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Glove Maker Forced Labor Lawsuit Not Over

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A California judge says he needs to know more about Smart Glove Holdings accused of forced labor before dismissing a lawsuit filed by AirBoss

Santa Clara, CAA California federal judge last month said he won’t dismiss a Smart Glove Holdings forced labor lawsuit filed by AirBoss until he has more information to bring before a California court. The Malaysian glove maker is trying to have the $68 million California labor lawsuit tossed.

AirBoss, also known as ADG, is a personal protective equipment unit within a larger rubber products company. It contracted Smart Glove in June 2021 to produce over 18 million boxes of disposable nitrile gloves related to the COVID-19 pandemic. ADG had a contract with a  U.S. Department of Health and Human Services (HHS) when the order reached U.S. ports. But in September 2022 ADG filed a complaint in the U.S. District Court for the Central District of California alleging that the glove maker failed to disclose that they were under investigation by the U.S. Customs and Border Protection (CBP) for using forced labor, and that Smart Glove deliberately concealed a CBP probe into its labor practices.

AirBoss chose Smart Glove as its supplier after a number of discussions with the company and a related distributor between April and June 2021. During those discussions, AirBoss says it was clear to Smart Glove that the gloves were destined for HHS, which meant they would have to meet government requirements. But Smart Glove knew during that time that it was being investigated by CBP over forced labor allegations, and intentionally did not disclose that information to AirBoss.

CBP in November 2021 issued a Withhold Release Order (WRO) against Smart Glove (which is a group of companies in Malaysia) based on information that reasonably indicated their production facilities utilized forced labor. In its newsletter, CBP said:

In response to the implementation of that WRO, Smart Glove has taken various measures to address the indicators of forced labor that prompted the WRO, to ensure that it is not utilizing forced labor throughout its supply chain. Smart Glove’s remediation efforts included repayment of recruitment fees, improvements to living conditions, and implementation of new worker-centered policies and procedures. CBP has determined the conditions of forced labor identified in the WRO have been remediated. Accordingly, the WRO has been modified and shipments of Smart Glove’s synthetic gloves received on or after April 26, 2023 will no longer be detained at U.S. ports of entry. 

Then in April 2023, CBP modified its restrictions against Smart Glove after determining its “successful demonstration that their products are no longer produced in whole or in part with forced labor. Effective immediately, CBP will allow Smart Glove shipments to enter U.S. commerce, provided the imports are otherwise in compliance with U.S. laws.”

But it’s not over for AirBoss, which says it is still on the hook for over $68.5 million in damages: more than $11.6 million in costs related to the CBP's Withhold Release Order such as for demurrage and storage; over $12.3 million in costs for procuring alternative gloves; and more than $12.6 million in lost profits and potential inventory losses above $32 million, according to AirBoss and reported by Law360.

The case is AirBoss Defense Group LLC v. Smart Glove Holdings Sdn. Bhd. et al., case number 2:22-cv-06727, in the U.S. District Court for the Central District of California.


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