The Saipan Workers’ Lawsuit

By Atty. Christina E. Caigoy-Barroga

On January 13, 1999, three separate lawsuits were filed challenging the unlawful sweatshop conditions in the Saipan, CNMI garment industry. The class-action lawsuit was filed under the Racketeer Influenced and Corrupt Organizations Act (RICO).

The Sweatshop Watch, Global Exchange, Asian Law Caucus and UNITE, filed the lawsuits in San Francisco and Los Angeles on behalf of the Saipan sweatshop workers against eighteen clothing retailers in the United States and twenty-two of their subcontractors in Saipan composed largely of foreign factory owners.

The plaintiffs were represented by the San Diego firm of Milberg Welss Bershad Hynes & Lerach LLP and the San Francisco firm of Altshuler Berzon Nussbaum Rubin & Demain.

The plaintiffs allegations were as follows:

· The garment workers in Saipan often work twelve-hour days, seven days a week, in unsafe and unclean conditions that violate the United States’ labor laws and international treaties.

· Majority of the garment workers in Saipan were young women from China and the Philippines who were required to sign “shadow contracts” waiving their basic human rights.

· These workers were also allegedly forced to pay “recruitment fees” as high as $7,000.00 just to come to the United States, giving them an indentured status that has been illegal in the United States since the civil war.

According to counsel, since China’s role in the violation of human rights on American soil is manifest, they believed that they would have little difficulty in adding state action allegations, considering that China owned several of the factories.

The retailer-defendants reasoned that they are not legally responsible for the actions of the factory owners since they were just “customers”.

The federal court granted in part and denied in part the defendants’ motion to dismiss the action, upholding the RICO claims but disallowing other claims such as for violations of the Alien Tort Claims Act (ATCA) without prejudice however to plaintiffs’ amendment of the complaint to include more detail or allegations of state actions involving China.

On October 29, 2001, the federal court judge rejected the motion to dismiss the sweatshop class action against Saipan garment factories The Gap and Target and retailers but dismissed the plaintiffs’ claim that the workers had been held in a state of involuntary servitude.

On May 14, 2002, the federal judge granted a class-action status to the lawsuit. Although the group was comprised of individuals who were employed in twenty-eight factories over a thirteen-year period, the court ruled that their problems “all stem from the same conspiracy amongst the defendants to dominate and control the garment workforce” on the island. The “conspiracy” resulted in violations of the workers’ civil rights and injuries such as unpaid working conditions and unpaid overtime wages and therefore allowed the workers to constitute a federal class and to continue their lawsuit against the said factory owners and retailers who have not yet settled. The ruling also allowed Verité, hired as part of the preliminary settlement, to begin independent monitoring of labor practices and factory conditions on the island.

The settlement consists of payment by the retailers of approximately $4 million to the workers and the retailers’ commitment that they will contract only with those suppliers who adhere to strict labor standards in their factories provision for safe food and drinking water, payment of the $3.05 per hour minimum wage plus overtime pay and elimination of worker abuse. The factory owners were also required to observe a code of conduct and seek the reduction of the exorbitant brokers’ fees paid by the workers.

The Saipan workers’ lawsuit is the first time that a class was certified in a sweatshop case under the RICO and potentially sets an important precedent for lawsuits involving workers in other low-wage industries.