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It was a warm, sticky evening in May when the trio of Americans arrived in an industrial city in the southern Chinese province of Guangdong. Emerging from their air-conditioned taxicab, the men stood outside a three-story concrete factory, one of many that have mushroomed across the flatlands of the booming province. At 9:00 p.m., the area was a hub of activity: Inside, lights burned, and workers bent over sewing machines; outside the gated compound, those with time off milled in the streets, stopping to eat from roadside food stands or rummaging through clothing sold at street stalls. Arriving unannounced, the strangers were apprehensive, but eager to see what life was really like for the mostly migrant women workers who populate this quasi-village of garment factories. The American visitors — Pharus Harvey, executive director of the International Labor Rights Fund; Rutledge Tufts, administrator from the University of North Carolina; and Doug Cahn, vice president for human rights for Reebok International Ltd. — were a delegation from the Fair Labor Association. The FLA is an unlikely coalition of apparel and footwear companies and human rights and labor advocates created four years ago to improve labor conditions in overseas factories. The group’s members — including Nike, Inc., Reebok, Liz Claiborne Inc., the Lawyers Committee for Human Rights, International Labor Rights Fund, and the Robert F. Kennedy Memorial Center for Human Rights — had painstakingly hammered out a code of conduct intended to improve factory conditions, then hotly debated how to implement them. Countless meetings, phone conversations and e-mails later, the FLA representatives, armed with their draft factory monitoring document, traveled to test the checklist at factories in the U.S., Mexico, Thailand, India and China. Tufts, Harvey, and Cahn had scheduled a factory inspection for the following day — advance notice is required under FLA rules. But they’d decided to stop by the evening before to see if they’d note anything unusual that their scheduled visit might not reveal. The lit factory was a clue that employees might be working overtime, a common problem in China, where workers often labor 12-hour days, six or seven days a week. When they returned for the planned inspection, the group reviewed the factory’s records on wages and hours, and conducted a full workplace check, looking for everything from safety guards on sewing machines to proper ventilation in the laundry rooms and accessible fire exits in the barracks-style dormitories. But although they could check the factory’s books, the inspectors knew that the entries might not correspond to actual time worked and pay received. And though they could see that fire doors were unlocked, that didn’t mean the factory owner wouldn’t lock workers in at night, or pile boxes of clothing in front of the shop doors the next day. Still other potential problems aren’t visible at all, such as recruiters extracting exorbitant fees from the women they transport to the factories from rural villages. And although the Chinese-speaking monitors that accompanied the Americans could interview the employees, the group knew the workers might be afraid to complain; under FLA rules, the majority of inspections are conducted by monitors hired by the clothing companies that contract with the factories. To be sure, Harvey, Tufts, and Cahn hadn’t gone there to inspect this factory’s conditions. They only wanted to determine whether the FLA’s monitoring document would adequately guide factory inspectors in the future. But their experience highlights the obstacles that investigators face as a result of the compromised processes inherent in a coalition as tenuous as the FLA. Back in Washington, the fragile alliance is being held together by one of the most powerful and well-connected attorneys in town: former White House counsel Charles Ruff, who serves as chairman of the association’s board. And if Ruff can’t succeed in transforming the grim conditions of the largely unregulated global garment industry, his corporate members may well face a controversial new frontier of litigation for decades to come. Having returned to Washington, D.C.’s Covington & Burling, where he was a partner for more than a dozen years, the 61-year-old former prosecutor is renowned as the hard-headed litigator who helped save the president from conviction during the Senate’s impeachment last year. A heavyset man with large, square glasses who has relied on a wheelchair since contracting an illness in Africa years ago, Ruff has a sonorous voice and commanding presence. But despite his illustrious background and air of authority, Ruff wouldn’t seem a natural referee for a disputatious alliance of corporations and their critics. A longtime litigator who earned his stripes as the final Watergate special prosecutor in the mid-1970s, then prosecuting congressmen in the Abscam bribery case as U.S. attorney for the District of Columbia, Ruff switched sides when he joined Covington in 1982. There he