$20 million settlement agreement reached in labor trafficking cases coordinated by SPLC on behalf of exploited Indian guest workers

A $20 million settlement agreement has been reached to resolve numerous labor trafficking lawsuits – spearheaded by the SPLC – against Signal International, a Gulf Coast marine services company that was found liable by a federal jury earlier this year for defrauding and exploiting workers it lured from India. 

The company, based in Mobile, Alabama, will issue an apology to guest workers who also sued in Texas and Louisiana. The agreement, if approved by the U.S. Bankruptcy Court, would resolve the 11 lawsuits still facing the company, which has filed for Chapter 11 bankruptcy protection. Those lawsuits represent more than 200 workers with the same claims as those of the workers in the successful SPLC lawsuit tried earlier this year.  

“We are happy to have reached an agreement and hope to see it quickly approved by the court,” said Jim Knoepp, SPLC deputy legal director. “These workers have waited seven long years for justice. This agreement and apology from the company will allow the workers to finally move on with their lives. It also serves as a warning to companies that might exploit guest workers.”

In February, a federal jury in New Orleans awarded $14 million in damages to five Indian guest workers represented by the SPLC, finding that the company and its agents engaged in labor trafficking, fraud, racketeering and discrimination. The jury also found that one of the plaintiffs was a victim of false imprisonment and retaliation.  The case was the first of the dozen lawsuits against Signal to go to trial.  Together, the suits comprised one of the largest labor trafficking cases in U.S. history. Another case was set to go to trial this month.

“This agreement will ensure some compensation for these workers who only sought a better life when they took these jobs,” said Alan Howard, SPLC board chairman and a partner in Crowell & Moring’s New York office. “They persevered and won justice. This agreement sends a powerful message that guest workers have rights and cannot be exploited.” 

Crowell & Moring, LLP, served as the SPLC’s co-counsel in the trial along with the American Civil Liberties Union, the Asian American Legal Defense and Education Fund, Coschignano & Baker, and the Louisiana Justice Institute.

The legal team was honored for its work on the case in Montreal last night when it received the Public Justice Foundation’s Trial Lawyer of the Year award.

Daniel Werner, SPLC senior supervising attorney, speaks about the SPLC’s lawsuit against Signal. The legal team received the Public Justice Foundation’s Trial Lawyer of the Year award for its work on the case.

In the aftermath of Hurricane Katrina, Signal used the U.S. government’s H-2B guest worker program to import nearly 500 men from India to work as welders, pipefitters and in other positions to repair damaged oil rigs and related facilities.

The workers each paid the labor recruiters and a lawyer between $10,000 and $20,000 or more in recruitment fees and other costs after recruiters promised good jobs, green cards and permanent U.S. residency for them and their families. Most sold property or plunged their families deeply into debt to pay the fees.

When the men arrived at Signal shipyards in Pascagoula, Mississippi, beginning in 2006, they discovered that they wouldn’t receive the green cards or permanent residency that had been promised. The company also forced them each to pay $1,050 a month to live in isolated, guarded labor camps where as many as 24 men shared a space the size of a double-wide trailer. None of the company’s non-Indian workers were required to live in the company housing.

Under the guest worker program, workers are not allowed to change jobs if they are abused but face the loss of their investment if they are fired or quit. An economist who reviewed the company’s records estimated the company saved more than $8 million in labor costs by hiring the Indian workers at below-market wages.  

In March 2007, some of the SPLC’s clients were illegally detained by the company’s private security guards during a pre-dawn raid of their quarters in Pascagoula. Two were detained for the purpose of deporting them to India in retaliation for complaining about the abuses and meeting with workers’ rights advocates. One worker was so distraught he attempted suicide. The SPLC filed suit in 2008.

The SPLC has documented the abuses within the nation’s broken H-2B guest worker program and the desperate need for reform in its report Close to Slavery.  It found that guest workers are routinely subjected to human trafficking, cheated out of wages and held virtually captive by employers or labor brokers who seize their documents.

Unprecedented collaboration

The other lawsuits facing Signal International and its agents were filed after a judge did not grant class action status in the SPLC case, which would have allowed the suit to benefit most of Signal’s guest workers. The SPLC coordinated an unprecedented legal collaboration that brought together nearly a dozen of the nation’s top law firms and civil rights organizations to represent, on a pro bono basis, workers excluded from the original SPLC suit. 

The settlement agreement was the result of an extraordinary collaboration.

After a federal jury found Signal International liable for defrauding and exploiting the workers – and facing 11 other similar lawsuits – the company publicly stated its intention to file for bankruptcy.

As a result, bankruptcy expertise was needed to ensure that the rights of the workers – many with cases pending against Signal – were protected and that they obtain a favorable outcome in the bankruptcy. Attorneys from several of the nation’s leading law firms and CohnReznick[JK1] , an accounting, tax, and advisory firm, undertook this task. 

“By using the deep restructuring experience at Skadden and among terrific co-counsel at the other firms, we were able to find a way to bring all of our clients some measure of justice,” David Turetsky, a corporate restructuring partner at Skadden, Arps, Slate, Meagher, and Flom LLP said. “Through an extraordinary level of creativity, dedication and professionalism, we were able to arrive at a settlement that we anticipate, subject to approval and implementation, will provide meaningful compensation for the trafficking victims.”

Restructuring and litigation attorneys Turetsky, Nick Kodes, and Eben Colby of Skadden, Arps, Slate, Meagher, and Flom LLP; Nathan Coco of McDermott Will & Emery; Shane Ramsey and Matt Hindman of Kilpatrick Townsend & Stockton LLP; and Daniel Adams, Mark Broude, and David McElhoe of Latham & Watkins LLP led the teams that contributed hundreds of pro bono hours to ensure the maximum recovery for the former guest workers while safeguarding their rights. 

Cliff Zucker and Kevin DeLuise of CohnReznick, working on a pro bono basis, drove the financial analysis that helped the attorneys push towards a settlement.

In addition to the law firms mentioned above, attorneys with Crowell & Moring LLP; Equal Justice Center (Texas); Sutherland, Asbill & Brennan LLP; DLA Piper LLP; Manatt, Phelps & Phillips LLP; Fredrikson & Byron P.A.; Kaye Scholer LLP; and Covington & Burling LLP also represented groups of former guest workers awaiting trial.