Saipan Workers Can Sue as Class

A group of U.S. retailers, including Gap Inc., J.C. Penney Co. and Target Corp., suffered a major setback this week when a federal judge ruled that thousands of garment workers on the Pacific island of Saipan could sue the companies and their contracted factories as a class.

The retailers also failed to block an $8.7-million settlement by 19 other firms, including Tommy Hilfiger Corp. and Liz Claiborne Inc., that sets a strict code of conduct and opens factories on the island to independent monitoring.

The two rulings, handed down Tuesday, are milestones in a three-year legal effort by California anti-sweatshop activists to change labor practices in Saipan, part of the U.S. territory of the Northern Mariana Islands, which has become a garment-producing center for the United States.

“It’s blockbuster,” said Michael Rubin, a San Francisco attorney who filed the lawsuit in 1999 with Los Angeles attorney Al Meyerhoff.

Whatever the ultimate outcome of the case, the certification of the class is significant because it recognizes all garment workers on the island as a single aggrieved group, Rubin said, when typically such classes are limited to workers employed by a single company.

The ruling could open the door to other lawsuits by low-wage workers in industries with multiple employers, he said.

Spokeswomen for Gap and Target said they were disappointed by the rulings. A J.C. Penney spokesman did not return phone calls. The ruling means the suit, which is against 13 retailers and 48 factories on the island and seeks compensation for about 30,000 current and former workers, can proceed.

The retailers and factory owners argued that because conditions varied from factory to factory, it was unfair to combine all garment workers on the island into a single class.

Gap, for example, used monitors and was selective about which factories it used on the island, said spokeswoman Tamsin Randlett.

However, U.S. District Judge Alex R. Munson, based in Saipan, ruled that although the problems may vary from one workplace to another, they “all stem from the same alleged conspiracy amongst the defendants to dominate and control the garment work force.”

Saipan is the most densely settled island in the Commonwealth of the Northern Mariana Islands, a U.S. territory. The Labor Department has documented widespread violations of labor laws in island factories and has levied multimillion-dollar fines and reached settlements with dozens of factories. But activists claim that the violations, such as unpaid overtime and payment of less than the $3.05 hourly minimum wage, continue.

Most workers are young women from rural China and the Philippines who pay large fees to recruiters, then spend years paying them back from meager earnings. Attorneys say the practice amounts to indentured servitude.

The practice will be discontinued under the settlement, which was allowed to proceed under the ruling. The settlement, signed by 19 retailers in 1999 and 2000, sets up a monitoring system through the Boston-based company Verite.

As a territory, Saipan is subject to all U.S. laws. But in 1989, to encourage economic development, the administration of President George Bush loosened immigration and minimum wage laws.

There have been congressional efforts to close the exemptions, but they have consistently stalled.

The class-action suit was filed under the Racketeer Influenced and Corrupt Organizations Act, which triples any damages awarded. Rubin said it was the first time a class in a sweatshop case had been certified under RICO.