Next step for $2-billion building collapse lawsuit against Loblaws

A $2-billion class-action lawsuit against Canada’s largest food retailer could reach the Supreme Court of Canada.

The bodily injury lawsuit against Loblaw Companies Limited was filed in 2015 in Ontario by victims of a 2013 commercial building collapse in Bangladesh. More than 1,100 died and thousands more were injured.

Some of those victims worked for a company making Joe Fresh-branded clothing intended for sale to Loblaws.

Vicarious liability is a risk for commercial clients if they are accused of bearing responsibility for negligence on the part of an employee or contractor.

The lawsuit against Loblaws was originally thrown out of court in 2017 by Justice Paul Perell of the Ontario Superior Court of Justice. Perell’s ruling was upheld in Das v. George Weston Limited, released Dec. 20, 2018 by the Court of Appeal for Ontario.

Loblaws anticipates the plaintiffs will seek leave to appeal to the Supreme Court of Canada, the grocer said in a securities filing released Thursday. The company has more than 500 retail stores across Canada, including Shoppers Drug Mart, No Frills, Provigo, Superstore and Zehrs.

The claims against Loblaws, arising from the 2013 tragedy in Dhaka, are covered by Bangladeshi law, Justice Perell noted. This is one reason he dismissed the lawsuit in Ontario.

Three of the representative plaintiffs – Arati Rani Das, Rehana Khatun and Mohamed Alauddin – worked for New Wave Style and were seriously injured as a result of the building collapse.

Loblaws purchased Joe Fresh clothing from Pearl Global Limited, which in turn outsourced some of the work to New Wave Style Limited and New Wave Bottoms Limited, both of which operated at Rana Plaza, the building that collapsed Apr. 24, 2013.

Perell ruled in 2017 that a Bangladeshi court is unlikely to find Loblaws vicariously liable in the Rana Plaza tragedy. Neither Pearl Global nor New Wave were agents of Loblaws, he ruled.

If the plaintiffs apply for leave to appeal to the Supreme Court of Canada, it will be up to a three-judge panel to decide whether or not Canada’s highest court will hear the appeal. If leave is dismissed, then the Court of Appeal for Ontario ruling is essentially final. If leave is granted, then it’s up to the court to decide whether it grants or dismisses the plaintiffs’ appeal.

On Apr. 23, 2013, Bangladeshi police evacuated Rana Towers after cracks were discovered in the pillars, Justice Kathryn Feldman of the Court of Appeal for Ontario wrote. “Later that day, however, managers at New Wave ordered New Wave employees to return to work the following day,” Justice Feldman wrote for the appeal court in last December’s ruling upholding the lower court decision. “The next morning, Apr. 24, 2013, New Wave advised workers that the building was safe and threatened to terminate their employment if they did not return to work.”

Rana Plaza collapsed at about 9 a.m. on Apr. 24, 2013. Backup generators on the upper floors caused the building to vibrate.

The question of whether a Bangladeshi court would find Loblaws vicariously liable was discussed at length by the Court of Appeal for Ontario.

Justice Feldman noted Loblaws and New Wave are not in a parent/subsidiary relationship. There was no contractual relationship between Loblaws and New Wave – only between Loblaws and Pearl Global.

“Loblaws was not directly involved in the management of New Wave or in the process of manufacturing the products,” Feldman wrote. “Loblaws did not have control over where the manufacturing operation took place. Loblaws’ only means of controlling New Wave was through cancellation of its product orders from Pearl Global.”

Loblaws hired a third party, Bureau Veritas, to compare New Wave’s conduct to Loblaws’ own standards of corporate social responsibility. On separate visits of New Wave Style in 2011 and 2012, Bureau Veritas found New Wave Style was not complying with some health and safety standards, Feldman noted. Those included safety equipment and emergency exit signage.

The Court of Appeal for Ontario rejected arguments from the plaintiffs to the effect that Loblaws controlled New Wave and that the alleged tort occurred in Ontario, where Loblaws is based.