dès lors, c’est l’attente et la chance, plutôt que la volonté de payer qui déterminent qui recevra et qui ne recevra pas le service ― et les engelures s’ensuivent.

J’en arrive aux questions juridiques qui se poseront dans la poursuite contre Uber. Mme Papillon et ses avocats prétendront sans doute que le contrat qui fait en sorte qu’une course de taxi qui coûte 80$ au lieu d’une dizaine « désavantage le consommateur  […] d’une manière excessive et déraisonnable », ce qui, en vertu de l’article 1437 du Code civil du Québec, donne ouverture à la réduction de l’obligation qui découle de ce contrat ― en l’occurrence, du prix payé par Mme Papillon. Ils soutiendront aussi qu’il s’agit d’un cas où « la disproportion entre les prestations respectives des parties est tellement considérable qu’elle équivaut à de l’exploitation du consommateur, ou que l’obligation du consommateur est excessive, abusive ou exorbitante », ce qui permet également au consommateur de demander la réduction de ses obligations, en vertu cette fois de l’article 8 de la Loi sur la protection du consommateur. Ils auront tort.

Car penser que la prestation d’Uber se limite au déplacement de son client, c’est ignorer les principes économiques fondamentaux que je viens d’exposer. Uber ne fait pas que déplacer son passager d’un point de départ à un point d’arrivée. Avant même de pouvoir le faire, Uber s’assure d’abord qu’il y aura une voiture pour cueillir le client ― et qu’elle sera là en un temps utile ou, du moins, assez court pour que le client ne se gèle pas les extrémités. C’est ça aussi, la prestation d’Uber, et la raison pour laquelle les gens font appel à ses services même lorsque ceux-ci sont plus chers que le taxi traditionnel. Et c’est pour s’assurer de livrer cette prestation qu’Uber doit faire augmenter ses prix lorsque la demande pour ses services est particulièrement forte. Le recours de Mme Papillon, qui fait abstraction de cette réalité, est, dès lors, fondé sur l’ignorance des règles économiques de base ou sur l’aveuglement volontaire face à celles-ci. Si les juges qui se prononcent sur ce recours comprennent ces règles, ils le rejetteront du revers de la main.

S’ils souhaitent raisonner a contrario, les juges pourront, par ailleurs, se demander quelle serait la réparation qu’ils devraient accorder s’ils faisaient droit à la demande de Mme Papillon. Il s’agirait, de toute évidence, d’une réduction du prix payé ― mais une réduction jusqu’à quel point? Si un commerçant réussit à flouer un consommateur en lui faisant payer un prix exorbitant, mais qu’il remplit, par ailleurs, ses obligations en vertu du contrat, il semble juste de réduire le prix jusqu’à celui qui prévaut sur le marché. Or, y a-t-il un tel prix dans les circonstances qui nous intéressent? Le prix du taxi traditionnel n’a rien à voir avec celui du marché, non seulement parce qu’il est le produit d’un fiat gouvernemental, mais aussi parce que, de toute évidence, ce n’est un prix d’équilibre, c’est-à-dire un prix auquel l’offre et la demande se rejoignent. Au prix du taxi traditionnel, la demande est de loin supérieure à l’offre ― d’où l’orteil gelé de M. Lagacé. Comment un tribunal s’y prendrait-il pour déterminer le prix du marché en l’absence, justement, d’un marché ― autre que celui qu’Uber a créé? Il ne pourrait le faire que d’une façon parfaitement arbitraire, ce qui serait contraire à notre compréhension habituelle du rôle des tribunaux. (J’avais déjà soulevé un problème similaire en parlant d’un recours contre la SAQ, fondé, lui aussi, sur l’article 8 de la Loi sur la protection du consommateur.) Comment est-ce qu’un tribunal saurait, en fait, que le prix exigé par Uber n’est pas le prix du marché? C’est à Mme Papillon, en tant que demanderesse, de le prouver, me semble-t-il. Je ne vois pas comment elle pourrait le faire.

Un mot, en conclusion, sur la position de Juripop dans cette histoire. Cet organisme n’est pas un bureau d’avocats ordinaire qui défend la cause de ses clients, fût-elle guidée par la plus pure cupidité. C’est soi-disant une « clinique juridique », une « entreprise d’économie sociale », dont la mission consiste à « soutenir l’accessibilité [sic] des personnes à la justice ». Or, Juripop ne se place pas du côté de la justice en appuyant Mme Papillon. Car la justice ne consiste pas à se déresponsabiliser face aux conséquences annoncées d’actions qu’on a posées, comme elle cherche à le faire. Et la justice ne peut pas se réaliser dans l’ignorance des lois économiques. Comme le disait fort sagement Friedrich Hayek dans La route de la servitude, « [i]l peut sembler noble de dire, “au diable la science économique, bâtissons plutôt un monde décent” ― mais c’est en fait simplement irresponsable » (je traduis). Les québécois le savent, d’ailleurs: ce n’est pas réclamer justice que de vouloir le beurre et l’argent du beurre.

