the 9th lawasia international moot in the...
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B1406-C
THE 9TH LAWASIA INTERNATIONAL MOOT
IN THE THAI ARBITRATION INSTUTE
BANGKOK, THAILAND
2014
BETWEEN
THE INTERNATIONAL COLLECTIVE IN SUPPORT OF TEXTILE WORKERS
(CLAIMANT)
AND
SPEAR SHIRTS INCORPORATED
(RESPONDENT)
MEMORIAL FOR CLAIMANT
1
CONTENTS
CONTENTS................................................................................................................................... 2
INDEX OF AUTHORITIES ........................................................................................................ 4
Cases ............................................................................................................................................ 4
Statutes/Conventions ................................................................................................................... 5
Books ........................................................................................................................................... 5
Articles......................................................................................................................................... 5
STATEMENT ON JURISDICTION .......................................................................................... 7
QUESTIONS TO BE PRESENTED ........................................................................................... 8
STATEMENT OF FACTS ........................................................................................................... 9
SUMMARY OF PLEADINGS .................................................................................................. 11
CLAIMANT’S PLEADINGS .................................................................................................... 13
I The Law of California should apply to the substance of the dispute ...................................... 13
II The Claimant is entitled to bring a class proceeding against the Respondent ....................... 15
III The Respondent Is Liable for the Claimant's Loss ............................................................... 17
A. The Respondent is Vicariously Liable for the negligence of Mae Sot Clothing Pty Ltd .. 17
C. The Respondent Is Liable in Negligence as Principal to an Agent ................................... 19
D. The Respondent Is Liable in Negligence .......................................................................... 20
D. Alternatively, the Respondent is liable under the Civil and Commercial Code................ 27
2
IV Damages are payable by the Respondent to the Claimant to compensate for the Claimant’s
loss ............................................................................................................................................. 29
CONCLUSION AND PRAYER FOR RELIEF ....................................................................... 32
3
INDEX OF AUTHORITIES
Cases
1. Aetna Health Plans of California, Inc. v. Yucaipa-Calimesa Joint Unified School Dist. 72
Cal.App.4th 1175 (1999)
2. Banfield v Addington, 140 So. 893, 896 (Fla, 1932)
3. Bent & Dunlop Ltd [1998] PIQR 416.
4. Boire v. Greyhound Corp 376 US 473, 481 (1964)
5. Doe v Dominion Bank of Wash, N.A, 963 F.2d 1552, (D.C. Cir, 1992)
6. Doe I v Wal-Mart Stores Inc 573 F 3d 677, 682-3 (9th Cir, 2009)
7. Gunn v Robertson 801So. 2d 555 (La. Ct. App. 2001);
8. Hodgson v Griffin & Brand of McAllen Inc., 471 F 2d 235 [12]-[16] (5th Cir, 1973)
9. Jameson v Gavett 22 Cal. App. 2d 646 (1937)
10. Jock v Sterling Jewelers Incorporated, No. 8 Civ. 2875, 2010 (S.D.N.Y. July 26, 2010).
11. Ltoh v Truck-A-Way Corp 70 Cal. Reptr. 2d 571 (Cal. Ct. app. 1998)
12. Moody v Blanchard Place Apartments 793 So. 2d 281 (La. Ct. App. 2001)
13. National Labour Relations Board v Browning-Ferries Industries of Pennsylvania, 691 F 2d 1117, [31] (3rd Cir,1982)
14. Nussbaum v Traung Label & Lithograph Co. 46 Cal. App. 561 (1920)
15. Rowland v Christian 69 Cal.2d 108 (1968)
16. Rodriguez v Bethlehem Steel Corp., 525 P2d 669, 680 (Cal. 1974).
17. Rutherford Food Corporation v McComb, 331 US 722, 730 (1947)
18. Palsgraf v Long Island Railroad Co. 248 NY 339, 162 NE 99 (NY 1928)
19. Peete v Blackwell 504 So. 2d 222 (Ala. 1986);
4
20. Sharp v W.H. Moore Inc., 796 P.2d 506, 509 (Idaho, 1990)
21. Shugar v Guill 283 S.E. 2d 507 (NC 1981)
22. Shultz v Hinojosa, 432 F 2d 259, 264 (5th Cir, 1970)
23. Stolt-Nielsen S.A. v Animal Feeds International Corp, 130 S. Ct. 1758 (2010)
24. Summers v Tice 199 P. 2d 1 (Cal. 1948)
25. Tarasoff v Regents of University of Cal., 551 P.2d 334 (1976)
26. Thomas v Duggins Construction Co Inc., 139 Cal. App. 4th 1105 (2006)
27. Ultramares Corporation v Touche 174 NE 441 (1931).
28. Wilson v Chicago, Milwaukee, St Paul and Pac, R.R. Co., 841 F.2d 1347 (7th Cir, 1988)
29. Wirtz v Lonestar Steel Company 405 F 2d 668, 669 (5th Cir, 1968)
Statutes/Conventions
1. California Civil Code 2. Civil and Commercial Code
Books
1. Born, GB, International Commercial Arbitration (Kluwer Law International, 2nd ed,
2014)
2. Moser, M and Choong, J. Asia Arbitration Handbook (Oxford University Press, 2011)
3. Tetley, W. International Conflict of Laws: Common, Civil and Maritime (International Shipping Publications, 1994)
Articles
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1. Atcharawongchai, W. ‘The Non-Pecuniary Damages in Wrongful Acts Causing Bodily Harm and Death: The Comparative Study on U.S. and Thailand Laws’ (2013) Volume 16(1).
