Revised October 10, 2000
By Michael Rubin, Attorney

On January 13-14, 1999, three separate lawsuits were filed challenging the unlawful sweatshop conditions in the Saipan, CNMI garment industry. A total of 26 U.S. based retailers and manufacturers have been sued for doing business in Saipan and using "indentured slavery." Eighteen U.S. mainland retailers have settled the lawsuit(s). They are:

Brylane, L.P.
Calvin Klein, Inc.
Cutter & Buck, Inc.
Donna Karan International Inc.
The Dress Barn, Inc.
The Gymboree Corp.
J. Crew Group Inc.
Jones Apparel Group, Inc.
Liz Claiborne, Inc.
The May Department Stores Company
Nordstrom Inc.
Oshkosh B'Gosh, Inc.
Phillips-Van Heusen Corp.
Polo Ralph Lauren Corp.
Sears Roebuck and Company
Tommy Hilfiger U.S.A., Inc.
Warnaco Group, Inc.
Woolrich, Inc.

Those that have not yet settled are:

GAP Inc.
Dayton Hudson/Associated Merchandising Corp. (Target and Mervyns)
J.C. Penney
Lane Bryant (The Limited)
Levis
Brooks Brothers
Talbots
Abercrombie and Fitch

Join our GAP Campaign or write a letter to the remaining companies.

The first case, filed in San Francisco state court, was brought by Global Exchange, Sweatshop Watch, UNITE, and the Asian Law Caucus against 18 U.S. garment retailers, including such companies as The Gap, Inc., Target Corp., J.C. Penney, Lane Bryant, and The Limited. Plaintiffs charged that all of the defendant companies engaged in unfair business practices (a violation of California Business and Professions Code '17200) by advertising their garments as being "Sweatshop Free," by violating the federal law prohibiting the shipment of "hot goods" in interstate commerce, by aiding and abetting their Saipan garment factories' violations of the laws against involuntary servitude, and by other misleading labeling and advertising practices. The case was assigned to San Francisco Superior Court Judge Munter.

On November 12, 1999, Judge Munter rejected "in their entirety" the retailer defendants' efforts to have plaintiffs' claims dismissed as a matter of law and to divide the case into separate proceedings against each retailer defendant. Judge Munter concluded that plaintiffs' legal and factual allegations were sufficient to state a claim for relief under California law against each of the defendants, and that the claims against each defendant should be tried in a single proceeding.

In light of Judge Munter's rulings, the parties began the lengthy task of exchanging information through the discovery process, a process that will continue for several more months. No trial date for the San Francisco action has yet been set.

The second case, filed by a class of approximately 25,000 young, non-resident garment workers who currently or formerly worked in Saipan, was brought in Los Angeles federal court against the same retailers plus 11 Saipan-based garment contractors, the factories which manufacture the retailers' garments. Plaintiffs allege in that federal action that the retailers and their Saipan-based contractors engaged in a series of unlawful conspiracies in violation of RICO (the Racketeer Influenced and Corrupt Organizations Act). Plaintiffs also charge that the system of garment production on Saipan violates the Anti-Peonage Act, which prohibits the use of forced labor, among other things, and the Alien Tort Claims Act which permits foreign nationals to sue in America for violations of generally-accepted human rights.

The Los Angeles case was originally assigned to U.S. District Court Judge Christina A. Snyder. On August 9, 1999, the defendant retailers and contractors asked Judge Snyder to give up the case and to transfer its venue to Saipan. Although Judge Snyder agreed to transfer venue, she rejected defendants' efforts to move the case to Saipan and instead sent it to federal court in Honolulu, citing among other factors the difficulties in obtaining a fair and unbiased jury pool in Saipan given the relatively small number of potential jurors and the extensive pre-trial publicity in the pro-garment factory local press.

From October 1999 through June 2000, the parties litigated that class action in Honolulu, against the original defendants plus new retailer defendants (including Levi Strauss, Talbot's, and Abercrombie & Fitch), and several more Saipan-based garment factories. Shortly before several major motions were scheduled to be heard, however, the Hawaii judge re-visited Judge Snyder's venue transfer order and ruled that the case should be litigated in tried in Saipan after all. Plaintiffs strongly disagree with that decision, and promptly filed motions in the Ninth Circuit Court of Appeals to block the transfer. Those motions remain pending before the Court of Appeals in San Francisco.

