CARDOZO JOURNAL OF INTERNATIONAL
AND COMPARATIVE LAW
TRANSCRIPT OF SYMPOSIUM'
February 28, 2013
INTERNATIONAL FASHION TRENDS: THE
BUSINESS OF INTERNATIONAL FASHION
LAW
TABLE OF CONTENTS
I. PANEL ONE: ACHIEVING COMPLIANCE 795
A. Opening Remarks 795
B. Discussion 797
II. PANEL TWO: NAVIGATING INTERNATIONAL TRADE 817
III. PANEL THREE: BACKSTAGE: THE LEGALITIES OF
INTERNATIONAL FASHION MODELING 841
IV. PANEL FOUR: THE LITTLE GREEN DRESS:
SUSTAINABILITY IN THE FASHION INDUSTRY 862
I. PANEL ONE: ACHIEVING COMPLIANCE
A. Opening Remarks
MS. JESSICA BLUMERT: Good morning and thank you for
joining us today at the Cardozo Journal of International and
Comparative Law Symposium, which is being co-sponsored by the
Intellectual Property Law Society and the IP Practice Group. My
name is Jessica Blumert, and I am the Symposium Editor of the
CJICL and the President of IPLS.
1 The content of this transcript is a textual representation of the panel discussions
that took place on February 28, 2013 at the CARDOZO JOURNAL OF INTERNATIONAL
AND COMPARATIVE LAW symposium. International Fashion Trends: The Business of
International Fashion Law. While best efforts were made to provide an accurate
transcription, there may be errors, omissions, or inaccuracies in the reporting of the
substance of the panel discussions.
795
796 CARDOZO J. OF INT'L & COMP. LAW [Vol. 21:795
Before we begin, I would like to thank Shane Martins, the
CJICL Assistant Symposium Editor, and Alexandra Simmerson,
the Fashion Law Chair of IPLS, for helping us create the event.
This event would not have been possible without their time and
effort.
Today's symposium will cover various issues in international
fashion law, including comphance, international trade,
international fashion modehng, and sustainability. Each of these
panels will explore the economic and strategic imphcations of
fashion law. Following the symposium, there will be a mixer with
the IP practice group.
Each panel will be an hour long. If there is any time
remaining, we will allow for questions from the audience.
Following each panel will be a short break before the next panel
begins.
The moderator for today's event—who needs no introduction
but will receive one anyway—is Barbara Kolsun, the Executive
Vice President and General Counsel of Stuart Weitzman LLC, a
luxury shoe design manufacturing and retail company. A global
brand with nearly one-hundred retail stores.
Barbara is also an adjunct professor of fashion law here at
Benjamin N. Cardozo School of Law. With Guillermo Jimenez,
she is the co-editor and co-author of the first textbook on fashion
law, the second edition of which is in the process of editing for
2013 publication.
Prior to her time at Stuart Weitzman, Barbara was the general
counsel to several other fashion houses, including Kate Spade,
Seven For All Mankind and also in-house counsel at Calvin Klein
jeans and Westpoint Stevens, the home textile company.
Additionally, Barbara has spoken and been published widely on
fashion law throughout the world, from Vietnam to Istanbul.
She is also a 1982 graduate of Cardozo. It is my pleasure to
introduce Barbara Kolsun.
MS. BARBARA KOLSUN: Thank you.
AUDIENCE: [Applause].
MS. KOLSUN: Well, I taught fashion law drafting this
morning at Cardozo and my esteemed colleague Lee Sporn, who
will be speaking later this morning, is teaching—thanks to Jeff
Goldfarb, one of our speakers in the first panel—the first FIT
Cardozo joint course—Lee, what's the name of it?
MR. LEE SPORN: [Interposing] Fashion law practicum.
MS. KOLSUN: —fashion law practicum ... [S]o we're really
2013] INTERNA TIONAL FASHION LA W 797
building a fashion law practice here at Cardozo. Many of my
students, our students, are sitting in the room.
When the students approached me about my thoughts on this
symposium, I said let's skip [intellectual property]. Everybody's
heard IP in fashion to death. Let's talk about all the other issues
related to working in the fashion business that those of us—and
there are many Cardozo grads who are in the fashion business—
that those of us deal with on a day-to-day basis.
I am, as Jessica said, the General Counsel at Stuart Weitzman.
IP is about ten percent of my practice. I deal with getting goods in
and out of the country, classifying those goods; lots and lots of
employment matters, which we're going to talk about; lots and lots
of corporate matters. My company was recently acquired by the
Jones Group, which is one of the big holding companies. I've
actually worked for companies that have been acquired by almost
every single major holding company. I seem to be the death
threat—when I arrive at companies we immediately get sold—or
the life threat.
We deal with many issues and we're going to talk about three
of those categories today starting with compliance and then talk
about navigating international trade: again, getting goods in and
out of the country. Then, we're going to talk about modeling this
afternoon and sustainability, which is a very hot issue that we're all
dealing with whether we like it or not.
B. Discussion
MS. KOLSUN: I'm going to let the speakers introduce
themselves but I will just start by introducing Jeff Goldfarb, who is
the Director of Business Development at G-III Apparel Group.
He is a graduate of Cardozo and in the business end at G-III. Jeff,
would you tell us first a little bit about what G-III is, what you do
there, and how you ended up there?
MR. JEFF GOLDFARB: Okay, good morning. At G-III
Apparel we design, distribute, and manufacture a variety of
apparel. We have major fashion licenses with Calvin Klein,
Kenneth Cole, Guess, the NFL, and the NBA. We have about
twenty-flve different licenses and we're kind of the brand behind
the brand, so the designers, the merchandisers, they're all part of
G-III.
And if you walk into [the G-III] showroom, you would think
that you were actually in a Calvin Klein showroom or a Guess
798 CARDOZO J. OF INT'L & COMP. LAW [Vol. 21:795
showroom. You wouldn't really think about G-III. The biggest
part of our business is licenses.
We also do private label where an Abercrombie or a
JCPenney comes in, and they say "hey, can you make outerwear
for us?" and we will make them coats or dresses. That is another
part of our business.
We also have about two hundred retail stores. The biggest
chain that we have is Wilson's Leather, which is primarily an outlet
chain. We are located in Minnesota for that. The rest is here in
New York. And then we have a large overseas offlce that does
compliance and sourcing and audits and checks on all the factors
and finds new factories and new facilities.
And we have two brands that we own besides licensing. One
is Vilebrequin and one is Andrew Marc. What we try to do is: we
buy these brands and we put them on our platform and we expand
their product. So in the case of Andrew Marc, it was a coat brand
and we are going to make dresses and sportswear, as we do for the
rest of the world; and for Vilebrequin, we'll do the same thing.
My job within the company has been a variety of different
things. While I was at Cardozo, I started at G-III, which was
founded by my grandfather. My father is now the CEO and it is a
public company.
But during the summers I worked in China and I worked in
the factories loading containers and worked online and worked
with management in finding new factories, doing all the things that
we do in China. Then, after law school I worked in producflon,
which is essentially the import department. So not being in China,
I got to travel there (but not be based there) and work with
Customs and work with customers to get products into the U.S.
I ran a division after that which was more sales oriented. Now
I do more M&A and operational work: finding new licenses,
finding new companies, and finding ways to build our business
either in the U.S. or overseas.
MS. KOLSUN: You wear the lawyer hat also?
MR. GOLDFARB: I guess you always wear the lawyer hat.
Every deal I look at there's something in my mind that has to do
with legal, but I don't necessarily only look at legal stuff. It's much
more of a business universe.
MS. KOLSUN: For those of my students who listened to my
first class on ethics, this is a lawyer wearing two hats example. Do
you have in-house lawyers at the company?
MR. GOLDFARB: No, the companies run each division
2013] INTERNA TIONAL FASHION LA W 799
because we have a lot of overlapping parts that actually compete
with each other. So there are a lot of different companies and then
a small management team at the top. I do a good amount of legal
work but a lot of it is given to our outside counsel.
MS. KOLSUN: A second speaker, Greg Weisman, is with us
on Skype. Is he on Skype yet, Greg?
MR. GREG WEISMAN: I'm here. Is the audio working?
MS. KOLSUN: I guess so. We can hear your voice. Can you
tell us briefiy where you are and what you do in connection with
the fashion business?
MR. WEISMAN: I shall. Good morning, everybody, my
name is Greg Weisman. I'm a Partner at Ritholz & Levy in Los
Angeles. I launched the Los Angeles office of this law firm about
a year ago and I've been practicing for eighteen years in Los
Angeles predominantly with a very similar practice to you,
Barbara, as outside general counsel for wholesale manufacturers
and distributors of apparel, accessories, and footwear.
My clients are very L.A. centric: meaning, it's sportswear,
outerwear, denim, juniors, action, sports, surf, skate. You can tell
by the skateboards on the wall behind me in my office—Barbara, I
don't think you can see the visual—but it's a very a L.A. centric
office. And from a legal discipline standpoint, as outside general
counsel it really sort of falls into three distinct categories, although
you have to be nimble and navigate a lot.
It's going to be a lot of contract work, sales rep agreements,
distribution agreements, license agreements, independent
contractor, co-lab product branding, development, PR, you name
it. The second discipline is corporate. I form entities for start-ups
to help take them all the way through the last cycle of getting
investors, doing a PPM and ulfimately a hquidafion or an exit
strategy event. We're a smaller shop, so if it's too big and we get
into a hard stubborn issue, we usually farm it out to a larger firm.
And the third discipline is intellectual property, which is
where I started. I started out as an IP htigator, and as any good
transactional lawyer will tell you, having a litigation background is
very helpful, especially in the garment business where,
conceivably, every contract that you enter into has some vested
sort of dispute down the road at some point that you can navigate,
and understanding kind of how that works, what the risks are,
what the costs and exposures and opportunity cost loss for your
client I think it's very helpful.
I grew up in San Diego and I went to school at Berkeley, so
800 CARDOZO J. OF INT'L & COMP. LAW [Vol. 21:795
I'm a fourth generation Californian [talking to you] about how we
do things out here in crazy California.
MS. KOLSUN: Separate state of California. Lee and I always
joke with our class about this: there's France and then there's
California. When we talk about employment—
MR. WEISMAN: [Interposing] That's right.
MS. KOLSUN: —matters. And that's a good introducfion to
Howard Robbins, who is our third speaker, a partner at the Labor
& Employment Department at Proskauer, which is a firm that
many of us work with for various matters. A very, very, very fine
employment firm.
We're talking about compUance in this first panel and a huge
part of compliance is compliance with labor laws—not just in the
U.S.—but worldwide, and they are different in every country. I
remember that somebody recently asked me if we translated our
employee manual into Italian and French, and I laughed said "no,
because Italy and France are very, very different." Their laws are
very much governed by unions and there's really no such thing as
at-will employment there, like there is here.
So Howard, tell us a litfie bit about your pracfice as it relates
to labor and employment compliance.
MR. HOWARD ROBBINS: Sure. I am a labor and
employment lawyer and a lot of what I do is in the sport sector.
Actually, I do work for the NBA and Major League Soccer and
the NHL but I also represent a number of employers in the what is
called the fashion industry: Michael Kors and Barney's and (until
they went bankrupt recently) HMX, and some others.
And it runs the gamut from collective bargaining where there
are fairly heavily unionized operations, whether it's sales
associates at Barney's or warehouses. There are wage and hour
compliance issues. I'm going to talk about today is disability
comphance issues involving new media. Just a very wide range of
issues that really affect all employers.
One thing I joke about is people applying for jobs at the firm
who often say "I want to be a sports lawyer" and they come to me
and I say, "why you want to be a sports lawyer?" [and they say] "I
love sports." I say, "I have two bits of bad news for you. One is
there's no such thing as sports law, okay, there's simply law as
apphed to certain industries, and the other is that you don't get
close to the game. You don't get to bounce the ball just because
you do this work," and I think the same is probably true of fashion
law.
2013] INTERNATIONAL FASHION LAW 801
Lee Sporn has yet to dress me up in any exciting clothing, but
that's okay.
MS. KOLSUN: Lee and I never go into stores and we never
go to fashion shows and we disappear on Fashion's Night Out.
MR. ROBBINS: So it's not about the fashion, which we all
know, but it's certainly an industry that presents a very interesting
range of issues. And I have been Proskauer for [almost] eighteen
years now.
MS. KOLSUN: G-III has a lot of companies and a lot of
manufacturing. Where are the countries where you manufacture
or where you, as a hcensee, manufacture?
MR. GOLDFARB: We always try to find the new low cost
provider so we're always looking for a new place to produce but
about seventy percent of our product is produced in China. We
have a major footprint; and China, it isn't the low cost provider
anymore, at one point it was.
Our company used to be mostly in Korea, and then, as China
built the superstructure, went over to China with Korean
management, and then, we really built our footprint there.
And it has the roads. It's stable. We hke to be there. We
kind of know what we're going to get but we're always looking for
the next place to be, so now we're in Eastern Europe. We're in
Indonesia. We're in Vietnam. We're in Bangladesh. We're in
India. We're in Pakistan, China, Korea, Italy, and Bulgaria.
We're pretty much all over the place.
MS. KOLSUN: Do you manufacture anything in the U.S.
anymore?
MR. GOLDFARB: We do some contract embroidery and
stuff hke that. We're a quick response business: if the Yankees
win the World Series, the next day you see a jacket that says
"World Champions." Well, we will have blank store here who will
embroider it up in the U.S. and can get it out really quickly but it's
not a meaningful part of our business. And quite frankly, if you
had any sort of labor issue or we had a union problem, we would
probably just walk away from that place.
MS. KOLSUN: I assume you work with many factories in
China?
MR. GOLDFARB: Yeah.
MS. KOLSUN: And how do you control human rights
comphance? Let's start with the tough one.
MR. GOLDFARB: Yeah, I think it's almost impossible. I
think we are in maybe five hundred different factories. The
802 CARDOZO J. OF INT'L & COMP. LAW [Vol. 21:795
answer is: you just [have] to keep auditing and for us, we're a
public company so we have certain standards that we have to
adhere to ... but we're also using other people's brands.
So Calvin Klein is our biggest brand and PBH, which owns
Calvin Klein, takes these matters very seriously, so it has standards
that are tougher than local laws.
MS. KOLSUN: When you work with the factories, do you
give them your corporate compliance guidebook? This is our
corporate compliance guidebook. Actually, it's Jones Company's
(that owns Stuart Weitzman now), with all sorts of pictures and
lengthy discussion about chemical handhng plans step-by-step,
wages and benefits, and every conceivable [guideline] on freedom
of association, pregnancy, etcetera. Does G-III have its own
compliance guidebook, or do you give, for example, the Calvin
Klein factories that are making Calvin Klein product the Calvin
Klein comphance guidebooks?
MR. GOLDFARB: We use the Calvin Klein comphance
[guidebook]. In our case, Calvin Klein and Nike are the two
toughest. They're tougher than everybody else. They're tougher
than what G-III normally would want to do because we will have
Walmart, which isn't Calvin Klein or Nike, so we don't do the
Walmart standards for that business.
But for the most part, before we go into a factory, we'll try to
[access] the Calvin bins. We pre-audit them to make sure that,
even before we price anything out, they are going to be able to hit
these standards and if they don't hit those standards, we help them
get there. And Calvin Klein, they are okay. If you explain to
people and you communicate that the factory is almost there, they
will help you because they want every factory to kind of be
brought up, so they will help you give them orders to kind of invest
in it.
But the way to pohce the human rights stuff is just to
consistently be there. We have two hundred and fifty people
there. They have to keep going to those factories and checking on
them. And when you give that factory an order, you have to make
sure that they didn't just take the order and then give it to a
factory up the street and make a little bit of money on the
difference.
You just have to keep going back and back and kind of
staying on them, and after a while, you create something that's
pretty special. A compliant factory is a good thing for an area
that's pretty depressed ... [b]ut our biggest problem would be
2013] INTERNATIONAL FASHION LAW 803
there really is no [check and balance] beyond what we're going to
do to make sure that they're actually being compliant with human
rights standards. The local governments usually don't do it. They
really don't care.
In China, you can't work more than sixty hours a week but if I
give a factory an order and it's going to take them more than sixty
hours a week to get it done, they're not going to say no to it.
They're going to flgure out a way to get it done because otherwise
that might go to the factory next door because it isn't really
compliant.
So they keep two sets of books and audit those two sets of
books. We have to be on it. You have to go back to the factory no
matter what it is. China's a big place. Just keep going back and
keep policing and making sure that they're doing what they said
they were going to do.
MS. KOLSUN: Are your auditors your employees or, I'll say,
consultants?
MR. GOLDFARB: They're ours. We have our auditors but
there are third-party auditors that you can hire. So in the case of
JC Penney, it will do it's own factory audit inspecflons. So our
auditors know their auditors and we have to make sure that our
auditors get there before JC Penney's auditors get there to make
sure that it's done the right way.
You have to police the auditors sometimes. You have to
make sure you're hiring somebody in China that doesn't make that
much money and could be paid off by the factory, so you have to
just consistently work it and be on it and check it out and get on a
plane and make sure your stuff is being made where you think it's
being made.
MS. KOLSUN: We've seen a lot of press recenfly about the
flres in Bangladesh and lots of commentary about exporflng jobs
to countries that have not experienced the triangle shirt factor type
of tragedy which led to labor unions and higher standards for
workers. How do you deal with that kind of criflcism as a
company that pretty much sources all of your goods?
MR. GOLDFARB: It's a race to the bottom: every store
wants a better price and every customer wants to buy a coat or a
dress cheaper and you want to get value. So it's a dirty game. You
have to go and find the cheapest place to do business.
The criticism in Bangladesh is [that] nobody is policing
anybody, so we don't do much in Bangladesh. I mean, anything
that I'll do in Bangladesh I'm on top of. Our people there will
804 CARDOZO J. OF INT'L & COMF. LAW [Vol. 21:795
make sure that it is the right factory.
But it is the next frontier also, so you can't ignore it. You
can't say that because there was a big fire and it's getting a lot of
negative press, we shouldn't be there. I doubt business in
Bangladesh is down that much. They're getting the orders [and]
people are still going there. So to point out the crificism of it,
there really is no way, except it sounds kind of backwards—but
invesfing more in it gives the local government more of a reason to
fix it, right?
So if they see that we're going to come there and we're going
to police it, they'll get behind it... [t]hey'll take care of their
people. I think it'll make it a better place actually with more
business there.
MS. KOLSUN: Greg, how do you advise your smaller, more
entrepreneurial clients who are manufacturing in or outside the
U.S. in setting up these kinds of compliance program? I assume
most of them are privately held companies.
MR. GREG WEISMAN: They are. Well, we have some
pubhc companies in Los Angeles but as you suggested, we have a
lot of entrepreneurial privately held companies. Jeff was very
honest just now about this race to the bottom. The idea that the
retailer is demanding such price considerafion on these goods and
it is so compefitive. And if you're a private company trying to
compete with a billion dollar public company who can sometimes
take back goods or give different terms or better terms at retail,
it's an even more difficult challenge.
To tell you an interesting story that's California specific:
Cahfornia had a huge garment-manufacturing base within
Southern Cahfornia. At a time in the mid-90s there were over a
one hundred thousand people employed in the garment business in
the state of California.
It was large employer. It contributed to the economy: a lot of
jobs, a lot of upward mobility. Say what you want about Doug
Charney and some of the news he's gotten into but he was an
advocate especially in the late 90s of taking immigrant labor and
saying listen this is our ability to take these people and give them
that American dream. And it was working, and it was robust.
And into the mid-90s, really before [the] El Monte sweatshop
raid of 1995, and a lot of legislative changes at the state level, you
had a ton of garment manufacturing going on here. People
manufactured domestically because, as Jeff suggested, in the fast
fashion business or quick turn or imprintables, it's easy. It was
2013] INTERNATIONAL FASHION LAW 805
cheap getting goods in three or four weeks instead of three months
on the boat and sometimes, it was even cheaper or as cheap.
And then, a lot of different sort of tragic things happened.
We had the El Monte sweatshop raid in 1995 where [over seventy]
Thai immigrant workers were found handcuffed to sewing
machines with barbed wire fences. It was the worst sort of tragedy
and travesty of [public relafions] really harkening back to the 19th
century. Most of the labor advocates in California said, "look, it's
the mid-90s, and this is still happening here."
The garment industry in Cahfornia is plagued by its own
legacy and it's done some of its own damage to itself with things
like this, and so they enacted some very heavy garment specific
registrations, which we can talk about in a little bit.
MR. WEISMAN: And so there was a lot of manufacturing
here, and then, in the mid-90s when the U.S. changed and
globalizafion opened up first Mexico, through NAFTA and then
Asia, those jobs are all gone. And we shipped them overseas
never to come back really. Although I see some optimism that it
might actually come back in drips and drabs.
But to answer your question, it's very difficult. It's very
delicate. It is retail driven, meaning: if the retail demands
comphance, you have to do it. I will tell you some of these guys
don't do it. They will represent and warrant to their retailers that
these goods are compliant without much comphance at all.
Supply chain management is expensive. It's expensive to have
boots on the ground in Asia. People use third-party garment
sourcing people and I will tell you that it is not as well regulated
and managed, as it should be.