defended such high-profile clients as Senator John Glenn in the “Keating Five” investigation, and Exxon Corporation in the criminal case after the Exxon Valdez oil spill. Given that Ruff’s background is neither in labor nor in negotiation, when he first got the call from a headhunter asking him to consider running the FLA board just days after returning to his old firm in August 1999, he said no. “It didn’t sound like something I’d be interested in,” Ruff recalls now, settled into his office on the eleventh floor of the well-appointed Covington building on Pennsylvania Avenue. Although roomy, Ruff’s space is sparsely decorated, notable for its baseball memorabilia and complete absence of photographs or any other mementos of his White House days. Although Ruff initially demurred on the FLA job, he agreed to at least travel to New York to meet with the association’s search committee, which included a sampling of the key players: Michael Posner, an old acquaintance of Ruff’s and executive director of the Lawyers Committee for Human Rights; Liz Claiborne’s general counsel, Roberta Karp; Nike’s head of government relations, Brad Figel; and the International Labor Rights Fund’s Harvey. That meeting was all it took. “It was the structure and process that intrigued me more than anything else,” says Ruff. “The notion of getting enemies together.” Bringing enemies together is truly the heart of the challenge. Since globalization became a buzzword and a mobilizing force — demonstrated most vividly by the protests against the World Trade Organization in Seattle last winter — a wide philosophical gap has opened between corporate America and labor and human rights groups. Multinational corporations have generally resisted trade or labor restrictions; labor and human rights groups have pressed for strict workplace regulations that would effectively keep U.S. corporations out of many developing countries, such as China, that either can not or will not meet their demands. The Fair Labor Association may be the most serious among a proliferation of efforts to stake out ground in the middle. In theory, at least, there’s something in it for everyone: American apparel and footwear manufacturers — such as Liz Claiborne, Nike, and Reebok — have been the targets of sharp attacks from human rights and labor activists who claim they make obscene profits off the backs of poor workers laboring in slavelike conditions. The FLA’s code of conduct offers companies the chance to shed their image as irresponsible global oppressors and to try instead to sell the notion that they can not only expand American capital, but export American values, standards of living, and working conditions as well. “We’re responding to some of the concerns about globalization,” says Figel, the point person on human rights issues for Nike, which relies on more than 500,000 workers to make its products in about 700 factories around the world. “We’re trying to establish a model for the rest of the industry.” For labor and human rights advocates, voluntary codes of conduct may be seen as a way of creating an essentially private legal system where no public, enforceable one exists. International labor and human rights laws, based on rulings from bodies such as the International Labour Organization, are notoriously ineffective and unenforceable. The few labor provisions included in global treaties and regional trade agreements are similarly vague and difficult to enforce. The recent granting of permanent normal trade relations status to China contains no regulations at all concerning labor, and China’s entry into the World Trade Organization would have no effect either: The only relevant clause in the WTO membership agreement allows countries to prohibit imports of products by prison labor. Although the WTO protects intellectual property and other concerns, it provides no regulations of everyday labor conditions. “Globalization does not mean we can run roughshod over labor rights,” cautions Ruff. Without enforceable local and international laws, the FLA’s code is “the rule of law in the most amorphous sense,” he says. “We’re creating a privately enforceable legal system.” The FLA, then, is an attempt to fill the vacuum through consensus. But other, more antagonistic efforts are out there. Most notably, plaintiffs lawyers are using litigation to hold multinational corporations liable for the working conditions in developing countries where their products are made. Of course, the FLA approach is limited by involving only the apparel and footwear industry, and won’t affect other production overseas. But it’s not surprising that the attempt to regulate labor conditions worldwide would begin here. The apparel industry presents the starkest example of the consequences of globalism for workers in the U.S. and abroad. As a “light” industry, garment manufacturing is easy to shift to developing countries where unemployment is high and wages are low, particularly by U.S. standards. That’s led to the loss of more than 730,000 apparel and footwear industry jobs in the U.S. over the past