Date of publication: September 14, 2005
Source: Financial Times (London)
By JONATHAN BIRCHALL
Wal-Mart, the world's largest retailer, is facing a lawsuit in California that seeks to make it legally liable for violations of its own code of conduct at its suppliers' factories around the world.
The case is likely to cause concern among US multinational companies which have increasingly relied on codes of conduct to assert their commitment to socially responsible behaviour without incurring legal liability.
A complaint listing violations such as forced overtime and unpaid wages at Wal-Mart's suppliers was filed yesterday in a state court in Los Angeles by labour rights lawyers on behalf of workers in China, Indonesia, Bangladesh, Nicaragua and Swaziland.
The plaintiffs' lawyers include the International Labor Rights Fund, which took a leading role in last year's settlement between Unocal, the US oil company, and a group of Burmese villagers over the claims of alleged complicity in human rights abuses.
Terry Collingsworth of the ILRF said the case would build upon the principle that California state courts would recognise action brought on behalf of overseas workers, as they had in the Unocal case.
"The preliminary question is whether the workers could bring these complaints in the countries where they occurred, and the answer is no . . .
in most of these places the workers could face violent reprisals," he said.
The complaint also asserts that the workers at Wal-Mart's sub-contractors have the right to sue Wal-Mart itself under Californian contract law, because they are party to the framework of legal agreements that the retailer signs with its suppliers including the code of conduct.
It also accuses the retailer of making misleading public statements in California about conditions in its factories, developing a controversial principle explored in a case brought against Nike by Marc Kasky, a labour activist.
The plaintiffs also include four unionised grocery workers from southern California, who are seeking damages for reductions in their pay and conditions due to competition from Wal-Mart's alleged treatment of its overseas workers.
While a variety of US clothing and toy brand owners now arrange for monitoring of factory conditions by independent third parties, Wal-Mart uses its own monitors.