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What Loblaws Ruling in Rana Plaza Case Means for Corporate Liability

Canada’s highest court dismissed on Thursday a $2-billion class-action lawsuit filed against Loblaws by the victims of the Rana Plaza collapse, which killed 1,134 people and injured thousands more outside Bangladesh’s capital city of Dhaka in 2013.

In a final decision, the Supreme Court of Canada said it will not hear an appeal from Arati Rani Das, a garment worker who lost a limb and her mother in the tragedy, and others because Canadian courts didn’t have jurisdiction to consider a claim that fell under Bangladesh’s laws. Loblaws, whose subsidiary Joe Fresh sourced from factories operating at Rana Plaza, also owed “no duty of care” to the proposed class members, who were previously denied by both Ontario’s Superior Court and Court of Appeal.

“The imposition of liability is unfair given that the defendants are not responsible for the vulnerability of the plaintiffs, did not create the dangerous workplace, had no control over the circumstances that were dangerous and had no control over the employers or employees or other occupants of Rana Plaza,” said Superior Court Justice Paul Perell in 2017, when the plaintiffs first argued that Loblaws was responsible for ensuring the safety of facilities where Joe Fresh garments were made.

Similarly, Ontario’s Court of Appeal determined that Loblaws, one of Canada’s leading retail chains, had little authority over the factories, since it did not own or manage them. Neither had Loblaws promised to audit Rana Plaza for structural soundness, it said.

“It is plain and obvious that a claim based on vicarious liability against Loblaws cannot succeed under the law of Bangladesh,” said the Appeal Court, which ordered the plaintiffs to pay Loblaws nearly $1 million in legal fees, which the Supreme Court did not challenge. The defendants’ bill will be footed by Ontario’s Class Proceedings Fund.

The legal team representing the plaintiffs expressed their disappointment at the court’s decision, which it said brought to the fore questions about corporate liability and the “transnational conduct” of Canadian corporations.

“The dismissal of this application leaves important questions unanswered by our country’s highest court,” the team told the Canadian Press. “However, these questions will no doubt re-emerge in the coming years with our growing reliance on workers manufacturing our products in precarious conditions.”