Saturday, June 10, 2006

Speaking of Sweatshops . . .

I need more exercise, but that is not what I had in mind.

On June 8, Senator Dorgan (D-ND) introduced a bill (S. 3485) to bar the importation of goods produced in sweatshops. Apparently trying to stay location neutral (and thus not offend the WTO), the bill also bans selling, transporting, advertising, or otherwise trafficking in sweatshop goods and the product of forced labor. It does this by making a those activities a violation of the Federal Trade Commission Act. In other words, this bill treats the issue as one of consumer protection, not international trade. Well, OK. I guess there might be sweatshops in the U.S., but don't we already have plenty of laws and enforcement mechanisms to address that problem?

Interestingly, the bill gives competitors and investors in offending retailers a private right of action. In other words, every shareholder of every publicly held retailer has a right to sue. And the damages that shareholder might suffer? Well, probably none. Probably, the share price increased as a result of any alleged sweatshop merchandise being purchased because it likely increased the retailer's profits. To get around this, the bill includes a statutory damages provision of $10,000 per violation or the fair market value of the goods, whichever is greater. Wow. All you need to be deputized as an Associate Attorney General is to buy one share of stock in your favorite retailer. After that, it is happy hunting. Just be sure that you have some real evidence.

The jurisdiction over these actions is set as the district courts. Why? This is a perfectly good example of a cause of action, at least as it relates to imports that could be given to the U.S. Court of International Trade. The CIT is chock full of good judges with the available capacity to handle more trade-related work. The Congress needs to take a look at the CIT and the various proposals that have been floated to give that Court jurisdiction over more things. Examples include:
  • Export control-related cases including penalties and OFAC sanctions
  • Seizure and forfeiture cases (maybe excluding criminal and narcotics cases)
  • Enforcement of foreign arbitral awards
My personal favorite is giving the CIT the initial review of 337 cases rather than the ITC. I know the patent bar goes nuts when this comes up but it makes sense to me. Here is a perfectly competent Article III bench with time to kill. Plus, the appeals already feed into the Federal Circuit, so there is a natural flow.

The counter argument (and I hear this about arbitral awards) is that the CIT has no experience in these areas, so why force the bar to educate them. My response is that for either of these issue in a district court, there is a decent chance that the judge assigned will have little or no substantive experience. So, the CIT would be no different. Also, because the cases would be concentrated at the CIT, the judges would quickly get up to speed and rapidly become the best informed bench in the country on arbitral awards and possibly on patent exclusion cases.

The other argument I hear is that no one should have to come to NY to deal with the CIT. Guess what people, Customs and trade lawyers have been doing it for 25 years. It works fine. And, if there is a trial to be held, the CIT can sit anywhere in the country (and theoretically outside the country).

As best I can tell, this is just resistance to change. But what do I know? I am just a customs lawyer.


paul said...

hi....nice law and nice system of enforcement....buuuuuuuuuuut.....if i recall correctly, there have allready been laws on the books prohibiting the importation of goods made via prison labor.

Considering most of the du-dads that we currently use are manufactured by said chinese prison labor, and previously, many of the convenience products, such as coffee makers, were produced by German Prison Labor, I don't see any NEW restrictions on sweat shop labor being enforced any more than the afore-mentioned current laws on prison labor.

In fact, add enforcent of current immigration laws, medicade eligability laws, and I REALLY don't see any enforcement potential.


Larry F. said...

Must be tough to be so cynical. Actually, there is evidence of enforcement on the prison labor front. Here is a summary from 2001: