J. Crew, Nordstrom, Others Agree to Settle Lawsuit Claiming Sweatshop Abuses
Three lawsuits filed Jan. 13 described Saipan as "America's worst sweatshop," saying some 32 contractors created a work environment where there were beatings, forced abortions, vermin-infested quarters, barbed wire, and armed guards. Employees worked 12 hours a day, seven days a week, the lawsuits claim.
The 32 Saipan factories, mostly owned by Chinese, Japanese, and Korean subcontractors, stamp their clothing with "Made in the USA" tags, misleading consumers to think the clothing is made in compliance with U.S. labor laws, the suits allege. Saipan is a popular spot for sweatshops, since its exports are exempt from U.S. duties and quotas that limit imports. Companies there shipped an estimated $1 billion in wholesale clothing to the U.S. last year, saving more than $200 million in duties.
"No one wants to destroy the garment industry in Saipan, but it should not come at the price of indentured servitude," plaintiff attorney William Lerach told the Associated Press.
Under settlements filed in U.S. District Court, the four retailers agreed to require independent monitoring of their Saipan contractors with a goal of eventual compliance with U.S. labor laws and international human rights treaties, the Associated Press reports.
In the Los Angeles class-action suit against 17 retailers, attorneys for the remaining 13 defendants argued Monday that California has no jurisdiction saying the case should be moved to Saipan. The judge told lawyers to submit more documents next week. Another federal suit, filed in Saipan, targets overtime pay. It was dismissed by a judge on Friday because identifying the plaintiffs by name could jeopardize their safety on the island, said Lerach. Meanwhile the third suit, filed at state court in San Francisco against 18 retailers, will also be settled, he said.
Under terms of the Los Angeles lawsuit settlement, the four companies will establish a $1.25 million fund to finance the independent monitoring program, provide money to the workers, create a public education campaign, and pay attorneys' fees. The lawsuits were the first legal attempt to hold U.S. retailers responsible for the alleged mistreatment of workers by their subcontractors.
"We believe the settlement is a positive step toward our goal of ensuring that the goods we contract to manufacture in Saipan are made in compliance with law," Nordstrom's co-president, Erik Nordstrom, said in a statement.
The other three companies did not take such a positive attitude toward the settlement. Calling it "a business decision" to settle, Harvey Jones, chairman and CEO of Cutter & Buck, said in a statement that he does not think his company should have been involved in the case since it already closely monitors its contractors. Both J. Crew and Gymboree released statements that denied wrongdoing.
Attorneys also filed a letter of agreement in principle to settle with Polo Ralph Lauren Corp., Phillips-Van Heusen Corp., Donna Karan International Inc., and Chadwick's of Boston Ltd., who were about to be named as defendants in the suit.