Canadian court dismisses Rana Plaza class action

brett mathews | 2nd January 2019

ONTARIO – An appeals court in Ontario has dismissed a case which claimed Canadian retailer, Loblaw, has a duty of care to suppliers’ workers who were victims of the 2013 Rana Plaza disaster. A US$2bn lawsuit against Loblaw and its auditing firm, Bureau Veritas, was initially dismissed by Ontario Superior Court of Justice last year which found there was no direct cause of action that linked Loblaw to the collapse, and denied the action. It was stated that neither Loblaw nor the auditor it hired owed a duty of care to the Bangladeshi workers. The Ontario Court of Appeal has now upheld this decision.

Rana Plaza, a nine-storey clothing factory, collapsed on April 24, 2013. The previous day, cracks appeared in the structure, yet an investigation into the collapse revealed garment workers were ordered to go to work that morning to finish an order of 24,000 pairs of Joe Fresh jeans. The workers were employed of New Wave, the Rana Plaza-based factory from which Loblaw — owner of the Joe Fresh brand — contracted manufacturing services. It is claimed Joe Fresh orders accounted for half of New Wave’s operations at the time of the accident.

As at the Superior Court, the Court of Appeal determined that Bangladesh law governs the plaintiffs’ claim. The plaintiffs claimed certain pleadings connect the claim to Ontario. In particular, the plaintiffs argued that Loblaws assumed responsibility over worker safety, determined the scope of audits. The plaintiffs also argued that Bureau Veritas’ alleged failure to provide professional advice to Loblaws happened in Ontario.

The Court of Appeal rejected the plaintiffs’ arguments and held that the essence of the claim is based in the injuries. The Court concluded that, because those injuries occurred in Bangladesh, the governing law is that of Bangladesh.

With respect to the claim against Loblaws, the Court of Appeal rejected the plaintiffs’ argument that the alleged duty of care is analogous to those found in English cases finding parent companies liable for the actions of subsidiaries. Among other things, Justice Feldman distinguished the English cases in that: (i) Loblaws had little control over the factories; (ii) Loblaws was not in the same business as the factories; (iii) Loblaws did not have superior knowledge or expertise about issues of structural safety; and (iv) Loblaws did not undertake to audit Rana Plaza for structural safety.

Similarly, with respect to the claim against Bureau Veritas, the Court held that it was plain and obvious that no duty of care was owed to the plaintiffs because Bureau Veritas did not undertake to inspect for structural integrity.