MS. KOLSUN: I worked for Seven For All Mankind in the
early 2000s and we manufactured, for the three years that I was
there, everything in California in downtown Vernon (which is
downtown L.A.) and I was the first in-house lawyer for the
company. And the first thing that I focused on was hiring a human
resources director. Would you beheve we didn't have a human
resources director?
And obviously, everybody who worked in that factory was
Spanish speaking, so we cut a deal with Immigration to do an audit
and the rules were set going forward and not going backward.
And I think the company still does a great deal of manufacturing
in California, but that's rare. It's rare but Vernon is still, I think,
relatively robust.
In addition to the comphance that we've talked about—
806 CARDOZO J. OF INT'L & COMP. LAW [Vol. 21:795
human rights compliance—there's also California. You mentioned
things. Prop 65 California regulation related to transparency and
supplies act, another recent California compliance statute. How
do you deal with those with your clients? I mean Prop 65 is a
nightmare for a small company.
[Crosstalk]
MR. WEISMAN: [Interposing] It is a nightmare, so Prop 65
for those in New York that don't know what it is, it's the Safe
Drinking Water Toxic Enforcement Act of 1986, which by its title
would suggest it's something sort of more municipal water related,
but the reality is any consumer that you bring in any retail store
you probably have to post an ambiguous sign noting that
"chemicals" which are known to cause cancer or reproductive
birth defects may be present in the product that you're selling. It
becomes a warning label.
Generally, a warning label is all that's required, but we have
some very litigious, very aggressive plaintiffs lawyers running
around Cahfornia using the private attorney general statutes to sue
people seeking really attorneys' fees under class actions, looking
for discrepancies.
MS. KOLSUN: Bonanza for class action lawyers Prop 65.
Every one of our companies is involved in Prop 65. Jeff, are you
guys involved in Prop 65 claims?
MR. GOLDFARB: It changes all the time. Wilson's with us,
we have retail stores there but it kinds of rears its head all the
time.
MR. WEISMAN: And there's a comic element to this. I
know it's serious but the claims are so ludicrous. We've had cases
involving products where the claim will come in that the brass
buckle was processed using something or other as though you'd be
licking it.
MS. KOLSUN: I always describe it as the "are you going to
let your child suck on the red patent leather shoe in your closet?"
because that's really the only way the kid could possibly get cancer
from the patent leather shoe. And, of course, the options for those
of us in the business are: you either saddle up with one of these
class action lawyers or you post on all of your beautiful luxury
boxes "this product could be detrimental to your health," which
your marketing people will shoot you for doing. So that's the real
issue.
The second law, the California regulation related to
transparency and supply act, was something that came into effect
2013] INTERNATIONAL FASHION LAW 807
in January of 2012 wherein we all had to post something on our
websites that said that human trafficking was not anywhere in our
supply chains, which you can imagine is very difflcult to swear to.
Howard did you have to counsel any of your clients on those
postings?
MR. ROBBINS: Yes.
MR. WEISMAN: And the list goes on. There's lead paint
issues relating to accessories, belt buckles as it was mentioned,
which has been difficult because as that particular statute comes
into effect, it sets different standards for children products and
defining what are children's products versus adult products.
MS. KOLSUN: And your wonderful plastic bag laws. Don't
you have one in San Diego? I know you have a whole ten-page
chart on plastic bags in California.
MR. WEISMAN: Right. Each municipality is going through
its own legislation on plastic bags. Santa Monica, for example,
outlawed them. I forgot [which] municipalities. Within the county
of L.A., I think West Hollywood is close. We have different
minimum wage laws, sometimes city by city. Navigating out here,
definitely not schilhng for myself, but you need local counsel:
someone around in California to advise, especially if you have a
retail presence.
I mean we're talking to New York manufacturers. New York
manufacturers get scared off by the garment registration statutes
that we have out here, which require garment manufacturers or
even wholesalers out of state who contract with domestic in-state
contractors very broadly and loosely to find to be registered as a
garment manufacturer. So that's one issue that causes trepidation,
I think, for out of state people.
The second being some of these consumer based statutes and
all of this stuff becomes more profound at the retail level. At the
wholesale level, selling goods into California, while we sometimes
sound we're a foreign entity, we're still a state within the United
States. We have crazy laws but again, that's more for operational
things that are within California: they're entrusting commerce and
especially, that retail presence.
MS. KOLSUN: Howard, can you talk to us about some of the
key issues that people and the companies in the fashion business
have to think about in the employment world. I know we've got
wage and hour, discrimination and also the differences that arise
from the fact that we have fifty states and many countries in which
we do business.
808 CARDOZO J. OF INT'L á COMP. LAW [Vol. 21:795
MR. ROBBINS: Sure. So plaintiffs lawyers are not unhke
retail shoppers. They are always looking for the best and easiest
deal, the lowest cost to extract the best value, and that trend plays
out in the types of claims that we see increasingly.
So while the discrimination cases are alive and well, those are
complicated for plaintiffs lawyers because they require proof of
intent generally. It's always easier to find a strict liability statute.
That's, by the way, one of the nice things for plaintiffs lawyers
about this Prop 65 stuff. Because once you have the toxic product,
that fact is there, and you're done in a way, and then it's just a
matter of the price.
So the wage and hour claims we've seen have been plaintiffs
lawyers' option of choice: their favorite place to shop, in part,
because most employers are guilty in some way or other. Wage
and hour law is really antiquated. It's very difficult to comply
with, and it's a very gray area in terms of exemptions from
overtime requirements and the use of interns, which is increasingly
being challenged. This is an industry where the use of unpaid
interns is common and the question of whether somebody really
should have been compensated; there are increasingly a number of
claims like that.
Barbara, as you know, around the world you have a whole
different set of employment laws ... We find that it's important to
have a network of local counsel because there are truly local
issues.
In China, while we have a Beijing and Hong Kong office, we
find we really need to have PRC lawyers in each locality. I don't
know if that's your experience as well, but so much in China is
really still local. There is a labor law in China that was passed in
2008. I think it is still largely theoretical in a way and there's
enormous evolution happening in China in terms of the legal
landscape. And there's a lot of labor unrest I think more than is
really being reported.
Some of it you see in the news but we hear stuff about more
labor disruption than I think you're hearing about... so we find
navigating other countries requires us to maintain a network of
local counsel.
MS. KOLSUN: What are the key issues that you're seeing in
EEOC claims that are coming? Most of us, our labor employment
issues arrive at our desks in the form of EEOC complaints from
employees that we've terminated, and as you know the U.S. is at
will for the most part. So these are your basic retail employees
2013] INTERNA TIONAL FASHION LA W 809
who we've terminated for various incendiary reasons, but what is
the majority of the claims that you see?
MR. ROBBINS: Some of this ebbs and fiows with whether
you're doing layoffs or not. The recession certainly prompted
waves of layoffs and so we saw a lot of age claims arising out of
those. The fashion industry is particularly sensitive to [such
claims]. [A]nd there was a famous Abercrombie & Fitch case
where there was an image. Supposedly, the company was alleged
to have been trying to achieve a young, white image. Claims that
relate to a company often trying to achieve a young image and
supposedly exiting older employees in connection, that's the
argument anyway. So we saw a lot of those—
MS. KOLSUN: [Interposing] Can I ask you—because we talk
about this in our class—can you require a dress code? Can you, in
fact, require that your employees look a certain way, and if so,
what are the parameters?
MR. ROBBINS: We've actually had claims exactly about that
issue and the short answer is: you can have a dress code. The
longer answer is: it cannot be a code that is discriminatory in the
sense that it excludes people of certain backgrounds because
they're unable to achieve that look. So some of it is an issue of
religious compliance and you have to be careful about that. There
have been claims in that area where people want to wear head
coverings.
And by the way, interestingly, under Title VII an employer
has a much lesser burden to say, "we don't need to comply with
someone's religious observance" than [an employer] does [under]
New York law. New York City actually has a relatively new law
requiring the same sort of standard as in disabihty discrimination,
that there has to be an undue burden to avoid allowing someone to
comply with their religious observance.
MS. KOLSUN: So if an Orthodox Jewish employee does not
want to work on a Saturday and the employer can prove that not
working on a Saturday would cause an undue burden to the
business?
MR. ROBBINS: Actually, curiously you say that because the
New York City law has a remarkable carve out [for the Sabbath
observance] that I think has yet to be litigated but I think is an
impossible standard. It cannot be alleged to be an undue burden
to let somebody observe the Sabbath. That's the feature of this
New York City law.
MS. KOLSUN: So I think the key takeaway here is that you.
810 CARDOZO J. OF INT'L & COMP. LAW [Vol. 21:795
obviously with these employment claims, have to start with Title
VII and various other [federal laws], the Equal Pay Act,
Americans with Disabihties Act, Age Discrimination in
Employment Act, et cetera, but you also have to look at the state
law—
MR. ROBBINS: [Interposing] And local law in some cases.
MS. KOLSUN: -and local lawMR.
ROBBINS: [Interposing] Right.
MS. KOLSUN: -absolutely.
MR. ROBBINS: So it's very dicey.
The EEOC has had its resources cut over the years so it's
always trying to justify its existence and it's looking for systemic
issues. The hot button things are where the EEOC will actually
take action—or issues that have a broader implication. So for
them, the Abercrombie & Fitch case was an attractive kind of case.
It was a broad, industry-wide sort of issue. Pregnancy
discrimination has been a focus of theirs.
It's recently announced an initiative where it's going to be
focusing on the use of criminal background checks as a code for
racial discrimination because of the impact of the use of criminal
convictions to screen out applicants. So I think you're going to
expect to see cases in that area.
MR. KOLSUN: Also, just to give you some statistics—for
those of you who don't know understand why we spend such an
inordinate amount of time on these cases—the EEOC received
almost one hundred thousand charges of harassment,
discrimination, and retahation against private sector employees
between October 1, 2010 and September 30, 2011. And that
number increased the following year. The EEOC recently
disclosed that it secured more than 365.4 million dollars from
private employers in 2012, a record for monetary benefits collected
that represents a $700,000 increase over the last year.
I learned yesterday in connection with a couple of cases we
have that the EEOC has been given a bigger budget to do fact
investigation. A case that we have in Texas—which is, I think,
unbelievably silly in terms of facts and the kind of thing that I
thought would've been dismissed very quickly—is now going to be
the subject of a fact investigation, which requires flying three
employees down to Texas. We spend a lot of money on this kind
of thing. Jeff, do you have these kinds of problems in your world,
or is it more of a retail problem?
MR. GOLDFARB: For me, I don't see this [very often] but
2013] INTERNATIONAL FASHION LAW 811
there's one thing I want to kind of go back to when we talking
about California, and it made me think about—I don't mean to
change topics—but it made me think about an issue that I am
having with Dodd-Frank. Because we're a public company, we
have these Dodd-Frank requirements and they want to know
where we get certain minerals that will be in our product. So
whether it's tin or nickel or certain things that might come from
the Congo.
And I make a jacket, and I buy the zippers here, and I buy the
buttons there, and I buy them in China, and I put them altogether.
I don't know where the guy was making the snaps or the buttons.
He's buying it from a smelter somewhere in China, who's buying
those raw materials from somebody. You're so far up the supply
chain that it's: how do I stay comphant?
I ask these people where they get everything and I think
they're telling me the truth but it's hard to kind of pohce that and
be in compliance with it. And to me, it's pretty interesfing how I
think the government is trying to regulate—through a public
company, through Dodd-Frank—the conduit, where we can and
cannot get raw materials. And it's tough.
And being in comphance with that, which I guess is a human
rights issue, it's tough to pohce. It's tough to be in compliance and
we always to make [note of this] in our public files.
MS. KOLSUN: When I was at Westpoint Stevens, which is a
home textile company, we had an issue related to Egyptian cotton,
from which we made Egyptian cotton sheets and towels. And the
question was—it was kind of driven by UNITE, a U.S. Labor
organization—is any of that cotton from family farms, in other
words, farms where children might have worked? And if you
know anything about the way these things work, it's the wine
industry. People who sell grapes who cooperatives, and were any
of those grapes picked by family by kids, and family farms children
often work during the summer.
And I'm not defending this, but how do you, as a public
company, certify that the cotton in your Egyptian cotton sheets,
which came from Egypt, and was sold to a cooperative from a little
farm, was never touched by children? You simply cannot do that.
You wouldn't even know how to begin to get that information, so I
think it's a very similar issue.
MR. GOLDFARB: It's nearly impossible—but the question is
how far up the supply chain do you force a public company to go
to really stand behind what they're doing? I mean, a factory, I
812 CARDOZO J. OF INT'L iSc COMP. LAW [Vol. 21:795
understand labor issues, that all makes sense. I don't know, I
always buy raw material. I'll nominate the raw materials and the
factory will actually buy it and I'll buy that finished product for the
factory.
So I could regulate the factory. I could regulate where they're
getting the raw material, but how far up do I have to go it's
something that we struggle with all the time.
MR. WEISMAN: Barbara, can I add a couple?
MS. KOLSUN: Sure.
MR. WEISMAN: So to follow up on what Jeff just talked
about, we had a case a couple of years ago where people were
seeking to invalidate "Made in the USA" claims ... [T]here's a—I
forgot whether it's a 9th Circuit out of Oregon or in California—
terrible decision that basically says if any component part—and
that could be the smallest [part] on a garment, some sort of
founding or trim element—is not created or made or smelted in
the United States, you are not permitted to say "Made in the
USA" on your product. And they were going after accessories
manufacturers thinking that it was just a snatch-and-grab by
plaintiffs lawyers seeking a few dollars from each of these
defendants but it just shows that sort of the legislative intent might
be noble. But the practical reality on the enforcement side is they
are impossible for suppliers, even thoughtful ones, to try and
manage. And then, if I could follow up on the comment... on the
apparel side in California, the wage and hour side rather:
California is at the forefront of the most aggressive wage and hour
class action lawsuits. We are trying to deathly defend every single
one of our clients all day long from some type of appointment.
I went to a CLE the other day just on 2013 changes in the
labor law and that was three hours. So even if you're a small
resource, don't have in-house counsel, you don't have dedicated
employment counsel, and your HR director isn't enough because
the law is ever changing; it's a disaster trying to figure out exempt,
non-exempt, the meal and rest break issues, which change
seemingly on a case by case basis ... I will tell you the garment
industry and the entertainment industry out in California are both
terrible at policing a couple of different areas.
Again, a troubled one is independent contractor versus
employee misclassifications. There's a law providing a very strong
penalty and new extension of the independent contractor
misclassification in California. It happened this year where there's
actually a scarlet letter requirement that if you get busted, you
2013] INTERNATIONAL FASHION LAW 813
have to post it on your website that you were in trouble for
misclassifying.
There are personal hability elements to the nature of the
claims and the damages against officers who ratify this misconduct
and even third-party consultants, so if you have an HR consultant
come in to advise on whether these people are independent
contractors or employees, and you get that wrong, you can be
personally hable as that consultant. So I dare say that's not going
to be a terrific place for those consultants to be assessing their own
liability.
The goal for these smaller brands is: we try and get to rent
and buy EPLI insurance, which is Employment Practices Liability
Insurance. It does not, to date, cover wage and hour claims but it's
going to get you at least some basic coverage on sexual
harassment, discriminaflon, the tort-related employment claims,
but you just need to have good employment counsel guiding you,
especially if you have any kind of base of operaflons here.
MS. KOLSUN: And small companies have also done this; for
example, the three companies where I arrived and there was no
human resources director and no employee manual and no
training. When I was at Seven For All Mankind, we used the
California Chamber of Commerce sexual harassment training,
which was very good and cheap,and it was the quickest, dirtiest
way to be able to certify that all our employees were trained.
Howard, would you like to just sum up anything that we
haven't covered on the employment compliance?
MR. ROBBINS: Just as a curious footnote, a new wave thing
that we've seen is a lot of lawsuits about website accessibility, the
expansion of disability laws, and companies getting sued for not
being comphant both as to their physical space but also as to their
digital space. And what's challenging about that is that, it's
currenfly just unknown as to what companies really need to do to
be compliant and there's an internaflonal flavor to this that really
exists more here than other areas.
The Web Accessibility Initiative is really an international
effort, and the guidelines that they're using, the WCAG (Web
Content Accessibility Guidehnes) look like they're being adopted
internationally. The Department of Justice considers that to be
their benchmark and so that's a comphance issue that I think a lot
of companies have yet to focus on but should be. And it's one of
the more difficult comphance issues, with respect to physical space,
because building codes vary in every locahty and the laws on
814 CARDOZO J. OF INT'L & COMF. LAW [Vol. 21:795
disability compliance vary in every locality, and so we do a lot of
public accommodafion work. And it's very challenging just
because it varies from site to site.
So we're seeing a lot of that and that's low hanging fruit for
plaintiffs lawyers because it's a kind of strict hability thing. They
find a violation and you're cooked. There's no issue of intent and
so that's one more thing we've seen.
MS. KOLSUN: Jeff, anything else you want to add before we
ask for questions?
MR. GOLDFARB: Nothing comes to the top of my mind. I'd
like to hear some questions.
MS. KOLSUN: Greg, anything?
MR. WEISMAN: I had one, which we didn't talk about the
joint liability issues we have out there with AB 633. I'll just
summarize for you in quick second: so we have a manufacturer
joint hability of contractor wage violations in California. I don't
know whether New York has it or not.
MS. KOLSUN: Only California. It just defies behef, the
things they think of.
MR. WEISMAN: So it runs so counter to any intuitive idea of
how businesses should run. You have wholesale manufactures
that subcontract out with garment contractors or wholly owned
separate business with their own administration and their own
staff, their own hours. We don't have anything to do with it, okay.
It's no different than hiring a plumber that manufactures our
goods.
But if those people fail these very, very difficult to navigate
employment laws—and they're highly regulated and inspected
quite a bit—the manufacturers who have goods on the fioor that
week are jointly and severally liable and since the contractors have
no money, ultimately they pick up the bill for those wage
violations. And we have no control and no oversight over these
absolute third-party companies with whom we do business.
So it was a very aggressive step taken in the mid-90s. It was
one of the things that caused all that work to go overseas.
MS. KOLSUN: Thank you. Let's take some quesfions from
the audience. As you can see, this is very complex: we spend a lot
of time dealing with compliance issues in our business and just
when we think we've finished one thing, there's something new
that's enacted. The consultant versus employee issue is: lots of
companies, in order to save money in the beginning of their
business, engage people as consultants to avoid employment-type
2013] INTERNATIONAL FASHION LAW 815
obligations. We're now seeing this in Europe where countries such
as Spain and Italy are searching for revenue and there's no better
revenue than an American company who's hired a lot of Italian
consultants who really should be employees paying their thirtythree
and a half percent social benefit. So this is going to be
haunting us in Europe soon.
Ouestions? Yes? A little louder.
MR. GOLDFARB: [Responding to an inaudible audience
question] Right. Well, in a lot of cases when you're bigger, you're
a bigger target, so people would have come after G-III because we
have larger brands and they want to prove a point. So there's a
certain amount of leeway you're going to get as a smaller business,
not that that's the answer or the way to do it, but there are certain
practical issues that you're not going to be able to figure out,
where that cotton is from and how it was picked. Even we can't do
that, so you just try to do business in the best place with partners
that you have a history with.
Usually, you get in trouble with the new guys, the people that
are trying to get in to your business because they have the lowest
price, and they're going to come to G-III with the best price. And
we're going to make the best margin. When it seems too good to
be true, it is too good to be true, so you've got to check those guys
out. You have to find out where they're getting the products, and
where they're getting their labor and check their books.
You have to stay on top of that, and in many cases, that's kind
of why we'll nominate supplies to the factory, so I might not buy
that raw material. But I know where that raw material was made
and it's good—not great—so I'll send it to five different factories,
which I also trust for a different reason. I wouldn't let those five
factories go out and try to find that same cotton because I can't
police all the places that are going to get it.
So you just try to make it as manageable as possible and then
just stay on them. I mean you have to take it seriously and stay on
it, and it's not cheap, and at the end of the day, it eats into your
margins. And shareholders don't like that, right, so you have to
figure out a way to do it in a cost effective way.
MS. KOLSUN: Ouestions? Thank you very much to our
three speakers, oh, sorry.
MR. MARC LIEBERSTEIN:^ Over here.
2 Marc Lieberstein serves as Brand Licensing Partner at Kilpatrick Townsend &
816 CARDOZO J. OF INT'L & COMP. LAW [Vol. 21:795
MS. KOLSUN: Oh, hi. Marc.
MR. LIEBERSTEIN: A quick question for Jeff with respect
to California and being so different from, I think, every other
state, are you forcing essentially all the people you work with to
comply with, so essentially, the California's laws are now the law
for all fifty states?
In other words, with comphance, with the supply chain up and
down, I know they've passed some really wacky laws that—
MR. GOLDFARB: [Interposing] Yeah, in California if you
take what was it Prop 65 —
MS. KOLSUN: [Interposing] Prop 65.
MR. GOLDFARB: —so that's usually an issue for us in
Wilson's, so we're able to kind of localize it.
MR. LIEBERSTEIN: Okay.
