A California appellate court recently overturned a $17 million dollar jury verdict that Sutter Health obtained against UNITE-HERE. The case began when UNITE-HERE decided to enmesh Sutter in a corporate campaign it was waging against Angelica Textile Services, a commercial laundry service company. In an effort to put pressure on Angelica, UNITE-HERE targeted its customers, including Sutter. Specifically, the union sent postcards to expectant mothers alleging that Sutter did not take sufficient precautions to ensure that its linens were "free of blood, feces and harmful pathogens." The allegations were untrue, and Sutter sued UNITE-HERE for defamation. Sutter prevailed when the jury awarded it damages on 12 of its 14 claims.

UNITE-HERE appealed, arguing that the trial judge improperly instructed the jury on the requisite legal standard for a defamation claim. In most defamation cases, the defamed party will prevail if it can show that the statement at issue is not true and the defendant did not use "reasonable care" in determining whether the statement was true or false. In cases involving labor disputes, there is a higher standard and the defamed party must show that the statement at issue is not true and that the defendant made the statement with "actual malice," meaning that the defendant knew the statement was false or acted recklessly in determining whether the statement was true or false. (This "actual malice" standard is the same standard that is used in evaluating defamation claims when a public person is involved, such as a politician.) The appellate court agreed with UNITE-HERE and overturned the jury verdict. It is possible the matter will now be retried.

The Sutter Health defamation trial court verdict was one of the best results to date to which employers could point when faced with the obfuscations, misstatements, half-truths and outright lies that are the hallmark of some corporate campaigns. Many will now be looking to see what effect the appellate court’s decision will have on other corporate campaigns. Employers subject to corporate campaigns have attempted different legal responses, such as RICO suits, with mixed results.

This entry was written by John Doran.