BUSINESS

Loblaws, Joe Fresh Face With Class-Action Lawsuit Over Bangladesh Factory Collapse

04/30/2015 01:55 EDT | Updated 06/30/2015 05:59 EDT
TORONTO - Loblaws is facing a proposed class-action lawsuit that alleges the retail giant knew of a "significant and specific risk" to workers making garments for its Joe Fresh clothing line in a Bangladeshi factory before the building collapsed, killing more than 1,000 people.

Toronto law firm Rochon Genova launched the lawsuit on behalf of those who survived the 2013 collapse of the Rana Plaza and the estates and dependants of those who died in the building.

A statement of claim filed in Ontario Superior Court last week seeks $1.85 billion in damages for wrongful death and injury for members of the proposed class action, and punitive damages of $150 million.

It alleges Loblaws (TSX:L) knew before the collapse that Bangladesh factories had "an extremely poor record" of workplace safety standards and industrial building standards.

"The Loblaws defendants were aware that there was a significant and specific risk to workers who manufactured Joe Fresh garments and who were employed by their subcontractors in Bangladesh," the statement of claim said.

"The Loblaw defendants were aware that the reason that subcontractors...could manufacture and supply the Joe Fresh garments at such low costs was not only because the garment workers were paid extremely low wages...but also because the subcontractors often operated sub-standard and unsafe factories."

George Weston Limited, which operates Loblaws, and Bureau Veritas, a company used by Loblaws to audit garment factories, are also named as defendants in the suit.

A spokesman for Loblaws said the company planned to "vigorously defend" itself.

"We believe that this claim is without merit," said Kevin Groh, the company's vice-president of corporate affairs and communication.

"We hope this claim does not distract from the positive work Loblaws has done and continues to do in respect of this tragedy, and that it does not discourage others from making similar contributions."

Loblaws is part of the Rana Plaza Arrangement, a fund established to provide relief to those affected by the collapse.

Rana Plaza was outside the Bangladeshi capital of Dhaka, and housed five garment factories when it collapsed, killing 1,127 people and injuring about 2,500. The incident is considered Bangladesh's worst industrial disaster.

The lawsuit notes that many of Joe Fresh's garments were made in the factory, which was operated by Loblaws Bangladeshi subcontractors, including one called New Wave.

The building had several illegally constructed floors which were added without building permits or proper structural engineering, the statement of claim said, noting that on the day of the collapse, the building had eight levels.

"Rana Plaza building was exhibiting clear warning signs of impending collapse and fresh structural cracks were noted in the building the day before the collapse," the statement of claim said.

The building had actually been ordered evacuated a day before the collapse, the statement of claim said, but workers were ordered back in the following day.

"New Wave and the other factory managers told the garment workers that the building was safe and threatened to cut the workers' pay or terminate their employment if they did not return to work," the statement of claim said.

Those factory managers were facing a delivery deadline of 24,000 pieces of boys' pants for Loblaws, the statement of claim said.

"This stringent deadline from the Loblaws defendants forced New Wave workers back into the building into unsafe and life-threatening working conditions," the statement of claim alleged.

"Neither the Loblaws defendants nor the Bureau Veritas defendants took any steps or made any efforts to release New Wave from the delivery obligations or to prevent workers from re-entering the Rana Plaza"

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