MR. GOLDFARB: And Wilson's, because they have stores,
there they'll be comphant in that way. I can't say that we ship
everywhere in the U.S. is completely - -.
MR. LIEBERSTEIN: So you're actually able to divide out
sort of California market and just—
MR. GOLDFARB: [Interposing] Yes.
MR. LIEBERSTEIN: -you're capable of doing that?
MR. GOLDFARB: Yeah-,
MR. LIEBERSTEIN: [Interposing] On retaü.
MR. GOLDFARB: —on the retail side we can do that. I do
not do that when I ship to Nordstrom's in California. On the
wholesale side, we ship it to them. They know that it's properly
labeled, and I guess it's on them, but on our own retail, we do ship
out. We do separate it.
MR. LIEBERSTEIN: And sort of a correlated question to
that is are you finding that the company is doing more auditing of
its supply chain, in other words, going out to the factories a httle
bit more often? I know everyone out there I'm sure has read
about Apple's report on all its suppliers. Now it's a big thing. Do
you find that you increased your auditing?
MR. GOLDFARB: Yeah, it's non-stop, and I think that was
kind of our advantage to grow as well as we did. We were one of
the first companies that got overseas and got our hands dirty, and
it is dirty business, right, and we were able to grow. And as we
grew, more problems, so we had to do more audits, and we had to
Stockton, LLP.
2013] INTERNATIONAL FASHION LAW 817
hire more people.
Today I think it's maybe two hundred and fifty people.
Overseas I think five years it was maybe sixty, so we're investing in
it, but you have to.
MR. LIEBERSTEIN: By the way, for the person in the back,
auditing is one way it's a little expensive, but you probably can
make one trip to sort of make sure your supplier is in compliance.
MR. GOLDFARB: It's multiple trips.
MR. LIEBERSTEIN: I'm sure it is.
MR. GOLDFARB: Well, first I think that the problem isn't
getting the laws. The problem is enforcing the laws so China's
going to go out and say, hey, there's a lot of smog in Beijing, right,
so let's change the environmental standards. But they're not going
to do anything about it, right, and so it's going to be it's on us to do
it. It's going to become more expensive. Well, it is becoming more
expensive.
So I think that as China realizes that they have to enforce it,
that maybe it'll be less of a burden for me, if they actually do it,
and I hope I'm wrong. But I don't think that these manufacturing
jobs in industries fashion [due to] the low margin are going to
come back to the U.S. because of auditing and apportionment
costs.
MS. KOLSUN: We never even talked about the minimum
wage here, but that's certainly a factor, our conversations about
raising the minimum wage here. Well, I think we have no more
time. Our next panel starts in five minutes, and it is on the topic of
the international trade. Thank you so much speakers. This was
terrific.
II. PANEL TWO: NAVIGATING INTERNATIONAL TRADE
MS. KOLSUN: Our second panel is on the topic of
international trade. As you heard from Jeff on the first panel,
many companies do most of their manufacturing far away and we
spend a great deal, those of us who work in-house, of time dealing
with getting goods in and out of the country. I spent about two
hours yesterday dealing with a pair of shoes, a pair of Jellies, that
we manufactured in Italy and then sent them to China to have a
bauble put on them. And those shoes were then sent back to
Spain to our distribution center and then off to various points of
sales.
And are those shoes "Made in Italy" or "Made in China"?
818 CARDOZO J. OF INT'L & COMP. LAW [Vol. 21:795
The shoe is made in Italy—but that took an opinion from
somebody that Frances [Hadfleld] referred us to in France, an EU
labeling lawyer, and now we have to convince the Chinese, who
want to mark them "Made in China," that they're really made in
Italy. So you're deahng with labeling laws of two different
countries, at least, and that is a big chunk of our glamorous fashion
lawyer days.
So our three speakers, who I will let introduce themselves in
more depth, include Lee Sporn who is a Adjunct Professor at
Cardozo. Lee and I started teaching fashion law here two years
ago, three years ago. This semester I'm teaching Fashion Law
Drafting and Lee is teaching the Fashion Law Pracflcum—which is
the flrst pracflcum, I think, in the country involving a fashion
school, FIT, and a law school and maybe he can tell you a little bit
about that.
Professor Guillermo Jimenez, who I have the privilege of
having asked me to work with him on the fashion law book and so
we together put together a syllabus and a book, which is going into
its second edition with Fairchild Publications. Guillermo is a
professor at FIT and with a vast background in internaflonal trade
law. And also Frances Hadfleld, who wrote the chapter in our
book on import/export and basic trade law related to getting goods
in and out of the country. Customs law, and she will be talking
about basically dealing with that issue.
Actually, let's each give a little introduction to who we are
and what you do at work, and then, I think we'll start with Frances.
MS. FRANCES HADFIELD: So my name is Frances
Hadfleld. I work for Grunfeld, Desiderio and my day is spent
helping fashion companies get their goods released from Customs
and disclosing to Customs when [companies] have things go
wrong.
MR. LEE SPORN: I'm Lee Sporn. I'm Senior Vice President
of Business Affairs and General Counsel at Michael Kors. I'm
responsible for our legal department, as well as our human
resources, facilities, operations, store design, and construction
departments, and I don't know what I'm doing half of the day.
[Laughter]
MR. GUILLERMO JIMENEZ: Okay, I'm Guillermo
Jimenez. I'm a Professor of International Trade and Marketing at
FIT and I'm also an attorney and, with Barbara, created the flrst
fashion law committee, I think in the world, back in around 2005.
And we ended up doing the flrst American book on fashion law in
2013] INTERNA TIONAL FASHION LAW 819
2010. It's now going into its second edifion and Frances and Lee
are both writing chapters for us in that book.
MS. KOLSUN: Okay, we're going to start with Frances who
will walk us through a very complicated area, which I always [tell]
any of my students who are interested in, that it's kind of being a
tax lawyer. It's just the ultimate detail oriented piece of our
business, which in my next life I will do.
MS. HADFIELD: So I sat in a httle bit on the last panel and
there were some really great quesfions and one of the quesfions
[was] whether or not manufacturing is coming back to the United
States. And I'll tell you by way of background that, back in 1996,1
was working for an apparel company before I became an attorney,
and it's not coming back.
We closed down factories across Alabama and North Carolina
where we were having products manufactured. It's just expensive
to make goods in the United States, so whatever your pohfical
leanings on this, however you feel about it, manufacturing is gone.
It's out of the United States. It's not coming back.
So the important thing to remember when you're an apparel
company is that importing goods in the United States is a privilege
and it's not a right. You do not have the right to bring your
product into the United States—and apparel is one of the most
highly regulated aspects of imported goods coming into the United
States. I'd say the other highly regulated area is actually exports,
goods leaving the United States, and technology transfers.
But as for fashion, typically—and correct me if I'm wrong
Lee—you're planning what you're going to be bringing in for the
winter about right now?
MR. SPORN: Depending on the product category, anywhere
from six to eighteen months in advance.
MS. HADFIELD: Okay. So you have a real long lead time,
as far as what's going on far in the future, and then, it happens to
be the case that a product isn't manufactured until maybe a month
or two before it's actually due. And you have a contract for
dehvery with Nordstrom or with Target or with Walmart and—the
way these companies structure their contracts—if you fail to
deliver on time, the contract's canceled.
So it's absolutely necessary that when your goods arrive, when
that ship arrives at a port—and there are hundreds of ports across
the United States; ports include both a ship via sea or a port can
820 CARDOZO J. OF INT'L & COMP. LAW [Vol. 21:795
sometimes just be a locafion across [the] Canadian border; JFK^ is
considered a port—that those goods are immediately released.
And where apparel companies go wrong so often is that they
haven't taken into account exactly what [goods] they have.
So branching off from what they were talking about in the
prior panel, one of the things that was menfioned is: we don't
know where our zippers are from. It's a problem, especially in
California, as they mentioned. Why is it a problem in California?
Well, they have these rules regarding new lead, so a lot of your
competitors will be running around with a little device to see
whether or not the zipper you have on your goods has lead in it.
And guess what? If you've got lead in that product, all of a
sudden [Customs] sees, is going to make you call and say you've
got a bad product. You have to recall that because it's dangerous.
So what I'm going to start to do is take you through the
import process. We're going to start from the beginning. Who are
the players in this, what you are going to do to get your goods into
the country, and what are the problems that you should know and
you should ask.
It's not that you're going to have the answer. You're not
going to have the answer to the question. It's that you can issue
spot and say this is a potential problem or this could be a potential
problem for my client.
So the big overarching player in this is U.S. Customs and
Border Protecfion. They are assigned the enforcement element of
importing goods from the United States and all of the other
agencies deal through them. The best analogy I can make to you is
that U.S. Customs and Boarder Protecfion (CBP) is the 1RS, okay.
They want their money and they're going to enforce the laws.
You typically use an accountant to file your taxes if you're not
doing them yourself. We have in the import world something
called a Customs broker, and if you think that bar exam is hard to
pass, the Customs broker license has an eighty five percent fail
rate.
MS. KOLSUN: Frances is a Customs broker.
MS. HADFIELD: Most of the people who take this test fail
and they do that on purpose. All of the deck is stacked against
you. It's not [that] they're working to facilitate things. They're
3 John F. Kennedy International Airport (JFK) is located in Jamaica, New York and
serves the greater New York area.
2013] INTERNATION AL FASHION LAW 821
working on making it harder. That's just the honest truth.
So the first thing that you need to know when you're bringing
goods to the United States is: what do you have? You don't want
to have the lead zipper. You've got to know exactly what your
product is and there's a compendium called the Harmonized Tariff
Schedule for the United States. It has ninety-nine chapters and
the last time I checked there were 645 pages of notes and rules at
the beginning.
Everything you bring in the United States, whether it's a pig
or a jet engine, has to be classified. Sometimes that classification
will result in a duty free tax on it, and it's called a tariff.
Sometimes it will not, and apparel has an average tax rate of
sixteen percent, so if you just want to think about what you're
wearing right now—whether it's your tie, your suit, your shoes,
anything you're wearing—the average tax on apparel is sixteen
percent. That's every piece of clothing.
And if you start thinking about how to pay taxes, you want to
make sure that you can take advantage of anything to reduce that
cost, so one of the things that we do is called "tariff engineering,"
where we help companies change their product just a httle bit or
we advocate to Customs to say we want this product to be X
routed and why.
So I've brought in, as an example, these two little items that I
have in front of me—and it's a classic example of how an importer
went wrong and how CBP is being difficult. The first thing you
would have to think about is: what is this product? You'll notice I
didn't call it anything.
822 CARDOZO J. OF INT'L & COMP. LAW [Vol. 21:795
Figure I: Costume {left) and Dress {right)
One of them is considered a costume by Customs and one of
them is considered a dress. The dress has a sixteen percent duty
rate. The costume is duty free, so it makes a difference what your
article is.
This is also true of handbags or tote bags. Depending on the
restrictions on handbags and tote bags, you can cut your duty rate
by half by making your product a tote bag and not a handbag.
So on the front end of developing products, you want to know
what exactly you have, and as you can see from this example, it's
not easy. Just looking at this, I could ask for hands and half of the
room would say the one on the right is a dress and half of the room
would say the one on the left is a dress. And it happens every time
I ask.
And the thing that Customs says is: if it's significantly flimsy,
it's a costume. And then, it has all sorts of factors for determining
what's flimsy. But in a practical world, all of us when we look at
these articles—for those of you have children —are any of you
going to put your little girl in this thing and send her to school or
temple or church? No, of course not. Halloween, playing with it
at home, but you're out into the world in this.
But yet. Customs makes a decision as far as what your
product is and one of the ways that you can play it safe and protect
2013] INTERNA TIONAL FASHION LA W 823
your company is by getting a ruling from Customs ahead of flme.
Go out and ask Customs, "hey, what have I got?" because
sometimes it's really not clear what you have and Customs can
come back and surprise you about what you really do have.
About over a year ago, I htigated a case for Victoria's Secret
and New York & Company before the Court of International
Trade —and that's the only place you can htigate import cases in
the United States, here in New York—and the question was
whether or not those tank tops that have a built-in brassiere got
classifled under Chapter 62 with brassieres or whether it got
classifled under Chapter 61 with tank tops.
And the spread and duty on that was over ten percent. I don't
have a result from the court yet on that but these are the types of
things that I do on a daily basis. Is it a bra? Is it not a bra? Is it a
tank top? Is it not a tank top? Is it a dress? Is it not a costume?
It's a little bit silly when you talk about it that way but
functionally, you need to know what you're bringing into the
United States. One of the mistakes that a lot importers make is
that they don't respond to Customs when Customs has a question,
so Customs will send to you what's called a Customs Form 28.
And it's a request for information. It says: tell us what you have,
tell us where it's from, tell us whether or not you have a lead
zipper. We want to know about your trim because we're
concerned about all of these issues.
And you better know everything you have and you better be
able to respond to Customs on these things—and audits are one of
the ways that apparel companies keep track of what they have.
The easiest thing to do is to follow the money, so if you want to
know what's in your product, well, somewhere along the hne
you've got a purchase order, and then, someone had to confirm it.
And then, someone had to pay for it, and you have receipts on
the far side. You have a bank transaction, and then, that thing
somehow got on someone's general ledger somewhere. So by
following the money, a lot of times we can help companies
determine what they've got, where it came from, and how it all
broke down.
Where you really get into trouble with Customs is when you
get a notice of action, CF29. That's when Customs says "you know
what? You didn't respond to me, or I didn't like your response,
and now I'm mad." And when you get a notice of action from
Customs, it says "you know what? You might've said that you had
a costume but I think it's a dress and I'm going to rate advance
824 CARDOZO J. OF INT'L & COMF. LAW [Vol. 21:795
your product to a tune of sixteen percent."
So let's say—and I'm quite sure where apparel companies are
nowadays on profit—but let's say you have an eight percent profit
on your product and you order in a milhon pieces worth of
costumes to sell throughout the United States in Target and
Walmart and they cost you say, ten dollars a piece to manufacture,
and you thought they were duty free. And now suddenly you have
a sixteen percent duty rate apphed to all of them and so you just
lost—if your profit margin's usually eight percent and you would
have to suddenly pay a sixteen percent tax on it—well, you just
[went] in the negative. So it really makes a difference [to know]
what your product is before you import.
Let's say you don't like Customs' answer. Customs says to
you "it's a dress" and you say "no, that's a costume." Anybody in
[his or her] right mind, other than Customs, would know that that's
not a costume. You can protest Customs' decision and say "for all
the following reasons, because this is ñimsy, because it is whatever,
it's not a dress it's a costume."
If the agency comes back to you and says "tough luck it's a
dress"—that's when you litigate before the Court of International
Trade and most of what I do is I tend to be on the litigation end.
In fact, I was dealing with a temporary restraining order this
week that we're filing. We have to file an opposition for our
clients for [an] increase of duties, so in addition to classification,
you always have country of origin issues. So going back to where
your product is from and free trade agreements: it doesn't really
matter how you feel about free trade agreements, the fact of the
matter is we have them.
There are rules to consider, like treaties. Here in the United
States, we don't consider executive agreements. A lot of apparel
companies take advantage of free trade agreements in order to get
rid of their duties. By their very nature, free trade agreements
obviated [many duties]...
Where do I see apparel companies go wrong? When they try
to take advantage of NAFTA or CAFTA or DR CAFTA nowbut
the Dominican RepubUc is part of it, they don't strictly
comply—so there's the case of the million-pocket fabric. One of
the rules with CAFTA when you manufacture a suit is that the
little bag inside [the pocket] has to be of originating fabric. And
they were talking about "how do we know where the cotton came
from?" And that they were ultimately milled in the fabric, well,
through the purchase orders.
2013] INTERNATIONAL FASHION LAW 825
And if you don't have the pocket fabric, which is on page 500
or something of the 645 pages worth of rule, where it says if your
pocket fabric isn't originating in your suit then you don't qualify
for duty free treatment, which takes your tariff up to seventeen to
twenty-seven percent, and that's how a company went out of
business because Customs sent them a notice requesting
information. And being the good company that they were, and it
was a family business, they responded and said "our designer
decided that they wanted pink instead of purple" or lime green
was the color of the season—and so they changed it. It was a onecent
change.
It's pocket fabric. They got it from China. By making that
one-cent change, that designer put that company out business and
into bankruptcy, and you can't get out of those duties. If you owe
the government money for duties, you have to pay.
I can negotiate you down, out of a penalty. If you get a
penalty for doing something wrong [which] leads to a negligence,
gross negligence, or fraud [claim], I can now negotiate with
government. I can't get you out of the duties you owe. You owe
them.
Another thing that companies typically fail at when they're
importing goods is: they don't do the required testing and Customs
will get you every time. One of the things is a lower duty rate for
water resistant products, so I always emphasize testing, testing,
testing. Did you test? Do you know whether that product really is
water resistant?
Because of the decreased duties. Customs runs an algorithm,
and they're looking for implications under that tariff classification,
so that they can get you. They want to get you and they want the
higher duty rates, so they're looking for it. And so if you import
goods under [the] water resistant [classification], did you bother to
test to see if the fabric really was water resistant? Do you know?
Reducing duties ... All I'm talking about is money, money,
money, money, money, but that's the bottom line for us.
Sometimes you can help your company by changing how it's
structured.
I went over to a German [company] that was a family owned
business that had been manufacturing glass bottles since, I think it
was sometime or not, the 1700s or 1800s, and sometimes by just
physically drawing a line on the floor of the factory and moving
some of their costs, their desk across the line, I can change the
dutiable elements. I can create a paper structure of divisions that
826 CARDOZO J. OF INT'L & COMP. LAW [Vol. 21:795
moves the things that are typically dutiable over to the nondutiable
side. So that's some of what I do.
Penalties. Penalties when things [spawn] negligence, gross
neghgence, [and] fraud. If you dehberately try to deceive
Customs, as far as what your product is, they're going to go after
you for fraud eight times the value of your imported product.
Nobody wants that and nobody wants a public case where they're
saying you cheated.
Most companies end up settling up. Unfortunately,
sometimes you can't settle out because the amount is too great. I
litigated a case for Ford Motor Company back in 2004,1 think, and
the Court of International Trade hit them with an eight million
dollar penalty. Nobody wants that large of a penalty.
Here are some of the things I had to say were final little points
where fashion companies should think about what the product
company is, what they're actually bringing in, and what isn't
always obvious. U.S. Fish and Wildlife requirements, so they're
[from] the convention on the International Trade of Endangered
Specifies, and you can't bring in that leopard pelt. You better
know what kind of fur you have. If you have just a little fur that's
on the lapel or just a little poof that's on the tip of the shoe, you
better know what kind of fur that is and make sure that it's not an
endangered species and that you have all your permits.
Not only is that regulated on a national level but it's also
regulated by states, so different states have different requirements,
and of course, as you've heard, California is the most stringent of
all, but I can tell you that Wisconsin laws are different. So every
state has different laws on fur.
MS. KOLSUN: Just one thing I would add there, Frances,
which is that your company may have some kind of a settlement
with something like PETA. When Stuart Weitzman became part
of the Jones Group, we learned that because of their settlement
with PETA, pursuant to a lawsuit earlier on, we could no longer
make boots that used rabbit, and my boss almost had a meltdown.
We make most of our products in Spain and he said "we eat
rabbit in Spain" and I said "well, yeah, you can keep eating rabbit
in Spain but you can't use rabbit fur anymore"—which was a big,
big deal.
MS. HADFIELD: Um-hum.
Protected plants. We had a client get in trouble over a wood
button because they didn't know what the wood button was and
what type of wood that was that was on the bag. You have to
2013] INTERNATIONAL FASHION LAW 827
know what's in your trim.
You have to know every little piece of what you're bringing
into the country and then, we had a case where pallets were
infested with worms or something. They even regulate pallets that
your products are being brought in on and you to certify that your
wood pallets aren't infested, so that you kill off the trees in the
U.S.
Children's apparel is an especially dangerous area because
you have all the normal regulations and then, on top of it, you
have all the concerns about dangers to kids. You've seen some
cases, probably, in the news about necklaces that had lead in them.
Kids put things in their mouths. You and I aren't going to chew on
our zippers but if a kid can get it in its mouth, kids are going to
chew on it. So there are higher standards for children's apparel.
There were some fatalities from your little hoodie and the
strings in them that now require that hoodies can't have strings in
them, so the [Consumer Product Safety Commission] is looking at
that. I think you guys heard about marking and labeling from the
prior panel—so I'm not going to go into that other than to say your
label better be right too because Customs is going to look at your
label, as well. And these aren't the most educated of people,
they're going to make mistakes.
I had a call on a Friday where someone at JFK was looking at
a label, and it was spelled P-O-L-I-S-T-E-R, which is the Spanish
way that you spell polyester, and he thought that it was counterfeit
good because it had Spanish on the label. This stuff happens, and
if you have a tight deadline where you have to get product
released, your label better be right because you don't have time to
have all of your product, and this has happened too, taken to a
warehouse, have a whole bunch of workers sitting there cutting out
the labels, have a whole new set of labels made, and sewn in. And
that's what can happen—but Customs will make you do it.
