For more background on this case: The National Labor Committee contrasts one company's public statements against the reality of worker's lives in Saipan in Wal-Mart: Words vs. Reality.

The Complaint
TABLE OF CONTENTS

I. INTRODUCTION AND SUMMARY OF COMPLAINT
II. JURISDICTION AND VENUE
III. PARTIES

IV. FACTUAL ALLEGATIONS

 V. CAUSES OF ACTION

 A. FIRST CAUSE OF ACTION
  Unlawful Business Acts And Practices In Violation Of California Business And Professions Code Section 17200 Et Seq., Against All Defendants, Predicated On 29 U.S.C. Section 215 Et Seq.

 B. SECOND CAUSE OF ACTION
  Unlawful Business Acts And Practices In Violation Of California Business And Professions Code Section 17200 Et Seq., Against All Defendants

 C. THIRD CAUSE OF ACTION
  Unfair Or Fraudulent Business Acts And Practices In Violation Of California Business And Professions Code Section 17200 Et Seq., Against All Defendants

 D. FOURTH CAUSE OF ACTION
  Untrue Or Misleading Advertising In Violation Of California Business And Professions Code Section 17500 Et Seq., Against All Defendants

VI. PRAYER FOR RELIEF


SUPERIOR COURT OF THE STATE OF CALIFORNIA COUNTY OF SAN FRANCISCO

UNION OF NEEDLETRADES INDUSTRIAL AND TEXTILE EMPLOYEES, AFL-CIO; GLOBAL EXCHANGE; SWEATSHOP WATCH; and ASIAN LAW CAUCUS, on Behalf of the General Public,

Plaintiffs,

vs.

THE GAP, INC., a corporation; THE ASSOCIATED MERCHANDISING CORP., a corporation; CUTTER & BUCK, INC., a corporation; DAYTON-HUDSON CORP., a corporation; THE DRESS BARN, INC., a corporation; THE GYMBOREE CORP., a corporation; J.C. PENNEY COMPANY, INC., a corporation; J. CREW GROUP, INC., a corporation; JONES APPAREL GROUP, INC., a corporation; LANE BRYANT, INC., a corporation; THE LIMITED, INC., a corporation; THE MAY DEPARTMENT STORES COMPANY, a corporation; NORDSTROM INC., a corporation; OSHKOSH B'GOSH, INC., a corporation; SEARS ROEBUCK AND COMPANY, a corporation; TOMMY HILFIGER USA, INC., a corporation; WAL-MART STORES, INC., a corporation; WARNACO GROUP INC., a corporation; and DOES 1-400, inclusive,

Defendants.



COMPLAINT FOR VIOLATION OF:

(1)  CALIFORNIA BUSINESS AND PROFESSIONS CODE §17200 ET SEQ., FOR UNLAWFUL BUSINESS ACTS AND PRACTICES (VIOLATION OF 29 U.S.C. §215 ET SEQ.);

(2)  CALIFORNIA BUSINESS AND PROFESSIONS CODE §17200 ET SEQ., FOR UNLAWFUL BUSINESS ACTS AND PRACTICES;

(3)  CALIFORNIA BUSINESS AND PROFESSIONS CODE §17200 ET SEQ., FOR FRAUDULENT OR UNFAIR BUSINESS ACTS AND PRACTICES; AND

(4)  CALIFORNIA BUSINESS AND PROFESSIONS CODE §17500 ET SEQ., FOR UNTRUE AND MISLEADING ADVERTISING

Type of Action:
Local Rule 2.3 Designation: (1)(a) Unlawful and Unfair Business Practices

03 - Unfair Business Practices


JAMES A. CAPUTO (120485) 
PATRICK W. DANIELS (190715) 
600 West Broadway, Suite 1800 
San Diego, CA  92101 
Telephone:  619/231-1058  
 
KEVIN P. RODDY (128283) 
ALBERT H. MEYERHOFF (54134) 
355 South Grand Avenue 
Suite 4170 
Los Angeles, CA  90071 
Telephone:  213/617-9007  
  
STANLEY S. MALLISON (184191) 
222 Kearny Street, 10th Floor 
San Francisco, CA  94108 
Telephone:  415/288-4545 

ALTSHULER, BERZON, NUSSBAUM, 
  BERZON & RUBIN 
FRED H. ALTSHULER (043878) 
MICHAEL RUBIN (80618) 
177 Post Street, Suite 300 
San Francisco, CA  94108 
Telephone:  415/421-7151 

MILBERG WEISS BERSHAD  
  HYNES & LERACH LLP

WILLIAM S. LERACH (68581)

PATRICK J. COUGHLIN (111070)

ALAN M. MANSFIELD (125998)

   [Additional counsel appear on signature page.]

Plaintiffs, on information and belief, make the following allegations against defendants:


I. INTRODUCTION AND SUMMARY OF COMPLAINT

1. This is a public interest private Attorney General action brought by an international labor union and three human rights organizations.  This action exposes the "how" and "why" underlying the unlawful, unfair, and fraudulent business scheme by defendants -- some of the leading manufacturers and retailers of "high end" garments in the United States of America ("United States" or "U.S.A.") (including several based in California) -- to contract for the making, purchasing, marketing and/or selling of garments which are manufactured under "sweatshop" conditions in the Commonwealth of the Northern Mariana Islands ("CNMI"), specifically on the island of Saipan.

2. As detailed below, foreign-controlled garment contractors manufacture garments in the CNMI for the benefit of the defendant retailers and manufacturers, who thereafter sell such products as being "Made in the U.S.A." or similar statement.  The right to label products manufactured in the CNMI as "Made in the U.S.A." (or not labelled "Made In China" or some other foreign country) provides a competitive advantage for defendants, as it allows them to sell such garments at a higher profit margin than they could otherwise earn, while at the same time permitting them to avoid the duties, tariffs or quotas that would otherwise be imposed if the garments were foreign-made.

3. In truth and in fact, there is little if anything "American" about these garments.  The garment factories in the CNMI are run by foreign corporations with controlling shareholders in Korea, Hong Kong, Japan and the People's Republic of China ("China"), which sometimes send entire foreign managerial staffs to run the Saipan factories.  These factories recruit and employ garment workers almost exclusively from China, the Philippines and Bangladesh.  These workers are forced to toil under oppressive and unlawful "sweatshop" working conditions that would not be tolerated on the U.S.A. mainland.1   The garment workers who manufacture defendants' products in Saipan are routinely underpaid and/or denied overtime premiums and are permitted only a few hours off each day.  Such workers have limited access to water at the workplace and are forced to work and live in unsanitary and overcrowded factories and barracks, some of which are ringed with barbed wire, with little freedom of movement or the ability to change employers or to return home.  Such conditions result in systemic violations of federal overtime laws, occupational safety and health laws, and the workers' basic civil liberties and rights guaranteed under U.S.A. and international law, including violation of the anti-peonage and indentured servitude laws.

4. By their conduct, defendants are committing unlawful business acts and practices by violating the federal "hot goods" prohibitions (codified at 29 U.S.C. §215(a)(1)) against shipping, transporting, delivering or selling garments manufactured in violation of federal overtime laws, as well as other violations of law as detailed herein.

5. Defendants' claims that their Saipan-manufactured garments are "Made in the U.S.A." (or phrases or words to that effect) and/or are not manufactured under sweatshop conditions, combined with defendants' claims of having in place strict monitoring and compliance programs to ensure their garments are not made under such conditions (as well as their failure to disclose the material facts to the contrary) have a tendency to deceive the general public and are fundamentally unfair.  In truth, defendants' garments are manufactured by foreign contractors using foreign fabric and labor under illegal sweatshop conditions.  If similar working and living conditions existed in a mainland U.S.A. factory, that factory would likely be immediately shut down.

6. Defendants control the key aspects of their contractors' garment manufacturing process, yet have neither insisted on eradicating nor materially remediated those conditions.  Defendants either are or should be aware of the unlawful and inhumane sweatshop conditions under which their products are being manufactured in Saipan because of the supposedly strict monitoring and compliance programs they advertise are in place.  Instead, defendants' purchase of such garments help to promote the unique status of the CNMI -- a Commonwealth that has the ability to adopt special laws while remaining exempt from many of the basic worker protection laws covering mainland U.S.A. employees (such as the federal minimum wage law) -- by taking advantage of this loophole to make a mockery of the "Made in the U.S.A." label, inter alia, by selling their garments to unsuspecting consumers without full and adequate disclosure of the facts detailing the deplorable working conditions under which those garments are being manufactured.

7. By this action, plaintiffs seek to remedy defendants' commission of the unlawful, fraudulent and unfair business acts and practices and untrue and misleading advertising described herein to ensure that the defendants who sell such garments in and from California are in fact held responsible for the conduct of the contractors they hire and take corrective action, provide full disclosure of the "how" and the "why" of the garments they sell, and pay restitution and disgorgement of their ill-gotten monies and profits.


 

II. JURISDICTION AND VENUE

8. This Court has jurisdiction over all causes of action asserted herein pursuant to the California Constitution, Article VI, §10, because this case is a cause not given by statute to other trial courts.

9. This Court has jurisdiction over each defendant named herein because each defendant is either a domestic corporation, a foreign corporation or an association authorized to do business in California and registered with the California Secretary of State; each year defendants such as The Gap, Inc. (and its Banana Republic, Inc. subsidiary); Dayton-Hudson Corp.; The Associated Merchandising Corp.; J. Crew Group, Inc.; J.C. Penney Company, Inc.; Jones Apparel Group, Inc.; OshKosh B'Gosh, Inc.; Tommy Hilfiger USA, Inc.; Sears Roebuck & Company; The May Department Stores Company; Warnaco Group, Inc.; The Gymboree Corp.; The Dress Barn, Inc.; Lane Bryant, Inc.; and Wal-Mart Stores, Inc. ship thousands or even millions of dollars' worth of the garments here at issue through ports in California for distribution nationwide; or does sufficient business, has sufficient minimum contacts with California, or otherwise intentionally avail themselves of the California markets through the advertisement, promotion, sale, marketing or distribution of their garments in California so as to render the exercise of jurisdiction by the California courts permissible under traditional notions of fair play and substantial justice.

