Nike Gets a Pass

Why did Marc Kasky settle his case against Nike for a $1.5 million payment to the Fair Labor Association, a group controlled by Nike and other major shoe manufacturers?

Kasky, described in various press reports as a "labor activist" and "gadfly," certainly deserves credit for filing a daring suit against Nike in a California state court, alleging that the company lied about its operations overseas and how its contractors treat workers.

In 2002, the California Supreme Court rejected claims by Nike's lawyers that the First Amendment immunized the company from being sued under state consumer protection laws.

Nike appealed to the US Supreme Court, and in a victory for Kasky earlier this year, the Court sent the case to trial in California.

But earlier this month, Kasky settled his claims against the shoe giant.

Under the terms of the settlement, Nike agreed to make a payment of $1.5 million to the Fair Labor Association (FLA) in Washington, DC.

A joint press release issued by Kasky and Nike says that "Mr. Kasky is satisfied that this settlement reflects Nike's commitment to positive change where factory workers are concerned."

Sweatshop activists last week expressed outrage at the settlement, pointing out that the FLA is controlled by Nike and the shoe and apparel industry.

"Nike and its corporate buddies basically run the FLA," said Andy Eisen, a student at Lake Forest College and a member of United Students Against Sweatshops (USAS). "It's governed by and for the corporations that it's supposed to monitor."

Corporations are given six of the seats on the FLA board, and the FLA charter states that all major decisions require a super-majority of the corporations on the board to be approved.

Students also attacked the FLA's operations as secretive and ineffective, saying that most important information is being kept from the public.

"This an organization that has been around for years, and yet has virtually no concrete accomplishments that it can point to," said Julia Plascencia, a student at the University of California Los Angeles. "It's not like we're asking the impossible--a truly independent monitoring organization like the Worker Rights Consortium regularly releases full reports about specific factories to the public, while the FLA took years to release a single report that didn't even include the addresses of factories."

Kasky, who works at the San Diego Naval Training Center Foundation in San Diego, California, did not return calls seeking comment.

He has filed similar lawsuits against other companies, including one in 1997 against Tarrant Apparel Group. That case was dismissed by a California state court.

Kasky's lawyer, Alan Caplan, of Caplan & Fielding in San Francisco, did not return calls seeking comment.

The New York Times reported earlier this month that "other terms of the settlement were not disclosed, and lawyers on both sides declined to say whether Nike had paid Mr. Kasky's legal fees or made other payments."

Jeffrey Ballinger, executive director of Press for Change, the group that initiated the corporate campaign against Nike in the 1990s, said that he met with Kasky's lawyers Alan Caplan and Phil Neumark in Italy in July of this year to discuss discovery for the upcoming trial.

Ballinger said that lawyers mentioned nothing about a possible settlement--they just spoke of the upcoming discovery and trial.

After hearing of the settlement, Ballinger called Caplan to try and get an explanation, but Caplan did not return his call, either.

"The terms of the settlement were totally set by Nike," Ballinger said. "If any money is going to come out of Nike to settle this kind of case, it should go to workers who were cheated by Nike. End of story. Nike has never been forced to pay for the cheating that has taken place at their contract factories--cheating that has been documented at their Indonesian factories for several years. Tens of thousands of workers being paid an illegal training wage. Nike admitted it in 1996."

Ballinger estimates that Nike owes Indonesian workers somewhere between $8 million and $12 million, "just for the wage cheating."

"You can talk about the sexual harassment," he said. "Some sort of compensation ought to be paid there. By Nike's own admission, there was widespread sexual harassment. There was a report in 2001 that came from a Nike-funded faux NGO--the Global Alliance."

Ballinger points out that Nike has spread its wealth around to various public interest groups--to Jesse Jackson's Rainbow Coalition, to The Robert F. Kennedy Center for Human Rights--in a largely successful effort to buy silence on the issue of the abuse of Nike's workers.

Discovery in the Kasky case had the potential to open the Nike files to public scrutiny, to document the mistreatment of workers throughout the world, and the flow of money from Nike to public interest groups.

And Kasky and his lawyers settle this potential historic case for a $1.5 million donation to a group controlled by the shoe and apparel industry. And now they won't talk about it.

End of story?

We don't think so.

Russell Mokhiber is editor of the Washington, DC-based Corporate Crime Reporter. Robert Weissman is editor of the Washington, DC-based Multinational Monitor. They are co-authors of Corporate Predators (Monroe, Maine: Common Courage Press; see http://www.corporatepredators.org). To subscribe to weekly corp-focus e-mail service, send an e-mail message to listproc@essential.org with the following all in one line: subscribe corp-focus 'your name' (no period).

(c) Russell Mokhiber and Robert Weissman