Nordstrom Inc., J. Crew Group Inc. and two other clothing companies have agreed to settle a pair of lawsuits filed on behalf of more than 50,000 garment workers who allegedly were forced to work under sweatshop conditions in the U.S. territory of Saipan.
Nordstrom, J. Crew, Cutter & Buck and The Gymboree Corp. will establish a $1.25-million fund to finance the independent monitoring of their Saipan contractors, provide funds to the workers, and create a public education campaign under the settlements. In addition, the agreements prohibit representatives of factories in Saipan from making the workers pay so-called "recruitment fees" to get their jobs.
"The reason why this is groundbreaking is that this is the first time companies in the garment industry have agreed to an independent monitoring system," said Jason Mark, a coordinator for Global Exchange, a San Francisco-based human rights organization that filed one of the suits.
The settlements, announced Monday, are subject to court approval. They come almost seven months after the federal and state suits were filed in California against U.S.-based clothingmakers and retailers seeking a total of more than $1-billion in damages.
Among other things, the suits claimed more than 50,000 garment workers from China, the Philippines, Bangladesh and Thailand had been fraudulently induced to work for factories in Saipan, denied regular wages, and forced to work in crowded, unsanitary factories. The factories are said to be run by foreign corporations with shareholders in Korea, Hong Kong, Japan and China.
None of the four U.S. companies acknowledged any wrongdoing, though plaintiffs' attorney Albert Meyerhoff said the settlements could pave the way for similar agreements by more than a dozen other major U.S. retailers. The Gap Inc., Tommy Hilfiger Corp.'s U.S. subsidiary and Wal-Mart Stores Inc. still face worker suits.
Four companies, which haven't been sued, have indicated they are interested in settling claims before they turn into court cases, Meyerhoff said. Those companies are Polo Ralph Lauren Corp., Phillips-Van Heusen Corp., Donna Karan International Inc. and Chadwick's of Boston Ltd., he said.
Nordstrom spokeswoman Brooke White described the department store's settlement agreement as "fair" and "generous," considering that the company believes it would have prevailed in litigation.
"Our alternative was to be involved in a long, expensive legal battle, which wouldn't have served anybody's interest," she said.