2. Lovanovich I, ‘Personal Injury and Damages for Non-Pecuniary Loss in the Law of Torts
and the Product Liability Law’ (2011) (unpublished thesis for Master of Laws prograFaculty of Law, Thammasat University), available online at: http://digi.library.tu.ac.th/thesis/la/1816/title-biography.pdf.
6
STATEMENT ON JURISDICTION
The International Collective in Support of Textile Workers (“Claimant”) and Spear Shirts
Incorporated (“Respondent”) jointly submit the present dispute to the Thai Arbitration Institute
for Arbitration according to the Kuala Lumpur Regional Centre for Arbitration Rules (“KLRCA
Rules”).
The dispute includes issues on the Tribunal’s jurisdiction. Pursuant to Article 6 of the
KLRCA Rules, the Tribunal may elect to rule on its jurisdiction as a preliminary question or
in an award on its merits.
Both parties shall accept the judgment of the Tribunal as final and binding and execute it in
good faith in its entirety.
7
QUESTIONS TO BE PRESENTED
1. Which State’s law should apply to the substance of the dispute?
2. Can the Claimant bring a representative proceeding against the Respondent?
3. Is the Respondent liable for the Claimant’s harm?
4. What remedies are available to the Claimant?
8
STATEMENT OF FACTS
1. The Claimant is an NGO based in India who is bringing the action against the
Respondent on behalf of the victims and families of factory workers who suffered loss
from the Mae Sot factory fire. The NGO investigates and reports on working conditions
in factories throughout Asia.
2. The Respondent is a wholesaler with it its principal place of business in Los Angeles,
California. The Respondent sells its clothing throughout the United States as well as
internationally. The Respondent has insurance which covers the injuries or deaths of its
employees, but this insurance does not extend to employees of its suppliers.
3. Mae Sot Clothing Limited (‘Mae Sot’) is the largest of more than 100 clothing factories
located in or near the town of Mae Sot, Thailand. Mae Sot produces clothing for some of
the world’s most famous brands, including the Respondent’s brand, Spear Shirts TM.
Collectively, Mae Sot employs almost 38,000 Thai workers and more than 60,000
workers from Myanmar.
4. Early in 2013, Theodore Snowden (“Snowden”) assistant to the Vice President in charge
of purchasing at the Respondent Company, Joe Baydon (“Baydon”), went to Mae Sot
factory (the “factory”) to meet the General Manager of Mae Sot, Paul Castro (“Castro”).
5. Snowden sent a text message to his boss, Baydon which expressed newfound knowledge
of how the factory workers were able to produce such great shirts at such a ridiculously
low price. Snowden reiterated that the factory was a “sweat shop” where employees were
worked to death before pointing out that he is lucky he did not break his neck from
constantly tripping over the rolls of stuff all over the floor. Snowden further pointed out
that the girls seem really young, possibly only 12 or 13 years of age but that Castro, with
9
a smile, reassured him that they were all above the legal age and all Thai women look
younger than they are.
6. On 15 October 2013, several months after Snowden’s visit, a fire erupted at Mae Sot
factory (“factory”) which led to the total destruction of the uninsured building. The fire
may have started from an overheated textile machine and quickly spread through the
factory as a result of the negligent or possibly grossly negligent manner, that Mae Sot had
been operating the factory in, such as non-functioning fire extinguishers and blocked stair
ways.
7. Fifty female employees lost their lives in the fire and more than 100 more were seriously
injured. The victims were all from Myanmar and many of them were under the age of 15,
the legal working age in Thailand.
8. The Claimant has accepted a report from an independent auditor that Mae Sot has no
assets and that it would be futile to pursue a legal action against it. The Claimant is
seeking compensation from the Respondent alleging that the Respondent company is
responsible in whole or in part for the injuries and fatalities which resulted from the fire.
9. In attempt to avoid the delay and costs associated with formal litigation, the Claimant and
the Respondent (together “the Parties”) have agreed to submit the dispute to binding
arbitration in Bangkok in accordance with the Rules of the Kuala Lumpur Regional
Centre for Arbitration (“KLRCA Rules”).
10
SUMMARY OF PLEADINGS
1. The Law of California should apply to the substance of the dispute as it was the
jurisdiction which governed the Purchase Order, the instrument which is the centre of the
Complainant’s relationship with the Respondent. Applying the law of California does not
cause the Respondent any prejudice, as it is the law of its domicile.
2. The Claimant is entitled to bring a class proceeding against the Respondent. The
Respondent agreed to a representative proceeding by entering into a valid arbitration
agreement with ICSTW, a public interest non-governmental organisation. A
representative proceeding is most conducive to an expeditious resolution of the present
dispute.
3. The Respondent is liable for the Claimant's loss on at least one of the following grounds:
a. The Respondent is vicariously liable for Mae Sot’s negligent actions which
caused the Complainant’s loss. The Respondent’s exercise of control over Mae
Sot’s commercial decisions makes the Respondent a joint employer, in the
practical sense.
b. The Respondent Is liable in negligence as principal to an agent. The Claimant, in
a practical sense, was acting as an agent, serving for the benefit of the
Respondent.
c. The Respondent is liable in negligence for its continuous failure to
d. Alternatively, the Respondent is liable under the Civil and Commercial Code
(‘Thailand Code’) because its negligently caused injury to the Complainant’s by
failing to show the requisite level of care.
