Saipan Sweatshop Lawsuit Ends with Important Gains for Workers and Lessons for Activists

January 8, 2004

By Nikki F. Bas, Sweatshop Watch; Medea Benjamin, Global Exchange; Joannie C. Chang, Asian Law Caucus

This month, the last of three lawsuits over sweatshop conditions on the U.S. island of Saipan came to a close. Saipan garment workers voluntarily dismissed their class action lawsuit against Levi-Strauss and Company, the only retailer to refuse to contribute to a settlement fund for the workers. Recognizing that they had already won a landmark $20 million settlement with 26 other U.S. retailers and 23 Saipan garment factories, the workers and labor advocates involved in the lawsuit declared victory. Back payments for up to 30,000 Saipan workers, including those who sewed Levi's, are being distributed and an independent monitoring program of Saipan garment factories, including those that produced Levi's, has begun.

During the course of the five-year litigation, many important gains were made for Saipan's garment workers. At the same time, anti-sweatshop activists tested new legal strategies and campaigned against the world's biggest retailers. While the settlement is viewed as a significant victory, several challenges emerged, which lend valuable lessons for future anti-sweatshop campaigns.

Background
Five years ago, Sweatshop Watch, Global Exchange, Asian Law Caucus, Unite, and Saipan garment workers filed three separate lawsuits against dozens of big-name retailers and Saipan garment factories alleging violations of U.S. labor laws and international human rights standards.

Saipan is the largest of a chain of fourteen islands in the Pacific Ocean known as the U.S. Commonwealth of the Northern Mariana Islands. It is home to a $1 billion garment industry, with about 30 garment factories employing more than 10,000 workers, almost all young women from China, the Philippines, Thailand, Vietnam, Bangladesh and other Asian countries. Plaintiffs in the lawsuit alleged that these workers live and toil in deplorable conditions, working up to 12 hours a day, seven days a week, and earning $3.05 an hour or less, often without overtime pay. With promises of high pay and quality work in the U.S., workers agreed to repay recruitment fees of thousands of dollars. Many workers also claimed that they signed "shadow contracts" waiving basic human rights, including the freedom to join unions, attend religious services, quit or marry. These circumstances, plaintiffs contended, trap Saipan garment workers in a state of indentured servitude. The retailers were also charged with misleading advertising by, among other things, using the "Made in the U.S.A" label and promoting their goods as sweatshop-free.

By the Fall of 2002, 26 retailers and 23 Saipan garment factories settled the lawsuit, leaving Levi's as the only hold-out. A federal judge approved the settlement in April 2003. The settling retailers include:
Abercrombie & Fitch, Brooks Brothers, Brylane L.P., Calvin Klein Inc., Cutter & Buck Inc., Donna Karan International, Dress Barn, Gap Inc. (Banana Republic, Old Navy), Gymboree Corp., J.C. Penney Company Inc., J. Crew Group Inc, Jones Apparel Group, Lane Bryant Inc., The Limited Inc., Liz Claiborne Inc., May Department Stores Company, Nordstrom Inc., Oshkosh B'Gosh Inc., Phillips-Van Heusen, Polo Ralph Lauren, Sears Roebuck and Company, Talbots Inc., Target Corp. (Target, Mervyn's, Marshall Fields, Dayton-Hudson), Tommy Hilfiger USA Inc., Warnaco Inc. and Woolrich, Inc.

Improvements for Saipan's Garment Workers
The Saipan lawsuit is ground-breaking in many ways. Past attempts to clean up sweatshop conditions on the island failed. Legislative efforts by Democratic members of the U.S. Congress have been blocked by Republican members, and a union organizing drive fell short by a few votes. However, the Saipan lawsuit brought new legal challenges to sweatshop abusers and generated worldwide public and media attention. This new spotlight on Saipan's garment industry prompted the companies, fearful of media exposés, to improve conditions. It also pushed the U.S. government to step up its efforts to curb labor abuses on Saipan.

In January 1999, the lawsuits were announced with great fanfare at a Washington, DC press conference where Chie Abad, a former Saipan garment worker from the Philippines, appeared on behalf of the workers. Soon, the companies began to "clean up their act" in Saipan. Dormitories were improved, clean drinking water and decent food were provided, overtime started to be paid, and supervisors started to treat the workers better. The lawsuit and the ensuing media spotlight, together with campaigning by Global Exchange, Sweatshop Watch and other anti-sweatshop groups, forced the companies to make major changes for the first time in the 20 year history of Saipan's garment industry.

The $20 million settlement is the largest award to date in an international human rights case. Workers will receive as much as $4,000 in back wages, nearly a year's pay. Over 15,000 of the eligible 30,000 workers have come forward.

The code of conduct agreed to by the settling companies ends some of the worst sweatshop abuses. Exorbitant recruitment fees of up to $7,000, which trapped workers in involuntary servitude, are limited so that only certain necessary expenses, such as transportation to Saipan, are allowed. Shadow contracts which prohibit workers from practicing their religions, dating, and joining unions are not tolerated. Factory owners are prohibited from confiscating workers' passports, preventing them from leaving their living quarters, and physically or sexually abusing workers. Workers cannot be forced to work "off the clock" or "volunteer" hours. They must be paid the minimum wage and time and a half for work beyond 40 hours. Workers can file complaints, with protection from retaliation. There is now a repatriation fund so that workers who want to return to their home countries are eligible for up to $3,000 in relocation fees.

Increased public attention to sweatshops on Saipan has also led to greater enforcement of labor laws by the U.S. government. The U.S. Department of Labor (DOL) has levied millions of dollars in fines against Saipan factories for wage and hour and health and safety violations. For example, in April 2002, the DOL announced that Express Manufacturing, Inc. would pay $224,000 in back wages owed to 258 employees to settle charges filed by the DOL that the company violated the overtime provisions of the U.S. Fair Labor Standards Act (FLSA).

