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LOS ANGELES---(August 9, 1999 - Reuters)---Four major U.S. clothing retailers settled a lawsuit alleging they ignored sweatshop conditions on Saipan.

Under the deal, Nordstrom Inc., Cutter & Buck Inc., Gymboree Corp. and J. Crew Group Inc., said they would set up a $1.25 million fund to help monitor conditions at foreign-owned factories in the U.S. Commonwealth island and to require overtime pay.

The lawsuit, filed in U.S. District Court in Los Angeles in January, said the companies, along with 14 other U.S. apparel retailers, were liable for the mistreatment of about 25,000 past and present workers employed on the island.

"The monitoring is a further step in working towards compliance in Saipan with U.S. labor laws and binding international treaties established to protect human rights," said a statement by Milberg Weiss Bershad Hynes & Lerach LLP, the law firm representing the plaintiffs.

The fund also covered partial damages to the workers and would help finance public education and legal fees.

The firms banned the use of "recruitment fees" that forced workers to pay up to $7,000 each for their jobs.

The suit marked the first time U.S. companies have been sued under federal racketeering laws, according to lawyers for the plaintiffs.

A related suit filed in San Francisco Superior Court alleging the retailers engaged in fraudulent and unfair business practices, will also soon be settled.

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