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4. Damages are payable by the Respondent to the Claimant to compensate for the
Claimant’s loss.
12
CLAIMANT’S PLEADINGS
I The Law of California should apply to the substance of the dispute
1. The parties have agreed, and it remains their common intention, for the present
proceedings to be governed by the KLRCA Rules. The parties have agreed that Thailand
shall be the seat of the present arbitration.
2. The law of the seat (lex arbitri), as contained in the Arbitration Act B.E. 2545 (2002)
(‘Arbitration Act’) shall apply. As the Act gives primacy to the parties’ choices, the
designation by the parties for the KLRCA rules to govern the procedural aspect of the
arbitration is effective. The lex arbitri shall apply, in respect of its mandatory laws, and
also in respect of procedural matters on which the KLRCA rules are silent.
3. The tribunal should give effect to the parties’ intentions unless doing so would be
inconsistent with a mandatory law or the KLRCA rules. It is the common intention of the
parties that the present dispute be governed by the law of California. The Respondent’s
intention is manifested in the terms of the Spear Shirts Purchase Order (‘Purchase
Order’), which states, in the ‘applicable law’ clause that the transactions between the
Respondent and Mae Sot are to be governed by the law of California. ‘Transactions’ as in
the ‘Applicable law’ clause should be construed broadly to include all dealings between
the Respondent and Mae Sot, including its employees, arising under the Purchase Order.
The ‘Jurisdiction’ clause which states that parties consent to the jurisdiction of the courts
in California in the event of ‘any legal proceedings [emphasis added]’ supports a broad
construction of the term ‘transactions’ as appears in the ‘applicable law’ clause.
4. The ‘Jurisidiction’ clause of the Purchase Order expressly notes that the clause does not
limit or diminish any further arbitration agreements entered into by the parties. The
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correct interpretation of this clause is that where there is conflict between the
‘Jurisdiction’ clause and the future arbitration agreement, the terms of the arbitration
agreement is to prevail. However, there is no such conflict in the present case, as the
parties have not made a further express designation on which law is to govern the dispute.
5. If, contrary to paragraphs 3 and 4 above, the tribunal determines that the parties have not
designated a law to govern the substance of the present dispute. Then article 35(1) of the
KLRCA rules enable the tribunal to determine the appropriate law to govern the
substance of the dispute. The tribunal has a wide discretion to make a direct choice of law
under article 35(1), and is not confined by the application of conflict of law rules.
However, conflict of law rules, and international principles on resolving conflicts can
provide useful guidance in determining the appropriate law.
6. Lex loci delicti, the law of the place where the tort occurred, is the classic approach in
selecting the substantive law jurisdiction. However, strict application of this principle has
long fallen out of favour.1 The appropriate law should be determined by reference to the
jurisdiction that has the most significant relationship, or is most closely connected, with
the dispute.2 While the tort occurred in Thailand, California is most closely connected
with the dispute for these reasons:
a. The Respondent is domiciled in California;3
b. The Purchase Order, which is the nexus of the relationship between the Claimant
and Respondent, is entered into in California;4
1 Tetley, W. ‘Chapter 13: Torts & Delicts in General’ in International Conflict of Laws: Common, Civil and Maritime (International Shipping Publications, 1994) 427, 428. 2 Born, GB, Chapter 19: Choice of Substantive Law in International Arbitration in Gary B. Born , International Commercial Arbitration (Kluwer Law International, 2nd ed, 2014) 2614, 2644; Tetley, W. ‘Chapter 1: Four Classic Approaches to Solving Conflict of Laws’ in International Conflict of Laws: Common, Civil and Maritime (International Shipping Publications, 1994) 3. 3 Moot Problem, p.1.
14
c. The law of California governed the pre-existing relationship between the
Respondent and Mae Sot. The Claimants, as employees of Mae Sot, are also
subject to that pre-existing relationship; and
d. The goods manufactured by the Claimants are delivered to California.5
7. Section 34 of the Arbitration Act has no application in the present case, as the KLRCA
addresses the procedure for determining the substantive law.6
8. Applying the law of California to the present dispute does not cause prejudice to the
Respondent as it is the jurisdiction of the Respondent’s domicile.
9. In the alternative, if contrary to paragraphs 6 above, the tribunal finds that section 34 of
the Arbitration Act does apply, the result is the same. Section 34 of the Arbitration Act
provides that the tribunal is to use the applicable conflict of law rules to determine the
law that is to apply to the substance of the dispute.
