California Labor & Employment Law Blog

A jury in Placer County recently came back with a $17.3 million defamation verdict in a defamation lawsuit brought by Sutter Health against UNITE HERE, one of the nation's largest unions.  The big verdict highlights the increasing move of organized labor away from grass roots organizing of workers and toward so-called "corporate campaigns" designed to pressure Corporate leaders and shareholders. Traditionally, unions would achieve recognition by persuading workers that union representation was in their interests and attempting to obtain a majority of support in a recognition election supervised by the National Labor Relations Board.

As the popularity of union membership has dwindled, however, large unions have been increasingly unable to achieve majority status in contested, free elections. To maintain their financial viability, which depends on a steady supply of dues-paying members, unions are more likely now to try to forego the election process altogether by pressuring the employer to simply recognize them as the exclusive bargaining agent for the workers.

Why would an employer agree to this? That is where the union's "corporate campaign" comes into play. A "corporate campaign" merely refers to a coordinated strategy of pressuring corporate managers and shareholders that it is healthier for their bottom line to simply accede to union demands rather than endure the continued attacks. The following are some of the pressure tools most frequently used as part of a corporate campaign.

• Encouraging media reports that damage the Company's goodwill and criticize its products and business practices.
• Encouraging and financing civil litigation, including class action lawsuits for alleged discrimination and Labor Code violations.
• Lobbying state and local lawmakers to enact laws and ordinances that are against the Company's interests.
• Obstructing Company projects with zoning or environmental objections.

Typically, the union attempts to distance itself from these activities by using various front organizations, often nominally established as tax-exempt, non-profit "educational" groups. If the Company brings a legal challenge, the Union or its affiliated front group will typically argue that its conduct is privileged under the First Amendment.

In the Sutter Health case, however, the jury decided that the Union's hard-ball tactics had crossed the line. In particular, the Union mailed out thousands of post-cards to expectant mothers telling them that if they gave birth at a Sutter Health hospital they could become infected from linens contaminated by "blood, feces and harmful pathogens."

The jury's $17.3 million did not include any award of punitive damages and was intended to compensate the hospitals for their financial losses. The Union has vowed to appeal on grounds that its conduct was protected by the First Amendment and that a higher standard for proving defamation should apply in cases involving a "labor dispute."