10. Venue is proper in this Court because:

(a) Defendants' garments here at issue are advertised, marketed, distributed and/or sold by defendants in this County and several defendants have either entered into contracts for the purchase and sale of such garments in this County or have taken possession of such garments in this County;

(b) Many of the defendants either have their principal place of business or operate stores located here; and

(c) Defendants have received substantial compensation from the sale of the garments here at issue in this County.

 



III. PARTIES

A. PLAINTIFFS

11. Plaintiff Union of Needletrades Industrial and Textile Employees, AFL-CIO ("UNITE") is based in New York City, New York, with one of its main offices located at 660 Howard Street, 2nd Floor, San Francisco, California  94105.  UNITE brings this action on behalf of the general public.  Plaintiff alleges no direct cognizable injury whatsoever regarding itself.

12. Plaintiff Global Exchange is a not-for-profit organization based in San Francisco, California with its main offices located at 2017 Mission Street, Suite 303, San Francisco, California 94110.  Global Exchange brings this action on behalf of the general public.  Plaintiff alleges no direct cognizable injury whatsoever regarding itself.

13. Plaintiff Sweatshop Watch is a not-for-profit organization based in Oakland, California with its main California offices located at 310 Eighth Street, Suite 309, Oakland, California 94607.  Sweatshop Watch brings this action on behalf of the general public.  Plaintiff alleges no direct cognizable injury whatsoever regarding itself.

14. Plaintiff Asian Law Caucus is a not-for-profit organization based in San Francisco, California with its main offices located at 720 Market Street, Suite 500, San Francisco, California 94102.  Asian Law Caucus brings this action on behalf of the general public.  Plaintiff alleges no direct cognizable injury whatsoever regarding itself.

B. DEFENDANTS

15. Defendant The Gap, Inc. ("GAP") is a Delaware corporation domiciled at One Harrison Street, San Francisco, California 94105.  Defendant GAP sells its garments in this State and maintains stores in this County.  During the last four years, defendant GAP and its Banana Republic, Inc. ("Banana Republic") subsidiary have shipped into the U.S.A. through ports located in California an estimated 39.2 million pounds of garments, worth an estimated wholesale value of $237.3 million, manufactured in sweatshops located in the CNMI.  Defendant GAP contracted with the following garment factories in the CNMI to produce such goods: Mirage (Saipan), Inc. ("Mirage"), United International Corp. ("U.I.C."), Winners Corp. ("Winners"), Sako Corp. ("Sako"), Onwel Manufacturing Saipan, Inc. ("Onwel"), Michigan, Inc., Mariana Fashions, Inc. ("Mariana Fashions"), and Hansae (Saipan), Inc. ("Hansae").  As detailed herein, both GAP and the factories identified herein, acting as GAP's agents, engaged in conduct which violates state, federal and international law.

16. Defendant The Associated Merchandising Corp. ("Associated") is a New York corporation domiciled at 1440 Broadway, New York, New York, 10018.  Defendant Associated, in cooperation with its controlling shareholder Dayton-Hudson Corp., ships garments into and through this State for the benefit of Dayton-Hudson Corp. and numerous other retailers and manufacturers.  During the last four years, defendant Associated has shipped into the U.S.A. through ports located in California an estimated 2.4 million pounds of garments worth an estimated wholesale value of $14.8 million, manufactured in sweatshops located in the CNMI.  Defendant Associated contracted with the following garment factories in the CNMI to manufacture such goods: NEO Fashion, Inc. ("NEO"), U.I.C. and Winners.  As detailed herein, both Associated and the factories identified herein, acting as Associated's agents, engaged in conduct which violates state, federal and international law.

17. Defendant Cutter & Buck, Inc. ("Cutter") is a Washington corporation domiciled at 2701 First Avenue, Suite 500, Seattle, Washington 98121.  Defendant Cutter sells its garments through stores in this State and in this County, including the Hound Shop, Inc., and Sundance of California.  During the last four years, defendant Cutter has shipped into the U.S.A. garments manufactured in sweatshops located in the CNMI, with the precise amount to be determined in the course of discovery.  Defendant Cutter contracted with Diorva Saipan Ltd. ("Diorva"), a subsidiary of Micronesian Garment Manufacturing, Inc. ("Little MGM"), in the CNMI to manufacture such goods.  As detailed herein, both Cutter and each of these factories, acting as Cutter's agents, engaged in conduct which violates state, federal and international law.

18. Defendant Dayton-Hudson Corp. ("Dayton") is a Minnesota corporation domiciled at 777 Nicollet Mall, Minneapolis, Minnesota 55402.  Defendant Dayton sells its garments in this State and maintains stores, including Target Stores, Inc., and Mervyn's, in this County.  During the last four years, defendant Dayton has shipped into the U.S.A. through ports located in California an estimated 15.2 million pounds of garments, worth an estimated wholesale value of $91.5 million, manufactured in sweatshops located in the CNMI.  Defendant Dayton contracted either directly or through its subsidiaries with the following garment factories in the CNMI to manufacture such goods: Hansae, Top Fashion, Winners and U.I.C.  As detailed herein, both Dayton and the factories identified herein, acting as Dayton's agents, engaged in conduct which violates state, federal and international law.

19. Defendant The Dress Barn, Inc. ("Dress Barn") is a Connecticut corporation domiciled at 30 Dunnigan Drive, Suffern, New York, 10901.  Defendant Dress Barn sells its garments in this State and maintains stores in this County.  During the last four years, defendant Dress Barn has shipped into the U.S.A. through ports located in California an estimated 2.7 million pounds of garments worth an estimated wholesale value of $16.5 million, manufactured in sweatshops located in the CNMI.  Defendant Dress Barn contracted with the following garment factories in the CNMI to manufacture such goods: NEO, UNO MODA Corp. ("UNO MODA") and Sako.  As detailed herein, both Dress Barn and the factories identified herein, acting as Dress Barn's agents, engaged in conduct which violates state, federal and international law.

20. Defendant The Gymboree Corp. ("Gymboree") is a Delaware corporation domiciled at 700 Airport Boulevard, Burlingame, California 94010.  Defendant Gymboree sells its garments in this State and maintains stores in this County.  During the last four years, defendant Gymboree has shipped into the U.S.A. through ports located in California an estimated 5 million pounds of garments worth an estimated wholesale value of $30.5 million, manufactured in sweatshops located in the CNMI.  Defendant Gymboree contracted with Global in the CNMI to manufacture such goods.  As detailed herein, both Gymboree and this factory, acting as Gymboree's agent, engaged in conduct which violates state, federal and international law.

21. Defendant J.C. Penney Company, Inc. ("J.C. Penney") is a Delaware corporation domiciled at 6501 Legacy Drive, Plano, Texas 75024.  Defendant J.C. Penney sells its garments in this State and maintains stores in this County.  During the last four years, defendant J.C. Penney has shipped into the U.S.A., through ports located in California, garments manufactured in sweatshops located in the CNMI, with the precise amount to be determined -- in the course of discovery.  Defendant J.C. Penney contracted with the following garment factories in the CNMI to manufacture such goods: Hansae and Marianas Garment Manufacturing, Inc. ("Big MGM").  As detailed herein, both J.C. Penney and each of these factories, acting as J.C. Penney's agents, engaged in conduct which violates state, federal and international law.

22. Defendant J. Crew Group, Inc. ("J. Crew") is a New York corporation domiciled at 770 Broadway, Floor 12, New York, New York 10003.  Defendant J. Crew sells its garments in this State and in this County.  During the last four years, defendant J. Crew has shipped into the U.S.A. through ports located in California an estimated 2.6 million pounds of garments, worth an estimated wholesale value of $19.3 million, manufactured in sweatshops located in the CNMI.  Defendant J. Crew contracted with the following garment factories in the CNMI to manufacture such goods: Concorde Garment Manufacturing Corp. ("Concorde"), Jin Apparel, Inc. ("Jin Apparel"), Big MGM, Mirage, N.E.T. Corp. d/b/a Suntex Manufacturing ("Suntex"), Onwel and Trans-Asia Garment Forte Corp. ("Trans-Asia").2   As detailed herein, both J. Crew and the factories identified herein, acting as J. Crew's agents, engaged in conduct which violates state, federal and international law.

23. Defendant Jones Apparel Group, Inc. ("Jones") is a Pennsylvania corporation domiciled at 2530 Pearl Buck Road, Bristol, Pennsylvania 19007.  Defendant Jones sells its garments in this State and advertises in this County.  During the last four years, defendant Jones has shipped into the U.S.A. through ports located in California an estimated 7 million pounds of garments, worth an estimated wholesale value of $41.8 million, manufactured in sweatshops located in the CNMI.  Defendant Jones contracted with the following garment factories in the CNMI to manufacture such goods: Concorde, Jin Apparel, NEO, Onwel and UNO MODA.  As detailed herein, both Jones and the factories identified herein, acting as Jones' agents, engaged in conduct which violates state, federal and international law.

24. Defendant Lane Bryant, Inc. ("Lane Bryant") is a Delaware corporation domiciled at 5 Limited Parkway East, Reynoldsburg, Ohio 43068.  Defendant Lane Bryant sells its garments in this State and maintains stores in this County.  During the last four years, defendant Lane Bryant has shipped into the U.S.A. through ports located in California an estimated 2.8 million pounds of garments worth an estimated wholesale value of $16.9 million, manufactured in sweatshops located in the CNMI.  Defendant Lane Bryant contracted with Top Fashion in the CNMI to manufacture such goods.  As detailed herein, both Lane Bryant and this factory, acting as Lane Bryant's agent, engaged in conduct which violates state, federal and international law.

