Ontario judge rejects $2bn class-action lawsuit involving Rana Plaza disaster

A judge in the Canadian province of Ontario has rejected a class-action lawsuit seeking $2 billion from Joe Fresh and Loblaw over the collapse of a Bangladesh garment factory in 2013.

Ontario Superior Court Justice Paul Perell said the Toronto-based counsel for three garment workers who were injured in the Rana Plaza building near Dhaka “failed to argue a viable cause of action in their claim.”

Refusing to certify the proposed class action, the judge criticised the plaintiffs’ claim as “bloated with conclusory statements that simply allege a cause of action as if it was a material fact” about Loblaw and other defendants’ potential roles in the collapse.

The disaster killed more than 1,100 garment workers and injured more than 2,500 in Savar.

However, proposing the class action, plaintiff law firm Rochon Genova had argued that Loblaw was “vicariously liable” for the negligence of its suppliers and sub-suppliers, Pearl Global and New Wave, the National Post newspaper reported.

The plaintiff had argued that before the building collapse, Loblaw hired Pearl Global to produce garments for Joe Fresh. Pearl Global outsourced some of the work to New Wave, which manufactured garments at Rana Plaza.

“The claim of vicarious liability failed because Pearl Global and New Wave were not agents or employees of Loblaw, nor were they independent contractors of the sort that can trigger vicarious liability in the legal sense,” Justice Perell wrote in his order issued this month.

“New Wave was selling goods, not services or tasks that were part of Loblaw’s enterprise,” he said in the decision. “Loblaw did not delegate its responsibility for the safety of the employees of New Wave because it had no such responsibility.”

The “exceptional circumstances” in which an enterprise can be ‘vicariously liable’ for the misdeeds of independent contractors were not evident in this case, said Perell, according to the Post.

“Loblaw had no control over how Pearl Global and New Wave carried on their manufacturing business or treated their employees.”

The proposed class action had also named Loblaw’s parent company George Weston, wholly owned Loblaw subsidiary Joe Fresh Apparel.

The branches of Bureau Veritas Consumer Products Services in US, France and Bangladesh, were also implicated in proposed legal action. The company was hired by Loblaw to perform inspections and audits of textile and garment factories.

The Canadian conglomerate Loblaw said in a statement that the company is “pleased” with the ruling.

The retailer and owner of house apparel brand Joe Fresh said it renewed its commitment to the global 2013 Accord on Fire and Building Safety in Bangladesh, which established stricter standards for workplace safety in Bangladesh factories.

“Our three-year renewal will help extend the Accord’s good work, auditing and eliminating building risks in facilities where our suppliers produce our goods and putting workers’ interests first.”

The company, which paid relief and compensation of some $5 million to Bangladeshi workers and various social agencies in the wake of the Rana Plaza disaster, now publicly lists the names of all factories it uses to produce Joe Fresh products, according to the newspaper report.

Last year, a Bangladesh court charged 38 people with murder in the country’s worst industrial disaster. Three others were also charged in assisting plaza owner Sohel Rana in his attempt to flee the country after the collapse.

The incident sparked international outrage and retailers and brand manufacturers faced heightened consumer pressure to expose the cracks in their supply chains, in particular, the sourcing of garment work to underdeveloped nations with cheap labour and poor safety standards.