II The Claimant is entitled to bring a class proceeding against the Respondent
10. Section 25 of the Arbitration Act provides that parties may agree on the procedural
conduct of the arbitration. Additionally, section 25 of the Arbitration Act and Rule 10 of
the KLRCA Rules both allow the arbitral tribunal to otherwise conduct the arbitration as
they think fit. Therefore, class arbitration is prima facie permissible, and does not fall
outside the tribunal’s jurisdiction. The Supreme Court of the United States has ruled that
4 Clarifications to the Moot Problem, B-5. 5 Clarifications to the Moot Problem, Attachment 1. 6 Henderson, A. and Srangsomwong S. ‘Thailand’ in Michael Moser and John Choong Asia Arbitration Handbook (Oxford University Press, 2011) 581, 586. 6. 6
15
class arbitrations are permissible, provided that the parties have agreed to this form of
arbitration.7
11. The Claimant is representing a class of people, namely the surviving victims of the
incident, and the family members of the deceased victims.8 The Claimant is a non-
governmental organisation based in India. It’s only connection with the present dispute is
the public interest of representing the rights of this class of persons. Therefore, the
Respondent agreed to class arbitration by agreeing with the Claimant to submit the matter
to arbitration.
12. The class of persons represented by the Claimant comprises:
a. members who were employees of Mae Sot, that were injured in the incident
(‘injured members’); and
b. and familial members of those who died (‘inheritors’).
13. The arbitration agreement between the Respondent and the Claimant is effective on each
of the class members whom the Claimant is representing. As such, under article 17(5) of
the KLRCA UNCITRAL Rules, the tribunal is within its power to join each victim, or
their family member, individually. While this approach achieves the same net result as a
class arbitration, it is highly undesirable in the circumstances:
a. the victims, being employees of a ‘sweat shop’ factory, do not have adequate
resources to obtain their own legal representation. Nor do they have sufficient
legal knowledge or expertise to be self represented;
b. even if the victims obtained individual legal representation, the balance would be
substantially in the Respondent’s favour, as it is a multinational corporation;
7 Stolt-Nielsen S.A. v Animal Feeds International Corp, 130 S. Ct. 1758 (2010); Jock v Sterling Jewelers Incorporated, No. 8 Civ. 2875, 2010 (S.D.N.Y. July 26, 2010). 8 Moot Problem, p 1; Further Clarifications, D-1.
16
c. many of the victims are still adolescents;9
d. the victims’ loss arise from the same incident; and
e. the victims and their families are seeking an expeditious resolution to this
dispute.10 A large multiparty arbitration will not be expeditious.
Therefore, the representative action brought by the Claimant on behalf of the victims and
their families is more appropriate in all the circumstances.
III The Respondent Is Liable for the Claimant's Loss
A. The Respondent is Vicariously Liable for the negligence of Mae Sot Clothing Pty Ltd
11. It is not disputed that the factory was operated in a negligent, or grossly negligent manner
by Mae Sot.11
12. The Respondent should be held vicariously liable for the negligence of Mae Sot as joint
employer. Applying the standard endorsed by the US Supreme Court in Boire v.
Greyhound Corp12 to the present case indicates that the question of whether the
Respondent is the "joint employer" of the factory workers is a question of fact that
requires a consideration of whether the Respondent possesses sufficient control over the
work of the employees to qualify as a joint employer with Mae Sot. The notion of control
was also recognised in Wirtz v Lonestar Steel Company13 where the court asserted that
the total employment situation should be considered, especially with regard to the level of
control the company exerts over employees as well as the hiring and firing power of the
company. The basis of the finding is simply that Respondent, while contracting in with an
9 Moot problem, p. 2. 10 Further Clarifications, D-1. 11 Moot Problem, p. 4. 12 376 US 473, 481 (1964); Hodgson v Griffin & Brand of McAllen Inc., 471 F 2d 235 [12]-[16] (5th Cir, 1973). 13 405 F 2d 668, 669 (5th Cir, 1968).
17
otherwise independent supplier, Mae Sot, has retained for itself sufficient control of the
terms and conditions of employment of the factory workers who are employed by the
other employer14
13. The present situation can be distinguished from that of Doe I v Wal-Mart Stores Inc.15 as
although in that case the court found that Wal-Mart could not be characterised as joint
employer because it did not have sufficient control over day-to-day operations, in this
case, the Respondent did have considerable financial control over the functioning of Mae
Sot thereby impacting it’s day-to-day activities. This is especially so regarding the
number of employees which would have been hired and the hours worked to meet the
orders of their largest customer on the wages they could afford to pay. The Respondent
indirectly set the rate of pay for the factory workers.
14. This analysis requires the “circumstances of the whole activity to be taken into
account”.16 The Tribunal should have regard not on the form of the relationship, but on
the “economic reality”17 including the relative economic and bargaining power of parties.
The Respondent has considerable financial control over Mae Sot as it has no assets and
must rely on it’s largest customer, the Respondent, to continue carrying on its business in
manufacturing apparel. The notion of control is further illustrated by the fact that the
Respondent has been given authority to make numerous suggestions regarding the
management of Mae Sot which have all subsequently been implemented.18
14 National Labour Relations Board v Browning-Ferries Industries of Pennsylvania, 691 F 2d 1117, [31] (3rd Cir,1982). 15 573 F 3d 677, 682-3 (9th Cir, 2009). 16 Rutherford Food Corporation v McComb, 331 US 722, 730 (1947). 17 Shultz v Hinojosa, 432 F 2d 259, 264 (5th Cir, 1970). 18 Clarifications to the Moot Problem, B-3.
18
15. It is open to the Tribunal to find that the Respondent is vicariously liable for the
negligence of Mae Sot as joint employer by virtue of the special relationship between the
parties.