25. Defendant The Limited, Inc. ("Limited") is a Delaware corporation domiciled at Three Limited Parkway, Columbus, Ohio 43230.  Defendant Limited sells its garments in this State and maintains stores in this County.  During the last four years, defendant Limited has shipped into the U.S.A. an estimated 3.3 million pounds of garments, worth an estimated wholesale value of $21.7 million, manufactured in sweatshops located in the CNMI.  Defendant Limited contracted with the following garment factories in the CNMI to manufacture such goods: American Pacific Textile, Inc. ("Am. Pacific"), Express Manufacturing, Inc. ("Express Mfg."), Advanced Textile Corp. ("Advanced"), Hansae, Mirage and Winners.  As detailed herein, both Limited and the factories identified herein, acting as Limited's agents, engaged in conduct which violates state, federal and international law.

26. Defendant The May Department Stores Company ("May Co.") is a Delaware corporation domiciled at 611 Olive Street, St. Louis, Missouri 63101.  Defendant May Co. sells its garments in this State and advertises in this County.  During the last four years, defendant May Co. has shipped into the U.S.A. through ports located in California an estimated 6.5 million pounds of garments worth an estimated wholesale value of $46.7 million, manufactured in sweatshops located in the CNMI.  Defendant May Co. contracted with Little MGM, Commonwealth Garment Manufacturing, Inc. ("Commonwealth Garment"), Express Mfg., Neo, UNO MODA and U.I.C. in the CNMI to manufacture such goods.  As detailed herein, both May Co. and the factories identified herein, acting as May Co.'s agents, engaged in conduct which violates state, federal and international law.

27. Defendant Nordstrom Inc. ("Nordstrom") is a Washington corporation domiciled at 1617 Sixth Avenue, Suite 500, Seattle, Washington 98101.  Defendant Nordstrom sells its garments in this State and maintains stores in this County.  During the last four years, defendant Nordstrom has shipped into the U.S.A. an estimated 3 million pounds of garments, worth an estimated wholesale value of $18.3 million, manufactured in sweatshops located in the CNMI.  Defendant Nordstrom contracted with the following garment factories in the CNMI to manufacture such goods: Global Manufacturers (Saipan), Inc. ("Global") and Onwel.  As detailed herein, both Nordstrom and the factories identified herein, acting as Nordstrom's agents, engaged in conduct which violates state, federal and international law.

28. Defendant OshKosh B'Gosh, Inc. ("OshKosh") is a Delaware corporation domiciled at 112 Otter Avenue, Oshkosh, Wisconsin 54901.  Defendant OshKosh sells its garments in this State and maintains stores in this County.  During the last four years, defendant OshKosh has shipped into the U.S.A. through ports located in California an estimated 1.5 million pounds of garments, worth an estimated wholesale value of $8.8 million, manufactured in sweatshops located in the CNMI.  Defendant OshKosh contracted with U.I.C. in the CNMI to manufacture such goods.  As detailed herein, both OshKosh and this factory, acting as OshKosh's agent, engaged in conduct which violates state, federal and international law.

29. Defendant Sears Roebuck & Company ("Sears") is a New York corporation domiciled at 3333 Beverly Road, Hoffman Estates, Illinois 60179.  Defendant Sears sells its garments in this State and advertises in this County.  During the last four years, defendant Sears has shipped into the U.S.A. through ports located in California an estimated 430,000 pounds of garments, worth an estimated wholesale value of $2.6 million, manufactured in sweatshops located in the CNMI.  Defendant Sears contracted with the following garment factories in the CNMI to manufacture such goods:  Hansae, Kyung-Suh (Saipan) Co., Ltd. ("Kyung-Suh"), a Hansae subsidiary and subcontractor, Pang Jin Sang SA Corp. ("Pang Jin"), Handsome (Saipan), Inc. a/k/a Kum-Kyung Corp. ("Handsome"), and Top Fashion.  As detailed herein, both Sears and the factories identified herein, acting as Sears' agents, engaged in conduct which violates state, federal and international law.

30. Defendant Tommy Hilfiger USA, Inc. ("Hilfiger") is a Delaware corporation domiciled at 25 West 39th Street, New York, New York 10018.  Defendant Hilfiger sells its garments in this State and in this County.  During the last four years, defendant Hilfiger has shipped into the U.S.A. through ports located in California approximately 1.1 million pounds of garments, worth approximately $6.85 million, manufactured in sweatshops located in the CNMI.  Defendant Hilfiger contracted with the following garment manufacturers in the CNMI to manufacture such goods: Concorde and U.I.C.  As detailed herein, both Hilfiger and the factories identified herein, acting as Hilfiger's agents, engaged in conduct which violates state, federal and international law.

31. Defendant Wal-Mart Stores, Inc. ("Wal-Mart") is a Delaware corporation domiciled at 702 Southwest 8th Street, Bentonville, Arkansas 72716.  Defendant Wal-Mart sells its garments in this State and advertises in this County.  During the last four years, defendant Wal-Mart has shipped into the U.S.A. through ports located in California an estimated 7.3 million pounds of garments worth an estimated wholesale value of $43.8 million, manufactured in sweatshops located in the CNMI.  Defendant Wal-Mart contracted with Mirage to manufacture such goods in the CNMI.  As detailed herein, both Wal-Mart and Mirage, acting as Wal-Mart's agent, engaged in conduct which violates state, federal and international law.

32. Defendant Warnaco Group, Inc. ("Warnaco") is a Delaware Corporation domiciled at 90 Park Avenue, New York, New York, 10016.  Warnaco sells its products both in this State and County.  During the last four years, defendant Warnaco, which is a licensee for Chaps by Ralph Lauren and Calvin Klein, has shipped into the U.S.A. through ports located in California an estimated 1.5 million pounds of garments worth an estimated wholesale value of $9.3 million, manufactured in sweatshops located in CNMI.  Defendant Warnaco contracted with the following garment factories in the CNMI to manufacture such goods: Grace International, Inc. ("Grace") and Big MGM.  As detailed herein, Warnaco and the factories identified herein, acting as Warnaco's agents, engaged in conduct which violates state, federal and international law.

33. The true names and capacities of the defendants sued herein as DOES 1-400 are presently unknown to plaintiffs, who therefore sue them by such fictitious names.  Plaintiffs will amend this Complaint to allege the true names and capacities of these defendants when they have been determined.  Each of the fictitiously named defendants is responsible in some manner for the conduct alleged herein.

34. At all times herein mentioned in the causes of action alleged herein, by participating in a scheme to affirmatively encourage and allow the conduct here at issue to continue unremedied and/or by not publicly disclosing such conduct, each and every defendant and the garment contractors for each, as identified above, was an agent and/or co-conspirator of each and every other defendant, as applicable.  By engaging in the conduct alleged herein, each and every defendant was acting within the course and scope of this agency or conspiracy, and with the authorization of each of the remaining defendants.  To the extent that any conduct or omissions alleged herein were perpetrated by one or more defendants by continuing to participate in this conspiracy, the remaining defendants confirmed and ratified said conduct or omissions by not disclosing the true facts as alleged herein.  As a result thereof, for years, and continuing to date, defendants and/or DOES 1-400 have engaged in a conspiracy to violate the law as detailed herein to mislead and deceive federal and state agencies, and to mislead and deceive purchasers of the garments here at issue and the general public regarding the facts detailed herein.


 

IV. FACTUAL ALLEGATIONS

A. BACKGROUND OF THE CNMI

35. The CNMI is a chain of 14 islands in the South Pacific, located approximately 120 miles north of Guam.  Following World War II, these islands were recognized as a Trust Territory of the United Nations, and the U.S.A. was designated as the administrator of the Trusteeship Agreement.

36. In a 1975 plebiscite, the citizens of the CNMI voted by an overwhelming margin to become a Commonwealth of the U.S.A.  Representatives from the CNMI and the U.S.A. negotiated the terms of their relationship in the "Covenant to Establish a Commonwealth of the Northern Mariana Islands in Political Union with the United States" ("Covenant").  The Covenant was approved by the United States Congress in 1976 (48 U.S.C. §1801 et seq.) and became fully effective by Presidential Proclamation on November 3, 1986, when the CNMI was removed from Trust status by the United Nations.

37. The Covenant extended U.S.A. citizenship to the indigenous people of the CNMI, delineated the responsibilities of the federal and local governments, and clarified which provisions of U.S.A. law would apply to the CNMI.  Although the federal government chose not to apply the federal minimum wage law to the CNMI at the outset of the Covenant, it did not exempt the CNMI from federal law provisions such as the overtime provisions of the federal Fair Labor Standards Act ("FLSA") (29 U.S.C. §207), and the Occupational Safety and Health Act (29 U.S.C. §553, 651-678) ("OSHA") and their implementing regulations.

