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William Lerach, another lead attorney. ”Companies like the Gap and

Wal-Mart have reaped millions in profits from this scheme. Now they will be held accountable.”

The suits were brought by the Union of Needletrades Industrial and Textile Employees, AFL-CIO

(UNITE), and three local nonprofits, Global Exchange and the Asian Law Caucus, both in San

Francisco, and Sweatshop Watch of Oakland.

Sweatshop Watch Press Release

January 13, 1999

15,000 Workers Living in Indentured Servitude While Producing Goods “Made in the USA”

More Than $1 Billion Sought — Defendants Include The Gap, Tommy Hilfiger, May Company, Sears

and Wal-Mart

In the first-ever attempt to hold U.S. retailers and manufacturers accountable for mistreatment of

workers in foreign-owned factories operating on U.S. soil, litigation was filed today in California

and Saipan against 18 high-profile U.S. clothing manufacturers and retailers, including The Gap,

Tommy Hilfiger, The Limited, J.C. Penny, May Company, Sears and Wal-Mart.

These companies are accused of violating federal law by engaging in a “racketeering conspiracy”

using indentured labor — predominantly young women from Asia — to produce clothing on the

island of Saipan. (Saipan is part of the Northern Mariana Islands, a U.S. Commonwealth in the

South Pacific.)

Their foreign-owned garment contractors in Saipan are also charged with failing to pay overtime

and ongoing intolerable work and living conditions. In the last five years, contractors in Saipan

have received more than 1,000 citations for violating U.S. Occupational Safety and Health

Administration (OSHA) standards, many of which characterized capable of causing death or

serious injury.

Two federal class action lawsuits were filed on behalf of more than 50,000 workers from China,

the Philippines, Bangladesh and Thailand. The workers were allegedly drawn to Saipan with the

promises of high pay and quality work in the United States. Instead, they found themselves

working up to 12-hour days, seven days a week, often “off the clock” without receiving any pay or

overtime.

A third companion lawsuit was filed in California state court by four labor and human rights

groups (Sweatshop Watch, Global Exchange, Asian Law Caucus, and UNITE). The lawsuit

accuses the retailers and manufacturers of using misleading advertising and trafficking in “hot

goods” manufactured in violation of U.S. labor laws.

Together, the three lawsuits are seeking more than a billion dollars in damages, disgorgement of

profits and unpaid wages.

“To allow such squalid conditions to persist on American soil is both patently unlawful and

morally reprehensible,” said Al Meyerhoff, one of the lead attorneys. “Saipan is America’s worst

sweatshop.”

According to the lawsuits:

* Garments made in Saipan’s sweatshops may carry a “Made in the USA” of “Made in the

Northern Marianas, USA” label. American consumers are deceived into believing they have

purchased a product made by American workers protected by U.S. labor laws, that guarantee a

decent wage and a clean, safe work place.

* Last year alone, the federal government estimated that contractors and U.S. retailers avoided

more than $200 million in duties for $1 billion worth of garments shipped from Saipan, that

would otherwise have been paid for the same clothing if it were manufactured in China or the

Philippines. Some Chinese garment interests have moved their textile operations to Saipan

virtually “lock, stock and barrel,” in large part, to avoid U.S. duties and quota restrictions. The

federal government estimates that this increase in Chinese apparel production in Saipan has

allowed China to exceed its import quota by 250% in 1997 alone.

* Although Saipan’s garment factories are owned predominantly by Chinese and Korean

companies, quality-control inspectors from The Gap, The Limited, and other U.S. retailers

allegedly oversee the manufacturing process. Still, they have refused to exercise their power to

mitigate the intolerable working and living conditions.

* Over 90% of garment industry jobs in the Marianas are held by foreign “guest workers.” These

and other foreign workers make up more than half of the estimated total Marianas population of

70,000. This is largely due to the Island’s exemption from U.S. minimum wage and immigration

laws instituted to encourage local economic development. Since 1996, over 200,000 apparel

industry jobs were lost in the continental United States.

* With promises of a good job and a new life, workers agree to repay recruitment fees from

$2,000 to $7,000. They often must sign “shadow contracts” waiving basic human rights, including

the freedom to date or marry.

* The crowded, unsanitary factories and shanty-like housing compounds are in flagrant violation

of federal law. The heat in some factories is so extreme it can cause workers to faint. Many live

in a room with up to seven other people in inward-pointing barbed wire-enclosed barracks. Their

movements are strictly supervised by guards, and are subject to lockdowns or curfews.

Complaints about the conditions are met with threats of termination, physical harm, and

summary deportation.

“Unfortunately, slavery and indentured servitude is alive and well in the many parts of the world,

including the United States,” said another lead attorney, William S. Lerach.


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