B. The Respondent Is Liable in Negligence as Principal to an Agent
16. Section 2338 of the California Civil Code provides in relation to a principal’s
responsibility for their agent’s negligence or omissions that, ‘[u]nless required by or
under the authority of law to employ that particular agent, a principal is responsible to
third persons for the negligence of his agent, in the transaction of the business of the
agency, including wrongful acts committed by such agents in and as a part of the
transaction of their business, and for their wilful omission to fulfil the obligations of the
principal.’
17. The principle that a master is civilly liable for the negligent conduct of their servant
committed by the servant while in their master’s service and within the scope of
employment is long-standing.19 Continuing the analysis at paragraph 14, Mae Sot can be
construed to be a ‘servant’, and the Respondents their ‘master’ due to the effective
control the Respondents exercised over them in their ordering and management
techniques. The reliance that Mae Sot placed upon the Respondents to maintain their
business functioning.
18. The exclusion from this category occurs where the servant acts without regard for his
employer and his role of performing work for his employer, and instead acts to further
some independent purpose of his own.20 Those who ran the Mae Sot factory remained
within the ambit of their service when they chose to maximise profits by ignoring safety
19 Jameson v Gavett (1937) 22 Cal. App. 2d 646. 20 Nussbaum v Traung Label & Lithograph Co. (1920) 46 Cal. App. 561.
19
standards and maintenance work. This approach is consistent with the finding that a
salesperson was found to have a duty of care to a purchaser’s employees upon selling a
product to their employer.21
C. The Respondent Is Liable in Negligence
19. The Respondent is liable to the Claimant in negligence, under section 1714 (a) of the
California Civil Code which provides, ‘(e)veryone is responsible, not only for the result
of his or her wilful acts, but also for an injury occasioned to another by his or her want of
ordinary care or skill’. ‘[I]n the absence of statutory provision declaring an exception to
the fundamental principle enunciated by section 1714 of the Civil Code, no … exception
[to the general principle that a person is liable for injuries caused by his failure to
exercise a reasonable care in the circumstances] should be made unless clearly supported
by public policy’.22 A defendant owes a duty of care ‘to all persons who are foreseeably
endangered by his conduct, with respect to all risks which make the conduct
unreasonably dangerous.’23
20. The Respondent is liable in negligence for the following reasons:
a. That the Respondent owed the Claimant a duty of care;
b. That the Respondent’s negligence breached that duty of care;
c. That the Claimant was harmed; and
d. That the Respondent’s negligence was a substantial factor in causing the
Claimant’s harm.
25. A duty of care is owed by the Respondent to the Claimant which arises because the
Claimants were foreseeable victims of the Respondent’s actions.
21 Thomas v Duggins Construction Co Inc., (2006) 139 Cal. App. 4th 1105. 22 Rowland v Christian (1968) 69 Cal 2d 108, 11 [70 Cal.Rptr. 97, 443 P.2d 561] 23 Rodriguez v Bethlehem Steel Corp., 525 P2d 669, 680 (Cal. 1974).
20
a. Any garment order placed by the Respondent would directly affect the workers
within the Mae Sot factory, as their job is to produce garments to meet the
Respondent’s needs, even when this amounts to production of ‘great shirts at such
a ridiculously low price’, and results in their workplace being a ‘sweat shop’
where ‘they work their employees to death’.24
b. It is proved that not only was the danger foreseeable, but indeed known about, as
Snowden attended the Mae Sot factory ‘several months prior to the fire’ and
reported to Baydon about the harmful conditions the factory was operated in.
Throughout the 20th century application of these principles in America, the court
has been consistently generous in their application of this principle nation-wide,
and recently, particularly in California. In a 1976 case, it was held that
psychotherapists have a duty to warn person threatened by their patients of danger
that could be occasioned to them.25 Later, the law was stretched incredibly to rule
that landlords have a duty to protect their tenants against rapists.26
c. Indeed, it has been affirmed that “in every situation where a man undertakes to
act … he is under an implied legal obligation or duty to act with reasonable care,
to the end that the person or property of others may not be injured.”27 Similarly,
“[e]very person, in the conduct of his business, has a duty to exercise ordinary
care to ‘prevent unreasonable, foreseeable risks of harm to others.”28
24 Moot Problem, p. 2 (text message). 25 Tarasoff v Regents of University of Cal., 551 P.2d 334 (1976). 26 Doe v Dominion Bank of Wash, N.A, 963 F.2d 1552, (D.C. Cir, 1992). 27 Banfield v Addington, 140 So. 893, 896 (Fla, 1932). 28 Sharp v W.H. Moore Inc., 796 P.2d 506, 509 (Idaho, 1990).
21
d. Unlike Palsgraf v Long Island Railroad Co.,29 this is not a situation where the
claimant is out of the ‘zone of danger’ by being so removed that it was
unforeseeable they would be injured by the conduct. By contrast, any action of
the Respondent had a direct impact on the Claimant and their working conditions,
and this is an appropriate situation for a duty of care to exist.
