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Wal-Mart labor suit likely to be dismissed

The plaintiffs blame the retail giant for alleged sweatshop conditions in Third World factories that supply it.

December 16, 2006|From the Associated Press

An Orange County judge is expected to toss out a class- action lawsuit that blames Wal-Mart Stores Inc. for alleged sweatshop conditions in five Third World countries that supply the retail giant.

U.S. District Judge Andrew J. Guilford, who heard arguments Monday and said he would issue a decision later, indicated that he would dismiss all claims against Wal-Mart.

The suit, filed on behalf of garment factory workers in China, Bangladesh, Indonesia, Swaziland and Nicaragua, alleged that Wal-Mart broke a promise to enforce its "Standards for Suppliers," which demand that foreign companies obey local labor laws and treat workers fairly.

The suit, filed in October 2005, also alleged that Wal-Mart misled Californians by promoting the standards policy as a reason to shop at its stores. The suit asks for injunctions to protect the workers and enforce the standards.

One allegation in the lawsuit is that Wal-Mart violated the 1789 Alien Tort Claims Act by allowing suppliers to withhold pay from foreign workers.

Guilford wrote in a tentative ruling that he was "sympathetic to the plight of the plaintiffs," but added that the alien tort law must be applied narrowly.

"Plaintiffs' theory of liability would have broad applications if accepted," the judge wrote. "Such a rule would support a federal claim for relief whenever any employee was denied pay ... while living under difficult economic conditions."

The suit seeks damages for thousands of workers that could amount to "perhaps millions of dollars," plaintiffs' attorney Anne K. Richardson said.

The plaintiffs' main contention is that they have the right as "third-party beneficiaries" to enforce the contracts between Wal-Mart and its global suppliers.

Bentonville, Ark.-based Wal-Mart requires foreign manufacturers to obey its supplier standards, which are included in the contracts, but the retailer failed to conduct proper inspections as promised, the suit said.

If Guilford rules against the plaintiffs, he said they could amend their complaint and try again. Richardson said Thursday that she and other plaintiffs' lawyers would probably refile or appeal if the suit was dismissed.

Plaintiffs' attorney Terry Collingsworth of the International Labor Rights Fund in Washington noted that workers in places such as China couldn't sue their local employers.

"This is their sole place to try to be heard," Collingsworth said.

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