Author of www.HotelLawBlog.com
13 November 2006
Hotel Lawyer on hotel labor and employment issues. On July 21, 2006, a Superior Court jury in rural Placer County California — where you still expect jurors to know the value of a dollar — found Unite Here guilty of “fraud, malice or oppression.” This time, Unite Here — the union that represents hotel and hospitality workers — was caught red handed in its typical outrageous behavior. And it got slapped … but good. The jury hit the union with a $17.3 million (actually $17,292,850) verdict for intentionally and maliciously acting to harm the business of the Sutter Health not-for-profit hospitals and birthing clinics. This is one of the biggest verdicts ever awarded against a labor union in the United States. As usual, I looked to Marta Fernandez, my hotel labor attorney partner, for insight and guidance.
Marta says, “This case is another very important one for all employers. It is right up there with Oakwood and Cintas. It is both educational as to the ‘hard ball’ tactics Unite Here regularly employs, shows the union’s true colors, and demonstrates that when employers will stand up to outrageous union threats and behavior, they finally may be vindicated and justified.” Listen to this story! If you are an employer, it will warm your heart. If you are a callow union boss, it should give you second thought.
“We are pleased that leaders of Unite Here have been held legally accountable for recklessly frightening patients and the public through outrageous and false allegations,” said Michael Roosevelt, chair of the Sutter Health Board of Directors. “We truly hope this decision encourages labor unions like Unite Here to think twice before using shameful scare tactics that ultimately hurt patients in an attempt to advance a political agenda.”
Unite Here is on of the nation’s largest labor unions. It is one of the dominant unions in the hospitality industry. It is actually a combination of UNITE (formerly the Union of Needletrades, Industrial and Textile Employees) and HERE (Hotel Employees and Restaurant Employees) which merged in July 2004.
Sutter Health hospitals and birthing centers, which were the plaintiffs seeking redress for Unite Here’s malicious attacks, are some of the most esteemed not-for-profit hospitals in northern California. They include respected health care facilities, such as Alta Bates Summit Medical Center in Berkeley and Oakland, and California Pacific Medical Center and St. Luke’s Hospital in San Francisco. Sutter Health is a family of not-for-profit hospitals, physician organizations and other medical services that share resources and expertise to advance health care quality, serving more than 100 communities in Northern California.
The intentional fraudulent, malicious and dastardly acts of Unite Here — Inflammatory outrageous, false allegations mass-mailed to the target’s entire customer base.
Marta says that Unite Here’s real beef was not originally with Sutter Health. It was with a laundry company (Angelica Textile Services) that Sutter Health used. But Unite Here — already representing 3,500 of Angelica’s employees — launched a nation-wide campaign against Angelica Textile Services to organize all the rest of its employees.
As part of its campaign against Angelica, Unite Here contacted Angelica’s customers, including Sutter Health. In a February 18, 2005 letter to the hospital chain, the union discussed its labor dispute with Angelica and warned that if Sutter Health continued to do business with Angelica, the hospital chain could face “service interruptions” in the form of delayed or halted delivery of laundry, according to the complaint. The union warned Sutter Health to “protect its interests.”
Remember! Sutter Health hospitals and birthing centers include some of the most prominent birthing centers in the State. It was only an innocent customer of Angelica, the company Unite Here was going after.
Blood! Feces! Harmful Pathogens! ??? Give me a break!
So — because of its ruthless campaign against another employer (Angelica Textiles) — in early April 2005, Unite Here sent a postcard to approximately 18,000 women of child bearing age in Sutter Health birthing centers’ market areas. The recipients included past, present, and prospective Sutter Health patients living in Northern California.
The front of the postcard had a picture of a sleeping infant and stated: “Expecting? You may be bringing home more than your baby if you deliver at a Sutter birthing center.” The back of the postcard went on to say:
“You will do anything to protect your vulnerable newborn from infection — but your Sutter birthing center may not be taking the same precautions. 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.”
Blood? Feces? Harmful pathogens? The jury found that these allegations were proven to be completely false, malicious, intentional and designed only to hurt the business of Sutter Health hospitals to gain an edge in a labor dispute with a company that was a customer of Sutter Health! Not even the main target of organizing efforts. Just a tool. A weapon against another legitimate business. Is this what Unite Here is all about? Extracting dues from workers at any cost?
