Metropolitan News-Enterprise


Thursday, July 22, 2010


Page 1


C.A. Overturns Huge Defamation Judgment Against Union

Panel Applies Times v. Sullivan to Secondary Labor Dispute




The U.S. Supreme Court’s “actual malice” standard applies to a suit accusing a labor union of defaming an opposing party in an organizing dispute, even when that party is not the targeted employer, the Third District Court of Appeal ruled yesterday.

Presiding Justice Arthur Scotland, writing for the court, said a Placer Superior Court judge erred in telling jurors that they could find the service workers’ union UNITE HERE liable for failing to take reasonable care before claiming that certain hospitals were having their laundry washed in an unhygienic manner.

Those claims were part of the union’s campaign to organize the laundry chain with which the hospitals did business. Scotland said the judge should have given a requested instruction based on New York Times Co. v. Sullivan (1964) 376 U.S. 254 and later cases holding that a public figure cannot recover for defamation absent clear and convincing evidence the defendant knew its statements were false or made them in reckless disregard of the truth.

The decision reverses a judgment for more than $17 million in favor of Sutter Health, which claims it was unfairly targeted in the union’s campaign against Angelica Textiles, Inc.

Angelica is a nationwide healthcare laundry company, one of the largest in that industry, with about 31 facilities. Sutter Health’s laundry was washed by another, unionized company until it was acquired by Angelica in 2004, two years before its agreement with UNITE HERE expired.

UNITE HERE represents about 450,000 workers in the garment industry, industrial laundries, and food service establishments across the continent, including workers at a number of Angelica facilities, and was actively attempting to organize the company’s other workers.

The union had been critical of certain washing practices at Angelica, claiming they violate OSHA standards dealing with the transmission of blood-borne pathogens, and has conducted informational leafleting in front of hospitals served by Angelica.

The alleged defamation at the heart of the lawsuit occurred in March 2005, when UNITE HERE mailed numerous postcards warning expectant mothers that their babies might be at risk if they gave birth at Sutter.

The cards read in part:

“Reports have surfaced that Angelica, the laundry service utilized by Sutter, does not ensure that ‘clean’ linens are free of blood, feces, and harmful pathogens.

Protect your newborn.

“Choose your birthing center wisely.


“UNITE HERE is engaged in a labor dispute with Angelica Textile Services.”

The hospital chain sued the union for defamation, trade libel, and intentional interference with prospective economic relations based on the publication of the postcard. The union unsuccessfully attempted to remove the case to federal court, the district judge observing that he matter could “technically be called a labor dispute” but finding that the claims did not raise a federal question.

At trial, Sutter health presented evidence regarding the impact the postcards were having on the opinions of women of childbearing age towards the company, and of an actual downturn in business.

It also presented experts to testify as to the high quality of its hygiene and its laundry-handling practices.

UNITE HERE, while admitting they had no evidence of anyone every acquiring an infection from linen laundered by Angelica and used by Sutter health, presented testimony from its employees that they had observed health and safety problems at Angelica facilities and received reports of such problems from the company’s employees.

Scotland, writing for the Court of Appeal, said Superior Court Judge Charles Wachob should have given the requested New York Times instruction because the postcard was a “labor dispute communication”—making Sutter Health, as a party to the dispute, equivalent to a public figure under controlling federal law.

Federal cases defining “labor dispute,” the presiding justice wrote, make clear that “secondary targets” such as Sutter Health must meet the same standard as primary targets in order to recover damages for defamation. While Sutter Health may have had a meritorious unfair labor practice claim against the union, the presiding justice pointed out in a footnote, it chose to eschew that remedy in favor of seeking tort damages in state court.

The instructional error, the presiding justice continued, was prejudicial.

“Whether UNITE HERE can be considered to have purposely avoided the truth and fabricated the publication, or whether it merely made a good faith reasonable inference based on the investigation it made and the scientific evidence available to it, is a question of fact for [a] jury; and we cannot say, as a matter of law, that UNITE HERE fabricated the publication,” he explained.

In unpublished portions of his opinion, Scotland concluded that Sutter Health will have the burden of proving falsity on remand, and that the jury’s finding that the union intentionally interfered with the business relationship between Sutter Health and Angelica falls with the defamation verdict but may be relitigated on remand. He rejected the union’s claim that a plaintiff’s expert lacked foundation for testifying that the plaintiff suffered tens of millions of dollars in damages as a result of the campaign.

The case is Sutter Health v. UNITE HERE, 10 S.O.S. 4166.


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