two decades. Just as garment factory conditions provided a focal point for the United States labor movement in the early part of the last century, the conditions of the tens of thousands of factories in China and other developing countries are now central to the controversy over globalization and trade in the 21st century. “They’re all laudable, positive efforts to shine light and bring some accountability to the process,” says Michael Santoro, a former lawyer who teaches business ethics at Rutgers Business School and whose recent book, “Profits and Principles: Global Capitalism and Human Rights in China,” is based on his decade-long study of human rights and working conditions there. But the FLA’s critics charge that the compromises have allowed the fox to guard the henhouse. For example, although the FLA monitoring system provides for some independent monitoring, it allows monitors hired by the clothing companies to conduct the majority of inspections, all of which are previously scheduled with factory managers. Monitors report their findings to the FLA, which then informs the public whether a company is in compliance. But the detailed findings remain confidential. “There are serious concerns about the transparency and accountability of the FLA,” cautions Dara O’Rourke, an assistant professor of urban studies and planning at Massachusetts Institute of Technology who released a report last month criticizing the factory monitoring practices of PricewaterhouseCoopers, which monitors overseas factories for many U.S. companies. O’Rourke and others question whether allowing private accounting firms hired by U.S. corporations that contract with the factories to conduct the inspections will yield honest assessments of labor conditions. Such doubts have divided labor and human rights advocates and prevented them from forming one unified code of conduct and monitoring system that could garner broad public support, influence apparel companies, and have the best opportunity for improving working conditions in factories abroad. The ability to get a critical mass of the apparel industry to join the FLA is now the organization’s biggest challenge. The more the FLA is seen as the Good Housekeeping seal of approval in the garment industry, the more it will become “the place to be,” as Ruff puts it. “We need to build up the organization for it to mean something.” That has yet to happen. From the beginning, this was a fractious coalition. Initially including a broad range of U.S. corporations, human rights, religious, and labor organizations, the group could never reach agreement on acceptable overseas working conditions. Worse, proposals for enforcement spawned tremendous friction that led religious organizations and labor unions — including the nation’s largest garment workers union, the Union of Needletrades, Industrial and Textile Employees — to withdraw, citing the association’s refusal to mandate either a “living wage” or the right to form independent labor unions, among other things. “We didn’t think it went far enough,” says Jay Mazur, president of UNITE. “We felt it was going to be a cover for a lot of firms that were looking for respectability.” On the industry side, clothing companies such as Karen Kane Incorporated and Warnaco Group, Inc. pulled out because they objected to the group’s insistence that independent monitors have the right to inspect factories. Members commit to having independent, accredited monitors inspect 30 percent of all factories they contract with in the first two or three years, and 5-15 percent in each subsequent year; their own monitors are to inspect half the factories the first year, and the other half in the second, in a manner “consistent with the monitoring principles” of the FLA, according to its charter. Although about a dozen companies representing close to 10 percent of the $300 billion apparel industry are currently in the group, many of the largest clothing retailers, including Wal-Mart Stores, Inc., Kmart Corporation, Sears, Roebuck and Co., and J.C. Penney Company, Inc., refused to get involved from the beginning, seriously limiting its impact. “There wasn’t any added value for Sears,” says Sears spokeswoman Jan Drummond. “I don’t think being a member or not being a member of any particular association carries much weight with our customers.” More than 145 universities are affiliated with the FLA, but some have faced pressure to withdraw from students who claim that the association isn’t sufficiently strict or independent. And the human rights and labor groups have withstood stinging criticism from more radical activists who think they’ve sold out. The advocates’ infighting has spawned FLA spin-offs and competitors. Although none of these has the potential to reach as many factories and have as great an impact on factory conditions in the garment industry as the FLA, the Workers Rights Consortium — backed by UNITE and the AFL-CIO — has the potential to seriously undermine the association’s efficacy. Designed to enlist universities to use their influence to affect the labor practices