38. The Covenant also granted the CNMI temporary authority over its immigration policy, allegedly because the territorial government sought standards of immigration more stringent than those that would otherwise be imposed by the United States Immigration and Nationality Act ("INA").  At the time of the Covenant negotiations, only 15,000 individuals lived in the CNMI, and the CNMI negotiators expressed the fear that application of the INA would allow too many alien immigrants to cross their borders, thereby undermining their island culture.  However, contrary to the initial representations of government officials that local management of immigration would ensure a tighter control over the influx of foreigners, the CNMI's immigration policy instead led to an aggressive expansion of non-immigrant foreign contract labor.  The exemption of the CNMI from the reach of the INA -- which exemption is now actively exploited by the CNMI contractors -- permits foreign-owned companies located in the CNMI to recruit tens of thousands of foreign laborers each year for their CNMI garment factories, which those companies would not otherwise be permitted to do if their factories were located on the mainland U.S.A.  The 1995 census placed the total population of the CNMI at nearly 60,000, over half of whom are foreign workers.  Recent estimates are that the population now totals over 70,000.  The largest portion of the recent growth in the number of U.S.A. citizens in the CNMI is due to births of infants to alien workers located in the CNMI rather than to indigenous citizens.  Recent reports place the number of foreign workers employed in the CNMI garment industry at 15,000, despite a supposed legal limit of 11,000.  Amazingly, 91% of the private sector jobs in the CNMI are held by foreign workers, despite a 14.2% unemployment rate among the U.S.A. citizens there.

39. Saipan-manufactured garments sold by defendants are not only made by foreign workers using foreign materials, but they are mostly manufactured in foreign-owned sweatshop factories.  Of the approximately 31 operating garment factories in the CNMI, at least 70% are owned by foreign interests.  Only nine have any U.S.A. shareholders, and the remainder are primarily owned by interests in Korea, Hong Kong, Japan, Thailand and China.  These factories are owned and operated by private operations located in Korea, Hong Kong, Japan, and China.  These foreign investors are actively solicited to take advantage of the CNMI's unique trade arrangement with the rest of the U.S.A. and are solicited to set up factories in the CNMI through advertisements focusing the litany of special privileges granted to the CNMI products: "Export duty free to the United States . . .  duty free status for manufactured products;" "Favorable tariff treatment . . . to the international market;" "Visa free borders," "exempt from U.S. minimum wage laws," and the lure that companies can advertise products manufactured in the CNMI as being "Made in the USA."3   The CNMI garment industry now outproduces and out-exports foreign countries such as Jamaica and Malaysia -- nations with populations as much as 1,900 times larger than the CNMI.

40. The foreign garment workers recruited from overseas to manufacture garments for the benefit of defendants have become the victims of an appalling scheme which deprives the workers both of wages and working conditions to which they are legally and contractually entitled, and of universally-recognized civil and human rights.  This scheme has, in the process, fattened and continues to fatten the bank accounts of defendants by allowing these companies to purchase garments fabricated under defendants' control under abhorrent conditions at cut rate prices, then sell them as "Made in the U.S.A.," "Made in the Northern Mariana Islands" or "Made In the Mariana Islands (USA)" (or not "Made in China") at a tremendous profit.

41. Almost all of the garments manufactured in the CNMI factories are sent to the U.S.A. mainland for sale, and the amount of those sales are huge.  For the fiscal year that ended October 1998, shipments from the CNMI to the U.S.A. mainland amounted to over $1 billion (wholesale value) worth of garments -- a substantial increase in goods being shipped from the CNMI during the past five years (e.g., $558 million (wholesale) worth of garments had been shipped in 1996; $798 million (wholesale) worth of garments had been shipped in 1997).  Since these products are declared as having a wholesale value averaging $6 a pound, and (depending on the garment) may be sold at retail for a markup of between 80% and several multiples of the wholesale price, conservatively the CNMI garments shipped to the U.S.A. mainland in the past year alone have an estimated retail value in excess of $2 billion.  These garments are sold by some of the most well-known -- and priciest -- names in the fashion business.  According to United States Senator Daniel K. Akaka, what is most alarming is that the United States Department of Commerce concluded in 1997 that 85% of the apparel shipped to the mainland U.S.A. from the CNMI -- such as shirts, blouses and suits -- was considered to be "sensitive apparel," the manufacture of which is facing significant decline in the U.S.A. mainland due to heavy import penetration and a resulting decrease in American jobs.  143 Cong. Rec. S8533, at S8555 (daily ed. July 31, 1997) (statement of Senator Akaka).

42. The foreign garment industry has chosen to locate in the CNMI in part to circumvent U.S.A. duties and quota restrictions -- mainly those imposed upon Chinese goods.  Foreign manufacturers could produce identical clothing products in their home nations, using the same foreign cloth, the same foreign factory managers, and the same foreign workforce they now "export" to the CNMI.   However, the reason for locating the cutting and assembly phase of the garment manufacturing process in the CNMI is simple -- by taking advantage of loopholes in the tariff, duty and quota exemptions provided to the CNMI by the U.S.A., defendants can and do pay less for each garment than if it were manufactured on the U.S.A. mainland or, in some instances, in the foreign country where these foreign shareholders are based or have other garment production facilities, and still use a label that references manufacture in the U.S.A.  Moreover, this arrangement allows Chinese manufacturers to increase their U.S.A. mainland shipments, as the combined imports from China and the CNMI exceeded 250% of China's import quota in 1997.4

B. WORKING CONDITIONS IN THE CNMI

43. Foreign garment workers are recruited by private agencies operating in the CNMI, China, Bangladesh, Korea and elsewhere.  These agencies' legal and financial connection to the CNMI factories ultimately employing them in the CNMI is deliberately obscure.5  These recruiters advertise well-paying jobs in the U.S.A., using misrepre-senta-tions such as that Saipan is only "a short train ride from L.A." as a lure to impoverished men and women living in severely underdeveloped nations.  These recruiters paint a rosy but false picture of working in the U.S.A. and what employees can expect: high paying jobs that will easily cover their recruiting costs and provide money to support their families; clean and safe factories making expensive high fashion clothing; and all expenses paid including good food, and clean, comfortable living quarters.  However, for the privilege of obtaining employment in the CNMI garment factories for up to a one-year period (the maximum contract period under CNMI law), each prospective worker must pay a "fee," or enter into a contract requiring payment of a "fee," of between $2,000 and $7,000 to the recruiting agency.  This fee is either paid by the worker (or his or her family) before the worker departs for the CNMI, or by the worker every two weeks when he or she receives a paycheck -- with the agencies sometimes taking close to 90% of these workers' bi-weekly take-home pay.  Garment workers must remain in the employment of the particular contractors working with the agency to repay such fees, and are almost never able to change employers.

44. The garment workers who come to the CNMI are routinely required to sign employment contracts which are enforced by the CNMI garment factories.  These contracts (often referred to as "shadow contracts") prohibit garment workers from participating in political or religious activities, or sometimes even dating or getting married.  The contracts routinely prohibit garment workers from asking for salary increases, looking for alternative employment, and from union organizing.  Violation of the terms of these contracts can be enforced by immediate termination of employment, deportation and employee responsibility for travel expenses and all financial losses.

45. The quality of the working and living conditions imposed on garment workers manufacturing defendants' products in the CNMI garment factories and barracks is worse than most of the poorest working conditions on the mainland U.S.A.  Often, little water is provided to workers during business hours, despite the usual lack of air conditioning and temperatures in the factories that often exceed 100 degrees.  The CNMI factories are often crowded, unsanitary and non-compliant with numerous OSHA regulations.  In fact, many of the CNMI contractors with whom defendants do business have been repeatedly cited for serious violations of OSHA regulations.  Appendix A (incorporated herein by this reference) summarizes the reported OSHA violations -- many of which are listed as "serious" -- in many of the CNMI factories with which defendants are currently contracting to perform defendants' work.

46. Defendants either are aware or should be aware of the persistent and serious nature of the OSHA violations which are a primary component of the sweatshop conditions complained of herein, yet defendants continue to do business with the CNMI garment contractors identified above without demanding such conditions be rectified.

47. Garment workers in the CNMI have also given alarming testimony regarding systemic wage and overtime violations by the CNMI garment contractors, including testimony that:

(a) Impossible quotas are set for the workers; those who do not meet the quotas must then work without any pay until their daily or weekly quota is satisfied;

(b) Workers who made mistakes during regular working hours are required to correct their mistakes through uncompensated labor, and are threatened with time off or deportation should they fail to provide such labor;

(c) Workers at some factories may toil 12 hours daily, seven days a week, with only a minimum number of days off every few months, without full compensation;

(d) Workers at other factories are compelled to work up to 10 or more hours a day, seven days each week, only being permitted to record and be paid for eight of those hours.  The remaining unpaid hours are considered "contributions to the company" -- unlawfully mandated involuntary donations that occur several days each week;

(e) New employees must contribute several days to the company without pay for "training" purposes; and

(f) When a Congressional delegation visited one garment factory in January 1998, the delegation was informed that the factory claimed to halt work at 7:00 p.m.  However, the factory actually recalled its workers to resume work after the delegation had completed its inspection tour.

48. The CNMI garment factories manufacturing garments for defendants routinely provide food and housing for their workers, either on-site or nearby.  However, as a further element of the expletive scheme to place their employees in a state of peonage, these garment factories charge each employee up to $100 per month for housing and up to another $100 per month for food, which by law and under contract they are required to provide.  The food provided by the factories is of poor quality or infested.  The living quarters are overcrowded barracks, sometimes with four to six people in a 250 square foot room (the minimum OSHA living space requirement is 100 square feet per person), have poor lighting both indoors and outdoors, exposed electrical wiring and rubble strewn throughout the area.  Fresh drinking water is not regularly provided in these barracks -- a violation of federal OSHA rules.  Instead, workers may need to haul water to their living quarters from nearby factories.  Their "kitchens" consist of a hotplate.

49. As these workers' minimum wage is $3 an hour, between an average recruitment fee of $5,000 and food and housing costs of up to $2,400 a year, these employees need to work 2,500 hours merely to repay the debt imposed upon them for the "benefit" of working in the CNMI garment factories -- before earning a single dollar for themselves.  Since the maximum contract can only be for one year, such harsh financial impositions place these workers in a state of peonage and financial bondage.

