NEW YORK — A federal appeals court on Tuesday upheld a 1999 district court ruling that had dismissed a lawsuit filed by workers at Mademoiselle Knitwear against UNITE. The decision ended a long-running legal battle that had centered on the union’s use of liquidated damages and on a commercial dispute between the factory and Liz Claiborne, one of its clients.
Another suit filed against Claiborne by Mademoiselle employees was dismissed last year.
Tuesday’s decision, according to UNITE, completely exonerates the union of wrongdoing in the case. Liquidated damages, the union’s practice of assessing a fine on unionized vendors that send factory work to nonunion contractors, have been a contentious issue in recent years and the subject of congressional debate. The case had been dismissed from federal court Aug. 31.
Mademoiselle employees had claimed the liquidated damages were a payoff to allow Claiborne to avoid its obligation to provide work to the factory, and that UNITE had failed to support its factory members. The case brought out documents that showed Claiborne had paid $13 million in damages for violations not related to Mademoiselle from January 1994 to May 1997.
The apparel company’s attorneys pointed out that while the practice is hotly debated, its legality has been consistently upheld by federal and state courts.
“We are delighted by the decision and want to point out that this means every one of the legal proceedings filed or instigated by Mademoiselle, including actions reviewed by arbitrators, the National Labor Relations Board, the U.S. Attorney and two federal courts, has been judged completely meritless,” said a UNITE spokeswoman.