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U.S. Retailers Offer Plan for Safety at Factories

July 10, 2013 by Leave a Comment

The American plan commits $42 million for worker safety, including inspections and an anonymous hot line for workers to report concerns about their factories, and more than $100 million in loans and other financing to help Bangladeshi factory owners correct safety problems. But unlike the accord joined mainly by European retailers that was unveiled on Monday, the plan lacks legally binding commitments to pay for those improvements.

Some labor rights groups estimated that it would cost as much as $3 billion to bring Bangladesh’s garment factories up to an acceptable safety standard.

Under the effort announced on Wednesday, called the Alliance for Bangladesh Worker Safety, the participating companies will contribute money — from a modest amount up to $1 million a year, depending on the level of business each does in Bangladesh. This would create a fund of $42 million during the five years of the plan.

The proposal calls for the retailers to inspect the estimated 500 Bangladeshi factories that the North American retailers use within 12 months, and then develop plans to fix any substantial safety problems that are found.

The North American retailers plan to develop a common safety standard for the factories by October and to create a clearinghouse to share information among themselves about which factories have been approved for production and which need safety improvements.

Their plan calls for “shared accountability” in responding to those safety problems: the companies would work closely with the factory owners, the government of Bangladesh and various government and aid agencies to figure out ways to finance safety improvements. If serious safety problems were discovered at a particular factory, the plan’s director would inform the Bangladeshi government, the factory owner and what the group calls the factory’s “worker participation committee,” a group to be elected by a factory’s workers.

That differs from the way retailers in the European-dominated plan take responsibility for safety violations. The Europeans pledge to ensure that there is money to fix serious fire and building safety problems in any of the factories they use in Bangladesh.

Under the American plan, the onus is on factory owners to improve their workplaces. Unlike the European group, the North American retailers are not promising to finance needed improvements, outside of the loans. Essentially, if a factory is not up to par and does not fix the problems itself, the American retailers say they will no longer do business there.

“In terms of legal liability, if a worker reports a factory is not measuring up, we have the measures to respond, to investigate,” said Jay Jorgensen, global chief compliance officer for Wal-Mart. “If a factory is not meeting the standards,” he said, “under our agreement they’re going to be terminated. That’s the ultimate pressure point on a factory to treat its workers well — the continuation of business.”

Five labor rights groups, including the Worker Rights Consortium, the Clean Clothes Campaign and United Students Against Sweatshops, criticized the American plan. “Wal-Mart, Gap and the corporations that have chosen to join them, are unwilling to commit to a program under which they actually have to keep the promises they make to workers and accept financial responsibility for ensuring that their factories are made safe,” the groups said in a statement.

The five organizations faulted the plan for being “company-developed and company-controlled,” adding that “under the Gap/Wal-Mart scheme, brands and retailers are not obligated to pay one cent toward the renovation and repair of their factories in Bangladesh.”

The retailers said repeatedly that their plan contained many of the same elements as the European-dominated effort: inspections of all factories, development of remediation plans, sharing of information on the inspections and safety training for Bangladeshi workers.

Article source: http://www.nytimes.com/2013/07/11/business/global/us-retailers-offer-safety-plan-for-bangladeshi-factories.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: , ,

Legal Experts Debate U.S. Retailers’ Risks of Signing Bangladesh Accord

May 22, 2013 by Leave a Comment

A few shareholders at Gap’s annual meeting this week questioned the company’s refusal to sign on to a plan that commits retailers to help finance safety upgrades in Bangladesh, where 1,127 workers died when the Rana Plaza factory building collapsed on April 24.

“In the United States, there’s maybe a bigger legal risk than there is in Europe,” Gap’s chief executive, Glenn Murphy, responded. “If we were to sign onto something that had unlimited legal liability and risk, I think our shareholders should care about that.”

Whether the new accord would subject retailers to substantial legal risks has been debated since nearly three dozen European retailers embraced the plan last week while almost all major American companies shunned it. The plan, called the Accord on Factory and Building Safety in Bangladesh, was forged by retailers, union leaders and government officials overseas.

Labor advocacy groups and other supporters of the plan pilloried the responses by Gap, Wal-Mart and other American retailers that have decided to rely on their own inspection systems rather than join the plan.

Johan Lubbe, a legal adviser to the National Retail Federation, asserts that the Americans’ worries about litigation are legitimate. “The liability issue is of great concern, at least on this side of the Atlantic,” Mr. Lubbe said. “For U.S. corporations, there is a fear that someone will try to impose liability and responsibility if something goes awry in the global supply chain.”

For example, if a Bangladesh factory burns and workers die, the victims’ families, represented by zealous American lawyers, might seize on the legal commitments in the accord to file lawsuits in the United States against retailers that bought apparel from the factory.

John C. Coffee Jr., a professor of corporate law at Columbia University, said American companies generally faced a higher risk of litigation than overseas competitors, largely because the court systems differ significantly. Unlike the system in the United States, courts in Europe generally prohibit class-action lawsuits, do not allow contingency fees for lawyers who win cases and require losing parties to pay legal fees for both sides. Those policies often discourage lawyers and plaintiffs from filing lawsuits.

But Professor Coffee also cited a Supreme Court decision last month that could greatly reduce the ability of overseas factory workers and their families to file lawsuits in United States courts.

“It may be that those retailers who worry about legal liability are pointing to an outdated sense of what liability is for actions taken abroad,” Professor Coffee said. He added that if an accident occurred abroad — for instance, at a factory in Bangladesh — “there is an increasing doubt that the American retailer could be sued in the United States,” because the Supreme Court ruling, Kiobel v. Royal Dutch Petroleum, went far to curb such lawsuits under the Alien Tort Claims Act.