26. The duty of care the Respondents owed to the Claimants was breached. The standard of
care owed by the Respondents was that which would be exercised by a reasonably
prudent person acting under similar circumstances.30 In these circumstances, the
Respondents are professional wholesalers. They own and have experience in running a
large wholesale company. Thus, they would be held to the standard of a large wholesaler
with knowledge of the manufacturing industry, under the principle that one who holds
specials skills is assessed against the standard of a reasonably prudent person who also
possesses those skills.31
27. The Respondents in this situation knew of the conditions in the factory. This knowledge
was gained when Snowden attended the factory several months prior to the fire and
reported to Baydon the conditions within the factory.32 Snowden reported to Baydon that
he now understood ‘how [Mae Sot] can supply [the Respondent] with such great shirts at
such a ridiculously low price’, and reported that the Mae Sot factory was a ‘sweat shop’
where ‘they work their employees to death’.33 He further noted that there were items,
such as ‘rolls of fabric and carts filled with partly finished shirts all over the floor’.
Snowden reflected, ‘I was constantly tripping over something’. He concluded his report
29 248 NY 339, 162 NE 99 (NY 1928) 30 United States v Carroll Towing Co., 159 F. 2d 169 (2d. Circ. 1947). 31 Heath v Swift Wings, Inc., 252 S.E.2d. 526 (N.C. 1979). 32 Moot Problem, p. 2. 33 Moot Problem, p. 2.
22
to Baydon by sharing that ‘The girls seem really young - some looked like they were
about 12 or 13 [years old]’.34
28. As articulated in paragraph 27, the Respondent, by way of its Vice President and his
assistant, have been put on notice regarding the situation within the factory. They are
aware of the violations of workplace standards and the worker’s conditions. The
Respondents have now been put on notice of the workplace conditions, combined with
their special knowledge of the industry, and thus are better placed to see the possible
consequences of the situation. Paragraph 26 articulates that the Respondents should be
held to the standard of reasonably prudent people with experience in the garment
industry, and thus, they are held to this standard, in addition to having:
a. Strong suspicions that the workers in the factory are not just below working age,
but ‘really young’.
b. Actual knowledge that the workers are worked ‘to death’ in a ‘sweat shop’.
c. Actual knowledge that the factory is an unsafe workplace due to various
manufacturing offcuts being ‘all over the floor’, and one would ‘constantly [trip]
over’ and be ‘lucky [they] didn’t break [their] neck’.
d. An understanding that they pay a ‘ridiculously low price’ for the shirts they
purchase from Mae Sot.
29. The Respondents breached their duty of care to the Claimant by three actions, which
were:
a. paying such a low cost for the shirts that it was impossible for Mae Sot to ensure
reasonable workplace standards.
b. continuing to trade upon knowing that the workplace had poor conditions.
34 Moot Problem, p. 2.
23
c. failing to perform follow up actions upon realisation that the workplace was
breaching labour standards.
30. Dealing with all three of these breaches together, the Respondents have acted with less
care than a reasonably prudent person with full knowledge of the situation in the factory
would by continuing to pay ‘ridiculously low prices’ for their shirts, continuing to trade
with Mae Sot and failing to commence action to improve the workplace standards within
the factory. It is clear that these breaches have occurred ‘in the course of employment’,
characterised by Mae Sot’s conduct being of the kind they are expected to perform, it
occurring substantially within the authorised limits of time and place, within the factory,
and working hours. Further, there is a low threshold requirement that the actions be at
least in part for the purposes of serving the master,35 which Mae Sot again satisfies as the
cost effective measures were designed to retain efficiency, and not slow the production
process with other concerns, being workplace safety, and worker age.
31. The breaches can all be characterised this as falling below the standard, as a reasonably
prudent person with the knowledge that the Respondent had obtained would not have
continued to trade without modifying their behaviour. There are expectations of the
Respondent to either cease their support of the poor workplace standards and illegal
workers, or take active steps to fix the situation before they continue trading. There are
many diverse, reasonable, inexpensive, quick approaches that one in the position of the
Respondent could employ in an attempt to remedy the breaches of law and human rights
standards that were occurring in the Mae Sot factory. An example could be requesting
proof that the workplace environment had been tidied such that it was safe to walk and
move through, and proof, by way of employment contracts and identification papers, that
35 Wilson v Chicago, Milwaukee, St Paul and Pac, R.R. Co., 841 F.2d 1347 (7th Cir, 1988).
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all workers employed at the factory were of legal working age and ceasing issuing shirt
orders till these requirements were complied with. Short of this, they could request that a
plan to achieve these goals be implemented, and offer financial assistance if it were
required to reach this goal, whether that be in a lump sum payment, or through increased
payment for the shirts. This would be a reasonable action given that the prices they
currently pay are ‘ridiculously low’ and the Respondent has an understanding of fair
wage rates, and cannot ignore human rights and workplace standards to increase their
profits. In fact, there are obligations on companies to ensure the products they sell
comply with all standards required of them, and liability for these torts need not be linked
to a specific negligible act. In Carroll v Fearon Bent & Dunlop Ltd,36 a car dealer who
sold cars which had been faultily manufactured was liable to customers for the
manufacturing faults. This generous interpretation should flow to the current case. The
reasoning there was that the claimant needs to be able to find someone to place liability
on, and that liability should fall to all involved in the process, so that damage to the
consumer is most easily mitigated as remedies are available from all sources.
32. Causation has two limbs,37 and the Respondents are liable because both factual causation
and proximate causation are made out.
33. The Respondents are liable to the Claimants because the law should be expanded to show
factual causation in this circumstance. Regularly, factual causation requires the
establishment of a connection or linkage between the breach and the injury. The ‘but for’
test is utilised to convince the jury that but for the Respondents careless act, the
36 [1998] PIQR 416. 37 Palsgraf v Long Island Railroad Co. 248 NY 339, 162 NE 99 (NY 1928)
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Claimants would be uninjured today.38 This situation highlights the appropriateness of
expanding the test to ensure it covers appropriate cases.