of companies that make clothing with university logos, the WRC does not admit apparel companies and claims that it would hold factories to higher standards than the FLA. Some student groups, claiming that the FLA is overly influenced by corporate interests, pressured their universities to withdraw from the group. Ruff objects to the student assaults: “It’s like saying you can’t ever work out a solution with your adversary. That’s real-world nonsense.” Even if the fledgling student group were successful, it would only affect clothes made for universities, “a tiny slice of the apparel market,” notes James Silk, executive director of the Orville H. Schell, Jr. Center for International Human Rights at Yale Law School and an FLA board member. Meanwhile, labor and human rights lawyers observing the conflict lament the persistent divisions. “That every organization does its own thing is a real loss for overall functioning,” observes Scott Greathead, a partner at New York’s Howe & Addington and director and CEO of WorldMonitors, which disseminates information about human rights and labor conditions to companies and nongovernmental organizations. Other lawyers are not waiting for apparel companies to improve conditions voluntarily. A growing number of litigators are searching for legal hooks. Michael Rubin, a partner at San Francisco’s Altshuler, Berzon, Nussbaum, Rubin & Demain, represents both individual workers and advocacy groups in the largest attempt yet to sue apparel retailers for labor abuses committed abroad. With cocounsel Milberg Weiss Bershad Hynes & Lerach and Bushnell, Caplan & Fielding, he brought three related cases in January of last year concerning factory workers in Saipan, the largest of the Northern Marianas Islands, an American commonwealth near Guam. Brought against 76 companies, including local factories and American retailers such as The Gap, Inc., The Limited, Inc., J.C. Penney, J.Crew Group Inc., and Levi Strauss & Co., Rubin and cocounsel sought more than $1 billion in damages for what they claim were prisonlike conditions for the mostly young immigrant women working there. One of the two federal cases — brought in California and transferred to Hawaii, and which may yet end up in the federal court in Saipan, due to venue disputes — alleges that workers were coerced into paying large sums to recruiters who lured them from China, the Philippines, Bangladesh, or Thailand with the promise of good wages. Upon arrival, the complaint says, they were forced to live in guarded, barbed-wire-enclosed barracks, and to work 12-hour days and seven-day weeks in unsafe conditions, often unpaid. It is also alleged that workers were beaten and women forced to have abortions. Eighteen of the companies — including Nordstrom, Inc., Sears, The Gymboree Corporation, Tommy Hilfiger USA Inc., and Polo Ralph Lauren Corporation — have reached settlements, promising back pay to workers and improved health and safety conditions. But others, including the Saipan-based factories and several American retailers such as The Gap, The Limited, J.C. Penney, and Levi Strauss, have resisted. Although Rubin hails the settlements as a victory for garment workers (they still must be approved by a district court, once the venue question is decided by the 9th U.S. Circuit Court of Appeals), Saipan’s unusual status as an American commonwealth subject to U.S. law means that much of the case cannot be replicated elsewhere. Claims for overtime under the Fair Labor Standards Act, for example, apply in the Mariana Islands but are inapplicable in most parts of the world. But other causes of action in the Saipan case could apply to companies that contract with factories anywhere in the world. That includes the allegations of forced labor and cruelty under the Alien Tort Claims Act, a recently revived eighteenth-century law increasingly used to bring human rights cases in U.S. courts. It also includes claims of false advertising under state law. Such state business laws form the backbone for another closely watched lawsuit currently pending before the California Supreme Court. San Francisco activist Marc Kasky — represented by the same Milberg Weiss and Bushnell, Caplan lawyers who are cocounsel on the Saipan case — claims that Nike misled consumers when, in responding to media reports that workers making its sneakers in developing countries were being exploited, the company unleashed a massive public relations campaign. The campaign assured customers that workers making Nike products were well treated, that the factories follow applicable wage and hour laws, that workers receive free meals and health care, and that Nike guarantees workers a “living wage.” Kasky sued under California’s Business and Professions Code, claiming false advertising. The trial court dismissed the case, and the appellate division affirmed, holding that Nike’s statements were constitutionally protected political speech about a matter of public importance, not commercial speech that would render it liable under state law. But if Kasky’s lawyers can convince California’s