The third case, filed by a similar class of Saipan garment workers, was brought in federal court in Saipan against 22 Saipan-based garment contractors, charging violations of federal overtime law (the Fair Labor Standards Act) and various CNMI laws (including minimum wage laws and laws protecting various workplace rights). The Saipan class is smaller than the Los Angeles/Honolulu/Saipan class because the laws involved do not extend as far back in time. This case was assigned to the only federal judge in CNMI, Judge Alex Munson. After Judge Munson dismissed plaintiffs' CNMI law class action claims (ruling that they were not sufficiently related to the federal overtime case to justify keeping them in the same case), individual plaintiffs, now numbering almost 650, began joining the lawsuit by filing Consents to Sue. Those individuals filed under "Doe" pseudonyms, because they feared retaliation by the contractors and government officials back home if their identities became known. Although Judge Munson initially rejected the workers' motion to proceed anonymously, the Ninth Circuit reversed that ruling in an emergency interlocutory appeal, and ordered that the case proceed, at least for the present, without any disclosure of the plaintiffs' true identities. See Does I et al. v. Advanced Textile, Plaintiffs have now filed a Fourth Amended Complaint in that Saipan Fair Labor Standards Act case, and have requested Judge Munson to permit a notice to be sent to all potential plaintiffs' informing them of the pendency of the case and their right to join in by filing Consent to Sue forms. That request for distribution of notice is pending before the Court.

Status of Settlement Talks

Beginning in the late Spring of 1999, plaintiffs' counsel started having extensive settlement talks with a broad range of defendants. The plaintiffs have now reached settlements totaling almost $8.5 million with 18 U.S. mainland retailers: Brylane, L.P., Calvin Klein, Inc. Cutter & Buck, Inc., Donna Karan International Inc., The Dress Barn, Inc., The Gymboree Corp., J. Crew Group Inc., Jones Apparel Group, Inc., Liz Claiborne, Inc., The May Department Stores Company, Nordstrom Inc., Oshkosh B'Gosh, Inc., Phillips-Van Heusen Corp., Polo Ralph Lauren Corp., Sears Roebuck and Company, Tommy Hilfiger U.S.A., Inc., Warnaco Group, Inc., and Woolrich, Inc. None of these settlements can take effect until after they receive court approval. However, plaintiffs' counsel are hopeful that the settlements will become final soon, and that even more defendants, contractors as well as retailers, will join in those settlements.

The settlements include both prospective relief, prohibiting Saipan-based contractors from violating the law in the future, and including strict and effective monitoring provisions to ensure compliance, and retroactive relief, payments to garment worker class members whose rights were violated in the past.

At the heart of the prospective relief provisions is a comprehensive new Saipan Code of Conduct. Every settling retailer has agreed, as a condition of settlement, to include in all future contracts with Saipan-based contractors a new series of provisions requiring the contractors' strict adherence to a set of detailed standards governing working and living conditions in the Saipan factories and barracks. These standards build on existing legal standards and previously-negotiated codes of conduct in other contexts, and result in a tough and clearly-stated list of conditions that each contractor must satisfy in the future.

To put teeth into the Code of Conduct, the settlement agreement also provides for extensive, on-site monitoring by Verite, a non-profit international human rights monitoring organization based in Amherst, Massachusetts. Verite's staff will be required to conduct initial pre-contract audits with all contractors who want to work for the settling retailers, to make sure their factories and living quarters comply with the Saipan Code of Conduct. Then, once the contracts are in effect, Verite will send in regular monitoring teams to ensure that the contractors continue to live up to their obligations under the Code. The monitoring will be done by teams of specially-trained monitors who are familiar with the law and the Code and are experienced in human rights and labor law monitoring. Not only will the monitors conduct physical inspections and periodically review the contractors' documents, but monitors who speak the garment workers' language and have similar cultural backgrounds will also conduct worker interviews, both on-site and off-site, and at the beginning and end of the workers' employment as well as during the period of employment, to ensure that the contractors are complying with all of their responsibilities.

One of the greatest innovations in the settlement agreement consists of provisions strictly regulating "recruitment" fees. These fees, which in Saipan can range from $2,000 to $10,000 per worker, are charged to the workers in their home countries as a condition of obtaining work in the Saipan garment factories. These exorbitant fees are one of the principal causes of the workers' involuntary servitude and peonage, because they effectively force the worker to continue working for their Saipan contractor, and to accept whatever overtime is offered, in the struggle to re-pay the enormous debt that they were forced to incur in order to get the job. The Settlement Agreement dramatically limits the amount and type of fees that can be charged to a Saipan garment worker and bans the notorious "Shadow Contracts", draconian provisions in the agreements the workers are required to sign in their home country, especially China, which require the workers to give up their right to date, to go to church, to become pregnant, or to exercise other rights that are clearly protected in the United States.

Out of the funds to be paid by the initial group of settling defendants, a substantial proportion will be devoted to getting the monitoring program up and running. However, a considerable amount will also be devoted to payments to the workers themselves, administrative costs, attorneys' fees, and a small percentage in a cy pres fund to be used to further the overall goals of the litigation. As more money is received from more settling defendants, larger and larger sums will be available for payments to the garment worker plaintiffs.

The status of the settlement discussions changes almost daily, as different defendants (and other companies who also have done business in Saipan but have not yet been sued) come to the table. All settlements are contingent upon final court approval, however, so none of these settlements will go into effect for at least another six months or so.