34. However, this situation is one where the Respondent’s lack of care materially
contributed, or at the very least increased the risk of harm occasioned to the Claimants.
Using walkways as an escape route during a fire are essential in any factory, particular a
busy one, where underage workers are present, who would deal with emergency
situations in a less calm manner than adults would in their place. In addition to these
factors, where workers are fatigued and could struggle to refocus after lengthy shifts of
work, clear exit routes are essential, particularly in a factory that doesn’t comply with
workplace standards, and thus may not keep their equipment in a safe condition; Mae Sot
was later found have neglected the upkeep of their safety equipment and could not prove
that the machinery which started the fire had been serviced recently due to records being
burnt.
35. This case should follow the well-accepted precedent and reasoning of ‘proximate cause’
to satisfy the causation test. Many causes can lead to the occurrence of a harm and the
case of Ultramares Corporation v Touche,39 laid out factors to be considered in
determining if the Respondent’s breach of duty was a major cause of the Claimant’s
injury. The two leading judgments in this case must be analysed separately.
a. Firstly, Justice Cardozo suggested two factors that could suggest a proximate
cause. First, the Claimant’s injury is a reasonably foreseeable consequence of the
Respondent’s breach of duty as it is evident that when there are trip hazards in
walkways, it will make it difficult for people to exit at any time, particularly in an
38 Summers v Tice 199 P. 2d 1 (Cal. 1948). 39 174 NE 441 (1931).
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emergency. Secondly, it is more than clear that the Claimant is a reasonably
foreseeable victim of the Respondent’s breach of duty as the Respondent’s
conduct directly affects the Mae Sot factory which the Claimants work within.
Thus, causation can be made out through Justice Cardozo’s ‘proximate cause’
test.
b. Alternately, Justice Andrews outlined several factors to determine the
Respondent’s breach was a proximate cause of the Claimant’s injury. These
factors regard the sequence resulting from the Respondent’s breach causing the
Claimant’s injury and how remote, direct and continuous and whether the
intervening causes were so unusual that people would expect them to break the
chain of causation. As articulated above, the fact that the fire resulted from
poorly kept machinery and spread in a factory with rusted and dilapidated fire
extinguishers is not sufficient to break the chain of causation as these are all
connected to the Respondent’s breach. Further, both legal counsel have accepted
a report from an independent auditor that the ‘blocked and cluttered aisles and
stairways; were the major factor in causing the many injuries and deaths.
D. Alternatively, the Respondent is liable under the Thailand Code
36. Under section 432 of the Thailand Code, the Respondent is deemed to be a joint actor as
they instigated or assisted the commission of a wrongful act by Mae Sot. It can be
reasonably inferred that the Respondent had knowledge that their main supplier, Mae Sot,
did not comply with the requisite safety and labour standards as set out in the
Occupational Safety, Health and Environment Act,40 the Factory Act41 and the
40 B.E. 2554 s 6.
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Regulations and Notifications issued thereunder.42 This inference is supported by the
documented communication Baydon, Vice President in charge of purchasing at the
Respondent Company, and Theodore Snowden, assistant to Joe Baydon, which took
place several months prior to the fire. The relevant text message evinces that Snowden
recognised the ‘girls’ appeared ‘really’ young and were possibly only 12 or 13 years of
age. The minimum working age in Thailand is 15 years old.43 It can be inferred that a
global company with substantial resources such as the Respondent would have been
aware of the minimum working age regulations in Thailand. Information regarding
Snowden’s inspection at Mae Sot was conveyed to the President of the Respondent
Company.44 In line with principles of corporate social responsibility within global supply
chains, the Respondent should have taken positive steps to insure that Mae Sot was
operating in accordance with labour laws. The precarious assertion by Paul Castro, the
General Manager of Mae Sot, that ‘all Thai women look younger than they are’ and were
all ‘above legal age’ is not sufficient to dispense with the Respondent’s responsibility to
ensure compliance with labour standards in these circumstances.
37. Additionally, Snowden reported to the Vice President that the factory was a “sweat shop”
where employees are worked to death and that he is lucky he did not break his neck from
constantly tripping over materials.
38. By continuing to trade with Mae Sot for months without renegotiating cost of goods after
becoming privy to the knowledge of possible exploitation of factory workers and breach
of labour and safety standards, the Respondents provided Mae Sot with an incentive for
41 B.E. 2535 s 8. 42 Ministerial Regulation No. 2 cl 5 (Government Gazette, Volume 109, Part 108, dated 16th October). 43 Moot Problem, p. 2. 44 Further Clarifications, Spear Shirts, A-3.
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the wrongful acts to continue as failing to comply with legal obligations regarding safety
and labour standards was the only viable way that the factory could continue to meet the
high volume production of shirts ordered by Mae Sot at such a ridiculously low price.
39. Furthermore, as the Respondent were Mae Sot’s largest customer, they provided the
financial assistance for the sweatshop to continue operating through their continued
orders.
40. Therefore, they are bound to make compensation to the factory workers for the damage
caused by virtue of their participation in a joint wrongful act.