highest court otherwise, Nike and scores of other companies waging public relations campaigns about labor conditions could be in for a rude awakening. The parties’ state supreme court briefs are being filed this fall. David Brown, a partner at San Francisco’s Brobeck, Phleger & Harrison, represents Nike in the litigation and insists that the company’s statements cannot support liability in California. “If Nike’s code of conduct said we’ll observe local overtime rules, and Nike routinely violated those overtime rules, presumably they’d be liable for whatever Vietnam law says,” says Brown. “But I think it will be a long time before any court in the U.S. will want to enforce Vietnam law. I don’t think the California court can stretch its jurisdiction into another state, let alone in another country.” But Elliot Schrage, who was an associate at Sullivan & Cromwell before teaching multinational business and human rights at Columbia Business School and who now advises The Gap on its overseas labor matters, thinks the Kasky case portends future troubles for apparel and footwear companies: “It’s where the rubber meets the road.” It’s not clear how the Kasky theory would apply to a code of conduct such as the FLA’s, which won’t be making any guarantees about working conditions. At best, FLA officials say they may develop a mark that a company can use to indicate membership in the organization or participation in its monitoring program. Nonetheless, if Kasky prevails, companies will have to be extra careful not to overstate their good intentions. The Kasky and Saipan litigations are just the beginning. “Each of these cases builds on the others,” explains Rubin, who consulted with Milberg Weiss lawyers on the Kasky case. “While the theories are refined from case to case, plaintiffs counsel do regularly consult with one another and brainstorm ideas to help focus the theories and make them applicable to new categories of international human rights problems.” Which is how lawyers came to see the Alien Tort Claims Act as a weapon in the Saipan case. The 200-year-old law — originally enacted to combat piracy — is seeing new life as a tool to hold United States companies responsible for alleged human rights violations committed abroad. In the past few years activists have used the long-dormant act against heads of state for war crimes and against American corporations for their activities overseas. ATCA is the basis for one of the three Saipan suits, for a case in California against Unocal Corporation for human rights abuses committed in Burma, and for another action against Chevron Corporation for abuses alleged in Nigeria. In the Saipan case, the Alien Tort Claims Act provides the legal ground for plaintiffs’ claims that they were held in virtual peonage after being recruited under false pretenses from China and other countries, charged exorbitantly, beaten, and forced to work in unsafe conditions for excessive hours and below minimum wage. Lawyers on both sides caution that a claim under the act requires allegations of severe abuses that rise to the level of international human rights violations, which frequently could not be satisfied in cases on behalf of garment workers. Terry Collingsworth, general counsel with the International Labor Rights Fund, one of the FLA’s founding organizations, brought the Alien Tort Claim case against Unocal and says he’s weighing various garment factory claims: “But the standard for a tort is very high. You must satisfy something approaching an international human rights norm.” Although he says he is aware of some such situations in China, they are not likely to be in factories that contract with U.S. companies. Nevertheless, ATCA remains one available tool. “There are a lot of people who feel that using the Alien Tort Claims Act for these lawsuits against corporations is the trend,” says Yale’s Silk. “They’re hard to do and take a lot of resources, so I don’t think they’ll ever be the single way to go, but where the violations are significant enough to justify a court’s jurisdiction, it’s a potential weapon.” Adds Lance Compa, who teaches international labor law at Cornell University’s School of Industrial and Labor Relations: “I think we’ll see more and more of these kinds of cases.” Ruff, who made his name waging wars in court, is skeptical. “Too many lawyers can dream up too many lawsuits,” he says. Even participants in human rights cases acknowledge their limitations. “How much can we affect what goes on in the world by these somewhat random lawsuits?” asks Silk, whose law clinic recently helped win plaintiffs a $4.5 billion judgment in an alien tort case against former Bosnian Serb leader Radovan Karadzic. It’s far too early to answer that question, although it’s clear that in the web of developing public and private laws aimed at filling the legal void in the global marketplace, litigation will surely be an expanding threat. On the other hand, if the members of the Fair Labor Association have their way, perhaps it will be less necessary.

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