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.