50. The workers who manufacture garments for the benefit of defendants also have little freedom of movement, as in many cases their ability to leave the barracks where they live is either severely restricted or altogether prohibited.  Many of the barracks in which these workers are required to live are surrounded by barbed wire and are guarded.  Numerous reports have been received of workers being restricted from leaving the compound grounds or even their barracks, of names being kept of those who left the barracks, and of requirements that workers return at imposed curfews (unless they have other "jobs") or face reports to management.

51. The CNMI law requires the garment factories to provide a financial bond and a return ticket for each worker whose employment contract is over to ensure that the worker can return to his or her homeland.  In many cases, however, CNMI employers falsely claim they are insolvent and cannot pay for return tickets, leaving these workers without the financial resources to return home.  Such circumstances force these workers to repeat the cycle again -- a cycle also encouraged by recently announced deportation "amnesty" laws for unemployed workers, through which such workers can avoid deportation (and the consequences thereof) if they sign on for another extended stay in the CNMI garment factories.

C. ON-GOING CONDUCT OF THE CNMI CONTRACTORS

52. Defendants contract for the manufacture of garments with numerous foreign-controlled garment contractors located in the CNMI, including those identified in paragraphs 15-32 above.  Many of these contractors have engaged and continue to engage in substantial violations of state/CNMI, federal and international laws.  Practically every factory identified herein has been cited for serious OSHA violations (as detailed in Appendix A hereto), and has also engaged in federal FLSA overtime law violations.  The following is a summary of the most recent conduct reported at particular garment factories in the CNMI.

53. Advanced: Employees are routinely forced to perform overtime work without pay.  Advanced typically does not pay employees for all overtime hours worked and requires the workers to perform extra hours, known as "voluntary time," to meet a "quota" issued by the factory, requiring workers to assemble garments at a high pre-determined daily rate.  Advanced is a contractor for defendant Limited.

54. Concorde:  The standard practice at Concorde is to require employees to meet an unrealistically high quota for the particular job assigned; patterns per hour, sleeves sewn, or finished garments ironed and packed.  If employees do not meet the quota, they are typically not paid for a standard eight hour day but they must provide so-called "voluntary time" to the company until the quota is met.  If employees do meet the quota within their eight hour shift, they still must provide "voluntary time" and are paid for only a portion of overtime.  It is rare for employees to meet their quota during their regular eight hour shift.  The company regularly requires "voluntary time" which is not recorded on time records, at the direction of the company.  Concorde is a contractor for defendants J. Crew, Jones, and Hilfiger.

55. Diorva, a subsidiary of Little MGM: Diorva is a subsidiary of Little MGM.  These companies have high quota requirements and workers are routinely denied pay for their standard eight hour days, denied pay for overtime, and required to provide large amounts of "voluntary time" to the companies.  Diorva and Little MGM are contractors for defendant Cutter.

56. Global: Workers are typically required to meet very high quotas.  If they cannot meet the quotas, they may be required to work "voluntary time."  As the company does not record all the hours worked during the day, an employee can work eight hours in a standard shift and only be paid for five or six hours at the standard rate and also denied overtime pay.  The company requires employees to work overtime to meet quotas and does not pay its workers for overtime pay; any overtime worked is considered "voluntary time."  Global is a contractor for defendants Gymboree and Nordstrom.

57. Grace: Grace has a very high quota which is difficult, if not impossible to meet, and not all overtime is paid to workers.  Workers are also routinely required to perform "voluntary work."  Grace is a contractor for defendant Warnaco.

58. Big MGM and its Subsidiary US CNMI Development Corp. ("US CNMI"):  Big MGM and US CNMI have high quota systems, and workers are typically required to work hours for which they are not paid.  Even during an eight hour shift the workers may not be paid for all hours worked.  US CNMI has been previously charged by the government with failing to pay employees for standard working hours (actual hours worked during the standard working period), for failure to pay overtime, and for requiring employees to "donate" substantial quantities of "voluntary time."  Employees regularly work an eight hour day, six to seven days a week, accumulating eight to sixteen hours of overtime for which they are not paid and then must work another 20 to 30 hours per week in additional "voluntary time" for which they also are not paid.  Workers do not receive overtime pay and are required to provide "voluntary time" to the company.  Big MGM and US CNMI are contractors for defendants J. Crew, J.C. Penney, and Warnaco.

59. Mirage:  Workers are routinely required to meet a quota, and are not paid for all regular hours worked when they cannot meet the quota schedule for the day.  Workers are also routinely forced to work overtime, not paid for overtime and forced to provide the company with "volunteer time."  Mirage is a contractor for defendants J. Crew, GAP (for Banana Republic), Limited and Wal-Mart.

60. Sako: Workers are typically required to meet a high quota.  If they cannot meet the quota, they are not paid for all the hours of the day they work and do not receive full overtime pay.  Workers are also forced to provide "volunteer time."  Sako is a contractor for defendants Dress Barn and GAP (for itself and Banana Republic).

61. Top Fashion: Workers are typically required to meet a quota or do not receive full pay for the hours they work.  Workers also are not paid for full overtime and are forced to provide "voluntary time" to the company.  Top Fashion is a contractor for defendants Dayton, Lane Bryant, and Sears.

62. Trans-Asia:  Workers must routinely meet a high quota.  If they cannot meet the quota they may not be paid for regular hours, not receive overtime, and forced to work "volunteer time."  Trans-Asia is a contractor for defendant J. Crew.

63. U.I.C:  U.I.C. has a high quota which employees must meet or they may not be paid for the full hours worked in the day.  Employees may also be forced to work overtime but are not paid the overtime premium required by law, and are also forced to provide "volunteer time."  U.I.C. is a contractor for defendants Associated, Hilfiger, May Co., Dayton, OshKosh, and GAP (for itself and Banana Republic).

64. Hansae and its subsidiary Am. Pacific: Workers are typically required to meet a high quota or may not be paid for the full hours worked in a day.  Workers may be forced to work overtime to meet that quota but not paid the overtime premiums required by law.  Employees have also been required to provide "volunteer time" to the factory.  Hansae is a contractor with defendants Dayton, J.C. Penney, Sears, GAP and Limited.

65. NEO: Workers are routinely not paid for the full hours they work if they fail to meet high quotas imposed by NEO.  Employees may also be forced to work overtime but are not paid the full overtime premiums required, or required to provide voluntary time. NEO is a contractor with defendants Associated, Dress Barn and Jones.

66. Pang Jin: Workers are routinely required to meet high quotas, not paid their overtime premium required by law, and must provide "volunteer time."  Pang Jin is a contractor with defendant Sears.

67. Mariana Fashions: Workers must typically meet a high quota or may not be paid for the full hours they work.  Employees may also be forced to work unpaid overtime either directly or by being required to provide "volunteer time."  Mariana Fashions is a contractor with defendant GAP.

68. Suntex:  Workers must typically meet a high quota or may not be paid for the full hours they work.  Employees may also be forced to work unpaid overtime either directly or by being required to provide "volunteer time."  Mariana Fashions is a contractor with defendant J. Crew.

69. Defendants control the conditions imposed upon these workers by the CNMI garment contractors, as evidenced by the following:

(a) Defendants effectively jointly exercise meaningful control over the overtime policies and working conditions of the CNMI foreign garment factory workers due to defendants' monitoring and oversight of the conditions there, and their apparent acquiescence to such conditions;

(b) Defendants control the operative details of the CNMI foreign garment factory workers' tasks, including the quantity, quality standards, turnaround time, and other operative details of the production process;

(c) Defendants' personnel are effectively supervising the production process by being present at the factories where the CNMI foreign garment factory workers toil, and because they review, inspect, oversee, monitor and audit such work, routinely taking random samples from the production line before shipment to ensure quality control;

(d) As a matter of economic reality, each defendant serves as an integral part in the CNMI garment manufacturing process due to both their control over and their right to reject shipments; and

(e) The CNMI foreign garment factory workers, as a matter of economic reality, have been and are dependent upon defendants for their livelihoods.  The economic power to control the working conditions and to prevent profiting from the underpayment of overtime rests with defendants, as their leverage is the orders they place with contracting companies.  Such orders give defendants the power to ensure good working conditions are provided for employees where defendants' clothing is manufactured.

70. Since defendants refuse to ensure better working and living conditions as a prerequisite for doing business with the CNMI contractors identified herein, these contractors continue their abhorrent and unlawful labor practices.  As a result of the foregoing, defendants are equally responsible for the conduct of the contractors they hire in terms of the conditions imposed upon the foreign garment workers in the CNMI who are producing garments sold to defendants.

D. GOVERNMENT INVESTIGATIONS IN THE CNMI

71. For several years, but increasing since 1997, several government and investigative reports prepared at the request of United States Congressman George Miller have been published, based on worker interviews and on-site inspections.  These reports include:  Office of Insular Affairs, United States Department of the Interior, Report to Honorable George Miller's Congressional Delegation re:  CNMI Labor and Human Rights Abuse Status Reports, Jan. 29, 1998 to Feb. 14, 1998 (Aug. 12, 1998) ("OIA Report"); United States Department of Labor, Evaluation of the Hay Report Minimum Wage Analysis for the Commonwealth of the Northern Mariana Islands (Mar. 1998); Democratic Staff Comm. on Resources H.R. Beneath the American Flag: Labor and Human Rights Abuses in the CNMI (Congressman George Miller (Mar. 26, 1998)); United States Department of the Interior, Federal-CNMI Initiative on Labor, Immigration, and Law Enforcement in the Commonwealth of the Northern Mariana Islands, Third Annual Report (1997); Democratic Staff Comm. on Resources H.R., Economic Miracle or Economic Mirage? The Human Cost of Development in the Commonwealth of the Northern Mariana Islands (Congressman George Miller April 24, 1997).  All of these reports are available either in whole or in part to defendants.  These reports detail the serious problems in the CNMI, as well as the CNMI government's administration of its labor and immigration policies described herein.  With the exception of a report by the Washington-based Hay Group (commissioned by the CNMI government at a reported cost of $1.48 million), all of these reports are highly critical of the sweatshop conditions in the CNMI and advocate a variety of sweeping reforms.  President Clinton informed then-CNMI Governor Froilan Tenorio on May 30, 1997 of the Administration's concerns over the labor and immigration policies of the CNMI in a letter stating "certain labor practices in the islands . . . are inconsistent with our country's values." (Emphasis added.)