The “Unequal Bargaining Power” Trope

Defenders of trade unions generally, and of constitutional protections for union rights, notably the right to force an unwilling employer into collective bargaining and the right to strike, usually invoke the “unequal bargaining power” of workers and employers in support of their position. The Supreme Court relied on this claim when it constitutionalized the right to collective bargaining in Mounted Police Association of Ontario v. Canada (Attorney General), 2015 SCC 1, [2015] 1 S.C.R. 3, and the right to strike in Saskatchewan Federation of Labour v. Saskatchewan, 2015 SCC 4, [2015] 1 S.C.R. 245. In Mounted Police, the majority claimed that

Without the right to pursue workplace goals collectively, workers may be left essentially powerless in dealing with their employer or influencing their employment conditions. … Individual employees typically lack the power to bargain and pursue workplace goals with their more powerful employers. Only by banding together in collective bargaining associations, thus strengthening their bargaining power with their employer, can they meaningfully pursue their workplace goals. [68, 70]

The problem with this statement is that it is simply not true. I said so here and in a National Post op-ed. But you don’t have to take it from me. Take it from the economist Bryan Caplan, who has a detailed, point-for-point reply to an “unequal bargaining power” argument over at EconLog. Hard as it is to resist the temptation to copy and paste the whole thing here, I’ll content myself with just two quotes:

Everyone talks as if bosses have the better end. But talk is very different from action. If everyone were trying to start their own businesses and hire workers, that would count as “acting as if bosses have the better end of the deal.” Most workers, however, make no effort to become entrepreneurs. You could object that most workers don’t have the money to open their own businesses, but most rich workers make no effort to become entrepreneurs either.

And:

Most workers in the U.S. aren’t in unions. Most aren’t even close to being in unions. Yet most U.S. workers earn well above the minimum wage. A simple supply-and-demand story can explain this. [The “unequal bargaining power means unions are necessary”] story doesn’t.

Please, please, please read the whole thing ― and pass the link on to a Supreme Court judge the first chance you have. Thank you!

Check Their Privilege

In my post criticizing the Supreme Court’s recent decisions in Mounted Police Association of Ontario v. Canada (Attorney General), 2015 SCC 1 and Saskatchewan Federation of Labour v. Saskatchewan, 2015 SCC 4, which constitutionalized rights to collective bargaining and to strike, I suggested, without elaborating, that they are inconsistent with the Supreme Court’s jurisprudence in that they constitutionalize organized labour’s economic rights and impose constitutional burdens on private parties. In this post, I want to develop this argument a little more.

The framers of the Charter chose not to include economic rights in our constitution ― neither the old-fashioned property rights and freedom of contract, nor the newer “social and economic” rights such as a right to housing, healthcare, or a pension. And, generally speaking, the Supreme Court has been extremely reluctant to protect anyone’s economic rights of either sort under the Charter. For instance, in Siemens v. Manitoba (Attorney General), 2003 SCC 3, [2003] 1 SCR 6, the Supreme Court held that “[t]he ability to generate business revenue by one’s chosen means is not a right protected under s. 7 of the Charter” [46], while in Gosselin v. Quebec (Attorney General), [2002] 4 S.C.R. 429, 2002 SCC 84, it refused to find that s. 7 required governments to provide welfare.

Now I have argued, here and elsewhere, that the failure to protect property and contract rights has been counter-productive, leaving the marginalized and the poor at the governments’ mercy, even as the well-off can use their political connections to avoid shakedowns. “Social and economic” rights are probably different, because ― as the majority of the Ontario Court of Appeal pointed out in a recent case where housing rights were alleged to be protected by s. 7, Tanudjaja v. Canada (Attorney General), 2014 ONCA 852 ― there are no judicially discoverable or manageable standards for courts to apply in such matters. Be that is it may, it is quite clear that Canadian constitutional law, as it now stands, recognizes no economic rights of any sort ― with one glaring exception.