But Unite Here tried to hide its shame. The postcard mailed to Sutter Health’s patients carried a New Jersey bulk mail permit but no sender name or address. The only clue to the mailer’s origin was a tiny statement noting: “Unite Here is engaged in a labor dispute with Angelica Textile Services.” Unite Here did not have a labor dispute with Sutter Health or any of its affiliates.
This conduct was appalling. “It’s shameful that a union that is supposed to represent our employees would support a campaign to scare away our patients by disparaging the quality of care provided by the very people they claim to represent,” said Barbara DeBaun, RN, MSN, CIC, director of infection control and patient safety for California Pacific Medical Center. “No one knows more than our dedicated caregivers that providing high-quality care is our top priority. To suggest otherwise is an insult to the very employees that [the union] is supposed to represent.”
The Jury Verdict and Outcome.
Marta Fernandez feels that this case is one of the most gratifying for employers and management labor attorneys who have been struggling with the ruthless tactics of Unite Here and its brethren.
The plaintiff’s complaint denied that there were any patient complaints or reports that laundered linen was contaminated and alleged that UNITE HERE, whose representatives serve on labor-management safety and health committees at the three facilities that provide laundry services for Sutter Health, knew that there had been no reports that laundered linens contained “blood, feces, or harmful pathogens.” The complaint alleged that the union intentionally sought to injure Sutter Health’s business.
The Union’s take on all this.
Even more interesting is the union take on all this. Except for the last sentence of this section or the one comment noted in [ ]’s, all of the following is verbatim from Unite Here’s web site on the Sutter Health verdict:
The jury’s decision, if upheld, is one of the highest ever awarded against a labor union in the United States, and could cripple the finances of Unite Here, a national union of about 450,000 workers in hotels, industrial laundries and apparel manufacturing.
Unite Here has used similar tactics [to those of the Sutter Health case] before in other parts of the country, using testing to prove its unsafe laundry claims, said Richard Hurd, professor of labor relations at Cornell University.
“It’s called secondary pressure,” he said. “It puts pressure on the ultimate consumer, who is the only one with the real economic power.”
In response, it is not uncommon for companies to use civil or criminal laws to try to thwart unions, said Hurd.
“Sometimes they might use racketeering laws to stop unions, and the companies have gotten a lot of mileage out of that,” he said.
“It leaves unions in a really weak state, and it certainly fits the mold of companies playing hardball with unions.”
Lichtenstein said the practice dates back to a 1906 case when workers at a hat manufacturing company in Danbury, Conn., were fined for urging customers to boycott the company’s hats.
“Here, (Sutter) has gone to a civil court to criminalize ordinary, perfectly normal propaganda techniques,” he said.
“And that’s troubling.”
That is the union’s take. My take is: “Troubling to Whom?”
The jury’s verdict.
- After three days of deliberations following a three week trial, the jury awarded Sutter Health and its plaintiff hospitals $17,292,850 in damages for harm to Sutter Health’s business and reputation.
- As Unite Here said on its website, this is one of the largest verdicts ever rendered against a union in the United States. Many, myself included, think it is well justified and should serve as a warning that there are limits to outrageous behavior of unions.
- Of course, the union says it will appeal. “We will be appealing this decision. We feel confident we will win on appeal,” said Amanda Cooper, a spokeswoman for Unite Here, describing the verdict as unprecedented. “We see this as an attack on labor unions and our ability to protect workers.”
- Sutter officials, who have long had a prickly relationship with health-care unions, were basking in a long-sought victory. “Labor unions continue to elevate their rhetoric … but this postcard was a new low in labor’s reckless efforts to advance their self-interested political agenda,” Bill Gleeson, a Sutter Health spokes person, told the San Francisco Business Times. “The jury clearly recognized this and acted accordingly.”
- Sutter officials said the money will be invested in unspecified patient care initiatives, although an appeal of the verdict is likely.
The bottom line — what this all means.
After talking to Marta Fernandez about this, here is my opinion on the bottom line of this case:
- The union is appealing.
- This case was a vicious attack on a company that had no problem with the union — except it was a customer of a company that was targeted by Unite Here and SEIU.
- The union launched a massive slanderous campaign against all of the poor target’s customers with incredibly inflammatory lies about the very health and safety of the a hospital’s facilities and services.
- Corporate America and organized labor are embroiled in an increasingly tense war over organizing efforts in light of recent court decisions and regulatory actions that have both sides crying foul.