72. In July 1997, the Clinton Administration issued its own inter-agency report that corroborated the conclusions of earlier government reports, and likewise called for fundamental changes in labor practices in the CNMI -- which changes defendants to date have done little, if anything, to either encourage or implement.  Official concerns about conditions in the CNMI have been matched by increasing efforts to influence members of the United States Congress not to take corrective legislative actions.  As a result, the conditions alleged herein and documented in these reports continue to persist, with either defendants' knowledge or reckless or negligent disregard of the continued existence of such conditions.

73. The OIA Report outlined the CNMI workers' reports of degrading treatment, abuse and punishment, in a graphic and frank account of a two week inspection tour.  The following excerpts from the public version of the OIA Report -- which were available to defendants -- summarize the OIA's findings:

This is a report prepared by a seven member team who were retained by the Office of Insular Affairs, United States Department of Interior to prepare an itinerary for the Congressional delegation that was scheduled to visit the CNMI in February 1998 on a fact-finding trip.  The itinerary was to include opportunities for the visiting members of Congress and their staff to speak directly to foreign contract workers, and to visit sites that exhibit serious problems connected to the present systems of labor and immigrants in the CNMI.  The delegation's fact-finding mission was unexpectedly cancelled at the last minute while team members were in Guam making final arrangements to go to the CNMI.  Nevertheless, the Office of Insular Affairs believed that it was important for team members to gather the latest information regarding emerging problems of particular concern to the Federal Government.  These issues included:

 

 *  *  *

 

 *  *  *
 
 *  *  *

Shadow Contracts and Fear of Retaliation

From the time garment workers first came to the CNMI, to the present time, the Chinese deploying agency sending them abroad has required all workers to sign contracts, kept by the deploying agency, which specify the workers' conduct and control over his wages while abroad.  These contracts also contain sanctions the workers face if they break this contract while working in the CNMI.  Because one of the sanctions specified provides for punishment if the workers reveal labor-related problems to the government agencies in the CNMI, all workers are fearful of sharing any information to interviewers and investigators.

Copies of these contracts have been made available to the Department of Interior, and as they all contain essentially the same restrictive provisions, many of which are in direct contravention to federal and local labor and civil right laws, this information will not be repeated here. . . .

[W]orkers feared returning to China because while employed in the CNMI, they had violated provisions of the Chinese contracts, also known as "shadow contracts". These are called shadow contracts because they are never made available to governmental agencies or other interviewers.  The violations they had been involved in included attending religious services in the CNMI, refusing to have an abortion, and complaining about labor violations during the period of time they worked here.

Working and Living Conditions

Two team members visited workers at the [Redacted] barracks.  There appeared to be little change during the past year despite OSHA inspections of the site.

Workers are housed in rooms approximately 25 feet by 10 feet with four to six people to a room.  The floors are bare concrete and the beds are made of plywood with light padding.  The rooms are hot and stuffy because there is no air conditioning.  Insect infestation is a common complaint and most workers need to sleep under mosquito netting.

An interview revealed that the water is turned on for only 15 minutes per day for bathing and house cleaning.  At this time workers will fill buckets for use later either flushing toilets or cleaning.  Hot water is made by immersing heating elements into buckets and leaving them for a period of a few hours.  Some workers [Redacted] are not provided with drinking water at their barracks and must fill bottles at the factory to bring back with them.

During the course of this inspection, team members encountered a women crying quite loudly in her bunk.  Coworkers explained that she was new to the factory and still "needed to get used to the situation."  After more questioning it was learned that the women was upset because of the little amount of money she was earning.  The workers made the claim that she must provide a certain amount of free work to the factory every day.  She was able to give a detailed explanation of the quota system, which is based on hourly and total percentages.  The woman was concerned that she would be unable to repay the money she borrowed for her recruitment fees and she worried for the well being of her family because she didn't have enough money to send home.

OIA Report, at 1, 15-16 (emphasis added).

74. During OSHA government inspections in February 1998, the OSHA Regional Administrator noted in an interview on a local CNMI television station that working conditions in the CNMI were not getting better but were in fact worsening, with more foreign garment workers living in poor conditions.  OSHA inspectors reported, based on those inspections, that workers' barracks were still unhealthy, with overcrowding, unsanitary facilities, little clean water, filthy and inoperable toilets, dirty kitchens and electrical hazards. These federal investigators also noted reports that workers were being abused or fired for complaining about poor facilities.

75. The Fourth Annual Report of the Federal-CNMI Initiative on Labor, stated that "the Administration continues to be concerned about the CNMI's heavy and unhealthy dependence upon an indentured alien worker program and on trade loopholes to expand its economy." Id. at 1 (emphasis added).  According to this report, defendants may have saved over $200 million in the last year alone in avoided duties by the use of CNMI sweatshop labor.  Id. at 8.  In a press release by the United States Department of the Interior accompanying the publication of this report stated, "the underlying immigration, labor, and trade problems of the Commonwealth of the Northern Mariana Islands (CNMI) remain as troublesome as ever, despite a year's worth of reforms set in motion by the recently-elected Governor of the [CNNI]."  Press Release accompanying the Fourth Annual Report of the Federal-CNMI Initiative on Labor, at 1 (emphasis added).

E. VIOLATIONS OF LAW IN THE CNMI

76. In addition to the reported OSHA and FLSA violations detailed in 43-68 above, the foreign contract labor system prevalent among defendants' CNMI contractors violates the Trade Act of 1930 (19 U.S.C. §1307), which prohibits selling products in the U.S.A. manufactured by indentured labor.  The conduct of the CNMI contractors (undertaken with either the knowledge or reckless or negligent disregard of defendants) in creating and sustaining the economic and living conditions to which the CNMI factory garment foreign workers are exposed, also violates the federal anti-peonage laws, codified at 18 U.S.C. §1581-88.  Evidence abounds of the peonage and indentured labor status of the CNMI foreign garment workers who manufacture defendants' products:

(a) Workers who are recruited for jobs in garment factories in the CNMI must agree to pay, in nearly every case, fees as high as $7,000 to recruiters as a condition of employment, which fees sometimes accrue exorbitant rates of interest;

(b) Workers are obliged to remain in employment in order to repay such fees, even if against their will;

(c) Workers are generally unable to change employers;

(d) Workers are generally limited in their freedom of movement and cannot even freely leave to return home; and

(e) Workers are routinely required to sign "shadow contracts" with recruitment agencies and with employers that restrict the workers' freedom of speech, freedom of religion, reproductive and other privacy rights, ability to seek alternative employment or engage in social activities, and other universally protected behavior.

77. The acts and practices described herein, of which defendants either are or should be aware, also violate numerous international laws, agreements, conventions, resolutions and treaties adopted by the U.S.A. and/or recognized by the community of nations to be universal statements of the laws governing human rights and duties, including the following:

(a) American Declaration of the Rights and Duties of Man, Mar. 30 - May 2, 1948, art. XV, O.A.S. Res XXX, O.A.S. Off. Rec. OEA/Ser.L/V/I.4 Rev. (1965);

(b) Universal Declaration of Human Rights, U.S., arts. 4-5, 23-24, Dec. 10, 1948, U.N. General Assembly, G.A. Res. 217A, U.N. GAOR, 3rd Sess., Pt. I, Resolutions, at 71, U.N. Doc. A/810 (1948);

(c) International Covenant on Civil and Political Rights, U.S., art. 8, June 8, 1992, 993 U.N.T.S. 171;

(d) International Labor Organization:  Convention Concerning Forced or Compulsory Labor, adopted by the General Conference of the International Labor Organization, June 28, 1930 as modified by the Financial Articles Revision Convention, 1946, Articles 2,4;

(e) International Covenant on Economic, Social and Cultural Rights, U.S., art. 7, Oct. 5, 1977, 993 U.N.T.S. 3, 1966;

(f) American Convention on Human Rights, U.S., art. 6, June 1, 1977, 1114 U.N.T.S. 123;

(g) Additional Protocol to the American Convention on Human Rights in the Area of Economic, Social and Cultural Rights, concluded at San Salvador, art. 7, Nov. 17, 1988, O.A.S.T.S. No. 69;

(h) Convention on the Elimination of All Forms of Discrimination Against Women, U.S., art. 11, July 17, 1980, 1249 U.N.T.S. 13;

(i) Declaration on the Elimination of Violence Against Women, U.N., arts 2-3, Dec. 20, 1993, G.A. Res. 48/104, U.N. GAOR, 48th Sess., Supp. No. 49, at 217, U.N. Doc. A/Res/48/104 (1994); and

(j) Declaration on the Elimination of all Forms of Intolerance and of Discrimination Based on Religion or Belief, U.N. General Assembly, arts. 1-2, 6, Nov. 25, 1981, G.A. Res. 36/55, U.N. GAOR, 36th Sess., Supp. No. 51, at 171, U.N. Dec. A/36/51 (1981).