That exception concerns the economic rights of unionized workers. The Mounted Police majority clearly recognizes ― although it does not quite acknowledge ― that the right to bargain collectively which it reads into s. 2(d) is an economic one. As it puts it,

[i]ndividual employees typically lack the power to bargain and pursue workplace goals with their more powerful employers. Only by banding together in collective bargaining associations, thus strengthening their bargaining power with their employer, can they meaningfully pursue their workplace goals. [70]

“Workplace goals” here is, quite clearly, a bit of a fig leaf. The judges may not understand the economics, as I’ve argued in my previous post ― they may be ignorant of the fact that nobody in a competitive labour market (or any other competitive market) has much bargaining power, and that employees are not under some special disability. But they surely understand that the “workplace goals” employees pursue are about compensation, whether it takes the form of a higher salary, greater fringe benefits, or even more leisure. So there you have it: employees are entitled to constitutional protection for their ability to get more money out of employers ― by means of cartelizing their output and eliminating competition.

The question is, why them? Why are employees given a constitutional privilege which freelancers, small businessmen or, for that matter, welfare recipients are not? The Court’s assumption seems to be that employees are uniquely vulnerable, but surely they are not more so than the people on welfare. And even businessmen can have a hard time making ends meet, in the face of competition. This, indeed, is their favourite argument for forming cartels of their own. You know the story: competition is too cut-throat, we need to limit the number of companies operating in a market, yada-yada. Let’s license restaurants, prohibit foreign law firms from operating in our jurisdiction, or just divide up the market, stop competing, and make everybody ― except the consumers of course ― happy. What is there, in the Supreme Court’s logic, that would have prevented the confectioners who thought you weren’t paying enough for your chocolate from arguing that they had a constitutional “right to join with others to meet on more equal terms the power and strength of other groups or entities” (Mounted Police [66]) ― such as the consumers? Score one for labour lawyers ― the Bay Street types, presumably, just hadn’t thought of making the argument.

Then again, I suspect that the Supreme Court wouldn’t have gone along with it, coming from a cartel of businesses. What about other forms of associations? Does, say, a religious community have a right to force a government to bargain with it, in good faith, about tax credits? Or do the members of a coalition of taxpayers have a right to strike, constitutionalized in Saskatchewan Federation of Labour ― to stop paying taxes ― as part of an exercise in joining with others to meet on more equal terms the power of the most powerful entity of them all, the government?  Am I being facetious here? Well, yes, somewhat. But really, what does “the right to join with others to meet on more equal terms the power and strength of other groups or entities” mean, as applied to groups other than trade unions?

Unlike the other two aspects of the freedom of association identified in Mounted Police, namely “the right to join with others and form associations; [and] the right to join with others in the pursuit of other constitutional rights,” [66] this “right to join with others to meet on more equal terms the power and strength of other groups or entities” seems to be simply inapplicable to any association other than a trade union. It is not a right in which all citizens can share, but a privilege granted, for reasons unexplained, to a single group in Canadian society. As such, it should not exist.

This unique privilege has a counterpart ― a unique burden imposed on one group only. Generally speaking, the Charter does not apply to private parties. By its own terms, it binds governments and legislatures alone. Yet the invention of a right to collective bargaining imposes a constitutional obligation to engage in it ― on employers. This is done indirectly, to be sure, since strictly speaking, the constitutional duty is that of legislatures to create a labour law regime which, in turn requires employers to bargain collectively. Still, the relationship between the constitutional requirement and the private party who must bear its burden is straightforward, and without obvious parallels in the Charter realm. I suspect that the fact that government ― which is subject to the Charter in all its capacities, including both as regulator and as employer ― is in fact the employer in these cases might have obscured the fact that the Supreme Court’s decisions ended up imposing Charter duties on private parties, but that’s hardly a good excuse for the Court’s muddled thinking. (It does make me wonder whether the Charter ought to apply to the government as an employer at all, but that’s a question for another time.) The Court doesn’t distinguish between the rights of government employees and those of private firms, and the correlative obligations of their respective employers, and there is nothing in its reasons that would support such a distinction.

In short, in addition to being based on economic myth and misconceiving the Court’s role vis-à-vis legislatures, the decisions constitutionalizing labour’s economic rights are out of step with the Court jurisprudence denying such rights to all other Canadians, and that which refuses to impose Charter obligations on private parties. It erects labour as a privileged class in Canadian society, endowed with greater constitutional rights than others. This is wrong. I will consider the options for remedying the situation shortly.