- Unions have taken organizing to entirely new levels, where its not just about recruiting employees anymore, but about embarrassing and harassing stockholders, board members and company bankers.
- The unions are not trying to appeal to the employees. That’s secondary. Today, they’re trying to pressure the employer in any way they can.
- The union’s goal is to force employers to accept the union’s demands or face a costly legal battle and public embarrassment.
- Adding to employers’ unionization fears, is a bill pending in Congress, the Employee Free Choice Act, which limits the rights of employers to interfere in unionization efforts.
- The unions are appealing to the public for support. These kinds of defeats are merited with the union’s reckless and irresponsible behavior, and will ultimately show the unions for what they are — dues hungry predators who will do anything to get the blood of hard working Americans.
- Workers have the right to form or join a union. But they also have the right not to join a union and have the union suck their earnings out in dues or otherwise abuse them. Unions do not have a great record in investing their workers’ pension funds. Employers have a legitimate concern, if not a duty, to resist the extortionist demands of union bosses to knuckle in and give over the hapless employees to the hardened union bosses.
- Put this in your file along with the decisions involving Cintas and Oakwood. Also, consider this in the context of many union contracts to be negotiated in light of recent labor settlements and many impending neutrality agreement wars. There is hope!
Marta says, “Experienced labor management lawyers know that the best way to gain leverage over the union is to turn the tables and make the union defend its actions in several arenas, as appropriate.” Sutter Health gives encouragement that unions are not above the law, and is another area in which we can make unions accountable for their often outrageous behavior.
Marta and I have some more thoughts on the significance of Sutter Health, which I will share with you in an upcoming posting over the next few days. See “Hotel Labor & Employment Lawyer Report — Sutter Health Implications Part II.”
Marta Fernandez is a senior member of the Global Hospitality Group® and a partner in the Firm’s Labor & Employment Group. A management labor lawyer with more than 20 years’ experience, Marta specializes in representing hospitality industry clients in all aspects of labor and employment, including labor-management relations such as union prevention, collective bargaining for single as well as multi-employer bargaining units, neutrality agreements and defense of unfair labor practice charges before the NLRB; implementation of preventative management strategies, such as executive training, arbitration enforcement and policies and procedures; defense of administrative and litigation claims, such as employee claims of sexual harassment and discrimination. For more information please contact Marta Fernandez at 310.201.3534 or MFernandez@JMBM.com.
Our Perspective. We represent developers, owners and lenders. We have helped our clients as business and legal advisors on more than $87 billion of hotel transactions, involving more than 3,900 properties all over the world. For more information, please contact Jim Butler at firstname.lastname@example.org or 310.201.3526.
Jim Butler is one of the top hotel lawyers in the world. GOOGLE “hotel lawyer” or “hotel mixed-use” or “condo hotel lawyer” and you will see why.
Jim devotes 100% of his practice to hospitality, representing hotel owners, developers and lenders. Jim leads JMBM’s Global Hospitality Group® — a team of 50 seasoned professionals with more than $87 billion of hotel transactional experience, involving more than 3,900 properties located around the globe.
Jim and his team are more than “just” great hotel lawyers. They are also hospitality consultants and business advisors. They are deal makers. They can help find the right operator or capital provider. They know who to call and how to reach them. They are a major gateway of hotel finance, facilitating the flow of capital with their legal skill, hospitality industry knowledge and ability to find the right “fit” for all parts of the capital stack. Because they are part of the very fabric of the hotel industry, they are able to help clients identify key business goals, assemble the right team, strategize the approach to optimize value and then get the deal done.
Jim is frequently quoted as an expert on hotel issues by national and industry publications such as The New York Times, The Wall Street Journal, Los Angeles Times, Forbes, BusinessWeek, and Hotel Business. A frequent author and speaker, Jim’s books, articles and many expert panel presentations cover topics reflecting his practice, including hotel and hotel-mixed use investment and development, negotiating, re-negotiating or terminating hotel management agreements, acquisition and sale of hospitality properties, hotel finance, complex joint venture and entity structure matters, workouts, as well as many operating and strategic issues.
Jim Butler is a Founding Partner of Jeffer, Mangels, Butler & Marmaro LLP and he is Chairman of the firm’s Global Hospitality Group®. If you would like to discuss any hospitality or condo hotel matters, Jim would like to hear from you. Contact him at email@example.com or 310.201.3526. For his views on current industry issues, visit www.HotelLawBlog.com.