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July 02, 2020

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Texas Defamation Verdict Drives Union into Bankruptcy

A Texas jury has awarded a company $7.8 million in compensatory damages and interest after finding Service Employees International Union Local 5 significantly damaged the company’s business through false claims of workplace violations. As a result, Local 5 has filed for federal bankruptcy protection.

In 2006, Local 5 launched the infamous “Justice for Janitors” campaign against several building service providers. One, Professional Janitorial Services of Houston Inc., refused to succumb. The union did its best to intimidate PJS and its customers. With the ubiquitous inflatable rats serving sentry duty at the company’s offices, Local 5 filed 19 labor law charges against the company (including for wage and overtime violations and discharges for union activity), then published the accusations as “facts.” None of the charges were found to have merit. Local 5 also used its political muscle to influence PJS customers to stop doing business with the company. In fact, later testimony revealed union officials wanted to “kill PJS.”

In 2007, PJS filed suit and fought the union through every stage of civil litigation. Finally, nine years later, a jury agreed with PJS and awarded it almost eight million dollars in damages.

The union filed a bankruptcy petition, saying bankruptcy protection will enable it to stay in business while appealing the “unjust judgment.” PJS argues the union should be required to obtain a $6.1 million bond before proceeding with an appeal.

The local union’s financial disclosure filings with the U.S. Department of Labor cast doubt as to whether Local 5 has the liquid assets to pay the judgment. PJS contends the Service Employees International Union in Washington, D.C. (Local 5’s parent organization) should subsidize their local union. “Justice for Janitors” was a campaign developed by the SEIU International; it was promoted and funded by the International in cities around the country.

Unions, be they locals or an international, generally have the ability to raise money from members for unexpected expenses by levying assessments on them, which the members are required to pay in addition to dues. There is no indication whether that will happen here. It remains to be seen whether and how much Local 5 ultimately pays PJS.

Attorneys will tell you that suing a labor union in these circumstances is an expensive and often losing proposition. However, this case shows that a single committed employer can stand up to a nationally funded corporate campaign.

Jackson Lewis P.C. © 2020National Law Review, Volume VI, Number 349

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About this Author

Thomas V. Walsh, Jackson Lewis, employment arbitration Lawyer, White plains, Union Organizing Attorney
Shareholder

Thomas V. Walsh is a Shareholder in the White Plains, New York, office of Jackson Lewis P.C. Since joining the firm in 1986, Mr. Walsh has represented employers in all aspects of labor and employment law and litigation.

Mr. Walsh has represented employers before numerous state and federal courts, regulatory agencies, as well as in numerous arbitrations. Mr. Walsh has extensive experience in representing employers faced with union organizing drives and in proceedings before the National Labor Relations Board. He has an...

914-872-6912
Howard Bloom, Jackson Lewis, labor union attorney, unfair practice investigations lawyer, employment legal counsel, bargaining law
Principal

Howard M. Bloom is a Principal in the Boston, Massachusetts, office of Jackson Lewis P.C. He has practiced labor and employment law representing exclusively employers for more than 36 years.

Mr. Bloom counsels clients in a variety of industries on labor law issues. He trains and advises executives, managers and supervisors on union awareness and positive employee relations, and assists employers in connection with union card-signing efforts, traditional union representation and corporate campaigns, and union decertification campaigns. He also represents clients at the National Labor Relations Board in connection with bargaining unit issues, objections and challenges, as well as unfair labor practice investigations and trials. Mr. Bloom also has been the spokesperson at countless first and successor contract collective bargaining negotiations, and regularly advises on collective bargaining agreement administration issues, including grievance/arbitration issues.

Mr. Bloom has appeared before the Massachusetts Supreme Judicial Court, the U.S. Court of Appeals for the District of Columbia, several U.S. District Courts, the National Labor Relations Board, the Massachusetts Labor Relations Commission, the Equal Employment Opportunity Commission and the Massachusetts Commission Against Discrimination.

617-367-0025
Philip B. Rosen Jackson Lewis  Preventive Practices Lawyer & Collective Bargaining Attorney
Principal

Philip B. Rosen is a Principal in the New York City, New York, office of Jackson Lewis P.C. He is a member of the firm's Board of Directors and co-leads the firm's Labor and Preventive Practices Group. He joined the firm in 1979 and served as Managing Partner of the New York City office from 1989 to 2009.

Mr. Rosen lectures extensively, conducts management training, and advises clients with respect to legislative and regulatory initiatives, corporate strategies, business ethics, social media, reorganizations and reductions-...

212-545-4000