Industry News

Alleged Victim of Forced Labor in Chinese Prison Sues American Company for Damages

Jul. 9, 2024
By: Pietro N. Bianchi

Those of you that read our news articles regularly may be familiar with the UFPLA detentions and WROs. However, the potential risk of direct civil liability has not been on most people’s radars. In Xu Lun v. Milwaukee Electric Tool Corp., an individual using the pseudonym Xu Lun sued Milwaukee Electric Tool Corp. and Techtronic Industries Co. for importing goods made with forced convict labor. For context, in 2005, Milwaukee Tool became a wholly owned subsidiary of Techtronic Industries, a Hong Kong based company. Xu Lun, a human rights activist convicted of subversion of state power and sentenced to five years in prison, claims he was forced to make work gloves bearing Milwaukee Tool’s distinct logo. Xu Lun’s complaint requests both punitive and exemplary damages and relief for unpaid wages, mental anguish, and pain and suffering under the Violations of the Trafficking Victims Protection Reauthorization Act 18 U.S.C. §§ 1589 & 1595.

Under 18 U.S.C. § 1589(b), a victim of forced labor can file a civil action against whoever knowingly benefits, financially or by receiving anything of value, from participation in a venture which that person knew or should have known was engaged in forced labor. Plaintiff claims that the defendants knew or should have known that forced labor was in their supply chains for a host of reasons, including:

·    Techtronic Industries’ deep background in and knowledge of China and its labor issues, which due to their close coordinate on all matters relating to manufacturing, gave it and Milwaukee Tool unique reason to know of the forced labor in this case.

·    On April 10, 2024, U.S. Customs and Border Protection blocked the importation of gloves made by the supplier who made the gloves at issue based on evidence “that reasonably indicates the use of convict labor” in violation of U.S. law.

·    Defendants “all but admitted they were reckless in failing to detect the forced labor at issue here” in responding to a Congressional-Executive Committee by stating it was aware that it was not able to adequately audit its suppliers in China, and that it was planning to move its suppliers to Southeast Asia as a result.

·    Citing a 1997 Senate Hearing and speech from President Bill Clinton on the topic, that it is well known to the general public, and in the textile and manufacturing industries especially, that the use of forced labor in PRC prisons is widespread.

In recent years Customs expectations for Importers’ supply chain diligence has been increasing. It is yet to be seen whether the Court will find that Milwaukee Tool knew or should have known that forced convict labor was in its supply chains. However, regardless of the eventual resolution of the case, Milwaukee Tool has already suffered reputational damage and the risk of litigation.

If you have questions about supply chain diligence or forced labor do not hesitate to contact an attorney at Barnes Richardson, & Colburn LLP.