By Bob Egelko
Associated Press Writer

Monday, April 20, 1998

SAN FRANCISCO (AP) -- Public statements by Nike defending wages and conditions at its Asian factories are misleading and violate California's false-advertising laws, a group of consumer and business lawyers said in a lawsuit filed Monday.

A Code of Conduct that the world's largest athletic shoe maker promoted in the media was intended "to entice consumers who do not want to purchase products made in sweatshops," the suit said. The code should be considered the equivalent of false advertising claims, subjecting Nike to potentially huge damages, said the lawsuit, filed in Superior Court.

The suit said Nike has stated that it guarantees a "living wage" to all workers, that its workers in Southeast Asia make twice the local minimum wage, as well as free meals and health care, and are protected from corporal punishment; and that it complies with government rules on wages, hours and health and safety conditions.

Those claims, the suit says, are refuted by studies from labor and human rights groups, news media investigations and especially a January 1997 audit by the firm of Ernst & Young.

The audit, commissioned by Nike, was leaked to reporters last November. It found that employees in a large Vietnam shoe factory were exposed to cancer-causing toluene and suffered a high incidence of respiratory problems.

Nike has about 22,000 employees, but most of its products are made by 450,000 workers in Asian factories run by contractors. The Beaverton, Ore.-based company insists it treats its workers fairly. The suit contained no new claims and "appears to be more of a press release dressed up like a lawsuit," Nike said Monday in a statement. "A growing body of data suggests our manufacturing practices will withstand the scrutiny of any objective body evaluating our code of conduct and workplace standards," the company said.

The suit seeks repayment of all sums Nike made by illegal business practices -- an amount that should equal all its profits in California, said Philip Neumark, a consumer lawyer taking part in the suit. He said the money could be paid to workers or consumers, as determined by the trial judge. The suit also seeks a company-funded "public information campaign" to correct past untruths and a ban on future misrepresentations. Plaintiffs' lawyers said the suit was the first in the United States over Nike's labor policies. Their legal weapon is a broad state law that forbids unfair business practices and false or deceptive advertising. The same lawyers invoked the same law in an earlier suit against the Joe Camel advertising campaign on the grounds that it promoted illegal cigarette sales to minors. R.J. Reynolds denied the allegation but dropped the ads and settled the suit.

Copyright 1998 The Associated Press