And then, out of left field, you have some fashion articles ...
prescription sunglasses and non-prescription sunglasses: they're a
class one medical device, and they are regulated by the Food and
Drug Administration. You don't want that glass breaking, so the
FDA does a drop ball test on your sunglasses.
So we have FDA. We have Fish and Wildhfe. We have
CPSC. We have FTC. We have U.S. Agriculture Department for
wooden buttons. And then you have all the state for licensing on
top of all the federal, so there are a lot of players that are involved
in the fashion industry.
828 CARDOZO J. OF INT'L & COMP. LAW [Vol. 21:795
And I hope this httle survey that I've done shows that there
are issues out there and that [you have to know your] product.
That's the best advice I can give to an importer. Know what you
have because it's not knowing the details, the devil is in the details,
that will sink you.
MS. KOLSUN: I think the key takeaway here is that in this
area of law, you really need outside counsel. This is not one you
can wing. You need a Customs broker and you need good outside
counsel. Thank you Frances. Guillermo, why don't you talk to us
about the kind of basics of international trade law and give us a
little bit of your background which is international commercial
practice.
MR. JIMENEZ: Well, just to segue on from what Frances has
been talking about, it's funny, I used to travel for the Internaflonal
Chamber of Commerce (ICC). I was based in Paris and traveled
to probably more than thirty countries for the ICC talking about
things [such as contract] terms and letters of credit and
international arbitration, and in the question and answer period, a
lot of times the importers would practically start having flghts with
the Customs officials.
And I figured it out after a while: importers don't like the
Customs officials. My god, they really clash, you can see a httle bit
why. I think that is universal everywhere in the world.
In the United States, our government used to make most of its
money—before 1912, when they started the income tax—[from]
Customs, so they take it very seriously. They do try and extract
money from you, but I think the happy ending is that people like
Frances can get you out of trouble—
MS. HADFIELD: [Interposing] Sometimes.
MR. JIMENEZ: —sometimes, not always, not a promise, not
a guarantee.
But sometimes they come to us at FIT because they want
experts. We had a case that we mentioned in the book where
Customs is arguing with an importer "was it a coat or was it a
jacket?" and Customs is saying "these are coats" and the importer
was saying "these are jackets." They asked for an FIT expert and
they believed the FIT expert because the judge didn't obviously
know [the difference] between a coat and a jacket, and so some
professor from FIT said "well, a jacket is this and a coat is this."
MS. HADFIELD: I'll tell you, I just hired an expert witness
[from FIT] for the trial that I mentioned before ... [t]hese are
great experts. When you need an expert witness to tell you about
2013] INTERNA TIONAL FASHION LA W 829
what a product is, FIT is the place to go. This is where you're
going to find the experts that have all the informafion that you
need.
MR. JIMENEZ: But a lot of these Customs are as Frances
describes, they sound kind of philosophical: is it a coat? What's a
coat?
My favorite one is Star Trek action figures were being
imported to the U.K., and they let in the Captain Kirk and the
Scotty but they blocked Spock. And they said [it was] because
they had a different duty or they had a different classification for
non-human action figures.
MS. HADFIELD: It's a doll.
MR. JIMENEZ: And they said, yeah. The funny thing is, the
Trekkies, they took this very seriously.
[Laughter]
MR. JIMENEZ: And they were saying Spock is half human.
His mother was human, and so there was this philosophical debate:
is Spock human or not human?
But anyway that kind of stuff tends to not be that well
covered, I think, in law schools, and so I think it's good to know a
little about international trade. And I think the reason why we
don't cover it that well in law school—I studied in law school, I
went to Berkeley, one of my colleagues here earlier and I took
course in international law—professors in law school, they love
case law because it's a great way to teach law.
But [for] a lot of international trade, there's no case law. A
lot of transactions are too small to generate case law and there's a
lot of practice, so it's easy to graduate from law school and not
know the basics of exporting and importing.
So usually when I'm at these seminars, the first thing I do is
hold up the purple book, which is the fashion law book that me
and Barbara did with Frances. So I hold up my other book, which
is [an] ICC Guide to Export and Import, and the last edition just
came out last year, and you can find it online. They sell it here in
New York to U.S. Counsel for Internafional Business.
And it goes over the basics, which I really don't have that
much time [for], but if I was going to give the ten minute class: I'd
say four basic things that you should know about internafional
trade practice that you may not learn in your international
830 CARDOZO J. OF INT'L & COMP. LAW [Vol. 21:795
business transactions law classes. One is Incoterms,'* another is
letters of credit, another is CISG^—which is what I call the Vienna
Convention on the International Sale of Goods, it's kind of a UCC
book for international trade —and international commercial
arbitration.
So I don't know how far I'll get—but just very, very quickly
first in terms of Incoterms—Incoterms, [the way I introduce them
is] I say, if someone offers you a price of $10,000 dollars per
container, what does it cost you? And the short answer is: you
don't know. You think you know but the answer is: it depends
where they deliver it. Because, if they dehver the container in
Uzbekistan and you need it in New Jersey, $10,000 container, you
have to go get in Uzbekistan and [it will] cost you another $10,000
dollars to get it here. Whereas, if they deliver it for $10,000 dollars
in New Jersey then it cost you $10,000 dollars. So it means all the
difference in the world to know where and how they're delivering
it and how much risk and cost is embedded—now people say
baked into it, for some reason—baked into the price.
And so the way people tell you that is with an Incoterm—and
the best-known ones in the fashion industry are FOB and LDP.
FOB means Free on Board; it's usually delivered in a port and it
means the seller takes all the risk up the ship. And LDP means
Landed Duty Paid; it means the seller takes all the cost and risk all
the way to your premises.
Now, actually, LDP is the most widespread Incoterm term in
the fashion business. It's not a real Incoterm. I always hate to tell
them that but it's [Dehvered Duty Paid] in Incoterms. So if you
use Landed Duty Paid, you're actually using a non-official term;
probably, you'll get away with it. The industry should go to DDP.
I don't know why. Someday we'll talk about that.
But every day gets by with LDP. You should recognize LDP
and DDP are probably the same but don't quote me on that.
But just to give you an example of the importance: one case
that came at FIT was what I call "the case of the stinky shirt."
And what it was, I think I mentioned this to Frances before, a law
firm from Toronto called FIT and said, "we need an expert on how
shirts are packaged." And they had got to me, got to some other
4 Incoterms are International Cotmnercial terms published by the International
Chamber of Commerce (ICC).
5 Referring to the United Nations Convention on Contracts for the International Sale
of Goods.
2013] INTERNA TIONAL FASHION LA W 831
people then ended up taking an answer from an expert on shirts. I
think they probably should have listened to me, I arrived too late.
And what happened in this case was that it was a container of
very beautiful Italian shirts. They're $100 wholesale, so the kind of
shirts Michael Kors designs and very beautiful shirts and I think a
thousand of them. And they arrive in Toronto, and they're stinky,
and the reason they're stinky is they were consohdated in a
container with Italian spices.
So I don't know if it was orégano or garhc, whatever. You
ended up smelling like a pizza.
AUDIENCE: [Laughter].
MR. JIMENEZ: So your date would be hungry; but usually if
you're spending $200 dollars on a shirt, you don't want to smell
like marinara sauce. And so the buyers didn't want the shirts and
they put them on hangers to air them out but I guess that didn't
work. So they called and said, "you shouldn't have packaged these
shirts individually"—and actually, that could be.
But a very difficult issue in international trade is: how do you
sue? Who's your legal beef with? Is it with the seller, or is it with
the carrier, or do you have to pursue insurance? And people
never get this right.
So there's a chain of events: the first thing you have to figure
out is between you and the seller, who's responsible; then when
you figure that out you decide, well, do I have to pursue the carrier
or the insurer? And Incoterms determine whether it's FOB or
LDP—and that makes all the difference.
Now sometimes people settle with another Incoterms, which
is called Ex Works, which you go all the way to factory to pick up.
If it's Ex Works and you buy Ex Works and the shirts get stinky
somewhere on the way, that's your problem as the buyer.
If it's Landed Duty Paid, that's the seller problem. You have
to pay for those goods.
MS. HADFIELD: And I'll interject right there.
MR. JIMENEZ: Um-hum.
MS. HADFIELD: You probably paid duty on that remember
the sixteen percent I said?
MR. JIMENEZ: Um-hum.
MS. HADFIELD: You can actually go back to Customs and
get a refund on it and a lot of the companies don't. They're
defective. It wasn't what you contracted for.
MR. JIMENEZ: Um-hum.
MS. HADFIELD: And so typically, I can get about ninety-
832 CARDOZO J. OF INT'L & COMP. LAW [Vol. 21:795
nine percent of the duties back and I end up negotiating maybe
seventy-five percent of the duties back on whatever you paid. You
end up selling it to Filene's Basement or something else because
you can't sell your $200 dollar silk shirt; you can get duties back on
that.
MR. JIMENEZ: That's good to know. See, I always learn
something on these panels. I didn't know that.
Okay, well, I have to move along quickly, so the thing I'm
going to mention is letters of credit. Letters of credit is a classic
international form of payment. I teach at FIT. I have textbooks
that I use ... they'll say the way you do payment in international
trade letters of credit.
And that shows that the typical textbook author doesn't know
what they're talking about because actually letters of credit have
been diminishing enormously over the past forty to fifty years
because they're incredibly comphcated and a pain in the neck to
use. People don't like to use them. Despite that, several hundred
billion dollars, if not trillions of dollars, of business go under every
year, so we still have to talk about it.
I think they're very good to understand because they're the
most complicated form of international trade transaction and if
you understand the letter of credit, you understand all of the
machinery of the international trade transaction because they use
it in the bill of lading [and] use it in inspection certificate. Often
you'll have the commercial etcetera and some other documents,
and so letter of credit is good training and they're still used.
And American lawyers don't get them. When I was fresh out
of law school, I had a letter of credit case, I tried to apply to UCC,
and it turns out UCC does cover letters of credit. But
internationally, no one uses it. Everyone uses a different ICC
rules called the UCP, [the] Uniform Customs and Practice.
So I actually twenty years later I realized my memo was
wrong but last time, I've been paid.
MS. HADFIELD: I, one time, tried to get a TRO against a
letter of credit. That doesn't work either.
MR. JIMENEZ: Yeah, it's hard. You can do it but only
under extremely narrow, narrow, narrow grounds, but that's
something that people don't understand. Importers don't
understand and lawyers don't understand; especially, exporters
screw this up.
And so, a case I worked on last year goes hke this, very
quickly: it was two million dollars of rebar, which is construction
2013] INTERNATIONAL FASHION LAW 833
material, iron bars, shipped from Turkey to the United States.
And when they arrived, the importer said "we're not taking them"
and the exporter was very unhappy [and said] "you're weasehng
out of the deal," and they had to sell them for about one milhon
dollars. They used us [to get] the remaining million.
Now, actually, they were wrong and their lawyer was
obviously badly informed to bring the lawsuit. Not only did they
lose, but, we got eighty thousand dollars in attorney's fees against
them and they wasted a lot of time. And the export manager was
flred and they're not going to use that law firm ever again because
that's why you should know letter of credit. It was very stupid.
Here's why: what happened was, this all happened in August,
September, October of 2008. Now when you read cases, you have
got to pay attention to those dates. You guys remember what
happened in those months? Does that ring a bell? It was a global
financial collapse.
Lehman Brothers closed and it was this chain reaction.
Everybody stopped buying stuff. It was the months after 9/11 back
in 2001, and so whenever that happens, two years later the Courts
are backlogged with the lawsuits that all that generates. And so
what happened, obviously, the buyer bought at a high price and by
the time the rebar was delivered, the rebar was probably half price
on the world market.
So the buyer has every incentive to weasel out of the contract
if they can because they can't sell that now. They could go under if
they take the shipment —and [for] that particular shipment, the
seller had screwed up all the documentaflon required for the letter
of credit, which is incredibly common, it happens it all the time.
They didn't get the inspection certificate signed. The bill of
lading was inaccurate and so they went to the bank and the bank
rejected the documents. And so the exporter said, "call the
importer, will you please adjust?" But they did it late and then
[the importer] said "but we fixed it—we fixed the inspection
cerflflcate, we fixed the bill of lading." And they thought that
would be good enough to get paid.
But that's not the rule in letters of credit. The rule in letters
of credit—it is called strict compliance—and it means you have to
be creditable to your word on time or you don't get paid. Now,
Frances was giving some ridiculous examples: there are milhons of
those.
Here's one example: I thought was a California case, I think it
was actually. People [are] talking about crazy California law—it
834 CARDOZO J. OF INT'L & COMF. LAW [Vol. 21:795
was a letter of credit [stating that] the exporter had to deliver
raisins and the bill of lading, for whatever reason, said dried
grapes. And they never got paid because they went to the bank,
and the bank said, "well, I'm sorry, they're different."
And the exporter [argued that] raisins are dried grapes.
That's what raisins are. The bank said, "we don't know that, that's
not our job, we're not raisin experts." And that's what happens.
There has been a letter of credit rejected because it called for
sugar and then the bill of lading said one hundred percent sugar.
The bank said, "I don't know, looks different to me," and so for
letters of credit, you have to obey exactly to the tee, or you don't
get paid.
MS. KOLSUN: By the way, we actually use letters of credit
with international distributors, particularly in countries that are
not Europe.
MR. JIMENEZ: Right. They're still used a lot for financing
because they allow the importer to raise finances; so, yes a
question?
MR. JIMENEZ: [Responding to an inaudible audience
question] Right. Well, the classic case in the whole world on that
is in New York. It's a 1941 case, Sztejn v. Schroeder,^ that
established that, and the rule is: if you can prove fraud to the court
before your bank pays, you can get a TRO. That's a very narrow
exception because usually the credits are paid and it could be just
preventing your bank for paying.
So a lot of times your bank doesn't want to pay because you
have $10 milhon dollars in the bank already; with Michael Kors,
it's even more and so you call and [instruct them not] to pay. The
bank says "we have got to pay" and so sometimes they'll say "if
there's fraud, go get a TRO against us."
MR. JIMENEZ: [Responding to an inaudible audience
question] Now CISG is the UCC for internafional sales. It's the
Vienna Convention on the international sale of goods. I'm
basically out of fime so all I will say is: you should know it. It
covers supplies to seventy-eight countries and it apphes whenever
the exporter and importer, which often the case, don't want to
think about these trivial things, like choice of law.
Often times, on an invoice on the Pro Forma of the purchase
6 Sztejn V. J. Henry Schroder Banking Corp., 177 Misc. 719, 31 N.Y.S.2d 631 (Sup. Ct.
N.Y. Cnty. 1941).
2013] INTERNATIONAL FASHION LAW 835
order, they don't include this stuff and so then there's a dispute:
what's the law? American law? Russian law? Spanish law? Very
often they forget it's going to be this internafional UCC—which is
CISG.
And it's very easy to understand and it's actually not bad law.
American corporations used to routinely exclude it, which you can
do. You don't have to use CISG. You can put in your contract
"we'll use American UCC instead." But a htfie point that
American lawyers always get wrong is they want to exclude CISG,
and they'll say, "instead of CISG we'll use the law of the United
States or New York law." But actually. New York is part of the
United States, and the United States signed CISG. So by trying to
exclude by saying American law, you just reapply CISG, and then,
you're face-to-face with CISG.
The final thing is arbitrafion. International business
contracts—you usually don't want to htigate them—you want to
arbitrate them, so internafional commercial arbitration is very,
very important in international business transactions.
The example I just want to tell everybody briefly is: I was
lecturing in Columbia and this Mexican female attorney came up
and spoke to me afterwards and she said, "oh, your lecture, you're
talking about all these problems, it reminded me of a story.
You're telhng all these stories-it reminded me the first time I had
to bribe a Judge" —
AUDIENCE: [Laughter].
MR. JIMENEZ: -real casual like.
And I sat down with her. I said "I want to hear about this,"
and she said, "yeah, yeah, I was a young rookie attorney in Mexico
and I had to go bribe the Judge. It was so embarrassing and the
Judge was horrendously offended, just shocked and stunned. And
I thought I was going to jail, and the Judge told me, he said, 'young
lady he said these kinds of matters are not discussed with a
woman.' And that it wasn't that he was honest, it's that he was
sexist."
He just didn't accept bribes from women and so she had to go
back to her office and send a male partner the next day to bribe
the Judge. Now believe it or not these kinds of things happen all
over the world —even in Brooklyn—and so you don't trust
hometown justice that much.
I don't want to disrespect. I made these jokes once and...
there were judges in the audience. Oh, they got so offended. A
judge stood up and chewed me out but the truth is, it happens.
836 CARDOZO J. OF INT'L & COMP. LAW [Vol. 21:795
And so international commercial arbitration it really can't
happen because of ICC arbitration. If that happens, where I see
arbitrator getting bribed, that's the end of ICC arbitration because
you do it because you trust it. So actually, ICC and Triple AAA
arbitration are pretty rehable compared to international htigation;
and much faster.
My last example is a case I teach in my law classes all the time:
Dayan v. McDonald's.'' It was the first franchisee in France, in the
Paris region, and ran the dirtiest restaurants in the history of the
world and the inspector said on a scale of A to Z it was worse than
Z.
The French fry all was black and, since it's getting close to
lunch, I won't tell you the other stuff, but it's unbelievable, and
McDonalds found out about this 1970. They ended the htigation
somewhere in 1981 or 1982, firing this franchisee because the
franchisee fought back in Paris, fought back in the United States,
and Illinois. And htigation can last a long time, and so you're
paying lawyers for eleven years.
So the lawyers are happy—they send their kids to college, to
law school—but your arbitration and even a complex arbitration
[runs] two or three years and you're done. So that's why we go to
arbitration. That's a httle brief overview, the rest is in the book.
MS. KOLSUN: Thank you, Guillermo.
MR. SPORN: We can't listen to Guillermo's story without, at
least, saying FCPA^ once I think.
MR. JIMENEZ: Yeah.
MR. SPORN: It's very important that we make sure that none
of our legal fees to international counsel are being used to bribe
foreign officials. Somebody will go to prison for that here.
MR. JIMENEZ: Actually, no, you can bribe private parties.
That's the little detail people [miss about the] FCPA. You can't
bribe government officials.
MR. SPORN: Yeah, except that if you're a public company
and you have a code of ethics that you're bound by, that would be
a very bad tactic.
MR. JIMENEZ: You'll violate the foreign law—but you
won't violate the FCPA.
MS. KOLSUN: Okay, Lee is going to talk to us about the way
7 Dayan v. McDonald's Corp., 125 111. App. 3d 972, 466 N.E.2d 958 (1984).
8 Foreign Corrupt Practices Act, 15 U.S.C. § 78dd-l, et seq. (1977).
2013] INTERNA TIONAL FASHION LA W 837
you all shop—you youngsters—which is on e-commerce, and he's
going to talk to us on international trade global e-commerce.
MR. SPORN: I'm going to make just a couple of points
because we want to leave time for questions. One, just to go back
to something Barbara said, Barbara and I are fond of saying that,
between the two of us, we have been in-house counsel exclusively
to fashion companies in the aggregate for over sixty years now.
And when you get to a certain point, you begin to beheve that
your experience and your intuition and your judgment begin to
count for something—not in this area, never in this area.
Experience, intuition, and judgment get you nowhere. You
need a whackadoodle who thinks this stuff is cool and lives it and
breathes it every day because you can't intuit what's a purse,
what's a handbag, what's a tote bag. You can't intuit what's a
jacket, what's a coat. There are a lot of words that get thrown at it
and somebody who does this has to navigate it.
Most kinds of administrative law and this, in particular, is an
area where things are very complicated and it's dynamic. What
you're looking at as the rule today isn't what you're looking at as
the rule six months from now. So again, outside counsel and
outside expertise working with the in-house team is absolutely
essential all the time. You'll never find an in-house counsel who is
willing to deal with this in a complete fashion. We'll always go and
get help.
The other thing I just wanted to say is: most of this sounds
terrible and at every turn there's a liability, which is true, but there
are tremendous opportunities for cost saving and margin
building—if you live in-house and you invest in and understand
this stuff, and get proper advice.
If you walk into a Michael Kors store, and most of our stores
are seventy percent accessories, there is a reason that no matter
how small the store is you will see a tote bag wall. It is a big
presentation and they're fancy, well-designed tote bags. There is a
reason for that.
The margin in a tote bag is always going to be better than a
margin in a handbag because the duty rate is wildly different, so
the more business we can do there, the better it is for us. There
are lots of examples of tariff engineering and people who are in
business to sell products at margins know how to drive business to
those high margin items. Stores get designed that way.
Go into any fashion oriented retail store [and] just look at
what you're seeing flrst. I guarantee the best presentations are
838 CARDOZO J. OF INT'L & COMP. LAW [Vol. 21:795
going to the highest margin profit. It's the nature of the beast.
Barbara mentioned e-commerce and we really don't have
time to get into it but one of the things we're involved in—and it's
becoming more and more important—is international ecommerce,
which is becoming interesting in so many ways.
If you're selling in the United States and your merchandise is
going to be through the United States in an international website,
you've got to be able to, first of all, flgure out how to tell
(confidentially) your customer in London what their delivered pay
price is for what they're buying from you. And then if they get it,
and they don't like it, and they want it to come back, who's going
to pay for that? How do you make sure you're not going to pay
duty again when it comes back into the United States?
