Supplemental Conditions

Texas Jury Awards $5.3 Million to Company Defamed by Union: Could it work in Pennsylvania?

Posted in Secondary Boycotts, Unions

In early September a Texas jury awarded a janitorial $5.3 million against the local chapter of the SEIU.  The janitorial firm claimed that the SEIU damaged its reputation and caused it damages when it spread false, defamatory, and disparaging stories about the firm.  Specifically, the janitorial firm claimed that the SEIU told the janitorial firms customer and potential customers that the firm “systematically failed to pay its employees for all hours worked, instructed janitors to work off the clock and had fired, threatened or refused to hire janitors who supported joining a union.”  According to Law360.com, the union did this with “fliers, handbills, letters, emails, newsletters, speeches and postings on its website accused [the firm] of violating wage-and-hour and other labor laws.”

The SEIU’s apparently tactics are hardly unique. Union campaigns that use fliers, handbills, letters, emails, newletters, ect. to pressure third-parties from doing business with a targeted employer are hardly unique.  In fact, they are quite common place in Philadelphia and its surrounding suburbs, particularly with the building trades unions.  Most of the business owners of the company’s that are the target of the campaign are frustrated – to say the least – with the truthfulness of the statements contained in the union’s literature.  For example, many unions claim a non-union employers pays substandard wages or wages less than what the union pays.  However, the union has no way of know whether that is truthful or not and the many firms offer packages that are better than the union rate.

Could a suit similar to the one brought in Texas be successful in Pennsylvania?  Yes.  In the Texas case, the SEIU was sued for defamation.  Pennsylvania recognizes the tort of defamation.  In the commercial context, defamation concerning a business is referred to as “commercial disparagement.”  A plaintiff in a commercial disparaging case needs to prove the following elements: (1) the statement is false, (2) the publisher either intends the publication to cause pecuniary loss or reasonably should recognize that publication will result in pecuniary loss, (3) a loss does in fact result, (4) the publisher either knows that the statement is false or acts in reckless disregard of its truth or falsity, an (5) no privilege attaches to the statement.

In many of the union campaigns that we see, the first three elements can usually be found.  The fourth could probably be proved through discovery, unless the plaintiff’s customer outright terminates their contract, in which case the company would have other remedies against the union.  The challenge would be element 5.

A conditional privilege attaches to a commercially disparaging statement when the statement involves some interest of the person who publishes it, some interest of the person to whom it is published or some other third person, or a recognized interest of the public.  KBT Corp. v. Ceridian Corp., 966 F. Supp. 369, 374 (E.D. Pa. 1997).  However, this privileged is lost when it is abused by “publication that is the result of malice, i.e. ‘a wrongful act done intentionally or without excuse or generated from reckless or wanton disregard of another’s rights.'”
There are no know reported cases in Pennsylvania involving a case against a trade union for commercial disparagement.  This might be because of the previous difficulty plaintiff had in proven the fifth element of the claim. However, as the Texas case showed, in the digital age proving that element is getting easier. In the Texas case, the plaintiff obtained emails showing that the intent of the union was to put the janitorial firm out of business and bragging about when the firm in fact lost business.  If a plaintiff can find emails like that, it makes it very hard for the defendant to claim that it was not acting in a manner done with the intent to harm the business.