78. As a result of the above-described on-going acts and practices in the CNMI garment factories, including the systemic practice by the CNMI contractors of failing to pay overtime as required by federal law, defendants' shipment, transport, delivery or sale of such garments within the U.S.A. violates the "hot goods" provisions of the FLSA (29 U.S.C. §215 et seq.)  According to the United States Department of Labor, "hot goods" are items made in violation of the minimum wage, child labor or overtime laws.  It is illegal for any person to ship or sell "hot goods" into interstate commerce; the law imposes strict liability on any retailers or manufacturers, such as defendants, who do so.  Defendants' conduct of selling such garments in violation of these provisions of law also constitutes negligence per se as a result of their commission of these statutory violations.  To the extent the "hot goods" law provides an exemption from such rules "in reliance on written assurance from the producer that the goods were produced in compliance with the requirements of the act" (29 U.S.C. §215) and defendants received such a writing, this exemption is inapplicable here because of the information available to defendants (as detailed above) and/or because defendants' monitoring practices (examples of which are described in Appendix B hereto) either did or reasonably should have placed defendants on notice of the above-described on-going practices.  Either defendants are publicly misrepresenting the effectiveness and impact of their active monitoring and quality control programs, or they are violating the above "hot goods" prohibitions as a result of, inter alia, the information which either is or should be in their possession.

 F. MISLEADING CLAIMS BY DEFENDANTS

79. Defendants, possibly realizing the potential adverse impact on corporate image (and sales) if it could be established they either were or should have been aware of the facts set forth above, have through their advertisements and claims either disassociated themselves with or avoided disclosing the nature of the work performed for defendants in the CNMI.  Many defendants publicly proclaim that all of defendants' contractors operate in "no sweatshop" conditions, and have claimed to "eradicate sweatshops in America" and to "ensure their shelves are stocked with only "NO SWEAT" garments."  These statements are disseminated publicly to customers as a form of advertisement or promotional material.  For example:

80. Defendants J. Crew, J.C. Penney, Lane Bryant, Dayton, GAP, Limited, Gymboree, Nordstrom, May Co. and Sears are all signatories to the National Retail Federation Statement of Principles on Supplier Legal Compliance, first signed on November 9, 1995.  Each such defendant claims in this Statement of Principles that:

(Emphasis added.)

These Principles state that the signatories:

81. Practically every defendant publicly proclaims and misrepresents in the above-cited codes of conduct that if any systemic sweatshop violations or other unlawful conditions were brought to their attention, defendants would take "appropriate measures" to resolve such violations, including terminating the offending contractors immediately.  Yet each of the defendants continues to do business in the CNMI even though each either knows, recklessly disregards or reasonably should be aware of the serious and on-going sweatshop conditions and violations of federal labor laws, OSHA, peonage and human rights abuses in the CNMI garment factories that manufacture garments for defendants' benefit.

82. Defendants have failed and refused to disclose the truth about such conditions to their consumers and the general public, or even recognize the existence of such conditions.

83. Many of the defendants also advertise or publicly proclaim that they have in place extensive anti-sweatshop, quality control standards and monitoring and inspection protocols, allegedly designed to both ensure quality control and compliance by their contractors with all applicable laws, in part to distinguish their products from their competitors.  Appendix B (incorporated herein by reference) includes examples of defendants' applicable codes of conduct and strict anti-sweatshop and monitoring programs, which are either located on websites, maintained by defendants or are sent to customers upon request.  If even remotely effective, such programs would identify the above-described abuses to defendants.

84. GAP has full-time operations and offices in the CNMI located in Gualo Rai, Saipan, which operations should provide information to GAP regarding the on-going abuses here at issue.

85. Cutter claims in its Form 10-K filed with the Securities and Exchange Commission that it engages in regular on-site inspections.  On April 15, 1997 in The News Tribune, Pat Nugent, Cutter & Buck's Vice President of Merchandising, stated: "I have no objection to outside monitoring because I have every confidence our factories would pass."   (Emphasis added.)  He also claimed that he, along with other company executives, inspects the garment factories Cutter contracts with in China, Hong Kong, Macao and Saipan approximately every two months.  Therefore, Cutter would (or should) have come across the conditions complained of herein.

86. Particularly since a television exposé on ABC's "20/20" television show which ran on March 13, 1998, several defendants' representatives, including representatives from GAP, have inspected the CNMI garment factories and observed the conditions there, but did not require these conditions be improved as a prerequisite for continuing to do business with their contractors.

87. According to the December 30 Report, "[t]he garments produced [in the CNMI] can be legally, but misleadingly, labelled as `Made in the USA.'"  Fourth Annual Report of the Federal-CNMI Initiative on Labor, at 7 (emphasis added).  Garments manufactured in the CNMI for defendants' benefit carry a "Made in USA" label or, in some cases, a "Made in Northern Mariana Islands (USA)" label, emphasizing the "American" nature of these garments.  In terms of direct advertising, one of Wal-Mart's primary advertising themes focuses upon the fact that it sells "Made in the USA" goods, supposedly saving and protecting American jobs in the process;  Hilfiger's advertising and clothing labels utilize a variant of an American Flag to emphasize the "American" quality of their garments; and OshKosh in its stores emphasizes its "American" origins, with pictures of Uncle Sam adorning its walls.

88. Defendants' promotional, labelling and advertising practices as alleged above have a tendency to deceive and mislead consumers and the general public, and defendants make significant profits on their CNMI-labelled garments due to this deception.  Contrary to what defendants claim in their advertisements and promotional materials, they either intentionally, recklessly or negligently permitted their garments to be manufactured under unlawful conditions.  Consumers are misled into believing they are not buying garments made in sweatshop conditions and are contributing directly to the U.S.A. economy by encouraging the employment of American workers.  Consumers are also lead to believe they are purchasing a garment manufactured in non-sweatshop conditions, i.e., in compliance with U.S.A. labor, health and safety laws and legal protections to which every worker in the U.S.A. has a right, and that defendants are actively monitoring their contractors to ensure compliance with U.S.A. laws and standards.  These laws and legal protections guarantee full payment for overtime work, clean and safe workplaces, and full protection of fundamental civil liberties to which all persons -- citizens, legal residents and non-residents -- on U.S.A. soil are entitled.

89. Such claims and omissions by defendants are material to a reasonable consumer, since according to a 1996 poll conducted by Marymount University in Arlington, Virginia, 84% of over 1,000 individuals questioned said they would pay at least $1 more for a garment that cost $20 if it were guaranteed to be made in a legitimate U.S.A. factory.  More significant, 78% of those surveyed said they would avoid shopping at stores that sell garments made in sweatshops.  The United States Federal Trade Commission ("FTC") has recently concluded that "[c]onsumers are likely to understand an unqualified U.S. origin claim to mean that the advertised product is 'all or virtually all' made in the United States."  In conducting extensive consumer research, the FTC found that "the country in which a product is put together or completed is highly significant to consumers in evaluating where the product is 'made.'"  FTC Notices, "Made in the U.S.A." and Other U.S. Origin Claims: Enforcement Policy Statement on U.S. Original Claims, 62 Fed. Reg. 63,756, at 69,768-69 (Dec. 2, 1997) (emphasis added).  Both consumers and the general public would be rightfully shocked to learn that billions of dollars' worth of the garments they purchase as being "Made in the U.S.A." (or similar designation) are in fact produced under abusive and oppressive conditions by exploited foreign workers operating in foreign-owned sweatshop factories in the CNMI.  Indeed, there is very little "Made in the USA" about these garments when they enter U.S.A. markets and are sold by defendants, directly competing with garments with smaller profit margins but made under lawful working conditions.


 

V. CAUSES OF ACTION

A. FIRST CAUSE OF ACTION

Unlawful Business Acts And Practices In Violation Of California Business And Professions Code Section 17200 Et Seq., Against All Defendants, Predicated On 29 U.S.C. Section 215 Et Seq.

90. Plaintiffs incorporate herein by reference 1-89, inclusive, as if fully set forth herein.

91. California Business and Professions Code §17200 et seq., provides that unfair competition shall mean and include any "unlawful . . . business act or practice."

92. Defendants either deliberately, recklessly or unreasonably have developed, encouraged and profited from the operation of a system of garment production that depends for its profitability and competitive advantage upon the systematic underpayment of workers in violation of, inter alia, federal overtime laws.

93. Each of the defendants transported, offered for transportation, shipped, delivered, and/or sold in intrastate and interstate commerce, and shipped, delivered, and/or sold with knowledge that such shipment, delivery, or sale in intrastate and interstate commerce was intended to be made, garments produced in the CNMI garment factories by garment contractors who did not pay their foreign workers all overtime premiums due as required by federal law, in violation of the "hot goods" prohibitions codified at 29 U.S.C. §215 et seq.

94. Such conduct also constitutes negligence per se on the part of defendants insofar as their conduct violates a statutory prohibition against such conduct.

95. Each defendant either knew, recklessly disregarded or reasonably should have known of these conditions, making inapplicable any exemptions defendants might claim to be applicable.

96. Defendants engaged in the above-described conduct for their own economic self-interest and as a result thereof have increased their sales, profits and/or market shares and have otherwise benefitted economically from such conduct.

97. Because of their increased profit margins on the CNMI-produced garments, defendants' conduct placed them at a competitive advantage vis-à-vis the retailers and sellers of garments actually fabricated in the U.S.A. by U.S.A. workers and U.S.A.-based companies under U.S.A.-mandated working conditions, enabling defendants to significantly increase their profits at the expense of their law-abiding competitors.  Defendants have thereby been unjustly enriched and have achieved an unfair competitive advantage over their legitimately operating business competitors.

98. Pursuant to California Business and Professions Code §17203, injunctive relief is necessary to prevent defendants from engaging in the unlawful business acts and practices as alleged herein.  Defendants, and each of them, and all persons acting in concert with them, have engaged in, are now engaging in and will continue to engage in the above-described acts and practices unless restrained or enjoined by this Court.  The above-described acts and practices will cause great and irreparable harm to the general public unless defendants are restrained from committing further unlawful business acts or practices.  Plaintiffs and the general public have no other adequate remedy at law.

