SEIU Local Socked With Big Verdict for ‘Disparagement’

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By Lawrence E. Dubé

Sept. 7 — A Texas state court jury delivered a verdict of more than $5.3 million against a Service Employees International Union local that waged a damaging corporate campaign against a non-union janitorial service company ( Prof'l Janitorial Serv. of Houston, Inc. v. Service Employees Local 5 , Tex. Dist. Ct., No. 2007-27181, jury verdict 9/6/16 ).

Professional Janitorial Service of Houston Inc. alleged that SEIU Local 5 made false and disparaging claims and statements about the company. In the Sept. 6 verdict the jury found 10-2 the union local was responsible for the company’s lost profits. SEIU’s international union was not named as a defendant in the case.

Local 5 failed to convince a Texas appeals court to terminate the case before trial, and it may now face a major challenge to get the large verdict set aside.

However, the union called the verdict an “assault” on First Amendment rights and said in a statement it intends to appeal.

Lawsuit Followed Union Campaign

PJS filed the lawsuit in the Harris County, Texas, district court in 2007.

Nathan Campbell, one of the attorneys at Ahmad, Zavitsanos, Anaipakos, Alavi & Mensing, P.C. who represented the company, told Bloomberg BNA Sept. 7 the company took action after it was targeted by Local 5 in connection with a Houston-area “Justice for Janitors” campaign.

Five of Houston’s six biggest janitorial contractors signed neutrality agreements with the union, but PJS refused to sign an agreement and said it would recognize Local 5 only if employees voted for union representation in a secret ballot election, Campbell said.

Local 5 responded by launching a corporate campaign against PJS, which the company said was marked by false allegations.

In 2013, a Texas appellate court denied Local 5’s interlocutory appeal of a trial court ruling that rejected the union’s bid for summary judgment in the lawsuit (415 S.W.3d 387, 2013 BL 248219 (Tex. Ct. App. 2013)).

The court said the case could proceed to trial because the union made statements about PJS on its website and in fliers, handbills, letters, reports, e-mails and speeches accusing the company of wage and hour law infractions and other labor law violations.

“The union’s admitted goal in publishing these accusations to PJS’s customers and others was to cause PJS to lose business to union contractors,” the court said.

Jury Verdict Was Based on Lost Profits

The union campaign was harmful to PJS, and the company lost several accounts, Campbell told Bloomberg BNA.

The company’s lawsuit was submitted to the state court jury on a theory of business disparagement, and 10 jurors agreed on the $5.3 million to compensate PJS for lost profits attributable to Local 5’s conduct. A unanimous verdict wasn’t required under Texas law.

The 10 jurors signed a verdict form stating that Local 5 disparaged PJS’s business by publishing statements that the company systematically failed to pay employees for hours worked and instructed janitors to perform work off the clock.

The SEIU local also disparaged the company by claiming it fired, threatened or refused to hire janitors who supported a union, the jury found.

The large jury award didn’t include any punitive damages. The jury found the $5.3 million award was fair compensation for monetary losses that were “proximately caused” by Local 5’s statements.

Attorneys for Local 5 didn’t immediately respond to Bloomberg BNA’s Sept. 7 request for comment on the verdict, but Local 5 provided a statement contending the jury trial was “riddled with procedural errors and blatant appeals to the prejudices of the jury.”

PJS failed to prove by clear and convincing evidence that the union made any false or defamatory statements that were outside the protection of the First Amendment and federal law, the union said in its statement. The local also argued PJS failed to offer reliable evidence that any specific statements caused economic harm to the company.

Ahmad, Zavitsanos, Anaipakos, Alavi & Mensing P.C. in Houston represented Professional Janitorial Service of Houston Inc. Deats, Durst & Owen P.L.L.C. in Austin, Texas represented Service Employees Local 5.

To contact the reporter on this story: Lawrence E. Dubé in Washington at ldube@bna.com

To contact the editor responsible for this story: Susan J. McGolrick at smcgolrick@bna.com

For More Information

Text of the jury verdict is available at http://src.bna.com/imB.

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