IV Damages are payable by the Respondent to the Claimant to compensate for the
Claimant’s loss
41. The Claimant comprises members, who were employees of Mae Sot, that were injured in
the incident (‘injured members’), and familial members of those who died (‘inheritors’).
Both classes of the Claimant are entitled to payment of damages from the Respondent
under the law of California. The quantum of damages payable by the Respondent is to be
calculated at a future date.45
42. Both classes of the Claimant are entitled to compensatory damages for any pecuniary loss
as the result of the Respondent’s negligence. Pecuniary loss include, but is not limited to,
loss of earnings, quantifiable medical expenses and funeral expenses.46 Both classes of
the Claimant are entitled to compensatory damages for each type of pecuniary loss.
43. Both classes of members are entitled to compensatory damages for the non-pecuniary
loss flowing from the Respondent’s negligence.
45 Moot Problem, p 3. 46 Moody v Blanchard Place Apartments 793 So. 2d 281 (La. Ct. App. 2001).
29
a. Non-pecuniary loss for the injured members include, but is not limited to, pain
and suffering, future loss of earnings, future medical expenses, loss of enjoyment
of life,47 and any other loss, excluding emotional disappointment, than cannot be
quantified. The injured members are entitled to compensatory damages for each
type of non-pecuniary loss.
b. Non-pecuniary loss for the inheritors include, but is not limited to, pain and
suffering, bereavement, loss of consortium, loss of income and any other loss,
excluding emotional disappointment, that cannot be quantified.48 The inheritors
are entitled to compensatory damages for each type of non-pecuniary loss.
44. Both classes of the Claimant are entitled to payment of punitive and/or exemplary
damages in light of the Respondent’s gross negligence, and continuing failure to warn
against and/or redress the significant risk of harm.49
45. Compensation for each type of loss described in paragraphs 42 to 44 above is payable is
payable in addition to compensation for the other types of loss described in those
paragraphs.50
46. If, contrary to the Claimant’s submission on the applicable law at paragraphs 1 to 8
above, the tribunal finds that the law of Thailand is applicable, then the Claimant’s
entitlement to damages will be assessed by reference to Book 2, Title V, Chapter II of the
Thailand Code.
47. Both classes of the Claimant are entitled to compensatory damages for pecuniary loss as
the result of the Respondent’s negligence under section 443 of the Thailand Code.
47 Ltoh v Truck-A-Way Corp 70 Cal. Reptr. 2d 571 (Cal. Ct. app. 1998). 48 Gunn v Robertson 801So. 2d 555 (La. Ct. App. 2001); Ltoh v Truck-A-Way Corp 70 Cal. Reptr. 2d 571 (Cal. Ct. app. 1998). 49 Peete v Blackwell 504 So. 2d 222 (Ala. 1986); Shugar v Guill 283 S.E. 2d 507 (NC 1981). 50 Atcharawongchai, W. ‘The Non-Pecuniary Damages in Wrongful Acts Causing Bodily Harm and Death: The Comparative Study on U.S. and Thailand Laws’ (2013) Volume 16(1).
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Pecuniary loss includes loss of earnings, medical expenses, funeral expenses and other
necessary expenses.51
48. The injured members are entitled to compensatory damages for non-pecuniary losses
resulting from the Respondent’s negligence under section 446 of the Thailand Code.
Non-pecuniary loss includes pain and suffering, loss of good health and loss of ability to
work.52
49. Inheritors who were owed a duty of service by the deceased are entitled to compensatory
damages for loss of service as the result of the Respondent’s negligence causing death
under section 445 of the Thailand Code.
50. Both classes of the Claimant are entitled, in addition, to punitive damages for the grossly
negligent and offensive nature of the Respondent’s conduct.
51. If the Tribunal finds the Respondent proportionately liable, the Respondent remains liable
to pay the full amount of damages for pecuniary loss to the Complainant, and the
proportionate amount of damages for non-pecuniary loss.53
51 Civil and Commercial Code, s 443. 52 Lovanovich I, ‘Personal Injury and Damages for Non-Pecuniary Loss in the Law of Torts and the Product Liability Law’ (2011) (unpublished thesis for Master of Laws prograFaculty of Law, Thammasat University), available online at: http://digi.library.tu.ac.th/thesis/la/1816/title-biography.pdf. 53 Cal. Civil Code, section 1431.2 (Prop. 51); Aetna Health Plans of California, Inc. v. Yucaipa-Calimesa Joint Unified School Dist. (1999) 72 Cal.App.4th 1175
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CONCLUSION AND PRAYER FOR RELIEF
Based on the submissions above, the Claimant respectfully requests that the tribunal declares the
following:
1. That the law of California apply to the substance of the present dispute.
2. That under both the law of California and the law of Thailand:
a. the Claimant is entitled to bring a representative proceeding against the
Respondent.
b. the Respondent is liable, in negligence, for the loss suffered by the Claimant by
one or more of the following:
i. vicarious liability;
ii. joint employer liability; and
iii. direct liability
c. the Claimant is entitled to compensatory damages, to be quantified at a future
time, from the Respondent for the loss caused by the Respondent’s negligence
including:
i. pecuniary loss; and
ii. non-pecuniary loss
d. the Claimant is additionally entitled to punitive and/or exemplary damages from
the Respondent for the aggravated and offensive circumstances of the
Respondent’s actions.
32