Laboured Thoughts

Over the last few weeks, the Supreme Court re-wrote yet another part of the Constitution ― this time, the Charter’s freedom of association provision. Section 2(d) now means that labour unions have a constitutional right to participate in a “meaningful process of collective bargaining,” created in Mounted Police Association of Ontario v. Canada (Attorney General), 2015 SCC 1, and in many if not in all cases, to strike in order to achieve their goals within that process, created in Saskatchewan Federation of Labour v. Saskatchewan, 2015 SCC 4. After the first of these decisions, Omar Ha-Redeye wrote that “everything we thought we knew” ― everything, that is, that the Supreme Court itself had been telling us ― “about labour law in Canada and s. 2(d) changed.” And then, a couple of weeks later, it changed some more. Mr. Ha-Redeye’s posts, over at Slaw (here and here), set out, with some sympathy if I read him right, the labour law story. In this post, I want to say something about the assumptions behind that story. As will quickly become obvious, for my part, I have no sympathy whatsoever for what the Court has done.

The foundations of the Supreme Court’s freedom of association jurisprudence, and especially its recent decisions, are shaky in several respects. I will skip over its cavalier approach its own recent precedents, which Mr. Ha-Redeye describes, pointing out that “when the law and interpretation of the constitution shifts so drastically, it also leads to some very creative legal writing,” including an “interpretation of existing case law” that is “open to dispute.” Geoff Plant, at Plant’s Rant, has also criticized the court (here and here) ― harshly and, in my view, with good reason.  I, instead, will focus on the Court’s economics, methodology, and view of its own powers.

The Court’s utter failure to understand the economics of trade unionism taints its interpretation of the s. 2(d) right. The Court believes that “[w]ithout the right to pursue workplace goals collectively, workers may be left essentially powerless in dealing with their employer or influencing their employment conditions” (Mounted Police, para. 68). Trade unions, and the imposition on employers of a duty to bargain with them, are in its view required to redress this imbalance of power. This is simply not true. A majority of workers in Canada are not unionized. Are they all at the mercy of their employers, unable to obtain reasonable employment conditions? Of course not. At the very least, judges ought to be aware that Bay Street lawyers ― including associates ― are not exactly starving because they are not unionized. Nor are, say, executives, or the employees of Google.  In a competitive market, an employer will not be able to impose unfair employment conditions on workers, no more than the buyers of goods are able to impose their conditions on the sellers. Sure, the labour market is not perfectly competitive. But nor is any other. The Court does not even attempt to explain why the labour market is somehow uniquely unbalanced.

Admittedly, it is true that in a competitive market, a worker by himself has almost no ability to “influence his employment conditions” ― but the exact same thing is true of the employer. Employment conditions for a given category of worker, like the price of any good in a competitive market, are those at which the market reaches equilibrium. They are outside the control of anyone ― worker or employer. So the Court is right to say that trade unions are necessary to give workers power to influence their working conditions. But that’s because in order to give anyone such power, the labour market must be distorted and made uncompetitive. This is exactly what trade unions do, by cartelizing labour supply and reducing the competition between workers that helps, like competition between suppliers in any market, keep the prices at equilibrium. In economics terms, labour unions extract monopoly rents from their employers ― who, of course, pass on the cost to consumers, if the employer is a private firm, or to taxpayers, if the employer is the government. (Another consequence of the artificially inflated cost of workers which the unions create is, as in any other market, the demand for labour goes down ― in other words, fewer workers will be employed. The Court seems to be blissfully unaware of this.)

Now some labour markets may be particularly uncompetitive. For instance, for some jobs, the government is (almost) the only employer, and might be able to exercise a monopsony power to drive down the price it pays for labour below what it would be in a competitive market. For these specific occupations, there might be a case for a prima facie right to bargain collectively, though even there, the costs it generates might be such that restrictions to that right would be well justified. But they are exceptions, and cannot justify extending, as a matter of constitutional law, a right to bargain collectively, and to strike, to all workers.

This discussion leads me to a second problem with the basis of the Supreme Court’s section 2(d) jurisprudence, which I referred to, above, as a methodological one ― its lack of grounding in the sort of social science evidence which it has been favouring in some of its recent decisions, such as Canada (Attorney General) v. Bedford, 2013 SCC 72, [2013] 3 S.C.R. 1101. As support for its claim about the purported imbalance of bargaining power, the Court cites not some economic study, but an almost-octogenarian decision of the U.S. Supreme Court. Indeed, the lengthy list of “authors cited” in the Court’s two recent decisions (which includes citations by the dissenters as well the majority opinions) consists largely of labour law scholarship, with a sprinkling of industrial relations studies, and not a single economics one. It is bad enough when judges, in Richard Posner’s words “duck, bluff, weave, change the subject” because “they don’t understand the activity from which a case before them has arisen” (Reflections on Judging, 85-86). But it is worse when think they understand it, but are in fact, proceeding on the basis of ideas that are little better than folklore. To quote Judge Posner once more, “[w]e need evidence-­based law across the board, just as we need evidence-­based medicine across the board, and not a combination of sci­en­tific and folk medicine” (62).

