New class actions arising from Rana Plaza disaster.

Its been two years since the collapse of Rana Plaza and those haunting pictures of people being pulled out of the rubble. They had all gone to work, like any other ‘normal’ day to keep up with the fast fashion culture that we in the West have cultivated and support. More than 1 100 workers did not come out of the rubble alive.

There have been endless number of charitable intitiativesarising in response to the Rana Plaza disaster. The Bangladesh Accord was set up as an independent, legally binding agreement between brands and trade unions designed to work towards a safe and healthy Bangladeshi Ready Made Garment industry. It has refocused the retail and other industries’ attentions on the reality of health and safety, in both operations and the supply chain, as a precursor to any integrated corporate sustainability strategy. But has it really made retail and other companies sit up and address their supply chains? Was it one of the reasons that there was a lobby in the UK to include a transparency in supply chain clause in the Modern Slavery Act?

We had not seen any direct legal action arising from the aftermath of Rana Plaza. That is, until now. The Financial Post published an article stating that a Toronto Law firm is bringing a class action lawsuit relating to the 2013 Bangladesh garment factory collapse, seeking $2billion in damages from Loblaw and its Joe Fresh clothing line. The suit was filed in the District of Columbia Court. A similar intended suit was filed in Washington D.C against retailers including Walmart, the Children’s Place and J.C Penney, which were also among the 20 Manufactures who had clothing made in the building. The Canadian notice of action also names Loblaw’s parent company George Weston Ltd, wholly owned Loblaw subsidiary Joe Fresh Apparel Inc and the US, France and Bangladesh branches of Bureau Veritas Consumer Products Services Inc, a company hired by Loblaw to perform inspections and audits of textile and garment factories. The notice of action was filed on behalf of three garment workers , two whom lost limbs in the collapse, and in the case of the third plaintiff , lost both his sons. The suit seeks damages for wrongful death and injury of $1.85 billion plus punitive damages of $150 million. It alleges that Loblaw was aware of the ‘significant and specific risk’ to workers who made Joe Fresh Clothing.

The statement of claim is damming. It states that ‘ it was known to the defendants prior to April 24, 2013, that Bangladesh factories had an extremely poor record of workplace safety standards and industrial building standards including garment factories, that there have been a recent history of very serious accidents and collapses at garment factories in Bangladesh in the period immediately preceding the collapse of the Rana Plaza,’ state Rochon Genova LLP, the plaintiffs law firm.

The proposed class action would cover all those who were in the building who survived the collapse that killed about 1130 and injured 2520 and the estates of those who died.

There are some noteworthy issues arising from this proposed action that companies involved in any form of manufacturing should take note of. In particular:

1. Auditing is by no means the solution to any issues or a defence in the case of an incident. The fact that the company hired to perform inspection and audits of the garment factories is cited as a defendant
2. Despite fears that the building was unstable, workers were ordered to return to work as factory managers were facing delivery deadlines. Procurement practices need to be revisited.
3. Loblaw had directed $5 million to voluntary relief related to Rana Plaza, becoming an early signatory of the Accord. This action is probably seen as a mitigating factor against the bad press and, had the company not done this, one wonders what the further damage would have been to its reputation.
4. The alleged damages are very high. And these do not take into account the cost of defending the action, nor the cost of personnel (senior management) that will have to be involved in defending the action
5. We will have to see how the court will interpret the ‘significant and specific risk’ and whether awareness of that risk is the relevant standard to be applied.
6. The action could take years to resolve. This could impact on a company’s reputation and pockets, as well as morale internally.
7. Looking at the Loblaw website they do not have a human rights policy, a recognised starting point on recognising responsibility and addressing a company’s approach to such issues.

The continued pressure on the garment industry to provide fashion that is ‘fast’ and ‘dispensable’ does not look like it is about to wain. But the reality for all companies is that they need to consider how they are going to tackle key health and safety and human rights issues in their supply chain. We have set out 10 steps that companies should take following the introduction of the modern slavery Act in the UK, but the principles apply to business and human rights more broadly; take a look here.

The law have everything to do with it.