MS. HADFIELD: It's called drawback.
MR. SPORN: AU possible but all a htfle bit technically
intricate, so planning it out in advance, working with your
internaflonal trade counsel is vital. Similarly, you've got
compliance issues. All the labeling requirements if you're going to
ship products from the United States everywhere, that's some tall
labeling challenge. If it's going to be regional then regional
labeling laws have to be complied with but if you're trying to run
an international commercial business, you've got to at least
address the risk that you're going to have one product that you
want to be able to move pretty much anywhere. How are you
going to do that? And I think we can leave time for questions.
MS. KOLSUN: I want to add a couple more things.
MR. SPORN: Okay.
MS. KOLSUN: One is: when you're running an internaflonal
e-commerce business you have to think about privacy laws and the
laws in different countries related [to your business]. We haven't
even begun to [discuss] Song Beverly,' that wonderful California
law about sharing customer information, and the battle between
your marketing people and your legal people in terms of what you
can ask for.
I mean, this is another just ripe area and it's not just in
California. It's all over the world. I had a question [regarding] our
e-commerce site about sweepstakes and they wanted to take our
kind of U.S. sweepstakes contest out into the world. We sent a
quick email to Freshflelds in London. I said, "don't spend more
Song Beverly Consumer Warranty Act, CAL. CIV. CODE § 1.7, arts. 1-3.
2013] INTERNATIONAL FASHION LAW 839
than an hour of time on this but it's five countries, each of which
[is] a nightmare," and we basically decided we're going to do it in
U.S. and Canada. And that's all we [could] afford and we
ultimately hired a consultant who manages [e-prizes] for you.
E-commerce people are young and they have great ideas, and
they're entrepreneurial, and it's what drives the company. But
they're a nightmare, particularly for me because I am old—and I
just I don't tweet. I don't text. I mean it's hard to get your arms
around the new world that is now e-retailing.
MR. JIMENEZ: Yeah, if I could just add, I think what Lee
has pointed out is: it has emerged as the classic problem in
international e-commerce, you have to calculate duties in every
country where you sell. Otherwise, you can't sell DDP and the
customers they don't want anything other than DDP. They don't
want to calculate the duty. They see something on your website,
that's the price they pay.
Now for a big company like Michael Kors, you can pay
consultants and you can hire software programmers that will
calculate the duties but if you're just a little tiny start-up and you
want to do e-commerce for the whole world, that's very hard for
you.
MR. SPORN: I would say it's impossible, can't be done.
MR. JIMENEZ: Yeah, fortunately there are ... a bunch of
consultants that will help you, so there're a lot of American firms
that specialize in bringing small e-commerce outfits global. And
you can find them. The Department of Commerce publishes a
publication about this, so there is help, but you do need to figure
that if you want to global e-commerce.
MS. KOLSUN: And one last point before we take questions.
I totally agree with Guillermo on the importance of fighting to get
arbitration and the kinds of agreements we're talking about
because there is no worse nightmare than litigating in Italy, let's
just start there, and it's just something that you really, really want
to fight for.
MS. HADFIELD: Yeah, we had a deposition in Italy where—
instead of having a normal deposition where you get the court
reporter, opposing counsel of the witness—they held it at the court
room and the judge would, like, interject. The judge was there and
would interject comments in the middle of a deposition. Have you
tried with a translator and to go through all this and have a judge
asking questions, who's not even a party in the case, just to make
sure you were somehow not impacting their right of their citizen?
840 CARDOZO J. OF INT'L & COMP. LAW [Vol. 21:795
That's a mess.
MS. KOLSUN: And we had a case in Italy involving some
real estate where the judge was a woman, and our outside counsel
was an arrogant Italian man and we should've won that case. But
we lost it because he was an arrogant Italian man.
[Laughter]
MS. KOLSUN: I have to say it gave me a little pleasure
because he always treated me so badly. I hated losing it but I said
to my boss, "see, I told you he treated me that way" and she was
pissed because it took her a long time to get where she is in Italy,
as you can well imagine.
Okay, any questions? This is hard stuff to formulate
questions about, so don't be embarrassed but go ahead.
MR. JIMENEZ: [Responding to an inaudible audience
question] When you agree to buy something by letter of credit, the
seller has agreed to comply with that letter of credit. That's a
fundamental element of the contract. If you put "time is of
essence" in a contract then they have to deliver on time and if you
don't put "time is of the essence," people deliver late. Maybe you
can claim some damages but if you put "time is of the essence" you
must deliver on time.
If you put in letter of credit: "you must comply with that letter
of credit and here's why: I may want to resell the next day and I
have the right to when I buy letter of credit, but if you didn't fulfill
the letter of credit, I can't resell." In fact, I don't even know what
the quality of the goods is until they arrive and by that time, you
may have destroyed business. So you promise a letter you must
fulfill and there's case law on that under CISG. It's a fundamental
breach of the contract.
MS. KOLSUN: Other quesfions?
MR. SPORN: [Responding to an inaudible audience question]
Now there is sometimes allowed a long negotiation before we get
to you, sometimes.
MS. KOLSUN: And the more sophisticated the other side is,
the more likely they are to fight and often, what you do is, you
compromise. If you're dealing with a distributor in Oatar, you
may negotiate an arbitration in London, which is perfectly fine
with us.
MS. SPORN: Yes.
MR. JIMENEZ: I agree that the answer is yes. I mean, the
reason you go to arbitration is because both sides don't trust each
other and both sides have some negotiating leverage but if you're
2013] INTERNA TIONAL FASHION LA W 841
the more powerful person, naturally, you're going to prefer your
own home court.
MR. SPORN: I always want to be home.
MR. JIMENEZ: The Knicks—they play best in Madison
Square Garden, right, so it's normal. You want to force the party
from Uzbekistan, if they have a problem with you, to come to New
York.
MR. SPORN: Particularly, what we're talking about is
international trade. I want to be here, and I want to litigate
because I'm the one who owes them money. I'm the buyer.
MR. JIMENEZ: Um-hum.
MR. SPORN: It's not the same in every context. If you ask
me this in the context of licensing agreements, I may have a
slightly different answer for you, but when I'm buying products
from the international markets and I'm receiving them here, if
there's going to be a fight, and I have the money, I'd like to do that
at home thank you very much.
MS. KOLSUN: Other questions? Thank you to our illustrious
panel. We now have a lunch break for about an hour and half.
There is lunch, and this afternoon we have two panels. The first
one modeling with some very distinguished individuals in this area
and sustainability, which is a really interesting topic, so see you at
2:00.
MR. JIMENEZ: Thanks.
III. PANEL THREE: BACKSTAGE: THE LEGALITIES OF
INTERNATIONAL FASHION MODELING
MS. KOLSUN: Thank you. Everybody welcome back. We
started and ended this morning's program with, I think, a very
good discussion on compliance issues, human rights compliance,
and various, corporate compliances in the state of California and
Europe. We talked about employment issues and all of the pitfalls
related to compliance.
And we're going to start this afternoon with Michael Wildes,
who is another adjunct professor at Cardozo and also a graduate of
Cardozo, right—
MR. MICHAEL WILDES: [Interposing] That's right.
MS. KOLSUN: —and where his father also taught, teaches
stillMR.
WILDES: [Interposing] Taught.
MS. KOLSUN: —taught, and he's married to Cardozo grad.
842 CARDOZO J. OF INT'L & COMP. LAW [Vol. 21:795
And his specialty is immigration, and he handles the work for
fashion companies, and he'll start by giving us some bullet points
on the kinds of pitfalls that we talked about just very, very briefly
at the end of the morning.
MR. WILDES: Wonderful, thank you. Good afternoon,
everybody, pleasure to be here and to be in my wife's company,
who actually joins us this afternoon, as well. I got more than I
bargained for when I took immigration law with my father as my
professor, only to meet my wife in the class. And twenty-two years
and four children later, we're very proud.
I am very proud of the portfolio of fashion clients that we've
developed. Our office is on 53rd and Madison. We have an office
in New Jersey. We're looking to expand into Miami.
The world of immigration and modeling is what I was asked to
speak on—but if I can pull the lens back in the world of fashion—
you should know that the world of immigration encompasses not
only cosmetologists and stylists and photographers, but all the
wardrobe and the drapers and all the other accouchements that
come in the world of fashion also.
We typically get work visas for individuals who are renowned
or people with academic or experiential talent, and then, people in
their entourage also have a mechanism by which they can also go
into the system. The typical visas that we deal with—and I don't
want to get too technical—is a carve out in the immigration law for
fashion models, the H1B3, the legal standard requires us to
demonstrate that you're not of national or international
recognition in the field that you're in.
If you've reached a level of some achievement or
extraordinary ability or outstanding achievements, you're
permitted to then apply for an O visa. Typically, an O visa could
be a pianist, but then, the O2, the O3 could be the spouse. It could
be the wardrobe manager, the PR specialist and everybody else in
that person's group.
The test that we have when clients in the fashion world,
particularly in modeling, come to us is to look at two moving
pieces at the same time. First, the H1B3—much like the HIB
professional work visa—is only available in October of every year,
and you have to apply for it in April before that.
So, lo and behold. Fashion Week just passed us in New York.
We represent, thankfully, Lincoln Center, which is a host of
Fashion Week. People cannot bring their models until after
Fashion Week because of the way the schedule of visas are
2013] INTERNA TIONAL FASHION LA W 843
available. This [works for] some sorts of immigration because they
seem to get science, technology, engineering, and math applicants
but when it comes to the wonderful world of fashion—and, for that
matter, food, hospitality and other corridors of industry—these
visas aren't available to meet the needs of that time.
The O visa is a common visa that we use for people who are
outstanding in the arts. We represent, for example— and we have
permission to talk pubhcly about it—the Miss Universe
Organization, so a typical Ms. Venezuela, Ms. Argenflna, Ms.
Israel will be ehgible to apply for an O visa, since they're
outstanding in their fleld. The winner itself has a corresponding
way to actually apply for a green card. It's the EB-1,
Employment-Based First-Preference, which is a person who is
extraordinary in their field.
So the winner of the Miss Universe pageant historically has
been eligible to apply because they are above other people, so you
use the O visa for the person who's outstanding, the lower the
standard of the H1B3 for people who are runway models, people
who have a lot of catalogue experience or work with top
photographers, and then flnally, you have the higher standard for
the extraordinary ability.
Within all these parameters in the world of modeling and
fashion, we have designers, editors, agents, jewelry designers,
drapers and the like that go through all sorts of challenges, and in
our world, there are mulflple bites at the apple for a person to
have good news, bad news, and sometimes ugly news—all in one
day. "Good news for you is we got your visa approved. The bad
news is now you have to go abroad and get a visa in the
corresponding American embassy." The ugly news is they once
stopped a person, despite everything, because of some httle
question that they have on the person when they come in.
The unavailability of visas, sometimes the double or triple
check you have to go through with the alphabet agencies of the
immigraflon authorifles and the State Department is very, very
daunting in the world of fashion. We also see it in the world of
publications related to the fashion industry and, parflcularly, in the
model world, it's not Elle, Vogue, or Glamour. We have,
sometimes, for Women's Wear Daily and other very substantial
periodicals had to show that they are actually authorities in this
world when we're trying to substantiate a person's achievements in
a calibrated way.
Immigration is always trying to judge each fleld with these
844 CARDOZO J. OF INT'L & COMF. LAW [Vol. 21:795
generic rules but you really do need a familiarity with the world of
modeling and fashion in order to be able to put out a good product
and that's the one that we see—and we're fortunate to be doing
this for many years.
My dad was credited was having with having a hallmark case
where you could only get O visas for people in the business,
science, and athletics. He convinced the immigration authorities
and it opened the world of O visas in the modehng industry with
famous Ford model claiming that she commanded such high
invoicing and such great acclaim that she should be treated as a
person who was successful in business. So the O-l visa evolved
there into the world of modehng based on business acumen.
We know that beauty is, in many ways, a subjective decision
but financial prowess or success can be calibrated on invoices and
all kinds of other financial parameters. So we see that the
government, over time, gets it but it's a very tedious world to be
involved in.
The education of models on these different standards and the
kind of challenges they have when English is, perhaps, a third or
fourth language, and the time to get somebody into makeup and to
get into a photo shoot or get to a third country, with all of these
controls, can be very difficult. But that's the world that we never
get, and when we have their trust, we try to work and earn it
continually.
I am given great comfort when I meet models, male/female,
from countries where they're highly educated, and they come to
me, and I say beauty will run out at some point. But if it's your
dream to stay in this nation, tell me about your academics. Tell me
about what drives you. What are you interested in, and I've
worked now—as I have gray hair and over a few years—with a lot
of these individuals to see that they turn and try to develop a
context.
So if you go to battle with a sword and the shield, that shield
might be the O or H1B3 visa, but the sword is going to be
something related to their academics. Or they may go into
transitioning. If they marry somebody, it should be a legitimate
marriage.
There's a push in the world of modeling, in the world of
entertainment and hospitality and everything in the New York
areas, particularly where there's a push to stay, "well I have a
friend. I can get married." We won't do that. We won't even take
a case. We won't even allow a person to have a conversation
2013] INTERNA TIONAL FASHION LA W 845
without interrupting them and letting them know not only the
ethical standards, but that they can legitimately do something. Or
telling a model you have a visa, an H or an O, why don't you go to
Parsons or FIT? Why don't you pursue the business side of the
ledger, of what it is that interests you, so that you can do
something to add greater value.
And, finally, just with a word on comphance—which seemed
to be the lecture before me—we have written, and there some
materials for you take home, extensively in the world of
compliance. We have a practice where there are five areas. We do
business immigration, family immigration. We deal with removal
proceedings in federal government before immigration judges. We
have a foreign consulate or practice where we deal with the U.S.
Embassies worldwide, and finally, we have a compliance division.
It's actually led by my wife Amy.
The onboarding of staff has been relegated by President
Reagan in 1986 to be a responsibility of the employer. It was
shifted from the government to employers in this form 1-9 that
everybody has to fill. The document is a document that identifies
a person and their authority to work. Within three days—and if
you're a restaurant and if you're fashion house and you're open all
the time—you do it within three consecutive days. And the right
documents and the right choices can land you before a judge if you
discriminate improperly even to comply with it.
I had to fill out an 1-9 when I taught as a professor here at
Cardozo, much hke everybody, other than my father, in our
pracfice had to, unless they hailed before 1986. The world of
comphance is a very a daunting world. We know a few years ago
that there was a big—they like to call them edits but we like to call
them raids—raid at American Apparel where they almost lost, or
they did lose, about 1,500 out of 5,600 staff because of this 1-9.
This President, with all of the talk and everything, has
deported more people than any President in our country's history
and if you look at the LGBT community and a lot of the very
important policy considerafions that are related not just to fashion
but to all sorts of industries—when it comes to commerce, food,
agriculture and so forth—has been disenfranchised. And there are
fashion houses that we represent that have made their campaigns
in foreign countries because of our myopic view of immigration,
and that we don't move with the times, and in many ways to a
community that heralds itself on art and creativity. And a nafion
that developed itself, the special DNA of immigration is not in
846 CARDOZO J. OF INT'L & COMP. LAW [Vol. 21:795
sync with the culture or fashion that we are seeing.
We hope and pray that Congress and our President will step
up to the plate. There's a legacy now that they are each trying to
write on this issue, and there's no greater playing than we see in
the world of fashion and modeling, thank you.
MS. KOLSUN: Thank you very much. Let me introduce Ted
Max, Partner at Sheppard Mullin. Ted and I actually do a lot of
speaking together. He's an IP lawyer. He's a htigator. He
represents many, many fashion companies including Louis
Vuitton. If you Google him, you'll see his name in a lot of
important decisions. Ted, what are the issues that you recently
had with models, and I'm going to ask you this question to sort of
kick off your remarks: we have just recently started having
problems with counterfeits of the boots that I'm wearing today,
and that Michael's wife is wearing today.
There's a website called Stuart Weitzman.org that you had
recently taken back and our photographer is Mario Testino and
our model is Kate Moss. Mario, as I understand it, doesn't register
his copyrights, and god knows Kate Moss has right of pubhcity.
We notified them of the fact that the counterfeiters were
using photographs from our website which really belonged to
them. Do you deal with this kind of issue with your clients? And
tell us what else you do in this world.
MR. THEODORE MAX: Well, yes, Barbara we dealt with
that issue before. Often times because finding where the
photograph came from, and whether there's permission, it gets a
httle problematic. We've had photo shoots for a retailer that were
done and basically wholesale reprinted in magazines as a fashion
shoot and editorial.
And it's sort of, what can you do there? And often times—
especially if the materials went out for publicity purposes—you
can't do anything. Obviously, with regard to a counterfeit, you
can, but the laws with regard to the right of publicity and privacy
in the U.S. vary state by state. So it's not as easy, for example, a
trademark infringement action or a counterfeiting action, and what
we often times will do with fashion design houses is make sure
that, with regardsto the copyright that have, either ownership of
the copyright, which is difficult with somebody hke Mario, or at
least, the ability to enforce the copyright, and do it that way. So
that is a big issue in terms of enforcing rights.
One of the things, in terms of what I was thinking about
talking about today, was fashion—and Michael's presentation was
2013] INTERNATION AL FASHION LAW 847
very, very useful in terms of segueing—fashion has changed
greatly over the years, so if we go to let's say the 1960s, just before
probably a number of you were even born, fashion modeling was a
different world than it is today.
The 60s and the 70s, if you were a major fashion model, you
became a celebrity because of that. In the 70s and 80s, you had
supermodels and all of a sudden, models were very, very
important, made a lot of money economically, and really could do
a lot for a brand.
In the 80s to the 90s to 2000 and beyond, what happened was:
celebrities all of sudden came on to the scene. So if you were to
look at the cover of Vogue over the years, you would have models.
And then, over time, you would start seeing celebrities being more
and more on the cover. You'd still have models but celebrities
became models for fashion designs and that has become more and
more an issue. And it affects modehng, but it also affects ours
laws, as well.
And so one thing is very significant—and it has come up in
negotiating agreements that are international agreements for
model/actress celebrities—is SAG and AFTRA. And how many
people know what SAG and AFTRA are? Well, basically they're
unions, and they're not unions for models, and that's a different
issue. But they're really for actors.
And SAG and AFTRA joined together just recently. On
Valentine's Day, there was a meeting and right now there are
negotiations between SAG and AFTRA and the representative of
the advertising. And why that is important is that affects the cost
of advertising, and it affects the cost of advertising if somebody is a
member of SAG or AFTRA.
So in some ways, it may affect that celebrity in the sense that
if you have a model who is not a member of SAG and AFTRA,
and there are issues that come out of the collective bargaining that
is underway, it may change that balance. Currently, with a SAGAFTRA
member, you take flfteen and a half percent of the flrst
milhon dollars—and there's a cap on it—and that goes to the
beneflts' program of SAG and AFTRA, and before there was a
cap. Because, if you remember, in 2009 there was a strike and
there were no advertisements being done.
Some people would go offshore and do advertisements, and
there was a famous incident with Tiger Woods, who went to
Canada and did an ad for—I think it was Buick —and SAG went
after him because he was a SAG member, and basically, he had to
848 CARDOZO J. OF INT'L & COMP. LAW [Vol. 21:795
forfeit all the money—and it was quite substantial—that he had
received to SAG under their agreement with him.
So that's a big issue right now affecting modeling, and it's a
big thing that comes up in negotiations as to, one, whether
someone is a member or not, and whether the photo shoot is a
SAG-AFTRA photo shoot. And that goes back to what Michael
was saying about offshore: SAG and AFTRA view the world as
one world and so, if you're a SAG-AFTRA model and you're
doing a photo shoot offshore, that should be considered a shoot
that is affected by their rules, as was the case with Tiger Woods.
There is some dispute on that and I'll leave it at that.
The other big issue that comes up is the content. The world of
what advertisements are has radically changed since the 1960s—
you might have print, you might have a television commercial.
Most of the television commercials were done live as opposed to
filming it. Today, you have hybrids.
So in the fashion world, Roman Polanski did an ad which was
a mini film for Prada and Ben Kingsley was part of that ad, as
was—I'm forgetting her name. She's married to the director who
all does the very strange —
MS. KOLSUN: [Interposing] Ouenfln Tarantino.
MR. MAX: —no close but—
MS. KOLSUN: [Interposing] While you're thinking of it,
James Franco did—
MR. MAX: —very good thank you—Helena Bonham Carter,
so they did an advertisement for Prada. But it was mainly film,
and so how would you see that?
You could see it as an ad if they buy time, you can see it
online, and trade photos made from that shoot. Also part of photo
shoots today are TVC, so it's the making—and that's part of the
whole world of reality TV, which I'll get to—but the making of it is
something that everybody's now very much interested in.
So that is also part of the capture of the rights of whether it's a
performer or a model is, not only do we want to see the finished
product but we want to see the making of it. So that's a big issue
today with SAG and AFTRA.
MR. KOLSUN: Ted, you also deal with adverflsing standard
issues.
MR. MAX: Sure.