Now the Court is probably not alone to blame for this state of affairs. If the governments that were defending their approaches to labour law failed to adduce relevant economic evidence, or indeed any economic evidence, they missed an opportunity to force the Court to consider it. Moreover,  at the s. 1 justification stage, the governments did not press cost considerations as the objectives behind the statutes whose constitutionality was challenged, focusing rather on the need for effective service delivery. Perhaps they had a sense that merely financial reasons would not be regarded as sufficient to justify infringements of rights. And indeed they often shouldn’t be. But the cost of union rights is a different matter than, say, the expense of printing ballot papers which courts surely could, under s. 3 of the Charter, require a government to incur.

That’s not so much because of the amounts in issue, but because making the Court consider the cost of its decisions would have required it to confront the third, and perhaps most fundamental problem with its reasoning ― its misapprehension of its constitutional role. As Justices Rothstein and (in Saskatchewan Federation of Labour) Wagner point out, labour law involves balancing competing interests, which is something legislatures are often better than courts at doing. But the issue is, if anything, even more fundamental. To the extent that public sectors unions are involved ― and they are the ones who drove the litigation that led to these decisions, and their main, if not their only, beneficiaries ― one of the competing interests is that of the taxpayers. The Supreme Court’s intervention in the field of labour law makes public sector workers much more expensive to employ which, at least in the short and medium term, means substantial public expenditures. The issue is not simply one of institutional competence. It is one of basic legitimacy. Allowing the citizens’ elected representatives to decide how they will be taxed, and how their money will be spent is, at least historically, the first and most basic function of a democratic constitution. Charles I lost his head over this issue, James II his crown, and Britain, its American empire.

Still, institutional competence matters too, and indeed it is directly connected to the issue of democratic legitimacy. As the Supreme Court itself had recognized in Irwin Toy Ltd. v. Quebec (Attorney General), [1989] 1 S.C.R. 927,

[w]hen striking a balance between the claims of competing groups, the choice of means, like the choice of ends, frequently will require an assessment of conflicting scientific evidence and differing justified demands on scarce resources. Democratic institutions are meant to let us all share in the responsibility for these difficult choices. Thus, as courts review the results of the legislature’s deliberations, particularly with respect to the protection of vulnerable groups, they must be mindful of the legislature’s representative function.

The idea that legislatures are entitled to some deference (the extent of which, admittedly, has never been made very clear), in making decisions involving a balancing of competing claims, especially competing claims on scarce resources, has been a recurrent ― and perhaps a strengthening ― theme of the Court’s jurisprudence since then.

The defenders of the Courts’ rulings might argue that unions, perhaps especially public sector unions, are in fact “vulnerable groups,” and that the need to protect them against the government’s depredations justifies setting aside the deference to which governments might otherwise be entitled. Perhaps that’s what the Court thinks, given its acceptance of the imbalance of power myth. But experience (which, admittedly, it would be best for governments to support with empirical evidence!) disproves this idea. Public sector unions have frequently been able to hold governments to ransom, and obtain, in exchange for “labour peace,” substantial benefits and advantages for their members. This makes perfect economic sense, of course. Governments aren’t giving away their own money, but taxpayers’, when accede to the civil servants’ demands. Moreover, by paying civil servants with fringe benefits and pensions, they are able to do so relatively untransparently, and often to peddle to cost to future generations rather than imposing it on current voters. But to the extent that current voters have to pay, the government, unlike a firm selling its products on a competitive market, can make them pay more or less as much as it asks. The idea of civil servants’ unions as vulnerable groups, or “discrete and insular minorities,” is groundless.

The Supreme Court’s recent decisions on the scope of s. 2(d) of the Charter are based on economic myths, unsupported by appropriate evidence, and derogate from the Court’s normal constitutional role. They are also inconsistent with the Court’s jurisprudence in other ways, notably in that they constitutionalize organized labour’s economic rights and impose constitutional burdens on private parties, something I will discuss separately. They call for a response, and indeed a reversal, in one way or another ― something I will also discuss separately. In the meantime, they need to be denounced, loud and clear.