Who Is My Neighbour? Ontario Court Rejects a Duty of Care to Employees of Foreign Suppliers
July 24, 2017
The Ontario Superior Court of Justice recently dismissed a proposed class action arising out of the collapse of a manufacturing facility in Bangladesh. On July 5, 2017, in Das v. George Weston Limited (Das), the court found that under either Bangladesh or Ontario law, putative class members had no legally viable claims against the defendants. The decision raises several local and international legal issues regarding jurisdiction, choice of law, and the scope of the duty of care owed by Canadian businesses that source goods from abroad.
Das should be of interest to Canadian businesses that purchase goods from foreign suppliers. In dismissing the claims in this case, the court was mindful of the limits of a company’s control over independent suppliers located abroad and the importance of not deterring responsible foreign investment by Canadian businesses.
Rana Plaza was a building in Bangladesh that housed numerous businesses, including a clothing manufacturer that was a sub-supplier to Loblaws. On April 24, 2013, the plaza collapsed, resulting in the death or injury of thousands. Four Bangladesh citizens commenced a proposed class action in Ontario against Loblaws and Bureau Veritas, a consultant retained by Loblaws to conduct a “social audit” of its sub-supplier in Rana Plaza.
The plaintiffs alleged that the defendants were liable for negligence, and that Loblaws was also vicariously liable for the negligence of its suppliers and sub-suppliers, and liable for breach of fiduciary duty. Among other things, the plaintiffs alleged that Loblaws failed to ensure that Rana Plaza complied with Loblaws’ Corporate Social Responsibility (CSR) standards and that the CSR standards were in any event inadequate.
The plaintiffs moved for certification of the proposed class action. The defendants brought a cross-motion to have the action dismissed on the bases of lack of jurisdiction, choice of law, limitations, and no viable cause of action against the defendants.
Jurisdiction Over Absent Foreign Claimants
The court found that there was no doubt that an Ontario court had jurisdiction simpliciter over the named parties. The matter of controversy was whether the court had jurisdiction over putative class members who were not individually named as parties to the litigation, and who resided in Bangladesh — the so-called “absent foreign claimants”. Loblaws argued that the absent foreign claimants should be required to actively attorn to the Ontario court’s jurisdiction before the class could be certified.
In response, the plaintiffs revised the proposed class definition and sought certification of an “opt-in” class rather than the usual “opt-out” class, such that the court did not have to determine whether it had jurisdiction to certify a global “opt-out” class. The motion judge held that had the class action been certified, it would not have been necessary for putative class members to have formally attorned before the certification motion because their attornment would have been achieved post-certification by a court-supervised opt-in notice program.
Choice of Law
The court rejected the plaintiffs’ argument that the pleaded wrongdoing occurred in Ontario, where the defendants have offices. Rather, the court held that any alleged wrongdoing took place in Bangladesh — the country substantially affected by the defendants’ alleged conduct and where the victims were located. Accordingly, Bangladesh law applied to the claims. To the extent that limited aspects of Bangladesh law regarding compensation might be found contrary to Canadian public policy, those aspects of the law could be severed.
The court held that the claims of all class members (except those who were minors at the time of the collapse) were statute-barred under the one-year limitation period that applies to a wrongful death claim under Bangladesh law.
Viability of the Plaintiff’s Claims
The court found that the plaintiffs’ assertion that a purchaser of goods (Loblaws) should have a duty of care to the employees of the manufacturer of those goods would be a novel duty, and went on to consider whether such a duty should be recognized.
The court noted that mere foreseeability of harm is insufficient to create a duty of care. The law does not impose a positive duty on a person to rescue others or to prevent a person from being harmed by a third party’s criminal acts, outside of narrow circumstances.
Applying Ontario law, the court held that there was insufficient proximity between the defendants and putative class members to recognize a duty of care. The court found that it would be unreasonable to impose such a duty on the defendants, given that they did not create the dangers at Rana Plaza, nor were they in a position to ameliorate those dangers.
The court also cited numerous public policy factors negating the existence of a duty of care, including the extension of liability imposed on purchasers who would become responsible for the safety of their supplier’s employees in foreign lands, and the spectre of indeterminate liability. The court noted Canadian businesses may be deterred from adopting CSR policies if doing so would mean exposing the company to claims that their policies were not robust enough to protect a supplier’s employees.
The plaintiffs’ vicarious liability claim against Loblaws was also found to be unviable, given the absence of any direct control on Loblaws’ part. The court also found that Loblaws could not owe putative class members a fiduciary duty because, among other things, there was no “legally significant relationship” between Loblaws and the employees of an independent sub-supplier.
The court concluded that the plaintiffs’ claims were not viable under Bangladesh law for similar reasons.
In the result, the court dismissed the plaintiffs’ action, finding that their claims did not disclose a reasonable cause of action. Had the pleadings disclosed any viable claims, the court would have been prepared to certify the class, with some modifications to the proposed class definition.
The court’s decision in Das signals that tort law has its limits, even as business becomes increasingly globalized.
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