Nike settles 'sweatshops claims' case

Nike said today it had agreed to pay £1m (€1.42m) to a workers rights group to settle the case which has been dragging on for five years.

Marc Kasky, a San Francisco labour activist, had sued the athletic shoe and clothing giant in 1998, accusing it of false advertising for claiming the company was protecting labour rights at overseas contract factories that make footwear for Nike.

“The two parties mutually agreed that investments designed to strengthen workplace monitoring and factory worker programmes are more desirable than prolonged litigation,” Nike said in a statement announcing the agreement.

The surprise settlement left hanging the core issue of whether Nike lied and if it did, if its adverts qualified as protected speech under the First Amendment of the US constitution.

The California Supreme Court had ruled that Kasky could sue Nike on the false advertising claim, prompting the company to ask for a review by the US Supreme Court. But after hearing oral arguments, the high court refused to tackle the issues and dismissed the case in June, leaving the decision up to California.

As part of the settlement, Nike has agreed to pay the Fair Labour Association £1.5m (€2.13m) to boost efforts to improve factory conditions and monitoring. The association, formed in 1999, promotes a code of conduct based on international labour standards, monitors labour practices and coordinates public reports on factory conditions.

“Mr Kasky is satisfied that this settlement reflects Nike’s commitment to positive change where factory workers are concerned,” lawyer Patrick Coughlin said.

Nike spokeswoman Maria Eitel said, “We have learned a great deal in the five years since this case was first filed about the challenges we and others face in addressing issues in manufacturing environments.”

Despite the long court fight, the issue of whether the advertising in question was false has never been addressed in court, said Jim Carter, Nike’s chief lawyer.

The case arose from Nike’s vigorous defence against allegations that it used Third World sweatshops to manufacture its athletic products. Nike defended wages and conditions at Asian plants, run by subcontractors, where workers make tennis shoes and athletic wear with the distinctive Nike swoosh logo.

Critics said the company’s defence hoodwinked consumers and amounted to false advertising.

Nike did not say whether the statements were true or false in the settlement, and admitted no liability.