MR. KOLSUN: With the recent Dakota Fanning photograph
with the—
MR. MAX: [Interposing] Marc Jacobs.
2013] INTERNA TIONAL FASHION LA W 849
MR. KOLSUN: —flower between her legs, which was —
MR. MAX: [Interposing] ASA.
MR. KOLSUN: Right.
MR. MAX: Yeah, that was the ASA. The ASA, in Great
Britain, it's a separate slideshow really, but basically, in Great
Britain—and we have it in the U.S., and there have been a number
of adverfisements dealing with wrinkles, and what is permitted as
an advertiser to say, and not to say with regards to your product
efficacy with regards to wrinkles, and what is permitted in terms of
the touch-up. And so in the U.S. and much more so in Great
Britain, there have been a number of actions taken by the ASA in
Great Britain where ads have been banned. And one was a Lola
ad with Dakota Fanning, another was the Marc Jacobs ad with
Marc Jacobs, but there were a number of other ads featuring—
MS. KOLSUN: [Interposing] Julia Roberts.
MR. MAX: -Juha RobertsMS.
KOLUSN: [Interposing] Christy Turhngton.
MR. MAX: —Christy Turlington, yeah, and the woman that
was in Black Swan—
AUDIENCE: [Interposing] -Natalie Portman.
MR. MAX: I'm sorry I am having problems with my names
this afternoon. But there were a number of those ads, and so what
happens is the ASA will ban the ad, and your ad is taken off. It
was funny, Jane Fonda did an ad which they raised a question and
they said, that's okay, because they showed enough of her wrinkles
to make it permissible.
MR. SPORN: I'm sure she appreciated that.
MR. MAX: Yeah, well, it's kind of a mixed blessing.
The other thing I wanted to touch on was how reality shows
have changed the world, as well. Because if we took this group
and said, okay, we're going to sign an agreement, and you're all
going to be in a reality show. If you look at those agreements, the
typical agreement where we're not celebrities already provides
that the producer will get a percentage of whatever happens after.
So if we take somebody hke Bethenny Frankel—and I'm sure
everybody knows who she is—she was in a reality show, and she
has parlayed that reality show into a very good business.
And so producers—and I doubt it happened for her because
she goes back a few years—but they get a percentage, and actually,
there was an issue with her sale of the Skinnygirl brand, as to
whether her agent got a percentage of that, but it is happening
more and more as well. Because, whether you're a model or a
850 CARDOZO J. OF INT'L & COMP. LAW [Vol. 21:795
celebrity or a celebrity model, that is part of the consideration, as
well.
And also with models, models are now brands too. I mean
look at Heidi Klum. That's a very good example of somebody who
has gone from modeling to being not only a celebrity but much
more than that: a business. So in that context, one has to be very
careful from the model side to understand what they're getting
into, understand what they're giving up.
Often times, people will approach people and say you know
what, we'd hke to do a master license with you, and a master
license can be very successful. Another example of that is Jessica
Simpson, who, again, has been a brand and expanded. A master
license basically, though, is somebody saying "I will control you
and bring opportunities to you" —so maybe an apparel deal,
maybe a shoe deal, maybe eyeglasses, maybe umbrellas,
everything from suits to knots—and "I will put that together for
you, and you approve it." And depending on the negotiation of
that agreement, it can be very restrictive on the part of the talent
in terms of what they approve, or what they don't approve, or
there will be clauses in those agreements which basically say "if
I'm putting the money up for this, and I'm doing this, you really
have to have a very, very, very good reason to say no." And, so
basically, the talent is more along for the ride than controlling
their choices. And part of that depends on the leverage, and the
bargaining power of the different parties.
How am I doing with time?
MS. KOLSUN: Good.
MR. MAX: Another big issue is the Internet, and what is
advertising because the Internet has changed that equation. You
can have, on the Internet, little films that somebody does, and it's
not done by Martin Scorsese for Chanel or Roman Polanski for
Prada, but somebody just does a film. And it's "Michael, I want to
include you in this. I'm coming out with a line of clothing. Will
you do it?" And Michael says "hey, that's great. It's exposure. I'll
do it." And if he signs something, depending on what he signs, it
could be there forever. And that ad could be out there at
infinitum—which depending on what it is, what it says, how it
affects him, how it effects politics, is there a message with it—can
be an important issue. And that's something especially in the
modeling world both for brands and for talent that is critical
because what you say about a product, or how it affects a product
is often times a very, very big deal.
2013] INTERNATION AL FASHION LAW 851
If we're talking about fragrance and beauty, being a face for
Chanel or another fragrance brand, they generally don't want to
take somebody if they've done it for somebody else, so they will
look for a celebrity or model and say what have they done before.
And if they've done nothing, but they're beautiful and attractive,
and they're a great spokesperson, that's a great thing.
So what you do and what you don't do unfortunately is much
more of a reahty today and more of an issue today than it was
when you were talking about a print ad, so controlling your brand
and controlling your image is much more important today than it
was.
Did you have a question?
MR. MAX: [Responding to an inaudible audience question]
Well, the issue is: it depends. A good lawyer's answer, right? But
for example with SAG-AFTRA, if you're involved in the creation
of the product, the contribution to the fund is less. No, what you
put in is less, so that's an important consideration, and you can't
just say it. I mean Jessica Simpson, for example, how much does
she design something? It's probably she's more involved in
selecting things. Natalie Portman for Chanel, that's probably more
Chanel driving that, but there have been celebrities who are
involved in creating a brand or a sub-brand or mini-brand for
companies.
And I just negotiated an agreement this past fall for a retailer,
and somebody was involved, and basically, it was sustainable
clothing and things hke that. And there was an issue as to how to
identify that person's role in the agreement. Was it going to be
spokesperson, was it going to be more than a face, and that really
is an important issue, and one of the issues was whether the person
felt comfortable answering questions about sustainable products
and things like that, which, if you can't do it or you don't feel
comfortable about it, that's one thing. Also, the FTC has
requirements today that if you're a spokesperson for something,
you basically have to believe it.
But again, talking about fragrance, in any fragrance contract
or any beauty contract, usually, you'll have a clause that says "you
have to wear this, and you can't go on the Today show and say,
yes, I'm a representative for Chanel. But my sister has this
fragrance line that's really great, and I'm wearing it right now."
What do you think Jay? You can't do that sort of thing.
MS. KOLSUN: And aren't there also issues, Ted, related to
the behavior of the—
852 CARDOZO J. OF INT'L & COMP. LAW [Vol. 21:795
MR. MAX: [Interposing] Yes.
MS. KOLSUN: —celebrity model in terms of clauses related
to the kind of repute or ill repute they bring upon the brand by
bad behavior.
MR. MAX: Right. However you categorize those, morals
clause is one way to put that, that is a big part of an agreement,
and it's a big part of the deal. Again, what people put on a
Facebook, for example, or Twitter or whatever, the world seems
much more open today, and so what you do and how you do it is
very, very, very important. Oftentimes, deals will be structured to
withhold a certain amount of the consideration, if that's an issue.
You also have clauses, which may deal with incapacity or things
that aren't really moral, but they show up. Another is, generally
the modehng agreement has a clause, and it says, "you know what
you're going to show up, and you're not going to have your head
shaven or scars" or, "we thought you weighed 120 pounds, and
you're 250." Those kinds of things that's pretty standard.
Although, when you get into the celebrity realm, you'd be
surprised what the push back is on that because often time they
are who they are. You just got to deal with it. I even had deals
that at ll"' hour be tied over tattoos, and whether tattoos could be
airbrushed out because the person, oh, that's part of their
personality. This was a celebrity deal.
And I would think, in a modeling deal, it would be no
problem but for the brand—and it was an international brand—we
said, tattoos in certain cultures and countries have a really bad
connotation, and that obviously would reflect poorly on the
celebrity but also poorly on the brand. So you have certain choices
in terms of approval rights with regard to the photographs, so if
you say, "I don't like that photograph," you still have the right, in
some agreements, to take the photograph.
But we were, this is important because, especially in certain
cultures, tattoos are seen as really bad, and it was something that,
well, we had to go back to the calendar to consider it. So those are
all big issues, and especially, when you take the international
aspect of things, how people do things. How people are
represented varies greatly culture to culture, and so, sometimes a
swimsuit shoot may be very limited if it's going to be in the movies,
and sometimes people are covered up. And that becomes an issue
in terms of what you can do.
Obviously, we touched on sort of airbrushing and things like
that. Generally, the agreements have a certain degree you can't
2013] INTERNATIONAL FASHION LAW 853
materially change people, but the other aspect of Internet when
get back to the SAG-AFTRA is residuals, and what is permitted.
Often times the limitations on Internet are not as great as they
would be for usage in print or in advertising, but more and more
they are, and that's one of the issues in terms of SAG-AFTRA is
the union will try to make inroads in terms of getting some
compensation for the Internet.
I don't see that as happening. Also, from our labor people,
we don't see a strike occurring but if there were a strike, that
would obviously affect who's going to be representing brands, and
that would be a good thing for models in the long run. So I think
that's about it.
MS. KOLSUN: Doreen, I'm going to skip to you next.
Doreen Small is probably the guru of modehng law. She was at
Ford. She's currently counsel at Golenbock, Eiseman. She, with
Ali Grace Marquart, teaches at Fordham, where I used to teach—
MS. DOREEN SMALL: [Interposing] Um-hum.
MS. KOLSUN: -before Cardozo and NYU. And Doreen,
how has fashion modeling—because you've been around doing
this as long as anybody I know—changed in your lifetime of
representing models?
MS. SMALL: Well, fashion modeling is ever evolving, and I
think it in some ways reflects the culture. As the world changed,
so did advertising, and the models, the paradigms of beauty for a
given era. I think, to Ted's point, the Internet and technology has
had a huge impact on the modeling industry. Ah and I had a panel
at Fordham Law School about walking into the future, and to a
panelist, it was the Internet and technology that they picked up as
the changes—not only in usage and image rights—but in avatars
and robots and photo-shopping, and the use of models, where
models fit into the landscape.
The other thing we've seen change is—and one thing I was
going to touch upon—is labor and employment issues. On the
model side, there had been a labor union in 2005 for the models,
and many, many thousands of applicants signed up, but it didn't
have much traction. There was enormous, I think, fear and
resistance from the industry at large.
In the last year, we've seen the development of the Model
Alliance founded by Sarah Zif, who is a model and fllmmaker, and
made a fllm documentary called Picture Me, which tracked her life
on the runway here and abroad, with a push to give models a
larger voice in the industry and improve working conditions.
854 CARDOZO J. OF INT'L & COMF. LAW [Vol. 21:795
Ah and I team our course at Fordham. It is thirteen weeks,
twenty-six hours of fashion modeling law and one of the things we
talk about are the labor employment issues that have changed over
the course of time. The other thing that, I think, is interesting is
the internationalization—and this is an international panel—of
modeling. Although there are some similar standards around the
world in terms of employment and labor, there are more changes,
differences, for example, France. In the United States, models are
independent contractors by and large. In France, they are both
independent contractors and employees, and they have two sets of
contracts, and here in the United States, they only have one
contract.
But again, I think we've seen some changes. There's a case
from 1944 which talks about some of the same difficult
circumstances in the modehng industry that models still face today,
that agencies sfill face today, clients still face today. So some
things have changed and evolved. Some things have stayed the
same.
MS. KOLSUN: Ali, what is the industry doing to prevent I
guess use of underage models? How does the industry deal with
these young girls that we've seen a lot of press on? Twelve-year
olds, thirteen-year olds, parents lying about their kids' ages. How
is the industry addressing that? How does Ford address it, I mean,
Wilhelmina, where you work, address that?
MS. MAROUART: Well, I think that-as Doreen
mentioned—we have seen some things change over the past, and
you went back to 1960.
MR. MAX: Um-hum.
MS. MAROUART: Modeling really goes even further back
than that, but it became really a profession, a career I think
starting in about the 60s and for a twelve- or thirteen-year old girl
to be considering a lifelong career in modeling at that age seems
ridiculous to most people, but not always to the parents. And I
think that there's a huge distinction for, hopefully models, but
certainly for the agencies in children modeling as children and
children modeling as adults.
So you've seen organizations like the CFDA, the Council of
Fashion Designers of America, get together and create a set of
guidelines. Now, they're not laws but they're guidelines for their
members where they recommend that models under sixteen not be
used. Now they've chosen sixteen. Anyone under eighteen is
considered a minor here in New York and in most states, so
2013] INTERNATION AL FASHION LAW 855
they've decided to go with sixteen, not something that we, at
Wilhelmina, and many of the agencies have chosen to enforce.
It's not so much matter of checking IDs for us, but we know
who we put together, for example, in a show package, so when
Fashion Week rolls around, we're putting together a package of
models to present to various casting designers or, sorry, casting
directors, and designers.
We sign a letter that CFDA sends us saying that we will not
submit anyone under sixteen, and many of those casting directors
and designers, then, also take it upon themselves and take it one
step further to actually check IDs at the casting as well. Again,
this isn't a law, so not all agencies have decided to adhere to those
guidelines. Not all designers have chosen to adhere to those
guidelines, but I think that, that is absolutely a step in the right
direction.
At Wilhelmina, this is a conversation that I have regularly, in
particular, our women's division. Because, on the men's side, the
careers can start later, and they tend to last longer, but on the
women's side, we do see them starting quite a bit younger. And
our women's director regularly points out that he actually prefers
to work with models who are older. Eighteen and older would be
his ideal. If designers and casting directors weren't requesting
younger and younger models because, for the first thing: the
contract actually means something.
If we sign a three-year agreement with a model who is over
eighteen, they are bound to that agreement. If they're a minor and
we don't have the contract approved by the court, then they can
get out and repudiate, so it's easier for us to enforce an agreement
with a model who's over eighteen.
Our women's director also has pointed out that they tend to
take this more seriously as a job, as a career. This is something
that they've chosen that they've given some thought to, not just "I
am beautiful, I'm a teenager, and traveling the world sounds very
interesting to me. I would love to be away from my parents." It's
not a rebeUious issue anymore. It's a career path.
They've chosen that. Modeling, at the moment, means more
to them perhaps than going to college. They'd like to try it for a
few years, what have you. Then, they've made that decision and
tend to really consider it a job and want to take it very seriously.
MS. KOLSUN: Doreen, how about the issue of underweight
models? That's been another—
MS. SMALL: [Interposing] That's interesting because the
856 CARDOZO J. OF INT'L & COMP. LAW [Vol. 21:795
issues of age and weight are very much tied together, and one of
the reasons why that you see guidelines and rules about age is
that—apart from the fact that it's the children working, and the
problems and the issues with the children working—the older
models, especially the female models, hormones start kicking in.
They start taking birth control. It's much more difficult to keep
models at the current aesthetic, the beauty standard, which is very,
very, very thin, very lean, flat, no hips. So the issues of age and
weight seem to be tied together.
On the issue of weight, taking the international approach,
Israel has actually instituted a law: a body mass index guideline of
eighteen and a half, which is the World Health Organization's
standard for underweight. And any model working in Israel
working in the runway or on advertisement has to have an up-todate
doctor's certificate that the body mass index is eighteen and a
half.
There is that. That this is not the best barometer, the best
gauge of health, well-being—it's easy to fudge, for example. It's
also not necessarily indicative of a model's health and some
models are naturally thin. Particularly the Hungarian ones, they're
naturally thin. They haven't matured yet and some just have a
very thin body structure. And they will be underweight but still
healthy.
And other models will meet the BMI but will have struggled
to get there and have eating disorders and all sorts of other issues
attached to even maintain the eighteen and a half BMI. The
Model Alliance had just this talk about weight issues. And Crystal
Renn, who's a friend of ours and one of my chents, and famously
was a straight size model and then became a plus size model and is
now a straight model again, albeit not a ninety-five pound straight
size model, wrote a book called Hungry about her experiences.
Her suggestion is that the sample size change and that the
designers that the "00" or the "0" sample size is punitive. It really
it forces, even naturally skinny models, to get down to a very, very,
very tiny frame.
What if the sample size was four or six? And the thin models,
you pin them, but then it would allow for a great diversity on the
runway to have the option. The designers will say—and again
designers and clients are entitled to manifest their own aesthetic,
their own vision—that they like a certain uniformity on the
runway, or that the tall and thin is a better clothes hanger for the
garments, and again, we talked about it over time, these aesthetics
2013] INTERNATIONAL FASHION LAW 857
change.
There have been skinny models in the past. I mean, there was
Twiggy and there was Penelope Tree, so but there were the
glamazons in the 80s who were size four or six and certainly not
"00," so I think weight is a complicated issue attached to age. I
think that industry feels a httle, in the U.S., more comfortable,
addressing it in terms of age.
MS. KOLSUN: Um-hum.
MS. SMALL: In fact, there are labor regulations now being
proposed to address certain issues about child performers. Those
regulations, unfortunately, will not cover children working as adult
models but I think there are some movements, and the tom-toms
are beating a little bit about addressing the age issues in a really
meaningful way.
MS. KOLSUN: Are there other issues—either Doreen or
Ali—related to models with respect to financial transparency or
prevention of sexual harassment that are being addressed in the
industry?
MS. MAROUART: I think there are quite a few lawsuits
ongoing at the moment. We've seen, in the past, probably three or
so years of just an influx of litigation, mostly agency versus agency.
Models break their contracts, they change agencies halfway
through their agreement, and the agency that the model leaves is
not likely to after the model. It's bad for business. They're likely
to go after the new agency who may have been whispering
backstage in the other model's ear that they could get her much
more, or that she wasn't being properly served at current agency.
So I think we're seeing a lot there.
And what has been the most interesting, in maybe the last
year, though—because that was, in fact, new—is that now we're
seeing the models participate in those, not agency versus model
but model versus agency, fighting back and saying "if you're going
sue each other, fine, but let me also remind you that you haven't
paid me my money. That when I left or if I properly terminated,
you owed me X, and you still have yet to pay, you have to give me
a statement." Things like that, so that's where I think that the
finances are coming up the most.
There are issues with financial transparency that have come
out over time. Every agency handles things very differently there.
For us, speaking for Wilhelmina, we're in an interesting position
because we're pubhcly traded. We're the only U.S. based
modehng agency, I'll say, the first U.S. based modeling agency to
858 CARDOZO J. OF INT'L & COMP. LAW [Vol. 21:795
do it. I don't know that will become a trend. It's an interesting
industry and position that we're in to do that, but I think from
what I understand from our models, from our agents, from other
agencies, they like being able to see our financial statements. They
can pull up things online. They know much more if they choose to
read what's going on with us.
But Elite actually did it before we did, in Europe, so they're
not publicly traded here, but they are public in Europe, so
transparency—it continues to be an issue in the industry certainly.
But I think that as the industry advanced, we're not seeing
privately held agencies as much anymore, or if they're privately
held, they're privately no longer by one or two individuals. It's not
really a mom-and-pop shop as much anymore.
There's more and more interest from a corporate perspective.
Their hedge funds are buying agencies and adding them to their
portfolios, and I think we'll see an interesting change, for better or
worse is yet to be determined.
MS. KOLSUN: Any other comments any of the panelists
want to make based on what we've talked about so far?
MR. MAX: I think the other thing about agencies is agencies
are our brand as well.
MS. MAROUART: Yes.
MR. MAX: And that's something that certainly is more recent
than not in terms of—
MS. SMALL: [Interposing] Well, we've been a brand since
the 1940sMS.
MAROUART: [Interposing] Um-hum.
MS. SMALL: - s o .
MR. MAX: Well, but I'm saying in terms of selling things, I
mean we've talked to people about agencies—
MS. SMALL: [Interposing] What Elite does?
MR. MAX: —yeah, and getting product out.
MS. SMALL: Um-hum.
MR. MAX: So that you're advancing the model, but you're an
agency, and you're creating a profit center above and beyond, so if
somebody says what are you doing for me—
MS. MAROUART: [Interposing] Yep.
MR. MAX: —you say, hey, look, we're branding everything.
MS. SMALL: Well, Elite has a separate division. They run a
worldwide modeling contest called the Elite Look, and the Elite
Look products are branded and sold worldwide, licensed
worldwide, so there's a total separate revenue stream.
2013] INTERNATIONAL FASHION LAW 859
And Ford tried to do that marketing hairdryers and other hair
care products and make-up kits, and also sorts of things like that,
and I think it would make sense to try to get back into that
business.
MR. WILDES: Another interesting experience that I'm
hearing, living in the world of immigration and modeling, is this
issue of transparency. I have yet to see one model who has ever
told me the truth about her age or his age, despite the fact that I'm
holding their passport in my hand. The forms they actually will
write down my business age is this, but my real age is that, and
with a straight face say that.
Also, I see the competing culture and the pressure outside the
realm of immigration too. We have peer group advisories that we
need to have when we do O visas for individuals in the world of
fashion and talent to make sure that their peers holds them up to a
certain standard of achievement, as well.
The social media was a very interesting experience to see.
Models now come in with a Facebook, and they have to friend
you. There's privacy issues when a model comes in and friends
you, particularly when you're married with twelve children, and
you have to make sure that that's how you're getting the
information. Then, you're opening yourself up to the fact that
your friends and other clients now know that you're representing
somebody.
