Suit says Nike factory claims violate false-advertising law

SAN FRANCISCO - Nike's claims that it pays overseas workers generously and protects them from health hazards amount to false advertising, a lawsuit says.

A Code of Conduct that the world's largest athletic shoe maker promoted in the media was misleading and intended ''to entice consumers who do not want to purchase products made in sweatshops,'' the suit said.

The code should be considered the equivalent of false advertising claims, subjecting Nike to potentially huge damages, said the lawsuit, filed in Superior Court.

Nike, based in Beaverton, Ore., has about 22,000 employees, but most of its products are made by 450,000 workers in Asian factories run by contractors.

The suit said Nike has stated that it guarantees a ''living wage'' to all workers, that its workers in Southeast Asia make twice the local minimum wage, receive free meals and health care, and are protected from corporal punishment; and that it complies with government rules on wages, hours and health and safety conditions.

Those claims, the suit says, are refuted by studies from labor and human rights groups, news media investigations and especially a January 1997 audit by the firm of Ernst & Young.

The audit, commissioned by Nike, was leaked to reporters last November. It found that employees in a large Vietnam shoe factory were exposed to cancer-causing toluene and suffered a high incidence of respiratory problems.

Some University of Arizona students, including a group called Students Against Sweatshops, have protested a proposed deal between Nike and the UA Athletic Department that would help finance the UA's 18 Division I sports teams.

Several hundred UA students, staff and faculty also have signed a petition opposing the Nike contract because of the company's working conditions.

UA President Peter Likins and Arizona State University President Lattie Coor met with Nike CEO Phil Knight in February to discuss working conditions for the company's overseas workers.

After the meeting, Likins authorized further negotiations for the multi-year contract with Nike and said he asked Knight for "firm guarantees" that the company will continue to adhere to its Code of Conduct.

Likins said Knight agreed to include a provision in the contract permitting the UA and ASU to break the contracts if Nike knowingly violates its Code of Conduct or overlooks human rights violations made by subcontractors.

In a statement responding to the suit, Nike said, ''We have always been concerned about the health, safety and wage levels of our workers and have consistently taken steps to help create the very best workplaces.''

The suit asks for the amount to equal all its California profits, said Philip Neumark, a consumer lawyer taking part in the suit. He said the money could be paid to workers or consumers, as determined by the trial judge.

It also seeks a company-funded ''public information campaign'' to correct past untruths and a ban on future misrepresentations.

Nike said the suit contained no new claims and ''appears to be more of a press release dressed up like a lawsuit.

"Nike assures every consumer that each of these claims and others brought to our attention have been previously addressed through penalties, new investments in training and equipment designed to improve the workplace," the company said.

Likins has said he does not think it is fair to refuse a deal with Nike on the basis of human rights issues as long as the company is honest in its desire to improve its working conditions.