99. California Business and Professions Code §17203 also provides, and plaintiffs request, that the Court can restore any money or property acquired by means of any unlawful, fraudulent or unfair business act or practice, in an amount according to proof at time of trial.

100. Courts in this State, including the Supreme Court, have also permitted or required pursuant to California Business and Professions Code §17203 the disgorgement of all ill-gotten monies and profits obtained from any unlawful, fraudulent or unfair business act or practice.  Due to defendants' unlawful business acts or practices, defendants have profited from the sale of these the CNMI-made garments at both the wholesale and retail level.  Defendants profited from the sale of garments that they either knew, recklessly disregarded or reasonably should have known were made in violation of state/CNMI, federal and international law.  Plaintiffs seek disgorgement of all monies obtained by defendants from their unlawful business acts and practices as alleged herein, including the monies and profits made by defendants on any and all garments sold in violation of the federal "hot goods" prohibitions sold either from or in this State and/or manufactured under the unlawful conditions as alleged herein, in an amount according to proof at time of trial.

B. SECOND CAUSE OF ACTION

Unlawful Business Acts And Practices In Violation Of California Business And Professions Code Section 17200 Et Seq., Against All Defendants

101. Plaintiffs incorporate herein by reference 1-100, inclusive, as if fully set forth herein.

102. California Business and Professions Code §17200 et seq., provides that unfair competition shall mean and include any "unlawful . . . business act or practice."

103. All defendants have engaged in a pattern and practice of conduct that offend public policies to eliminate substandard and detrimental working conditions and policies to avoid either directly or indirectly, encouraging acts of peonage and indentured servitude which are prohibited by law.  Specifically, defendants have, inter alia, aided and abetted the violation of anti-peonage and indentured servitude laws and numerous aspects of international law, including 18 U.S.C. §1581-88 and 19 U.S.C. §1307 and the treaties and covenants identified in 77, above.

104. In addition, as a result of their control over the on-going conduct at issue herein, defendants are independently responsible for the unlawful business acts and practices as alleged herein committed against these foreign garment workers.  Moreover, defendants' acts of untrue and misleading advertising constitute a separate unlawful business act or practice.

105. Plaintiffs reserve the right to identify additional violations of law by defendants as further investigation warrants.

106. Through the conduct alleged herein, defendants, and each of them, have acted contrary to state/CNMI, federal and international law and the public policies described herein and as detailed above, separate and apart from their violations of the "hot goods" prohibitions.  Defendants have thereby engaged in unlawful business acts and practices in violation of California Business and Professions Code §17200 et seq., entitling plaintiffs to the relief set forth herein.

C. THIRD CAUSE OF ACTION

Unfair Or Fraudulent Business Acts And Practices In Violation Of California Business And Professions Code Section 17200 Et Seq., Against All Defendants

107. Plaintiffs incorporate herein by reference 1-106, inclusive, as if set fully forth herein.

108. California Business and Professions Code §17200 et seq., provides that unfair competition shall mean and include any "unfair or fraudulent business act or practice."

109. The acts and practices as described above, specifically defendants' claims in advertisements and promotional materials of refusing to work with contractors who violate the law or who operate sweatshop conditions, that they follow and implement their Statement of Principles and other active monitoring claims, their misleading labelling and advertising practices and their non-disclosures of the facts detailed herein, both had and have a tendency to deceive the general public of this State, including purchasers of the garments here at issue sold either directly or indirectly by defendants.

110. In addition, the gravity of the consequences of defendants' conduct as described, "including, but not limited to, the acts and practices of defendants' purchase and sale of garments manufactured using a labor system based on acts of peonage and indentured and involuntary servitude," above outweighs any justification therefor, particularly considering the available legitimate alternatives which exist in the marketplace.

111. As a result of the foregoing, defendants have engaged in fraudulent or unfair business acts and practices in violation of California Business and Professions Code §17200 et seq., entitling plaintiffs to the relief set forth herein.

D. FOURTH CAUSE OF ACTION

Untrue Or Misleading Advertising In Violation Of California Business And Professions Code Section 17500 Et Seq., Against All Defendants

112. Plaintiffs incorporate herein by reference 1-111, inclusive, as if fully set forth herein.

113. California Business and Professions Code §17500 provides that:

It is unlawful for any person, firm, corporation or association, or any employee thereof with intent to directly or indirectly to dispose of real or personal property . . . to make or disseminate or cause to be made or disseminated from this state before the public in any state, in any newspaper or other publication, or any advertising device, or by public outcry or proclamation, or in any other manner or means whatever, any statement, concerning such real or personal property . . . which is untrue or misleading, and which is known, or which by the exercise of reasonable care should be known, to be untrue or misleading . . . .

114. As a result of the foregoing claims made by defendants both through their advertising and labelling practices and promotional materials, their "no sweatshop" policies and their allegedly strict compliance and monitoring practices, which defendants either knew or by the exercise of reasonable care should have known were neither true nor accurate, and as a further result of defendants' failure to disclose the material facts alleged herein, each of the defendants has engaged in untrue and misleading advertising, constituting a violation of California Business and Professions Code §17500 et seq., and entitling plaintiffs to the relief set forth herein.


 

VI. PRAYER FOR RELIEF

WHEREFORE, plaintiffs accordingly pray for the following relief on behalf of the general public:

1. A temporary restraining order, preliminary and/or permanent injunction enjoining defendants, their agents, employees, assigns, and all persons acting in concert or participation with them from engaging in the unlawful, fraudulent or unfair business acts and practices described herein, requiring a corrective advertising campaign or independent monitoring program to rectify the misinformation disseminated by defendants and/or imposing an asset freeze or constructive trust over all ill-gotten monies or profits traceable to defendants;

2. Payment of full restitution as may be ordered by the Court;

3. Disgorgement of all ill-gotten monies and profits obtained by defendants due to the conduct described herein, attributable to:

(a) The shipping, transport, delivery or sale of garments in violation of, inter alia, the federal "hot goods" laws;

(b) The monies saved by not requiring the CNMI garment factories to pay minimum wage and full overtime premiums to the CNMI foreign factory workers or other wages or payments legally and/or contractually due, nor to pay for the repair of non-compliant and oppressive working conditions, and the monies saved by otherwise failing to act in accordance with the laws as detailed above and by avoiding import tariffs and duties; and/or

(c) The increased sales, profits and/or market share obtained by defendants attributable to the claim that the garments here at issue are not made in sweatshop conditions and/or are "Made in the USA," or words or phrases to that effect;

4. Pre- and post-judgment interest on any amounts ordered be paid by defendants;

5. Reasonable attorneys' fees, reimbursement of expenses and costs pursuant to, inter alia, the common fund and private Attorney General doctrines and California Code of Civil Procedure §1021.5; and

6. Such other and further relief as this Court may deem just and proper.

DATED:  January 11, 1999

MILBERG WEISS BERSHAD 
HYNES & LERACH LLP
WILLIAM S. LERACH
ALAN M. MANSFIELD
JAMES A. CAPUTO
PATRICK W. DANIELS 
  
______________________________
WILLIAM S. LERACH

600 West Broadway, Suite 1800
San Diego, CA  92101
Telephone:  619/231-1058

MILBERG WEISS BERSHAD 
HYNES & LERACH LLP
KEVIN P. RODDY
ALBERT H. MEYERHOFF

355 South Grand Avenue
Suite 4170
Los Angeles, CA  90071
Telephone:  213/617-9007

MILBERG WEISS BERSHAD 
HYNES & LERACH LLP
STANLEY S. MALLISON

222 Kearny Street, 10th Floor
San Francisco, CA  94108
Telephone:  415/288-4545

ALTSHULER, BERZON, NUSSBAUM, 
 BERZON & RUBIN
FRED H. ALTSHULER
MICHAEL RUBIN

177 Post Street, Suite 300
San Francisco, CA  94108
Telephone:  415/421-7151

GALLOWAY & ASSOCIATES
THOMAS L. GALLOWAY

2260 Baseline Road, Suite 212
Boulder, CO  80302
Telephone:  303/938-0445

BUSHNELL, CAPLAN & FIELDING, LLP
ALAN M. CAPLAN, PHILLIP NEUMARK

221 Pine Street, Suite 600
San Francisco, CA  94104-2715
Telephone:  415/217-3800

Attorneys for Plaintiffs
MARIANAS\JGD00221.CP

 


1.  For purposes of this Complaint, the meaning of the term "sweatshop" is as defined by the U.S. General Accounting Office: "We define a sweatshop as an employer that violates more than one federal or state labor laws governing minimum wage and overtime, child labor, industrial homework, occupational safety and health, workers compensation, or industry registration."  General Accounting Office Letter Report, Garment Industry:  Efforts to Address the Prevalence and Conditions of Sweatshops, at 3 n.1 (Nov. 2, 1994).

2.  Concorde and Trans-Asia, along with Global Manufacturers, Inc., and L & T International Corp. ("L & T") are all wholly-owned subsidiaries of Tan Holding Company.  Workers at these four facilities collectively refer to the group of companies as L & T, and routinely are shifted from factory to factory.

3.  Democratic Staff Comm. on Resources H.R., Beneath the American Flag:  Labor and Human Rights Abuses in the CNMI (Congressman George Miller (Mar. 26, 1998)) ("Beneath the American Flag").

4.  United States Department of the Interior, Federal-CNMI Initiative on Labor, Immigration, and Law Enforcement in the Commonwealth of the Northern Mariana Islands, Fourth Annual Report,  at 7 (1998) ("Fourth Annual Report of the Federal-CNMI Initiative on Labor").

5.  It is illegal for these factories to hire overseas directly, but the federal government claims collusion exists between the recruiters and these factories because the factories have a financial interest in the recruiter's efforts.