We're always trying to get endorsements from our chents and
get permission for our marketing purposes, but we have to be
discreet at the same time. And, again, fraud is a very, very
dangerous with all these competing issues whether it's age or
weight or other pressures. The fact that people will take a visa and
work from one agency and then travel, or they go and they search
at a lot of these parlors and the meatpacking industry and
everything, in the evenings, is very dangerous.
And we see immigration agents now actually asking models to
look at their Blackberries and Facebooks, and they go onhne, and
they actually search their bags, and if they see matchbook, and if
they see menus, they'll then call. And they conduct many
investigations at the airport to see that somebody's consistently
being paid a prevailing wage at the right agency, and they're not
doing anything else outside of the scope of what was allowed.
MS. SMALL: It's tough on models because it is such a fluid
industry, and models do move from agency to agency, and the
foreign models just have to get new visas because their sponsor has
860 CARDOZO J. OF INT'L & COMP. LAW [Vol. 21:795
changed. And in many changes, visa costs become part of the
model's [financial calculus].
MR. WILDES: [Interposing] We're about to take an
entertainment lawyer to rent space from us because a lot of the
models will come in and say "could you review my contract." We
do the immigration. We're often the first lawyer that they'll meet.
Now they get burned on a photo shoot by a light, or they
don't know how to sign or if they should sign a contract, and often,
I pull the reigns back no matter who sends the model in. And I
think, what's the best interest? Now, there's a mother agency
overseas that actually has a better relafionship with our trust with
this model, and the fact that there's no governing body with law
and not just recommendations is a glaring omission in this realm.
MS. MAROUART: And so the last thing that I wanted to
touch on—since this is a panel with an international focus—is just
about monitoring international usage, and how challenging that
can be. Much of my day is spent reviewing contracts and releases
usually created by the ultimate client for models, so if they're
performing for Calvin Klein, for example, or e-commerce for
Nordstrom or what have you, then, I'm reviewing the agreements
created by these chents.
And those agreements will contain a usage description, and
another large part of my job, then, becomes helping agents try to
monitor this usage and make sure that the scope of what we've
agreed to has not been exceeded, and that can be very, very
difficult on an internafional scale. And then, if it is exceeded, what
law is going to apply? If they exceeded the scope, if it was
supposed to be U.S. only, then, great. Then, we know we're here.
Everything is good.
Then, we go overseas, and all of a sudden the model is usually
the one to find it because he or she is out travehng, sees their
image on a billboard in Mexico or Thailand or wherever and takes
a picture and calls us and says I thought that, that was only for the
U.S. or for New York only or whatever you have. And then we
have to figure out do we need to even help them retain counsel.
That's usually a right of publicity, right of privacy issue that we're
talking about, so the agency doesn't hold those rights. That's the
model's individual right.
And it can be very challenging to do that. The Internet in that
way has been helpful. It is actually much easier to track, so as
broad as the scope of use usually is now because it includes all of
these technology social media and what have you, it is easier for us
2013] INTERNA TIONAL FASHION LA W 861
to track it that way. But if it's not onhne, then, it can be very
difficult.
MR. MAX: Well, and it has to be related to a brand that has
brick and mortar.
MS. MAROUART: Right.
MR. MAX: So that you can sort of go after that person.
In terms of law, we do a lot of different things, and sometimes,
we actually do things that are fun and help people out, and you
sort of say, wow, that was great. A while ago, I had a situation
where a model was an IT girl from the 60s. She was a Ford model.
She was the muse of WiUiam Klein, for anybody who's a real
photography buff, and she babysat.
Because although she was Ford model, she did not make gobs
of money, and she did the modeling and got married and had
children and then, unfortunately, got divorced and was sort of not
really doing all that well but doing okay, and so she was
babysitting for a colleague of mine. And she raised with him the
fact that her photograph was used in Compare that was pretty
much all over the place. It was on buses. It was in magazines and
so forth.
And so one of the things that I did was we wrote to Compare.
We swiftly, after threatening to sue them, negotiated a very
favorable deal, which only included the past but going forward,
and it gave her current dollars, as opposed to when she was a
model, and it financed her going to NYU for the School of Social
Work.
And she became a social worker, and it was one of those
nicest things because she couldn't really a pay lot, so it was
contingency type of thing. So it worked out well, but that's was an
example of fortunately Wilham Klein got paid for the ad, and that
was part of the reason you did it. But also it was legitimate
company that sort of stepped up and paid a fair wage for the use of
her image.
Unfortunately, with the Internet you can't find anyone, so
often times even if it's just using pictures to generate fifteen-year
old boys coming to the site and seeing pretty models in bathing
suits or something like that, that's where often times you don't get
compensation.
MS. KOLSUN: Right, thank you. Any quesfions? None?
Well, we'd hke to thank our wonderful panel. We will pick up
with our last panel on sustainability in about 15 minutes, and
that'll be our afternoon.
862 CARDOZO J. OF INT'L & COMP. LAW [Vol. 21:795
IV. PANEL FOUR: THE LITTLE GREEN DRESS: SUSTAINABILITY IN
THE FASHION INDUSTRY
MS. KOLSUN: Our flnal panel of the day is on the topic of
the sustainability: a topic near and dear to my heart because it's a
lot of work. Jones our parent company recently hired a consultant.
One of those annoying consultants who sends you an email and
asks you how many bags of garbage does your store in Milan
generate every day, and how much electricity is that store using,
and how many computers and blah, blah, blah, blah.
And often the person who's sitting in my chair gets stuck with
the job because there's no one else to do it, and in fact, the
consultant said to me—I actually turned in all of the information
incredibly quickly because it's really about finding out who has the
answers—and the consultant who would have done this but for
you, since you do not have sustainabihty department at Stuart
Weitzman. And I said I don't have a secretary at Stuart Weitzman
or a paralegal, so I'm doing it because this is the office of last
resort.
So despite the fact that it was an annoying project, it's an
important project and a useful project. Tying this discussion into
our conversation this morning and early this afternoon about
China and sourcing, Frances Hadfield's comment that we can
dream on about bringing jobs in our industry back home, but it
ain't going to happen. So we've certainly seen lots and lots of
press about obviously the lower cost of manufacturing in China
and other countries, Bangladesh, et cetera, but the price of getting
the goods back here, so that is another issue in terms of
sustainability. The issues related to transport of goods.
So our panel is four people, Jeff Trexler, who is next to me.
Jeff, why don't you give your brief bio—
MR. JEFF TREXLER: Great. I'll make it real brief. I'm an
attorney. I have been one for a while. I've been an attorney in the
do-gooder world my entire career, and in addition to being a dogooder
attorney and consultant—a very annoying consultant as
well—I am also teaching the class in fashion, ethics, sustainabihty
and development at the Fashion Institute at Fordham Law School.
MS. KOLSUN: Georgia Kalivas.
MS. GEORGIA KALIVAS: Hi, name is Georgia Kalivas,
and I teach over at the Fashion Institute of Technology in the
Textile Development and Marketing department, but my second
job is: I am an auditor and U.S. representative for the Institute for
2013] INTERNA TIONAL FASHION LA W 863
Marketecology. I go and I inspect different companies that
wanted to be certifled to the global organic textile standard known
as GOTS and also their trade standards. We have one called Fair
for Life.
MS. KOLSUN: Thank you. And Peter Fields.
MR. PETER FIELDS: Hi, I'm Peter Fields, a partner at the
firm of Ritholz, Levy, Sanders, Chidekel & Fields, so who can
repeat that name? You get a prize. We are a media and
entertainment law flrm, so we do a lot in the music business,
television, publishing, and fashion is also a very big part of what
we do.
We represent some well-known fashion brands, such as Nicole
Miller, and some major upcoming designers Peter Som and Rafe
Totengco, who we did a deal with the Jones Group a few years
ago. Rafe's now over there. And my partner—
MS. KOLSUN: [Interposing] It said that on our website
yesterday and I don't know the brand so it was interesting.
MR. FIELDS: Right, he's a handbag guy.
MS. KOLSUN: Yeah.
MR. FIELDS: He's fantasflc. We did that deal about two
years ago with Jones.
My partner, Greg Weisman, heads up our L.A. offlce. He was
one of the panelists this morning and they had him in by Skype
and I understand that was a lot of fun so I'm looking forward to
participating in this panel.
MS. KOLSUN: And Natalie Nixon, who I met in Philadelphia
during Philadelphia Fashion Week, which by the way is very
robust. There is fashion in Philadelphia and I bought some of it.
MS. NATALIE NIXON: Hi everyone, my name is Natalie
Nixon. I'm the Director of the Strategic Design MBA Program at
Philadelphia University. If any of you would like to learn more
about that I'd be happy to share more afterward.
I'm also an Associate Professor in the Fashion Merchandising
and Management Program, also at Philadelphia University, and
my background in the industry is an entrepreneurial hat designer.
I also worked in global fashion sourcing for a division of the
Limited Brands, lived abroad in Portugal working for mass
industries and making lots of bras and panties for Victoria's Secret.
MS. KOLSUN: I've got to start with a quesflon for the whole
panel: how has the fashion trend of going green, eco chic, whatever
you want to call it, expanded? And how do you think the fashion
world has reacted to sustainability issues? Are we easy clients?
864 CARDOZO J. OF INT'L & COMF. LAW [Vol. 21:795
Are we hard clients? As annoyed as I sound—and I'm really not,
because I am a do-gooder—it's just doing the work and making the
changes. Jeff, I'll start with you.
MR. TREXLER: Okay, great. Now I would say that things
are converging. For a while in the sustainabihty, eco fashion,
corporate, social responsibihties space—as we like to say in our
area, everything's a space—things went along the hnes of what I
would call refrigerator door fashion. That is to say, it was
sustainable fashion that was celebrated in the same way a parent
would celebrate their child's wonderful, artistic, amazing drawing,
and just put it up on the refrigerator door. Maybe no one else
would think it would be amazing and wonderful and artistic but,
because it is your child, you praise it.
And for a long time, I think there's been that sense of eco
fashion, sustainable fashion as occupying that same role. It's
something if you're a do-gooder, you love it, it's amazing, but
there weren't that many reasons to buy it other than the fact that it
was sort of representing that particular value for you—if the value
was important to you.
But in recent years—and in particular, we saw it in Fashion
Week—things are converging and converging for a number of
reasons. You have a major mainstream designers, like Maria
Kaneohe, who have incorporated ecologically friendly techniques
into their fashion, without really even calhng attenfion to it. It's
not branded eco fashion. It's just styling, cutting edge fashion.
And on the other side, you're seeing eco fashion designers
coming in and saying, you know what, we are ecologically friendly,
we're sustainable, we're trying to promote development
internationally but we're also going to do really cutting edge
stylish fashion and put fashion first.
A designer said to me: "I'm a designer, I put design, I put
style first." That, I think, is the future of sustainable fashion: not
something separate, but something blended.
MS. KOLSUN: Let me add another piece to that question—
and then, each of you will address that as well—is fast fashion an
enemy of sustainability? I mean, before the economy collapsed,
we saw the rise of H&M and Forever 21 and we read a lot about
fast fashion and how it's affecting IP rights. But it's also people
buying a lot of stuff that they quickly discard. Is that an enemy of
sustainability? I mean, as compared to the old days in France
where you bought one beautiful skirt and you wore it three times a
week.
2013] INTERNATION AL FASHION LAW 865
MS. KALIVAS: Well, when you're talking about the cost of
sustainable fashion—because this is one of the things that has been
part of the problem—do people want to pay more money
something; especially, people going to H&M fast fashion? It's
either: we're going to sell a better quality garment that's
sustainable and fashionable or are we going to do just a quick
organic t-shirt and let's get it out there as quickly as possible but
it's going to be so thin that you're going to see right through it?
What I found is it's important now—and you were just saying
before—instead of just trying to sell crunchy granóla, hippy type
yoga clothes as sustainable fashion, to sell the fashion first, sell the
style, and then, everything that's sustainable or eco-friendly about
it is the fringe benefit. And then, everybody looks as if they are
doing good and they're doing better by doing good.
MS. KOLSUN: Peter?
MR. FIELDS: I think an interesting question is —and perhaps
you were going to ask this further down—what is the obligation of
a fashion company to promote sustainable fashion? And if there is
a responsibihty to do that, does the fast fashion company or
retailer like H&M—which promotes disposable fashion, "you
bought this sweater last fall, forget that one and buy this one
now,"—does that type of company have a greater obligation
because they're promoting wasteful habits with the consumer? My
own personal opinion is: I don't think the fashion industry has any
greater responsibility than any other industry, so I don't think
there's any special burden on the fashion industry in this area. The
fact that the fashion industry is embracing [sustainability], I think
that's a great thing. It's better for everybody.
And you get the same arguments in each industry. In the food
industry, we would make healthier food but people don't want to
eat it. So on the fashion side, we can make sustainable ecofriendly
fashion products. Will people buy it because of that? I
think the evidence is starting to show, yes, consumers like that and
they feel good about buying something that was produced in a
more eco-friendly manner. So I think it's a good trend but I think
that's one of the important questions to ask.
MS. KOLSUN: Natalie?
MS. NIXON: Yeah, so I think that the fashion industry is a bit
schizophrenic about this issue. There are obviously the big fast
fashion retailers, H&M and Zara, but fast fashion retailer H&M
also has its own little corner of green eco-fashion, notably the
Garden CoUecfion, so you have fast fashion. And alongside that,
866 CARDOZO J. OF INT'L & COMP. LAW [Vol. 21:795
this emergence of slow fashion brands of retailers.
In Philadelphia, from where I hail, there's a really exciting
growth of slow fashion retailers—and I think we have to really be
clear from the onset when defining sustainable fashion, so
sustainabihty is about a triple bottom line agenda. And that triple
bottom line includes environmental sustainability, fiscal
sustainability, and social sustainability, so a fashion brand
collection can strive to achieve accountability in all three of those
areas. Most of the time, we only think of it in terms of the
environmental sustainability.
I also think it's really interesting, in accordance with the
second panel discussion today, all of the discussion on public
pohcy in the fashion industry. We have this dynamic where we
have a public policy climate that is about hberal trade policies,
which is awesome for levehng the playing field and allowing
emerging economies to have a lower barriers of entry to markets
the United States and Europe.
On the other hand, as you pointed out earlier, Barbara,
KAFTA, NAFTA, the upcoming possible Trans-Pacific public
policy now means we're condoning shipping large quantities of
product back and forth duty free, quota free, so those are
examples of us being a bit schizophrenic from market demand and
also from the pohcy side.
MR. TREXLER: May I illustrate something because I'd love
to join in this conversation too—
MS. KOLSUN: [Interposing] Absolutely.
MR. TREXLER: —I'm not going to go through and give the
whole presentation but there's a picture here that's right on point,
if I can figure out how to get this one. Thank you so very much.
This is the problem in using a MAC now all time is I'm completely
Windows illiterate. My Windows self is gone.
MR. TREXLER: Okay, good. With regard to H&M, it's
actually tied in with the mainstream of fashion and when they're
designing clothes, I mean, there's the utilitarian cover-the-body
part of it and there's also this utilitarian let's-save-the-environment
part of it—but fashion is, in many ways, about identity. It's an
expression of the designer and it's expression of the wearer. As
Professor Susan Scafidi mentioned in her Fashion as Intellectual
Technology article, they converge.
So just as sort of fashion design is very personal and the artist
wants to put something artistic, it's also personal when it comes to
our relation to transparency. So you see here: this is the Pearl
2013] INTERNATIONAL FASHION LAW 867
River in China and that is dye from a jeans factory polluting the
Pearl River—and now why is this important? It's not important
because we can see it and now we have the great transparency and
so we can regulate it.
But as this sort ofthing spreads out into general consciousness
and our awareness of what our clothes are; you're actually wearing
this. You're the flre in Bangladesh. You're wearing the pollution
in the Pearl River. Greater transparency in the immediacy of
photography and the Internet. All these things mean that when
somebody is buying H&M, they're not just buying cheap clothes
anymore, which is a social value of itself, they are wearing
pollution. They are wearing death.
So it's not so much a question of obligation, in terms of, does
H&M have an obligation to do this, it's a market of market
survival because all of a sudden the brand is less valuable in the
eyes of the consumer.
MS. KOLSUN: But who gets that message out? I mean,
obviously, H&M isn't going to get that message out and you're
certainly not going to discourage shoppers and the Bangladesh
flres—those who work in the business were appalled by the
Bangladesh fires. And most of us who are old enough to know
what the triangle shirt flre was [know that] the current FDNY
comes right out of the triangle shirt fire—and yet we have
exported that disaster to two other countries.
In China, we've got a lot of pollution, and we in the fashion
business and in women's wear know what's going on in terms of
the horrors, and those of us that work for pubhc companies have
the obligation to ñx this. But, the general public only hears about
these kinds of issues when, for example, China hangs somebody in
the public square ... So how do we get that message that H&M is
selling death?
I mean it's a powerful message and I'm sure you work with
marketing people. How does that get sold to consumers?
MR. TREXLER: A part of it is just simply-Marshall
McLuland talked about a sort of changes in news and one of the
things he talked about with satellites and satellite broadcasting was
that in the area of satellites, it creates a proscenium arch—the
whole world becomes a theatre. And so when you have something
that's spectacular, when someone creates a fantastic visual image,
it's inchned to go viral.
Now I would say that the images of the flre actually spread
beyond the World Wide Web. There were many mainstream news
868 CARDOZO J. OF INT'L & COMP. LAW [Vol. 21:795
sources. They were all over the Internet, the same thing with some
of this pollution. Anything that can have a compelling image or a
compelling sound is something that will grab attenflon and is likely
to spread.
To paraphrase team America: it's the triangle fire times a
thousand is what we're getting here because it's no longer just a
big sort of issue in the United States. It's a global thing.
MS. KALIVAS: Yes, just how when China was doing the
Olympics, that is when, all of a sudden, we kept hearing about the
pollution in the rivers.
MR. TREXLER: Um-hum.
MS. KALIVAS: Before the picture wasn't there. We were
here in the U.S., we didn't really care, but once we had the
Olympics over there, we cared more. And it's not to say here in
the States we've had a lot of laws in place already from many,
many years, and because of that, there have been many changes
and especially in the textile industry, which is really one of the
biggest polluters in the industry today.
And because of that, we also had the unions. We've made
sure that there are safe condiflons for workers. And when you
think about developing countries, they are going to be where we
are now and it's going to happen a whole lot quicker than it did
here in the U.S. So as you even see now in China, there's a lot of
work being done in China, as far as waste board of management,
and taking care of things because the world is small.
We've got the Internet, we can see everything, but I think part
of this too is: we're trying to develop a conscious consumer. It's a
consumer consciousness for what's going on and that's really
what's going to bring sustainabiHty over the top.
MS. KOLSUN: And we've certainly seen it on college
campuses with students concerns over where our athletic jerseys
are being made and lots of protests and conversaflon. I was a
trustee at a college where that was a conversation we had with
students.
MS. KAIVAS: Yeah, at FIT for the last seven years, we've
been [discussing sustainability] more at business and design
conferences and what I've noticed, even as time is going on, is the
students I have now—it's almost as if it's cycle—are the Baby
Boomers' grandchildren. And you can see they wear a lot of
[similar fashions] as the Baby Boomer wore in the 1960s and 1970s
'60s and care about making a difference, so it really is
heartwarming.
2013] INTERNATIONAL FASHION LAW 869
MR. FIELDS: I think the comment about that the world is a
theater is a great line. Maybe one can argue that everybody has
always cared about unfair labor pracfices, about pollufion—but
weren't aware of it. So with media, we know where our shirt is
manufactured and we see the conditions and that makes us
concerned, so that's a great thing.
You look at smoking in the 30s, 40s, and 50s: nobody cared
about smoking, everybody did it. Then, everybody became
educated about it and stopped smoking. Same thing with the food
industry with bad food, so maybe it's just a natural thing that
happens in many industries, and now fashion. And, "wait a
minute, look at the child labor issues, I feel bad now about that
shirt I'm wearing"—I think that's a good thing.
MS. NIXON: I think that the picture can come in a much
more tangible form not, just through digital media, the Internet,
and viral imagery. It can come in the form of all of a sudden
having more options and knowing that you have opfions to buy
clothing. That is part of a slow fashion movement that's
handcrafted.
When you have a consciousness that something you are
buying can impact your local economy, can impact a small business
development, and people who are being hired at fair wage, that
makes a big difference on your consciousness. I mean the slow
fashion movement came from Italy's slow food movement, so even
the fact if you look at the parallel industry of food, we have the
traditional supermarkets, and then, alongside that we have Whole
Foods—overpriced as it may be, and then you also have the local
markets that pop up kind of in the form of pop-up retail over
weekends and weekdays.
There's a slow fashion designer in designer retailer in
Philadelphia named Sarah Van Aken, her business is called Sa Va
Fashion, and her goal is to use locally produced, regionally sourced
fashion as a model of economic development, and she wants to
scale that out.
I think that was people beginning to understand, "hmm, I
could pop into Forever 21 or H&M or Zara and pick up
something, I also could support and check out this slow fashion
designer that I have." I mean, now part of that happening more is
making sure that sources of funding for small business
development are available so that more of these types of designers
have a space and a place to sell their work.