Long before the Bangladesh safety plan was developed, overseas workers had sued American retailers over illegally low wages, 12-hour shifts and the use of guard dogs and barbed wire fences, said Scott Nova, executive director of the Worker Rights Consortium, a university-backed factory monitoring group. In 2003, Gap, Nordstrom, Target, Wal-Mart and 20 other retailers settled a lawsuit for $20 million on behalf of 30,000 garment workers on the Pacific island of Saipan who alleged those abuses.

Mr. Lubbe cited a more recent lawsuit as evidence that American retailers still faced risks. Last year, the University of Wisconsin sued Adidas, demanding that it pay $1.8 million in severance benefits to former workers at an Indonesian factory it used. The factory’s owner had failed to comply with an order to pay those benefits to 2,800 workers who lost their jobs.

Mr. Nova said the University of Wisconsin lawsuit was based on a licensing agreement with more specific obligations than the Bangladesh accord. Adidas had pledged to comply with a labor code of conduct that said it must “ensure that all manufacturers comply” with the code and “provide legally mandated benefits,” such as severance benefits.

Liz Alderman contributed reporting.

This article has been revised to reflect the following correction:

Correction: May 22, 2013

An earlier version of this article misstated the position that Philip J. Jennings holds at Uni Global Union. He is the general secretary, not the executive director.

Article source: http://www.nytimes.com/2013/05/23/business/legal-experts-debate-us-retailers-risks-of-signing-bangladesh-accord.html?partner=rss&emc=rss

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Quebec’s Rules on Signs Not in French Lead to Lawsuit

November 23, 2012 by Leave a Comment

When it comes to American companies, KFC and Staples are exceptions in Quebec in that they have translated their names into French (PFK representing Poulet Frit Kentucky and Bureau en Gros meaning Office Wholesale). A large majority of signs along Boulevard Maloney could be just as at home in, well, Kentucky: they include Costco Wholesale, Walmart, Toys “R” Us, Best Buy, Pizza Hut and Linen Chest. A Comfort Inn sits nearby to receive overwhelmed shoppers.

Quebec’s stringent language laws, first passed in 1977, have long meant that regardless of the name out front, all large retailers serve customers in French and post signs that are predominately, or entirely, in French along their aisles. Now, after decades of permitting a plethora of English-language trade names on signs, the government agency responsible for enforcing language laws has changed its mind. Its efforts, accompanied by threats of legal action and fines, to add French phrases and slogans to those trade names prompted six major American retailers to take the province to court last month.

“How can you organize your business when you’ve had a law that’s been applied a certain way for 35 years change without any discussion?” said Nathalie St.-Pierre, the vice president for Quebec at the Retail Council of Canada, who spoke on Thursday on behalf of all the plaintiffs. “It’s a bit like you take the tax laws and then suddenly change the way they are applied. People would feel it was very unfair.”

The plaintiffs’ suit asked the Quebec Superior Court to assess the legality of the policy change by Quebec’s office of the French language. The companies are all American-owned and include the Canadian subsidiaries of Wal-Mart, Best Buy (which operates under its own name in Canada and which owns a separate electronics chain here called Future Shop, even in Quebec), Guess, Costco Wholesale and the Gap, which listed its Old Navy operation as a separate plaintiff.

But while American companies may be leading the resistance, many Canadian retailers are also affected by the change. Boulevard Maloney has an enormous Canadian Tire store, and while it stocks “pneus” on its shelves in Quebec, the chain still maintains its full English name on its signs along the road.

Martin Bergeron, a spokesman for the language agency, acknowledged on Thursday that it had until now “tolerated” signs containing nothing but trademarked names in languages other than French. But he said that a growing influx of retailers from the United States and elsewhere in the world into Quebec caused the agency to focus its attention on the issue about 18 months ago. Mr. Martin said that complaints to the office about signs had been steadily increasing and represented 46 percent of the 4,000 it received last year.

“This is not against any language,” Mr. Bergeron said. “English, Italian or Chinese, it’s all the same.” He added that the agency will even investigate signs containing names that are not related to any known language.

Provincial law clearly permits the use of trademarks, from any language, on signs unless a company has specifically registered a French trade name. So even now, Best Buy does not have to become Meilleur Achat. The language agency, however, is demanding that companies with non-French trade names add to their signs a slogan or description in French of what they sell.

On a special Web site with an address that can be translated as “respect for the law,” the language office offered some hypothetical tips using a fictitious store named Daily Living. Although it cannot require it, the office suggested that the store’s owners could adopt the name Les Beaux Jours (The Beautiful Days). Otherwise, it said, the imaginary store could comply by adding a much larger French name above its English name, tacking on the French word for furniture or introducing a French-language slogan meaning “Furniture, bedding and decoration.”

In their court filing, the retailers disagreed with the language office’s interpretation of the law and contended that signs displaying non-French trademarks still complied. The arcane legal argument hinged on questions related to the relationship between corporate names and trade names. The language office, according to the court documents, told Best Buy in August that it might recommend prosecutors take the company to court. In the case of all the plaintiffs, the office has threatened to suspend certificates of compliance with language laws that all large companies, not just retailers, must hold to operate in Quebec.

Ms. St.-Pierre said that aside from cost, retailers wanted to maintain consistency in all their brand materials, including signs, globally. She also wondered aloud exactly what adding on the word “magasin” (store) to Walmart’s name would bring to consumers or French culture in Quebec.

When asked that question, Mr. Bergeron replied: “Our role here is to make sure the law is applied.”

Article source: http://www.nytimes.com/2012/11/23/business/global/quebecs-rules-on-signs-not-in-french-lead-to-lawsuit.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: , ,