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Business Commentary Canadian courts must open themselves up to families of victims of Rana Plaza factory collapse and hit Loblaw where it hurts

People rescue garment workers trapped under rubble at the Rana Plaza building after it collapsed, in Savar, 30 km (19 miles) outside Dhaka April 24, 2013.

Andrew Biraj/REUTERS

Allan C. Hutchinson is a distinguished research professor at Osgoode Hall Law School in Toronto. He is counsel to law firm Rochon Genova, which brought a class-action lawsuit against Loblaw Cos. Ltd. but he played no part in the litigation.

The Supreme Court of Canada’s recent decision to deny an appeal in a lawsuit brought by victims of a Bangladeshi tragedy might seem like a small and obscure footnote to class-action jurisprudence. But it is not. Its ramifications are highly significant for serious and wide-ranging matters on corporate responsibility and global trade.

Some will remember the Rana Plaza factory collapse in Bangladesh a few years ago, when 1,130 garment workers died and at least 2,520 others sustained serious injuries. Canadians were appropriately shocked and saddened by this incident, one of an increasing number of similar accidents with catastrophic results. However, sympathy is not enough.

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Canadians must begin to take responsibility and action on this horrendous trend, especially when it involves Canadian companies. As the beneficiaries of the cheap products made and exported to us, we are implicated in the conditions that give rise to these deaths and injuries.

Bangladesh and surrounding countries have a history of factory deaths. In the past few years, many thousands of workers have been killed and many more injured or maimed. Building codes are weak, regularly flouted and rarely enforced. In short, any building site or completed factory is a disaster waiting to happen.

These countries are the source of some of the cheapest labour for manufacturing goods and clothing. Along with their U.S. counterparts, Canadian companies outsource much of their manufacturing to these countries. Paying wages as low as $3 or $4 a day, they obtain merchandise at rock-bottom prices, ship the goods here, sell them at rock-bottom prices and still reap enormous profits.

One egregious example of these practices is the collapse of the Rana Plaza in Savar, Bangladesh. Joe Fresh, now owned by Loblaw, imported massive amounts of garments each year from more than 70 factories in Bangladesh. One of its main suppliers was New Wave, which worked out of the Rana Plaza. The conditions were typical – long hours, low pay and unrelenting pressure to get the job done.

On the morning of April 24, 2013, the Rana Plaza collapsed. Other companies in the building had closed because of reports of its perilous condition. New Wave did not heed such warnings; it had orders to fill and deadlines to meet. Later that day, 1,130 garment workers died and at least 2,520 others sustained serious injuries.

Actions were brought by the workers in Bangladesh. But, like the buildings, the legal process is in ramshackle state. The government is heavily dependent on and involved in the rag trade. The prospects for any reasonable or sufficient redress are extremely low. It is a case of business as usual. Workers are a cheap and expendable resource.

In such circumstances, it is the main and highly profitable beneficiaries of cheap Bangladeshi goods that should be held accountable – Loblaw, in this case. It had a longstanding and close relationship with New Wave, and it would be well aware of the dangerous state of buildings, the poor working conditions, the history of fatal accidents and the need for robust monitoring of the situation.

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A group of injured Bangladeshi workers filed suit in Canada, but courts here decided there was an insufficient link between what happened and Loblaw. However, this defies serious analysis. Loblaw kept the pressure on New Wave to live up to its contractual obligations, delivery dates and product standards. As such, Loblaw should step forward and assume a fair share of the responsibility. It must be prepared to use its ample profits to help victims and prevent future disasters.

Unless Loblaw and others are brought before Canadian courts and the grounds of liability extended to encompass it, it will continue to exploit cheap foreign labour for its own financial gain. In contrast, Loblaw and other Canadian corporations must know that they are not beyond the law or redress in such matters.

Gestures of relatively small contributions (of a few million dollars) to local relief funds do not cut it. Loblaw reaps enormous profits from its dealings in Bangladesh. If it can so easily absolve itself from direct legal and substantial liability, little will change. It is simply not acceptable that large corporations should be able to enjoy the good times and then walk away when tragedy strikes.

If Loblaw persists in taking the profits, then it must also accept the blame and its costs. Global capitalism may be a modern phenomenon, but it need not be carried out in such a Victorian and oppressive manner. With profits, come responsibility; it is that simple.

Canadian courts must open themselves up to the families of victims and hit Loblaw, a leading Canadian corporation, where it hurts. Arguments that it should pay at Bangladeshi rates add insult to injury. The profits are measured in Canadian terms, so must the liability imposed and damages awarded.

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