When I talk to my students—again, this word schizophrenic
870 CARDOZO J. OF INT'L & COMP. LAW [Vol. 21:795
comes into mind—they're really spht. Some of them are very
complacent and happy with the fact they have the options of
H&M, and others it's very much in the front of their minds, so I
wouldn't say that is a generation that is gung ho about
environmentahsm and about sustainability. They have a lot of
choices in front of them, and if they could make a living by
building more of a sustainable slow fashion business model, and
they had more of the support to do that, they would.
The other opportunity, again, in Philadelphia we have Urban
Outfitters right in our town. If more of the big brands began to
explore hybrid sourcing models and hybrid approaches to
production, I know that would be interesting. I know AFA is
helping a lot of their members to explore that, so that's just one
other way to permeate more in the consciousness of consumers.
MS. KOLSUN: You think the economy has had a negafive or
a positive effect on sustainability?
MR. FIELDS: The trend towards becoming more sustainable
has been growing steadily over the past couple of years as the
economy has been in a recession, so I don't see any impact that the
economy has had on that. I think the manufacturer and distributor
of fashion, of course, looking to their bottom line, and I think
those companies see a dual benefit of: if we're more socially
responsible, our brand is going to perceived better. That's good
for the business.
So I think it's looked at as a good business development and I
don't think it's been effected by the economy. I think companies
have shown reading some materials about manufacturing
methods—like Nike and what they're requiring among suppliers
using less water and growing cotton—is actually lowering
production costs. So maybe that's a good thing in a bad economy.
MR. TREXLER: Because that lowering production cost is
key, and we have fortunately again, convergence, my word of the
day. We have one sort of study in finding that there alternative
ways that are cheaper. The technology to produce sustainable
goods, also the cost of production is going down.
I also think there's been a fortunate kind of balance. Say
several years ago, I've heard people talk about how about
sustainabihty and, in fact, I used to talk about sustainability as a
luxury good. Let's say five, ten years ago it was relatively more
expensive to do something in a more local, environmentally
friendly sort of economically sustainable fashion.
Essentially, maybe this is the end, but there are a couple of
2013] INTERNATIONAL FASHION LAW 871
other things going on besides the technological advancement and
production model advancement. There's a sense, in the broader
world, that fashion itself was a luxury good or frivolous, that it was
not something that you were going to be spending money on,
particularly the higher up you went, the more that feeling came
into play.
So marketing sustainability, marketing ethics, marketing
charitable tie-ins became a way to counteract, to make buying
clothing, not simply self-indulgence, but an act of social virtue.
And so that came into play as well.
MS. NIXON: There's a great article I recommend to everyone
called Fashion and Sustainability, it's by Virginia Gross. And one
of the things that [she] mapped out very well is that expanding our
options and sustainable fashion, it's not only restricted to
production but it's about reuse. It's about recychng. It's about a
designers' part of the production cycle all the way early on to yarn
engineering and fabric development, as well as production.
Students I teach, for example, they are a generation where
they love vintage and vintage to them means thrift stores, so that's
another approach to sustainable fashion. They are repurposing.
They're reusing. They're not necessarily buying something new
and that's a really creative approach to this issue.
MR. TREXLER: One thing you saw in Fashion Week this
year was, in addition to the "this is the style," "this is when the
model's coming down the runway wearing this," you also saw a
number of designers describing the sourcing.
This is the fabric. It was produced by this technology. This is
vintage. It's been repurposed. When they're doing it in their
production notes, when they're trying to sell the fashion, it's a sign
that something very interesting is going on.
MS. KALIVAS: No. And I have to agree with that because
one of the things that I've noticed is: it used to be you go see a
runway show, and you hear music, and you see fashion. And now
it's more important, also, to hear about what's going into it.
One of the things I do with my fashion students, I have them
develop an eco-friendly garment and part of that is sourcing
everything.
MR. TREXLER: Um-hum.
MS. KALIVAS: And one way we can do that is if you're using
companies that are certified to different standards, the Global
Organic Textile Standard, it's a lot easier. There are quite a few
other organizations out there one called Source for Style also helps
872 CARDOZO J. OF INT'L & COMP. LAW [Vol. 21:795
you to find different manufacturers.
The Global Organic Textile Standard is one where companies
processing organic fiber, and what they will do is they will be
sourced from NOP fiber. National Organic Program USDA
Certified Fiber, and from there it goes to a yarn mill.
And what's going to happen at the yarn mill? The yarn mill
has to be certified. From the yarn mill, it'll go to either weaving or
knitting facilities to make fabric, which must also be certified.
Then, you're going to cut and sew, okay. Once you get to cut and
sew, we have to make sure that all the operators and everybody's,
whatever materials they're using within the facilities, are
approved.
When I say approved, meaning different chemical standards:
they can't be toxic. There are chemicals that one may use and if
it's not on the list, you can't use it, even all the way down to the
labeling of the final textile product.
What's important here is: as people are looking for sources, I
always tell them if you can go to the country where your garment
is being made, go and see it, so that you know for yourself, but if
not, then the next best thing is to be able to know that you're
getting it from a trusted supplier, and by getting by from a trusted
supplier, you can be guaranteed that a third-party certificate body
has gone in, has seen everything. Transparency has been proven
all the way through and the transparency is going to be all the way
down from actually annual visits into the facility; but also, it's
going to have to do with following the proper documentation,
making sure that when somebody says something is organic, that
it's truly organic.
You have to have the documentation, such as transaction
certificates and company certificates that are valid and current.
MS. KOLSUN: Let me interrupt you with a quick question.
One of the things Jeff from G-III mentioned this morning was the
enormous number of components involved in the industry. And
when you talk about this kind of procedure, all I can think about
is: how about all those components.
You gave an example of a button or something that had
something from the Congo and I gave an example of working in
the textile industry and having been asked, even at night, to certify
that our Egyptian cotton was not farmed from farms where
children worked. And how impossible that is for a company to
prove. I mean, I know it because I tried.
MS. NIXON: Yes, so we begin to enter the realm of green
2013] INTERNATIONAL FASHION LAW 873
washing, where it's a slippery slope to begin to just say slap some
green on it, and we'll hope that it will slide into the realm of being
sustainable. To source, design, manufacture an apparel garment is
an incredibly complex system, so when we say that something is
organic, are we talking about from the point of crop production?
Are we talking about engineering of farm systems, and how in the
wet processing of fiber and yarn and fabric, how is it released and
admitted? How is the product shipped?
The same designer, Sara Van Aken, the entrepreneur retailer
in Philadelphia who I mentioned earlier, gives a really hysterical
example to say, "look, if I was going to be one hundred percent
green, sustainable, I would dye everything from berries that are
local. I would grow my cotton on the rooftop, and I would hand
spin my yarns, and I'd only one want to deal with consumers who
walked to my store."
So you could really stretch this to a ridiculous extent. So she's
content, let's start, with employing local workers at a fair wage,
safe conditions, at a healthy, happy environment to work in,
regionally sourced and produced, and that right there is probably,
at least, a fifty percent gain on what the current matrix looks like
for a lot of major brands.
MS. KALIVAS: Yeah, I agree with you totally on that
because sustainability is basically baby steps, and a lot of
companies can't afford to do everything perfectly all at once, and
economically, it's not feasible, truthfully. And so whenever
anybody's doing something, especially nowadays there's a
movement to go back to made in America, and consumers like
this. I mean, my father was an immigrant and he was such a
patriot. If it wasn't made in America, he wouldn't allow us to buy
it, okay.
But he passed away ten years ago. He would be having a
really hard time today.
I just want to show you this one thing on this. You can see it
up on the screen. Anybody can go this website and can find, just
by searching—you could even do it by company if you like—
actually we're going to do it by country since we're here in the
States today.
MS. NIXON: What is the website?
MS. KALIVAS: This is the GOTS working group website.
MS. KOLSUN: And basically what does it show?
MS. KALIVAS: It shows companies that are certifled to
different standards.
874 CARDOZO J. OF INT'L & COMF. LAW [Vol. 21:795
MS. KALIVAS: Right. So if you were looking for somebody
who, perhaps, was doing organic cotton fabric, you could search
organic cotton fabric, or if you wanted, somebody who was a
screen printer that was certified, you can search it that way. What
I just did today was, I just searched by companies that are in the
U.S. that are certified. You find lots of companies for babies,
okay, because baby products are very easy to sell to new mothers
and new parents.
But this is one way of finding companies. Also, if you have a
label, and on the label there would be the GOTS symbol, and what
you could do is, there would be a license. So if you see somebody
with a license number, you can actually just put in the hcense
number and search that to find out if it's a real certification, okay.
So I'm just going to go away from this PowerPoint.
MR. FIELDS: Just a point here that I think is important is:
what is the standard? And we talking about all these different
standards; this company's doing this and this company's doing that.
The FTC, I heard it mentioned in a prior panel, has issued green
guidelines to help marketers, who are making environmental
claims, make such claims and not make them in a deceptive or
unfair manner. They didn't come up with a definition of
sustainability and their research and the pubhc commenting on the
rules, and these guidelines were amended last year. There's no
definition for sustainability because, what does that mean?
I think everybody seems to want to do good and be good, but
what are the standards? And then, you'll see certain companies, as
we're talking, are creating their own standards. The big retailers
who have a lot of leverage over the suppliers—Walmart and
Kmart and Nike—are creating their own standards in their own
supply chain and either enforcing them or not because there is no
law on that here, so I think that's an important point to raise.
MR. TREXLER: It's very important for you guys as well, in
terms of whether you're in practice or going to be in practice, let's
think a little bit about the green guides and also about industry
self-regulation. With respect to the green guides, Peter's exactly
right. We have so many competing standards out there in terms of
what is sustainable, what is organic, what is eco-friendly, what is
green, and so the government's taking the position, and I think
wisely so, that it cannot necessarily regulate that one thing is ecofriendly
and so on and so forth.
But it can say if you're going to make a claim, you better be
able to back it up, or you better explain exactly why you're making
2013] INTERNATIONAL FASHION LAW 875
this particular claim. Do you have empirical evidence? Can you
explain, exactly, what it is you're saying is ecologically friendly
about your ecologically friendly item? So those two, they just
shoot right through the green guides, and again and again, in a
number of practical applications.
In the industry of self-regulation, one of the interesting things
we're seeing right now is a standardizafion of standards. That is to
say, you may have heard about the Sustainable Apparel Coalition
and the HIG index. Part of the HIG index, if you get a copy of the
spreadsheets, sort of how it's done, it's extremely granular: row
after row and row on the spreadsheet are things you have to check.
But on the consumer end, what they're going to see eventually is a
number and so it's something that is granular in terms of
inspection.
But it also has this very easy signaling value to the consumer,
and they'll be able to compare how they rate on this particular
scale, and they make a decision are they willing to pay more for
something that's say that is higher rated. And I think those two
things—if you look at Sustainable Apparel Coalifion and the HIG
index—you'll see where things are going, and also look at the
principle of the green guide, you'll get a good handle on where the
sort eco-regulation is going with the governmental and selfregulating
standard.
MS. KOLSUN: Outside of the U.S. which countries are
getting this and doing it right? I mean, who should we turn to for
guidance?
MR. TREXLER: My first thought is to say in the United
Kingdom you cannot sneeze without somebody coming and
making sure you adhere to some sort of governor, your
handkerchief, but here's some sort of government standard. I
mean I know, practically speaking, they're somewhat obsessed
with social entrepreneurship and standards, but other folks may
have some other standards.
MS. KALIVAS: Germany, Switzerland.
MR. FIELDS: Well, the EU in general has a much more
stringent regime in the environmental law area, and with respect to
the manufacturing process, and in the advertising area. So as a
general proposition, it is much more stringent over there. So if
much more stringent means better, then, they're better.
MS. NIXON: But it's interesting that Kitty Dickerson talks
about shifts and standards of production for apparel production,
apparel sourcing. So we see these more stringent regulations to
876 CARDOZO J. OF INT'L & COMP. LAW [Vol. 21:795
help us, as a society, be more mindful about the environment in
countries where production is no longer happening; in countries
that became developed world countries after a history of going
through an Industrial Revolution and having an agricultural
economy and an industrial economy.
And so, we can't miss that piece of it. I mean, it wasn't too
long ago in the United States we were an agricultural based
economy. Cotton was the economic generator for the wealth of
this country and slavery, so now we kind of stand up high and look
amiss and look scolding on these other countries that, in fact, are
doing what we once did. And what we did in order to get to the
place of wealth where we are as a nation.
So it's a little easier to start setting up these pohcies of being
socially minded when you don't have the same economic drivers to
grow your economy.
MS. KOLSUN: And this is certainly an issue that's come up in
the human rights compliance realm, which is: if we shut down that
factory because it doesn't meet our standards, look at the people
we're putting out of business. It's certainly something that's been
discussed widely. Let me ask you all, how would you advise
smaller companies to kind of start a sustainabihty program? I
mean, we recently became part of a multi-billion dollar public
company, so I was thrust on us with a consultant to help us.
So it made it a lot easier. Here's the list of what you have to
do. Let's pick seven retail stores out of one hundred and answer
these questions, and let's start there. But for a smaller company, a
privately held seventy five million dollar company, where does one
begin?
MS. KALIVAS: I think the best place to begin is to look at a
standard, okay, because all these standards are available publicly.
You can go to the GOTS website and find the standard. Just
because somebody might not be certified, doesn't mean that they
can't follow.
You'll find a lot of organic farmers who may not be NOP
certified but follow all the NOP rules, and it's the same thing
because you've got social criteria. You've got different rules as far
as fair wages, child labor—and all of these things are covered in
there, and environmental policies and goals and you have to
relook at them every year because that's the important thing.
You get companies to say, okay, I'm going to do this. I'm
doing good, I'm recycling. Well, okay, so you're recycling. What
are you going to do next year? And so you set goals to begin to
2013] INTERNATIONAL FASHION LAW Sil
look at how can I improve.
MR. TREXLER: Yeah, if I'm working with a small
company—and I have to apologize, but this is coming to one of the
things I've done in my career, which is teach entrepreneurship
classes for business schools, so this is coming from talking to
people who are running small businesses in their day. I've been
trying to help them get these things started small clothing
businesses, dry cleaning businesses, that sort of thing.
And you're talking to somebody, it's very easy for you to get a
client. It is very easy for the chent to get lost in the details, so I've
found that there are three questions that can be very helpful to
somebody who is just starting out and for whom all of this is very
confusing. And one is: you have to ask yourself if you're an
entrepreneur and you're starting a brand—and branding is key—
who am I? What do I want? What am I comfortable with?
This product is an extension of you, so what are you
comfortable having that product be? What are we comfortable
having that product be? And then, who are your intended
customers? What they are buying when they're buying your
clothing, other than just a body covering?
And so those are two key questions. A third one: what's
going to blow up? In other words, is there something along the
line in your supply chain and your retail and that sort of thing that
could put your company out of business in a single day?
Those three questions are a very good place to start. Then,
there's a lot of granularity that comes when you're developing
those questions but that's a new client, a small chent they can get
their head around [them] pretty quickly.
MR. FIELDS: If I'm advising chent, the first thing I say is:
you don't have to do anything, you're not required to do this. But
if you want to do it, and you do impose standards on yourself, and
you make those standards pubhc, you better be careful and follow
them. If you imposed standards and you impose them on your
supply chain or whatever aspect of your business, people are going
to hold you to that in the court of public opinion and the FTC.
If you're making claims that you're manufacturing in a certain
way, or you're distributing in a certain way, and you don't do it,
there's where the legal liability comes in.
MS. NIXON: I advise them to start with your user and to start
with the market—and that really should be constant the feedback
loop. Start with a user and your identified customer and
everything else will follow.
878 CARDOZO J. OF INT'L & COMP. LAW [Vol. 21:795
There's a great principle something called the Golden Circle,
which is the principle to start with. Why do you exist as a
business? And generally, businesses start with the what-and-whothey-are,
the funcflonal aspect, but if it's truly values driven, that
becomes a differentiator. And to be able to have a business model
based on locally sourced, possibly going to local funded business
plans, then that's something that really differentiates them.
MS. KALIVAS: I also think to also consider how you want to
be perceived. What do you want the world to think about your
company?
MS. KOLSUN: And selling this kind of thing, management is
really a combination of doing the right thing and the risk of one
bad act ruining your business, and we've seen this over and over in
the press cycle. Any questions?
MR. WEISMAN: I mean one thing that we're finding is: in
the U.S., the laws in California are equally stringent and, in some
ways, more stringent than Europe. So part of it is: where you want
to do business? And if you're somebody who's retailing
throughout the United States, whether you're talking about Prop
65, which probably you should. There are other laws that tell you
"who makes it."
MS. KOLSUN: Plastics bags, I have a whole chart of plastic
b a g MR.
WEISMAN: [Interposing] We're talking about skin and
selling very exotic skins, and even how you acquire information in
terms of whether it's online information or information while
you're purchasing. So the issue, then, is the lowest common
denominator.
For a little company, it might be difficult, but it's sort of what
you were saying Barbara .. about just selhng locally and having to
comply with New York law. But if you have an international or a
national company, well, then the facts become more comphcated.
So it is a big issue and I think that's the other aspect that Jeff was
talking about, you want to be ahead of the curve with that. It's not
just conservative style but also, in terms of branding and
marketing, so sustainability, organic those are buzz words that
people are willing to pay more for.
So Whole Foods, it is can of pop, that's club value. By the
way, H&M is going for the sustainabihty, so they're getting the
picture.
MR. TREXLER: And they've come under a lot of pressure
recently over the chemicals used that sort of thing.
2013] INTERNATIONAL FASHION LAW 879
MR. WEISMAN: Some of the bamboo a lot of the U.S
companies use: you just have to see it.
MS. KALIVAS: H&M was also a part of the Better Cotton
Initiative too, which if you can't do organic, you can do integrated
pest management. So again, it's baby steps. And you do the best
that you can do.
MS. KOLSUN: Are there questions? Great, thank you.
MR. FIELDS: I have a question for Georgia. When did you
implement, in your curriculum, creating an eco-friendly product
because —
MS. KALIVAS: [Interposing] 2007.
MR. FIELDS: —that's interesting, so what prompted your
school to do that?
MS. KALIVAS: Well, I had just finished my masters and I did
my thesis on sustainability in the textile industry, and basically, I
just learned too much. And what happened was I had to share
with everybody, including my students.
And I thought it was a great project for them to do because,
instead of me spouting out facts to them, it forced them to start to
sourcing and to start looking and going outside, going on the
Internet, asking or calling companies to see what they could
provide for them. And what I found, the feedback I got from that
also was I've had students contact me two years later, they're in a
foreign country, and they want to start doing their own branding.
MR. FIELDS: [Interposing] in 2007 you could make a
generalization that the students said: why are we doing this? Why
does it matter? Whereas, today they would say: yeah, I want to
see that in my fashion class.
MS. KALIVAS: Actually, they were sfill as excited in 2007 as
they were today, which was really nice, and I think part of it, in
2007, was that it was something for them to do.
MR. FIELDS: Um-hum.
MR. TREXLER: Yeah, students are easy marks.
MS. KALIVAS: Yeah.
[Laughter]
MS. KALIVAS: So, yeah, in that sense, they enjoyed the fact
that they could do something that wasn't just having to put
together a garment.
Okay, let's go back. Okay, let's see if this will work now,
thank you, Jessica.
[Movie playing]
MS. KOLSUN: Wow, that wasn't fun.
880 CARDOZO J. OF INT'L & COMP. LAW [Vol. 21:795
MR. TREXLER: While she's working that through, I want to
make an important point. We were talking about the students, one
of the things that you see in the do-gooder realm for years and
years is the students come to you with a lot of enthusiasm and it's
very easy to get caught up in that when you're teaching. And it's
fair to say, okay, well, they're so enthusiastic about doing good,
Whitney Houston Children Are Our Future, flowers, sunshine,
everything like that.
But I think what important is what Georgia's doing, what
everybody's doing here, is why you're in school, to get the skills, so
that you can perpetuate that after you've graduated. I want to
build on something that was talked about earher this morning. In
fashion law, there's this temptation to see it all about air kisses and
gushing over styles and that sort of thing, but as an attorney and as
a consultant, you need to know it as well as or better than the
designers themselves. So you can actually take this sustainability
interest of yours—and of theirs—and make it sustainable for the
long term.
MS. KOLSUN: Great, thanks.
[Movie playing]
MS. KALIVAS: And you can actually order that film if you
want it. It's about a seventeen-minute film. You just saw the real
fast version of it.
There was something that you mentioned before about the
different standards. There are so many standards. This particular
standard was meant to be the standard to end all standards, and it
was for about a year until some other companies started to come
out with more standards.
The thing that this standard has though that the other ones
don't is the social and environmental criteria, okay. Some of them
are just, okay, it's organic, and we're proving it's organic all the
way through, and the fact that you couldn't plant organic cotton
with conventional cotton. And you can't use any GMO fibers with
this.
MS. KOLSUN: Thank you.
MS. KALIVAS: You're welcome.
MS. KOLSUN: I think if there are no more questions, our
time is up. I want to thank the panel for their time. It was a great
panel. And thank you all for coming.
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