A related benefit to garment workers in Saipan and the world over, is the tremendous public education the lawsuit and campaign generated. All of the groups involved in the lawsuit have used the case to educate the public about sweatshop conditions. In addition, Chie Abad has been traveling around the U.S. non-stop for the past three years talking about sweatshop working conditions. She is perhaps the only foreign garment worker who has devoted herself, with the help of Global Exchange, to full-time public education about the garment industry. She has visited hundreds of high schools, colleges and places of worship to make people aware of the problems workers face and to pressure companies for change. Chie's work alone has made a major contribution to the anti-sweatshop movement.

The Saipan case is part of a growing trend of using litigation to hold corporations accountable for their labor and environmental abuses. Using obscure laws such as the federal Alien Tort Claims Act and the Racketeer Influenced and Corrupt Organizations Act, as well as California's false advertising laws, the Saipan case and others are testing new legal ground in today's global economy. At first, the retailers named in the case refused responsibility for the conditions in the factories that make their goods. The settlement creates a direct link between the retailers and the workers who sewed their clothes. It sends a powerful message and will hopefully deter other multinational corporations from using exploitative labor in the U.S. and abroad.

Lessons learned
Litigation is a long and complex process, which should not be taken on without careful consideration. It requires close communication with the attorneys in order to monitor frequent and detailed developments, as well as coordination with the workers involved. Such communication is critical to the outcome of the litigation as negotiations of key issues and important decisions should be made with full participation of the plaintiffs. The limited resources of the organizational plaintiffs, particularly those without attorneys on staff, limited our ability to be intimately involved in the complexities of the case, and communication with the attorneys in such a complicated case was a big challenge.

Litigation is most successful with an accompanying public campaign. When the lawsuit was announced in January 1999, Global Exchange and Sweatshop Watch worked together to launch a national campaign against the Gap, the largest clothing producer on Saipan. At the beginning of the campaign, we mobilized activists in dozens of cities around the country and later abroad, holding protests at Gap stores on the first Saturday of every month. As the case dragged on for several years, it became harder to muster the resources for a sustained campaign. In the end, the tapering off of public actions against the retailers weakened our ability to demand an even larger settlement and a stronger monitoring program.

Settlements, unlike verdicts or court orders, allow each side to claim victory. The settling companies have spun their media machines to claim they are admitting no wrongdoing by settling the case. Levi's, the only non-settling company, states "the dismissal of this lawsuit confirms that there was no substance to the claims." However, Levi's fails to admit that the dismissal was not ordered by a judge and there was no ruling on the merits of the case. Saipan workers volunteered to dismiss the case, given the significant settlement they achieved from the other companies.

The Saipan settlement involves the first legally mandated independent monitoring program. In negotiating the settlement, the organizations involved faced the monumental challenge that no precedent exists. The monitoring program the groups envisioned, which would build capacity among Saipan garment workers to monitor their own workplaces, did not exist, nor did an agency with the experience and capacity to create such a program. Moreover, there are no non-governmental agencies on Saipan who could educate or organize the workers around labor rights issues. The companies balked at the idea of creating such a program from scratch and insisted an existing monitoring agency be hired. After lengthy negotiations, the organizational plaintiffs agreed to create an oversight board of three retired judges to oversee the monitoring program. The organizations choose one judge, the companies chose another, and the two judges chose the third. All parties also agreed to ask the International Labor Organization (ILO) to conduct the actual monitoring. As a tri-partite organization of government, labor and business, it was amenable to all involved, and it has been conducting monitoring of garment factories in Cambodia as part of the U.S.-Cambodia free trade agreement. However, shortly before Federal Judge Alex Munson was scheduled to rule on the final settlement, the Bush Administration stunned the Marianas Islands Governor by rejecting his request to allow the ILO to conduct the monitoring program on Saipan and insisting that a private monitor be selected.

Further negotiations stalled when the anti-sweatshop organizations in the lawsuit could not agree with the companies on a single monitor. This forced each party to select two monitors, each to be approved by the Oversight Board who wanted to work with existing monitoring agencies with past experience. Clearly, that limited the choices of monitors who could carry out the plaintiffs' vision of empowering workers through the monitoring process. The anti-sweatshop organizations proposed Verité, arguably the most independent and experienced in labor rights of existing monitors (excluding the Workers Rights Consortium, which only monitors university licensees). The factories chose Global Social Compliance, the controversial Price Waterhouse Cooper social auditing spin off, which has been criticized for using ill-trained accountants for cursory inspections of factories.

As the monitoring program began in late 2003, more challenges arose. Originally, $4 million had been set aside for the 4-year monitoring program, but that amount decreased as some of the factories declared bankruptcy. The Oversight Board began to set up its operations on Saipan, with office expenses and hefty salaries for the three judges leaving even less for the monitoring.

The organizations in the lawsuit envisioned the Saipan monitoring program as an experiment, and still believe that it can yield useful lessons for improving conditions in garment factories. The code of conduct still emphasizes worker education and protection of workers from retaliation so that they can assert their rights by filing complaints. Reports on the program will be made public.

In reflecting on the Saipan lawsuit, the outcome is a significant victory for garment workers. Their living and working conditions have and are being improved. For the larger anti-sweatshop movement, the organizations involved in the case experimented with some new strategies and made progress in the struggle for workers' rights. We faced new and unexpected challenges by combining a complex legal strategy with a campaign that needed far more resources than we had, but we learned some valuable lessons along the way which we hope will help build the movement for workers' rights.