Case Study: Does I V. the Gap, Inc.: Can a Sweatshop Suit Settlement Save Saipan?

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I. INTRODUCTION

After visiting a Saipan garment factory in 1998, U.S. Representative Tom DeLay stated, "I didn't see anyone sweating."1 In 2002, a district court judge disagreed and denied motions to dismiss garment workers' claims against major United States-owned retailers and foreign-owned manufacturers for labor rights abuses in Saipan.2 The suit resulted in a settlement, and a major victory was declared for Saipan garment workers.3 The plaintiffs, suing anonymously, named popular clothing companies, including The Gap, J. Crew, Tommy Hilfiger, and Target, as defendants and alleged labor violations, including indentured servitude, peonage, and numerous acts of racketeering activity.4 This case is a revolutionary one in sweatshop litigation because it is the first time a class in a sweatshop case has been certified under RICO,5 and it is the first drafting of a legally mandated collaborative monitoring agreement.6 Currently, all but one of the defendants have settled the case, agreeing to pay a total of twenty-million dollars7 and to the implementation of an independent monitoring program to ensure that garment factory employees receive treatment consistent with, and above, what the law requires.8

This Note will first explore Saipan's history as a U.S. commonwealth and its unique exemption from certain labor laws. It will then consider the background of the Gap litigation and examine the settlement agreements accepted by the parties. This section first discusses the plaintiffs' specific claims for relief and their accomplishments and losses during the preliminary court decisions. With the exception of the Levi Strauss Company, all retailer defendants settled prior to trial, in basically two waves. The settlement agreements, what they accomplished, the differences between them, and the influence of these differences on the settlement's success will be explored next. Finally, this Note discusses the case's effects on the future of the garment industry in order to determine if litigation will suffice to fully reform Saipan's labor-rights problems.

This Note posits that this litigation, coupled with increased enforcement by the U.S. agencies that currently enjoy jurisdiction over Saipan, is the most likely way to develop a system of true worker protection for Saipan's garment workers.

Saipan's situation as a U.S. territory makes its promotion of labor rights a unique one. As such, this Note does not attempt to relate the possibilities for improving garment workers' rights in Saipan to improving those of any other country; though the monitoring model designed by the plaintiffs could serve as a model for monitoring everywhere.

Besides the Gap litigation and the more powerful presence by U.S. agencies in Saipan, two other basic possibilities for complete (or near-complete) reform exist: changes in the law and self-regulation. To date, self-regulation by garment retailers has been unsuccessful and should only be considered a peripheral possibility. Legislation instating a higher minimum wage and reforming the immigration laws would be a positive development, but it would not be a panacea; nor is its passage likely under the current administration. For this reason, increased action of certain Department of Labor ("DOL") divisions would help to support the ideals of the litigation. This increased action, in turn, would more fully enforce adequate conditions for Saipan garment workers.

II. HISTORY OF SAIPAN AND ITS GARMENT INDUSTRY

Saipan is the capital of the United States Commonwealth of the Northern Mariana Islands ("CNMI"), a chain of fourteen islands located in the Pacific Ocean approximately 150 miles northwest of Guam.9 Following World War II, the United States administered authority over the Northern Mariana Islands as a trust territory. In 1975, the territory's citizens voted to become the CNMI in Political Union with the United States of America.11 The Covenant to Establish a Commonwealth of the Northern Mariana Islands (the "Covenant"), which provides the islands with several exemptions from U. …